Bluegreen Vacations Corporation Reports Financial Results for the Third Quarter 2020

BOCA RATON, Fla.--(BUSINESS WIRE)-- Bluegreen Vacations Corporation (NYSE: BXG) ("Bluegreen" or the “Company") reported today its financial results for the quarter ended September 30, 2020.

Third Quarter 2020 Highlights:

  • Net income attributable to shareholders was $9.9 million in the current year quarter compared to $20.3 million in the prior year quarter.
  • Earnings Per Share (“EPS”) was $0.14 in the current year quarter, compared to $0.27 in the prior year quarter.
  • Adjusted EBITDA attributable to shareholders decreased to $22.4 million in the current year quarter, compared to $37.0 million in the prior year quarter.
  • Total revenue decreased to $144.6 million in the current year quarter from $202.7 million in the prior year quarter.
  • System-wide sales of vacation ownership interests (“VOIs”) decreased to $104.3 million in the current year quarter from $170.4 million in the prior year quarter.
  • The current year quarter’s results were adversely affected by the economic impact of the COVID-19 pandemic. In response to the pandemic, we temporarily closed all of our VOI sales centers in the last week of March 2020. By September 30, 2020, we recommenced our marketing operations at 92 Bass Pro Shops and Cabela’s stores, reactivated our Choice Hotels call transfer program, reopened all of our resorts, and reopened all but one of our VOI sales centers. Resort occupancy for the third quarter of 2020 was approximately 70%.
  • Completed a private offering and sale of approximately $131.0 million of VOI receivable-backed Notes in October 2020.

Alan B. Levan, Chairman, President and Chief Executive Officer of Bluegreen, commented, “After our growth had essentially stalled in the periods prior to and including the third quarter of 2019, we launched our “Bluegreen Renewal” initiative, with the internal goals of revitalizing our sales and revenue growth and better managing our expenses. We reorganized our team and put in place processes which we believed would help us achieve operational improvements quickly. We were encouraged by the results of our efforts which included an upward trend in system-wide sales, achieving 6.5% growth in the fourth quarter of 2019 and 16.5% growth in system-wide sales through February 29, 2020, compared to the comparable prior year period. Unfortunately, in March 2020 the United States began to experience the impacts of the unprecedented COVID-19 pandemic, which resulted in significant declines in our occupancy and guest tours and closures of several of our resorts and all of our sales and marketing operations. Our response to the pandemic required us to prudently change our focus from pursuing growth to dramatically reducing expenses during the crisis and bolstering our liquidity, both of which we did immediately.”

Mr. Levan continued, “Beginning in the second quarter of 2020 and continuing in the third quarter, our focus has been on safely reopening our resorts and our sales and marketing operations. In that regard, we are pleased with the pace of the rebound in our third quarter system-wide sales of VOIs, which at $104.3 million were just 39% below the third quarter of 2019, despite the continued impact of the COVID-19 pandemic. Further, the Company returned to profitability in the third quarter, generating $22.4 million in consolidated adjusted EBITDA attributable to shareholders and $9.9 million in net income attributable to shareholders. It is our hope that, if conditions allow, we will soon be able to return to the upward trend in sales and increased profitability that we believe the Bluegreen Renewal initiative will deliver. However, it goes without saying that this continues to be an unprecedented event in the United States, and it is currently impossible to predict the duration or severity of the pandemic or if and when the economy and our business will return to pre-pandemic levels. In the meantime, I would like to thank our owners, guests and shareholders for their continued support, as well as our management team and associates for their continued excellence in delivering fun and safe vacations and supporting the Company’s initiatives during these challenging times.”

Financial Results

(dollars in millions, except per share data)

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

Change

 

2020

 

2019

 

Change

 

 

 

 

 

 

 

Total revenue

$

144.6

$

202.7

(28.7

)%

$

370.0

$

560.5

(34.0

)%

Income before non-controlling interest and provision for income taxes

$

17.4

$

30.4

(42.7

)%

$

6.4

$

42.5

(85.0

)%

Net income attributable to shareholders

$

9.9

$

20.3

(51.3

)%

$

1.3

$

24.3

(94.8

)%

Earnings per share basic and diluted

$

0.14

$

0.27

(48.1

)%

$

0.02

$

0.33

(93.9

)%

Adjusted EBITDA attributable to shareholders(1)

$

22.4

$

37.0

(39.5

)%

$

29.3

$

91.8

(68.1

)%

Capital-light revenue(2) as a percentage of total revenue

 

66.7%

 

70.2%

(350

)bp

 

70.1%

 

76.3%

(620

)bp

(1)

See Appendix for reconciliation of Adjusted EBITDA Attributable to Shareholders to Net Income Attributable to Shareholders

(2)

Bluegreen's "capital-light" revenue includes revenue from 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.

Adjusted EBITDA was $22.4 million, including $27.3 million generated from the Sales of VOIs and Financing Segment and $15.4 million produced by the Resort Operations and Club Management segment, partially offset by $20.4 million spent on corporate overhead and other expenses. Please see discussion of Segment Results below for further information.

Segment Results

 

Sales of VOIs and Financing Segment

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

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

Change

 

2020

 

2019

 

Change

 

 

 

 

 

 

 

System-wide sales of VOIs

$

104.3

$

170.4

(38.8

)%

$

254.8

$

463.6

(45.0

)%

Segment adjusted EBITDA

$

27.3

$

41.6

(34.3

)%

$

24.4

$

107.2

(77.2

)%

Sales offices

 

25

 

26

(3.8

)%

 

25

 

26

(3.8

)%

Sales offices selling to new prospects

 

18

 

19

(5.3

)%

 

18

 

19

(5.3

)%

Guest tours

 

36,268

 

65,875

(44.9

)%

 

83,022

 

179,180

(53.7

)%

Average sales price per transaction

$

17,094

$

14,799

15.5

%

$

16,324

$

15,290

6.8

%

Sale to tour conversion ratio

 

16.9%

 

17.6%

(70

)bp

 

18.9%

 

17.0%

190

bp

Sales volume per guest ("VPG")

$

2,889

$

2,609

10.7

%

$

3,079

$

2,605

18.2

%

Number of Bass Pro and Cabela's marketing locations

 

92

 

75

22.7

%

 

92

 

75

22.7

%

Financing revenue, net of financing expense

$

15,545

$

15,008

3.6

%

$

46,658

$

45,101

3.5

%

Selling and marketing expenses, as a % of system-wide sales of VOIs

 

51.4%

 

51.8%

(40

)bp

 

61.1%

 

51.4%

970

bp

Provision for loan losses

 

16.7%

 

19.8%

(310

)bp

 

28.0%

 

17.5%

1,050

bp

Cost of VOIs sold

 

6.1%

 

4.7%

140

bp

 

7.7%

 

9.4%

(170

)bp

System-wide sales of VOIs
System-wide sales of VOIs were $104.3 million during the three months ended September 30, 2020. As discussed above, all of the Company’s VOI sales centers were temporarily closed on March 23, 2020 and remained closed until June 2020, when 21 of the Company’s 26 VOI sales centers were re-opened for sales to existing owners with one of these sales centers also selling to new prospects. During the third quarter of 2020, we reopened all but one of our VOI sales centers.

As a result, the sales mix for the third quarter of 2020 was heavily weighted toward sales to existing owners at 67% of system-wide sales of VOIs.

Fee-based sales commission revenue
Fee-based sales commission revenue was $22.1 million and was 67% of third-party VOI sales during the current year quarter. Third-party VOI sales were 32% of system-wide sales during the current year quarter, which is lower than is typical. Third-party VOI sales tend to occur more often at sales centers selling to new prospects, which were more significantly impacted by the COVID-19 pandemic.

Financing Revenue, net of Financing Expense
Interest income on VOI notes receivable decreased 5.0% to $19.0 million in the third quarter of 2020 compared to the third quarter of 2019, driven by lower notes receivable balances primarily due to the temporary closure of VOI sales centers as a result of the COVID-19 pandemic. Interest expense on receivable-backed notes payable decreased 22.8% to $3.9 million in the third quarter of 2020 compared to the third quarter of 2019, primarily due to lower outstanding receivable-backed debt balances and lower weighted-average cost of borrowings due to lower market interest rates.

Cost of VOIs sold
In the third quarter of 2020, cost of VOIs sold represented 6% of sales of VOIs compared to 5% in the third quarter of 2019. 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.

Provision for Loan Losses
The provision for loan losses varies based on the amount of financed, non fee-based sales during the period and changes in our estimates of future notes receivable performance for existing and newly originated loans. The provision for loan losses as a percentage of gross sales of VOIs was 17% during the current year quarter compared to 20% during the prior year quarter.

The provision for new loans generated during the third quarter of 2020 was 24%, which was consistent with the prior year quarter. However, the percentage of VOI sales that were financed during the third quarter was 59%, compared to 60% in the prior year quarter, which resulted in an overall lower provision as a percentage of sales in the 2020 period. Additionally, in the first quarter of 2020, the Company recorded an additional allowance for loan losses of $12.0 million, which included its estimate of customer defaults expected as a result of the COVID–19 pandemic. The Company attempted to provide assistance with mortgages on a case-by-case basis with a view to mitigating defaults, however there is no assurance that these efforts will be successful or that the allowances for loan losses will prove to be adequate.

The Company continues to monitor and address the activity of so-called third-party timeshare exit firms. Certain firms have increased their activities during the COVID-19 pandemic and the Company will continue to consider appropriate courses of action regarding this industry-wide issue.

Net Carrying Cost of Inventory
Net carrying cost of inventory increased $2.7 million or 46% in the third quarter of 2020 compared to the third quarter of 2019, primarily due to decreased rentals of developer inventory and decreased sampler stays due to decreased travel associated with the COVID-19 pandemic and increased maintenance fees and developer subsidies associated with our increase in VOI inventory as a result of reduced sales during the period.

Selling and Marketing Expense
Selling and marketing expense were 51% of system-wide sales of VOIs during the current year quarter as compared to 52% during the prior year. The Company believes that its cost mitigation efforts during this period of reduced sales, as well as a higher proportion of sales to owners in the third quarter of 2020, helped maintain this percentage at historical levels. As of September 30, 2020, the Company had recommenced marketing operations at 87 Bass Pro and Cabela’s locations and marketing operations commenced at 5 new Cabela’s stores. These stores sell vacation packages to drive marketing guests to its sales offices in the future. In addition, the Company had restarted its call transfer marketing program with Choice Hotels, although volumes of packages sold continue to be adversely impacted by the COVID-19 pandemic. Additionally, in October 2020, the Company reopened marketing operations at one additional Bass Pro Shop that was open in March 2020 prior to the pandemic and commenced marketing operations at 4 new Cabela’s stores for a total of 97 Bass Pro Shops and Cabela’s stores.

General and Administrative Expense
General and Administrative Expense related to the Company’s sales and marketing operations decreased $1.6 million or 21% as compared to the third quarter of 2019, primarily due to the Company’s cost mitigation efforts during this period of reduced sales.

Resort Operations and Club Management Segment

(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Resort operations and club management revenue

$

42.2

 

$

47.3

 

(10.8

)%

 

$

124.9

 

$

132.9

 

(6.0

)%

Segment adjusted EBITDA

$

15.4

 

$

15.5

 

(0.5

)%

 

$

49.4

 

$

45.0

 

9.9

%

Resorts managed

 

49

 

 

49

 

%

 

 

49

 

 

49

 

%

In the third quarter of 2020, resort operations and management club revenue decreased by $5.1 million, or 11%, to $42.2 million from $47.3 million in the prior year quarter, in part due to a decrease in cost reimbursement revenue, which has no impact on segment adjusted EBITDA. Net of cost reimbursement revenue, resort operations and club management revenues decreased 10% as a result of decreases in revenues from our Traveler Plus program, other owner programs, resort retail operations and third-party rental commissions largely, we believe, as a result of the COVID-19 pandemic. However, segment adjusted EBITDA was relatively flat at $15.4 million and $15.5 million, respectively, driven primarily by lower costs incurred during the third quarter of 2020 due to cost mitigation activities implemented in the first quarter of 2020 and lower Traveler Plus program costs, other owner programs and costs of resort retail operations. Resort occupancy for the third quarter of 2020 was approximately 70%.

Corporate and Other 

Adjusted EBITDA related to Corporate and Other was relatively flat at $20.4 million and $20.1 million in the third quarter of 2020 and 2019, respectively. Further, Corporate General and Administrative expenses decreased $1.9 million primarily due to cost mitigation steps implemented in the first quarter of 2020.

Balance Sheet and Liquidity

As of September 30, 2020, unrestricted cash and cash equivalents totaled $193.1 million. Excluding receivable-backed notes payable, the Company’s net debt-to-EBITDA ratio as of September 30, 2020 was 0.68.

The Company had availability of approximately $182 million under its receivable-backed purchase and credit facilities, and corporate credit line as of September 30, 2020, subject to eligible collateral and the terms of the facilities, as applicable. During the third quarter of 2020, the Company repaid $60.0 million drawn down under our line-of credit in March 2020 as a precautionary measure to provide the Company liquidity due to COVID-19. Further, in October 2020, the Company completed a private offering and sale of approximately $131.0 million of VOI receivable-backed Notes (the "2020-A Term Securitization"). As a result of the 2020-A Term Securitization, availability under the Company’s receivable-backed purchase and credit facilities and corporate credit line increased $82.1 million as of October 8, 2020, 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 $46.1 million for the nine months ended September 30, 2020, compared to $31.8 million for the nine months ended September 30, 2019. The increase in free cash flow was primarily due to a decrease in the settlement payments made to Bass Pro pursuant to the agreement entered into in June 2019. The Company paid Bass Pro a $20.0 million initial settlement payment in June 2019, as compared to a $4.0 million settlement installment payment made to Bass Pro in January 2020. In addition, income tax payments decreased $14.8 million, spending on the acquisition and development of inventory decreased $17.2 million and the purchase of property and equipment decreased $12.6 million during the 2020 period as compared to the 2019 period. These increases in free cash flow were partially offset by lower cash sales and down payments from customers associated with the closure of VOI sales centers in response to the COVID-19 pandemic.

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 attributable to shareholders 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 and manages resorts in popular leisure and urban destinations. The Bluegreen Vacation Club is a flexible, points-based, deeded vacation ownership plan with 68 Club and Club Associate Resorts and access to nearly 11,300 other hotels and resorts through partnerships and exchange networks. 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 Vacations Corporation is approximately 93% owned by Bluegreen Vacations Holding Corporation (NYSE: BVH) (OTCQX: BVHBB) (formerly BBX Capital Corporation), a Florida-based holding company. For further information about Bluegreen Vacations Corporation, please visit www.BluegreenVacations.com.

About Bluegreen Vacations Holding Corporation: Bluegreen Vacations Holding Corporation (NYSE: BVH) (OTCQX: BVHBB) (formerly BBX Capital Corporation), is a Florida-based holding company whose sole investment is its approximate 93% ownership interest of Bluegreen Vacations Corporation (NYSE: BXG). For further information, please visit www.BVHcorp.com.

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 public health issues, including in particular the COVID-19 pandemic and the effects of the pandemic, including resort closures, travel and business restrictions, volatility in the international and national economy and credit markets, worker absenteeism, quarantines and other health related restrictions; the length and severity of the COVID-19 pandemic and our ability to successfully resume full business operations thereafter; governmental and agency orders, mandates and guidance in response to the COVID-19 pandemic and the duration thereof, which is uncertain and will impact our ability to fully utilize resorts and re-open sales centers and other marketing activities; the pace of recovery following the COVID-19 pandemic; the risk that resorts and sales operations, including those at Bass Pro and Cabela’s store locations, may not reopen to the extent or when expected, or may be subject to additional closures in the future, particularly in locations where COVID-19 cases have increased; competitive conditions; our liquidity and the availability of capital; our ability to successfully implement our strategic plans and initiatives to navigate the COVID-19 pandemic; risks that default rates may increase and exceed the Company’s expectations, including due to the impact on consumers of the COVID-19 pandemic and if our efforts to address the actions of timeshare exit firms and the increase in default rates associated therewith are not successful; risks related to our indebtedness, including the potential for accelerated maturities and debt covenant violations; the risk of heightened litigation as a result of actions taken in response to the COVID-19 pandemic; the impact of the COVID-19 pandemic on our operations and our payment of regular or special dividends in the future, including that despite the special cash dividend declared during July 2020, we have suspended the payment of regular quarterly cash dividends due to the impact of the COVID-19 pandemic, and dividends may not be paid at historical rates or at all; the impact of the COVID-19 pandemic on consumers, including their income, their level of discretionary spending both during and after the pandemic, and their views towards travel and the vacation ownership industries; the risk that our resort management fees and finance operations may not continue to generate recurring sources of cash during or following the pandemic to the extent anticipated or at all; risks that our current or future marketing alliances may not be available to us in the future; that the Company’s current strategy to reduce sales of fee-based inventory may not result in EBITDA growth or otherwise positively impact the Company and such strategy may change; our ability to successfully implement our strategic plans and initiatives, generate earnings and long-term growth; risks that the Company’s costs, including costs of VOIs sold, will not be within the expected ranges; risks that natural disasters, including hurricanes, may result in declines in leisure travel or traffic at locations where we have marketing operations, adversely impact the availability of credit, or otherwise adversely impact the Company’s financial condition and operating results; any damage to physical assets or interruption of access to physical assets or operations resulting from public health issues, such as the COVID-19 outbreak, or from hurricanes, earthquakes, fires, floods, windstorms or other natural disasters, which may increase in frequency or severity due to climate change or other factors; 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, 2019, which was filed on March 12, 2020, and the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2020, which is expected to be filed on or about November 9, 2020. 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.

FINANCIAL SCHEDULES

 
 

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 Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Gross sales of VOIs

 

$

71,149

 

 

$

82,729

 

 

$

157,530

 

 

$

225,834

 

Estimated uncollectible VOI notes receivable

 

 

(11,884

)

 

 

(16,411

)

 

 

(44,083

)

 

 

(39,483

)

Sales of VOIs

 

 

59,265

 

 

 

66,318

 

 

 

113,447

 

 

 

186,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based sales commission revenue

 

 

22,119

 

 

 

60,478

 

 

 

64,619

 

 

 

161,033

 

Other fee-based services revenue

 

 

27,831

 

 

 

33,744

 

 

 

83,558

 

 

 

94,015

 

Cost reimbursements

 

 

15,684

 

 

 

17,883

 

 

 

46,654

 

 

 

48,933

 

Interest income

 

 

19,672

 

 

 

22,081

 

 

 

61,646

 

 

 

65,964

 

Other income, net

 

 

 

 

 

2,146

 

 

 

41

 

 

 

4,228

 

Total revenue

 

 

144,571

 

 

 

202,650

 

 

 

369,965

 

 

 

560,524

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of VOIs sold

 

 

3,597

 

 

 

3,121

 

 

 

8,734

 

 

 

17,541

 

Cost of other fee-based services

 

 

20,861

 

 

 

22,872

 

 

 

61,107

 

 

 

63,913

 

Cost reimbursements

 

 

15,684

 

 

 

17,883

 

 

 

46,654

 

 

 

48,933

 

Selling, general and administrative expenses

 

 

79,350

 

 

 

118,033

 

 

 

222,427

 

 

 

357,666

 

Interest expense

 

 

7,319

 

 

 

10,388

 

 

 

24,677

 

 

 

29,955

 

Other expense, net

 

 

365

 

 

 

 

 

 

 

 

 

 

Total costs and expenses

 

 

127,176

 

 

 

172,297

 

 

 

363,599

 

 

 

518,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before non-controlling interest and provision for income taxes

 

 

17,395

 

 

 

30,353

 

 

 

6,366

 

 

 

42,516

 

Provision for income taxes

 

 

4,850

 

 

 

7,778

 

 

 

1,073

 

 

 

9,124

 

Net income

 

 

12,545

 

 

 

22,575

 

 

 

5,293

 

 

 

33,392

 

Less: Net income attributable to non-controlling interest

 

 

2,644

 

 

 

2,248

 

 

 

4,021

 

 

 

9,095

 

Net income attributable to Bluegreen Vacations Corporation shareholders

 

$

9,901

 

 

$

20,327

 

 

$

1,272

 

 

$

24,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to Bluegreen Vacations Corporation shareholders

 

$

9,901

 

 

$

20,327

 

 

$

1,272

 

 

$

24,297

 

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 Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2019

Earnings per share attributable to Bluegreen Vacations Corporation shareholders - Basic and diluted

 

$

0.14

 

$

0.27

 

$

0.02

 

$

0.33

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

72,485

 

 

74,446

 

 

73,010

 

 

74,446

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

1.19

 

$

0.17

 

$

1.31

 

$

0.51

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

September 30,

 

 

2020

 

2019

Operating activities:

 

 

 

 

 

 

Net income

 

$

5,293

 

 

$

33,392

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

14,307

 

 

 

14,069

 

Loss (gain) on disposal of property and equipment

 

 

326

 

 

 

(1,926

)

Provision for loan losses

 

 

44,083

 

 

 

39,483

 

Benefit for deferred income taxes

 

 

(2,047

)

 

 

(6,563

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Notes receivable

 

 

(5,628

)

 

 

(46,205

)

Prepaid expenses and other assets

 

 

12,473

 

 

 

(10,586

)

Inventory

 

 

(3,408

)

 

 

(12,672

)

Accounts payable, accrued liabilities and other, and deferred income

 

 

(13,424

)

 

 

41,333

 

Net cash provided by operating activities

 

 

51,975

 

 

 

50,325

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(5,895

)

 

 

(18,502

)

Proceeds from sale of property and equipment

 

 

167

 

 

 

3,249

 

Proceeds from repayment of related party loan

 

 

80,000

 

 

 

 

Net cash provided by (used in) investing activities

 

 

74,272

 

 

 

(15,253

)

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

Proceeds from borrowings collateralized by notes receivable

 

 

53,780

 

 

 

79,168

 

Payments on borrowings collateralized by notes receivable

 

 

(96,863

)

 

 

(102,631

)

Proceeds from borrowings collateralized by line-of-credit facilities and notes payable

 

 

80,000

 

 

 

20,386

 

Payments under line-of-credit facilities and notes payable

 

 

(65,597

)

 

 

(35,731

)

Payments of debt issuance costs

 

 

(1,134

)

 

 

(255

)

Repurchase and retirement of common stock

 

 

(11,741

)

 

 

 

Dividends paid

 

 

(95,923

)

 

 

(37,967

)

Net cash used in financing activities

 

 

(137,478

)

 

 

(77,030

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(11,231

)

 

 

(41,958

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

239,646

 

 

 

273,134

 

Cash, cash equivalents and restricted cash at end of period

 

$

228,415

 

 

$

231,176

 

 

 

 

 

 

 

 

Supplemental schedule of operating cash flow information:

 

 

 

 

 

 

Interest paid, net of amounts capitalized

 

$

22,912

 

 

$

26,067

 

Income taxes paid

 

$

400

 

 

$

15,200

 

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except for per share data)

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2020

 

2019

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

193,103

 

 

$

190,009

 

Restricted cash ($15,135 and $22,534 in VIEs at September 30, 2020 and December 31, 2019, respectively)

 

 

35,312

 

 

 

49,637

 

Notes receivable

 

 

559,918

 

 

 

589,198

 

Less: Allowance for loan losses

 

 

(149,805

)

 

 

(140,630

)

Notes receivable, net ($271,539 and $292,590 in VIEs at September 30, 2020 and December 31, 2019, respectively)

 

 

410,113

 

 

 

448,568

 

Inventory

 

 

350,345

 

 

 

346,937

 

Prepaid expenses

 

 

13,577

 

 

 

10,501

 

Other assets

 

 

37,413

 

 

 

52,731

 

Operating lease assets

 

 

19,443

 

 

 

20,858

 

Intangible assets, net

 

 

61,452

 

 

 

61,515

 

Loan to related party

 

 

 

 

 

80,000

 

Property and equipment, net

 

 

93,046

 

 

 

99,262

 

Total assets

 

$

1,213,804

 

 

$

1,360,018

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Accounts payable

 

$

17,511

 

 

$

16,653

 

Accrued liabilities and other

 

 

92,934

 

 

 

103,948

 

Operating lease liabilities

 

 

20,880

 

 

 

22,124

 

Deferred income

 

 

14,635

 

 

 

18,074

 

Deferred income taxes

 

 

90,457

 

 

 

92,504

 

Receivable-backed notes payable - recourse

 

 

77,417

 

 

 

88,569

 

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

 

 

303,301

 

 

 

334,246

 

Lines-of-credit and notes payable

 

 

160,671

 

 

 

146,160

 

Junior subordinated debentures

 

 

72,710

 

 

 

72,081

 

Total liabilities

 

 

850,516

 

 

 

894,359

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

Common stock, $0.01 par value, 100,000,000 shares authorized; 72,484,293 shares issued and outstanding at September 30, 2020 and 74,362,693 shares issued and outstanding at December 31, 2019

 

 

725

 

 

 

744

 

Additional paid-in capital

 

 

257,812

 

 

 

269,534

 

Retained earnings

 

 

51,196

 

 

 

145,847

 

Total Bluegreen Vacations Corporation shareholders' equity

 

 

309,733

 

 

 

416,125

 

Non-controlling interest

 

 

53,555

 

 

 

49,534

 

Total shareholders' equity

 

 

363,288

 

 

 

465,659

 

Total liabilities and shareholders' equity

 

$

1,213,804

 

 

$

1,360,018

 

BLUEGREEN VACATIONS CORPORATION

ADJUSTED EBITDA RECONCILIATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

(in thousands)

 

2020

 

2019

 

2020

 

2019

Net income attributable to shareholders

 

$

9,901

 

 

$

20,327

 

 

$

1,272

 

 

$

24,297

 

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

 

 

2,644

 

 

 

2,248

 

 

 

4,021

 

 

 

9,095

 

Net Income

 

 

12,545

 

 

 

22,575

 

 

 

5,293

 

 

 

33,392

 

Add: Depreciation and amortization

 

 

3,891

 

 

 

3,585

 

 

 

11,680

 

 

 

10,453

 

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

 

 

(623

)

 

 

(1,799

)

 

 

(3,388

)

 

 

(5,437

)

Add: Interest expense - corporate and other

 

 

3,409

 

 

 

5,326

 

 

 

11,932

 

 

 

14,564

 

Add: Franchise taxes

 

 

101

 

 

 

112

 

 

 

118

 

 

 

171

 

Add: Provision for income taxes

 

 

4,850

 

 

 

7,778

 

 

 

1,073

 

 

 

9,124

 

EBITDA

 

 

24,173

 

 

 

37,577

 

 

 

26,708

 

 

 

62,267

 

Loss (gain) on assets held for sale

 

 

283

 

 

 

(166

)

 

 

326

 

 

 

(2,146

)

Add: Severance, net of employee retention credits

 

 

381

 

 

 

1,924

 

 

 

4,904

 

 

 

1,924

 

Add: COVID-19 incremental costs

 

 

282

 

 

 

 

 

 

1,756

 

 

 

 

Add: Bass Pro Settlement

 

 

 

 

 

 

 

 

 

 

 

39,121

 

Adjusted EBITDA

 

 

25,119

 

 

 

39,335

 

 

 

33,694

 

 

 

101,166

 

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

 

 

(2,757

)

 

 

(2,364

)

 

 

(4,438

)

 

 

(9,339

)

Adjusted EBITDA attributable to shareholders

 

$

22,362

 

 

$

36,971

 

 

$

29,256

 

 

$

91,827

 

BLUEGREEN VACATIONS CORPORATION

SEGMENT ADJUSTED EBITDA SUMMARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

(in thousands)

 

2020

 

2019

 

2020

 

2019

Adjusted EBITDA - sales of VOIs and financing

 

$

27,344

 

 

$

41,618

 

 

$

24,402

 

 

$

107,152

 

Adjusted EBITDA - resort operations and club management

 

 

15,391

 

 

 

15,462

 

 

 

49,429

 

 

 

44,983

 

Total Segment Adjusted EBITDA

 

 

42,735

 

 

 

57,080

 

 

 

73,831

 

 

 

152,135

 

Less: corporate and other

 

 

(20,373

)

 

 

(20,109

)

 

 

(44,575

)

 

 

(60,308

)

Total Adjusted EBITDA attributable to shareholders

 

$

22,362

 

 

$

36,971

 

 

$

29,256

 

 

$

91,827

 

BLUEGREEN VACATIONS CORPORATION

SALES OF VOIs AND FINANCING SEGMENT- ADJUSTED EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30,

 

 

2020

 

2019

 

 

Amount

 

% of
System-
wide sales
of VOIs (5)

 

Amount

 

% of
System-
wide sales
of VOIs (5)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Developed VOI sales (1)

 

$

37,314

 

 

36

%

 

$

87,863

 

 

52

%

Secondary Market sales

 

 

24,076

 

 

23

 

 

 

72,081

 

 

42

 

Fee-Based sales

 

 

33,159

 

 

32

 

 

 

87,646

 

 

51

 

JIT sales

 

 

14,845

 

 

14

 

 

 

4,505

 

 

3

 

Less: Equity trade allowances (6)

 

 

(5,086

)

 

(5

)

 

 

(81,720

)

 

(48

)

System-wide sales of VOIs

 

 

104,308

 

 

100

%

 

 

170,375

 

 

100

%

Less: Fee-Based sales

 

 

(33,159

)

 

(32

)

 

 

(87,646

)

 

(51

)

Gross sales of VOIs

 

 

71,149

 

 

68

 

 

 

82,729

 

 

49

 

Provision for loan losses (2)

 

 

(11,884

)

 

(17

)

 

 

(16,411

)

 

(20

)

Sales of VOIs

 

 

59,265

 

 

57

 

 

 

66,318

 

 

39

 

Cost of VOIs sold (3)

 

 

(3,597

)

 

(6

)

 

 

(3,121

)

 

(5

)

Gross profit (3)

 

 

55,668

 

 

94

 

 

 

63,197

 

 

95

 

Fee-Based sales commission revenue (4)

 

 

22,119

 

 

67

 

 

 

60,478

 

 

69

 

Financing revenue, net of financing expense

 

 

15,545

 

 

15

 

 

 

15,008

 

 

9

 

Other income, net

 

 

 

 

0

 

 

 

537

 

 

(1

)

Other fee-based services, title operations and other, net

 

 

481

 

 

0

 

 

 

1,847

 

 

1

 

Net carrying cost of VOI inventory

 

 

(8,580

)

 

(8

)

 

 

(5,878

)

 

(3

)

Selling and marketing expenses

 

 

(53,613

)

 

(51

)

 

 

(88,232

)

 

(52

)

General and administrative expenses - sales and marketing

 

 

(5,889

)

 

(6

)

 

 

(7,440

)

 

(4

)

Operating profit - sales of VOIs and financing

 

 

25,731

 

 

25

%

 

 

39,517

 

 

23

%

Add: Depreciation and amortization

 

 

1,405

 

 

 

 

 

1,507

 

 

 

Add: Severance

 

 

208

 

 

 

 

 

594

 

 

 

Adjusted EBITDA - sales of VOI and financing

 

$

27,344

 

 

 

 

$

41,618

 

 

 

(1)

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.

(2)

Percentages for provision for loan losses are calculated as a percentage of gross sales of VOIs, which excludes Fee-Based sales (and not as a percentage 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 as a percentage 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 as a percentage 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. Equity trade allowances were generally eliminated in June 2020 with certain exceptions.

BLUEGREEN VACATIONS CORPORATION

SALES OF VOIs AND FINANCING SEGMENT- ADJUSTED EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended September 30,

 

 

2020

 

2019

 

 

Amount

 

% of
System-
wide sales
of VOIs (5)

 

Amount

 

% of
System-
wide sales
of VOIs (5)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Developed VOI sales (1)

 

$

128,396

 

 

49

%

 

$

255,288

 

 

55

%

Secondary Market sales

 

 

98,576

 

 

39

 

 

 

184,571

 

 

40

%

Fee-Based sales

 

 

97,266

 

 

39

 

 

 

237,793

 

 

51

 

JIT sales

 

 

20,453

 

 

8

 

 

 

9,157

 

 

2

 

Less: Equity trade allowances (6)

 

 

(89,895

)

 

(35

)

 

 

(223,182

)

 

(48

)

System-wide sales of VOIs

 

 

254,796

 

 

100

%

 

 

463,627

 

 

100

%

Less: Fee-Based sales

 

 

(97,266

)

 

(38

)

 

 

(237,793

)

 

(51

)

Gross sales of VOIs

 

 

157,530

 

 

62

 

 

 

225,834

 

 

49

 

Provision for loan losses (2)

 

 

(44,083

)

 

(28

)

 

 

(39,483

)

 

(17

)

Sales of VOIs

 

 

113,447

 

 

45

 

 

 

186,351

 

 

40

 

Cost of VOIs sold (3)

 

 

(8,734

)

 

(8

)

 

 

(17,541

)

 

(9

)

Gross profit (3)

 

 

104,713

 

 

92

 

 

 

168,810

 

 

91

 

Fee-Based sales commission revenue (4)

 

 

64,619

 

 

66

 

 

 

161,033

 

 

68

 

Financing revenue, net of financing expense

 

 

46,658

 

 

18

 

 

 

45,101

 

 

10

 

Other income, net

 

 

 

 

0

 

 

 

537

 

 

0

 

Other fee-based services, title operations and other, net

 

 

2,364

 

 

1

 

 

 

5,260

 

 

1

 

Net carrying cost of VOI inventory

 

 

(27,407

)

 

(11

)

 

 

(18,853

)

 

(4

)

Selling and marketing expenses

 

 

(155,597

)

 

(61

)

 

 

(238,205

)

 

(51

)

General and administrative expenses - sales and marketing

 

 

(19,372

)

 

(8

)

 

 

(60,823

)

 

(13

)

Operating profit - sales of VOIs and financing

 

 

15,978

 

 

6

%

 

 

62,860

 

 

14

%

Add: Depreciation and amortization

 

 

4,447

 

 

 

 

 

4,577

 

 

 

Add: Severance

 

 

3,977

 

 

 

 

 

594

 

 

 

Add: Bass Pro Settlement

 

 

 

 

 

 

 

39,121

 

 

 

Adjusted EBITDA - sales of VOIs and financing

 

$

24,402

 

 

 

 

$

107,152

 

 

 

(1)

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.

(2)

Percentages for provision for loan losses are calculated as a percentage of gross sales of VOIs, which excludes Fee-Based sales (and not as a percentage 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 as a percentage 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 as a percentage 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. Equity trade allowances were generally eliminated in June 2020 with certain exceptions.

BLUEGREEN VACATIONS CORPORATION

SALES OF VOIs AND FINANCING SEGMENT

SALES AND MARKETING DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

 

 

2020

 

2019

 

Change

 

2020

 

2019

 

Change

 

 

 

 

 

 

 

Number of sales centers open at period-end

 

25

 

26

(4

)%

 

25

 

26

(4

)%

Number Bass Pro and Cabela's marketing locations at period-end

 

92

 

75

23

%

 

92

 

75

23

%

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

 

15

 

15

%

 

15

 

15

%

Total number of VOI sales transactions

 

6,130

 

11,613

(47

)%

 

15,657

 

30,530

(49

)%

Average sales price per transaction

$

17,094

$

14,799

16

%

$

16,324

$

15,290

7

%

Number of total guest tours

 

36,268

 

65,875

(45

)%

 

83,022

 

179,180

(54

)%

Sale-to-tour conversion ratio–total marketing guests

 

16.9%

 

17.6%

(70

)bp

 

18.9%

 

17.0%

190

bp

Number of new guest tours

 

17,583

 

40,914

(57

)%

 

40,762

 

109,451

(63

)%

Sale-to-tour conversion ratio–new marketing guests

 

12.4%

 

14.4%

(200

)bp

 

15.1%

 

14.0%

110

bp

Percentage of sales to existing owners

 

66.8%

 

52.5%

1,430

bp

 

63.9%

 

53.9%

1,000

bp

Average sales volume per guest

$

2,889

$

2,609

11

%

$

3,079

$

2,605

18

%

(1)

As previously described, during the last week of March 2020 we temporarily closed all of our VOI sales centers in response to the COVID-19 pandemic. As of September 30, 2020, 25 of our 26 sales centers were open.

BLUEGREEN VACATIONS CORPORATION

RESORT OPERATIONS AND CLUB MANAGEMENT SEGMENT- ADJUSTED EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

(in thousands)

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 

Resort operations and club management revenue

 

$

42,234

 

 

 

 

$

47,338

 

 

 

 

$

124,859

 

 

 

 

$

132,856

 

 

 

Resort operations and club management expense

 

 

(27,165

)

 

 

 

 

(32,435

)

 

 

 

 

(77,365

)

 

 

 

 

(89,161

)

 

 

Operating profit - resort operations and club management

 

 

15,069

 

 

36

%

 

 

14,903

 

 

31

%

 

 

47,494

 

 

38

%

 

 

43,695

 

 

33

%

Add: Depreciation and amortization

 

 

208

 

 

 

 

 

321

 

 

 

 

 

588

 

 

 

 

 

1,050

 

 

 

Add: Severance

 

 

114

 

 

 

 

 

238

 

 

 

 

 

1,347

 

 

 

 

 

238

 

 

 

Adjusted EBITDA - resort operations and club management

 

$

15,391

 

 

 

 

$

15,462

 

 

 

 

$

49,429

 

 

 

 

$

44,983

 

 

 

BLUEGREEN VACATIONS CORPORATION

CORPORATE AND OTHER - ADJUSTED EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

(dollars in thousands)

 

2020

 

2019

 

2020

 

2019

General and administrative expenses - corporate and other

 

$

(20,254

)

 

$

(22,149

)

 

$

(48,603

)

 

$

(58,603

)

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

 

 

(2,757

)

 

 

(2,364

)

 

 

(4,438

)

 

 

(9,339

)

Other (expense) income, net

 

 

(365

)

 

 

1,609

 

 

 

41

 

 

 

3,691

 

Franchise taxes

 

 

101

 

 

 

112

 

 

 

118

 

 

 

171

 

Loss (gain) on assets held for sale

 

 

283

 

 

 

(166

)

 

 

326

 

 

 

(2,146

)

Add: Depreciation and amortization

 

 

2,278

 

 

 

1,757

 

 

 

6,645

 

 

 

4,826

 

Add: Severance

 

 

59

 

 

 

1,092

 

 

 

1,782

 

 

 

1,092

 

Less: Employee Retention credit related to severance

 

 

 

 

 

 

 

 

(2,202

)

 

 

 

Add: COVID-19 incremental costs

 

 

282

 

 

 

 

 

 

1,756

 

 

 

 

Adjusted EBITDA - Corporate and other

 

$

(20,373

)

 

$

(20,109

)

 

$

(44,575

)

 

$

(60,308

)

BLUEGREEN VACATIONS CORPORATION

FREE CASH FLOW RECONCILIATION

 

 

 

 

 

 

 

 

 

For the Nine Months Ended
September 30,

(in thousands)

 

2020

 

2019

Net cash provided by operating activities

 

$

51,975

 

 

$

50,325

 

Purchases of property and equipment

 

 

(5,895

)

 

 

(18,502

)

Free Cash Flow

 

$

46,080

 

 

$

31,823

 

BLUEGREEN VACATIONS CORPORATION

OTHER FINANCIAL DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

(in thousands)

 

2020

 

2019

 

2020

 

2019

Financing Interest Income

 

$

19,049

 

 

$

20,043

 

 

$

58,258

 

 

$

59,985

 

Financing Interest Expense

 

 

(3,910

)

 

 

(5,062

)

 

 

(12,745

)

 

 

(15,391

)

Non-Financing Interest Income

 

 

623

 

 

 

2,038

 

 

 

3,388

 

 

 

5,979

 

Non-Financing Interest Expense

 

 

(3,409

)

 

 

(5,326

)

 

 

(11,932

)

 

 

(14,564

)

Mortgage Servicing Income

 

 

1,403

 

 

 

1,588

 

 

 

4,508

 

 

 

4,621

 

Mortgage Servicing Expense

 

 

(997

)

 

 

(1,561

)

 

 

(3,363

)

 

 

(4,114

)

BLUEGREEN VACATIONS CORPORATION

SYSTEM-WIDE SALES OF VOIs RECONCILIATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

(in thousands)

 

2020

 

2019

 

2020

 

2019

Gross sales of VOIs

 

$

71,149

 

$

82,729

 

$

157,530

 

$

225,834

Add: Fee-Based sales

 

 

33,159

 

 

87,646

 

 

97,266

 

 

237,793

System-wide sales of VOIs

 

$

104,308

 

$

170,375

 

$

254,796

 

$

463,627

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 VOIs purchased by us for sale as part of our JIT sales activities.

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 relating to VOIs sold by them.

Resort Operations and Club Management Revenue. Represents recurring fees from managing the Vacation Club and transaction fees for Traveler Plus and other member services. 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 generally 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 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, severance payments, 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 uncollectible VOI notes receivable. In addition to the factors impacting system-wide sales of VOIs (as described below), 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 guest tours by the number of VOI sales transactions.

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.

EBITDA and Adjusted EBITDA. We define 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 and depreciation and amortization. We define Adjusted EBITDA as our EBITDA further adjusted to exclude amounts attributable to the non-controlling interest in Bluegreen/Big Cedar Vacations (in which we own a 51% interest), loss (gain) on assets held for sale, and other items that we believe are not representative of ongoing operating results. Accordingly, we exclude severance charges net of employee retention tax credits, incremental costs associated with the COVID-19 pandemic, and amounts paid, accrued or incurred in connection with the Bass Pro settlement in June 2019 in the computation of Adjusted EBITDA. For purposes of the EBITDA and Adjusted EBITDA calculations for each period presented, 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 ordinary operations of our business.

We consider our total EBITDA, Adjusted EBITDA and our Segment Adjusted EBITDA to be indicators of our operating performance, and they are used by us to measure our ability to service debt, fund capital expenditures and expand our business. EBITDA and Adjusted EBITDA are also used by companies, lenders, investors and others because they exclude 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. EBITDA and Adjusted EBITDA also exclude 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.

EBITDA and Adjusted EBITDA are not recognized terms 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 EBITDA or Adjusted EBITDA as an analytical tool include, without limitation, that EBITDA and Adjusted EBITDA do 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 EBITDA and Adjusted EBITDA do 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.

Free Cash Flow. Defined as cash provided by operating activities less capital expenditures for property and equipment. We consider free cash flow to be a useful supplemental measure of our ability to generate cash flow from operations and is a supplemental measure of liquidity. Free cash flow should not be considered as an alternative to cash flow from operating activities as a measure of liquidity. Our computation of free cash flow may differ from the methodology utilized by other companies. Investors are cautioned that the items excluded from free cash flow are a significant component in understanding and assessing Company’s financial performance.

Investor Relations: Leo Hinkley, Managing Director, Investor Relations Officer
Telephone: 954-940-5336 Email: Leo.Hinkley@BluegreenVacations.com

Source: Bluegreen Vacations Corporation