BBX Capital Corporation (NYSE: BBX) (OTCQX: BBXTB) ("BBX
Capital"), announced that Bluegreen Vacations Corporation (NYSE:
BXG), which is approximately 93% owned by BBX Capital, issued the
following press release. Please see the Bluegreen press release
below.
BBX Capital Corporation Investor Relations Contact: Leo
Hinkley, Managing Director, Investor Relations Officer Phone:
954-940-5300 Email: LHinkley@BBXCapital.com
---------
Bluegreen Vacations Corporation Reports
First Quarter 2020 Results
BOCA RATON, Florida (May 11, 2020) – Bluegreen Vacations
Corporation (NYSE: BXG) ("Bluegreen" or the “Company") today
reported its first quarter 2020 financial results.
1Q20 Highlights:
- Net income attributable to shareholders was $0.2 million in the
first quarter compared to net income of $15.2 million in the prior
year first quarter.
- Earnings Per Share (“EPS”) of $0.00, compared to $0.20 in the
prior year quarter.
- Adjusted EBITDA of $11.0 million, compared to $26.2 million in
the prior year quarter.
- Total revenue decreased 5.3% to $156.9 million from $165.7
million in the prior year quarter.
- System-wide Sales of vacation ownership interests (“VOIs”)
increased 5.9% to $137.4 million in the current year quarter from
$129.7 million in the prior year quarter.
- The current year quarter’s results were adversely impacted by
the economic impact of the COVID-19 pandemic and initial steps
taken by the Company in reaction to the impact of the pandemic.
These steps included the temporary closure of all of the Company’s
VOI sales centers commencing in the last week of March 2020 and the
incurrence of $15.5 million of pretax expenses ($0.21 loss per
share) including the following:
- a $3.3 million pretax charge or ($0.04) loss per share for
severance and employee furloughs;
- a $12.0 million pretax charge or ($0.16) loss per share to
increase the allowance for loan losses.
- Net income and EPS were also adversely impacted by a $2.0
million pretax charge ($0.03) loss per share for severance charges
related to a reduction in force in January 2020 unrelated to the
COVID-19 pandemic.
Alan B. Levan, Chairman, President and Chief Executive Officer,
commented, “While the Company started the year off strong, with
system-wide sales of vacation ownership interests up 16.5% through
February 29, 2020, Bluegreen has since experienced significant
declines in occupancy, guest tours, and system-wide sales of VOIs
and an increase in mortgage defaults, which we believe were
associated with the impact of the COVID-19 pandemic. This is an
unprecedented event in the United States and globally, 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. We entered this period of disruption with a
strong balance sheet and liquidity and believe that we are
executing a prudent plan of action in response to the current
circumstances.”
As previously announced, the Company temporarily closed all of
its VOI sales centers; its retail marketing operations at Bass Pro
Shops; Cabela’s stores and outlet malls; and its Choice Hotels call
transfer program. Additionally, the Company canceled existing owner
reservations through May 15, 2020 and new prospect guest tours
through June 30, 2020. Several of the Company’s resorts have been
closed based on various governmental mandates and advisories. We
are currently developing a plan to reopen these operations
including accepting guests as of May 16 and reopening VOI sales
centers and marketing operations beginning June 1 on a phased
schedule. The Company has also taken additional actions including a
reduction in force, temporary furloughs and reduced work hours. In
addition, the Company is providing temporary relief to owners with
mortgages on a case-by-case basis.
Mr. Levan added, “We remain committed to our owners and the
future of Bluegreen and look forward to the end of this global
crisis and the reestablishment of our full business operations. We
will be excited to welcome our owners and guests back for much
needed vacations as soon as conditions allow.”
Financial Results (dollars
in millions, except per share data)
Three Months Ended March
31,
2020
2019
Change
Total revenue
$
156.9
$
165.7
(5.3)
%
Income before non-controlling
interest and
provision for income taxes
$
1.0
$
22.2
(95.5)
%
Net income attributable to
shareholders
$
0.2
$
15.2
(98.7)
%
Earnings per share basic and
diluted
$
—
$
0.20
(100.0)
%
Adjusted EBITDA
$
11.0
$
26.2
(58.0)
%
Capital-light revenue(1) as a
percentage of
total revenue
69.8%
69.5%
30
bp
(1)
Bluegreen's "capital-light" revenue includes revenue from the
sales of VOIs under fee-based sales and marketing arrangements,
just-in-time inventory acquisition arrangements, and secondary
market arrangements, as well as other fee-based services revenue
and cost reimbursements revenue.
Total revenue for the three months ended March 31, 2020
decreased 5.3% to $156.9 million from $165.7 million in the prior
year quarter, primarily associated with a $12.0 million increase in
the allowance for loan losses associated with the COVID-19
pandemic, and a decrease in fee-based service commission revenue
partially offset by increases in VOI sales and growth in resort
operations and club management revenues, as discussed more fully
under “Segment Results” below. Adjusted EBITDA decreased to $11.0
million in the first quarter of 2020 from $26.2 million in the
first quarter of 2019, primarily associated with the economic
impacts of the COVID-19 pandemic discussed above.
Segment Results
Sales of VOIs and Financing Segment (dollars in millions,
except per guest and per transaction amounts)
Three Months Ended March
31,
2020
2019
Change
System-wide sales of VOIs
$
137.4
$
129.7
5.9
%
Segment adjusted EBITDA
$
13.4
$
31.1
(57.0)
%
Number of total guest tours
40,665
48,138
(15.5)
%
Average sales price per
transaction
$
15,873
$
15,796
0.5
%
Sales to tour conversion
ratio
21.4%
17.1%
430
bp
Sales volume per guest
("VPG")
$
3,390
$
2,705
25.3
%
Selling and marketing expenses,
as a
% of system-wide sales of
VOIs
54.0%
50.3%
370
bp
Provision for loan losses
40.2%
17.7%
2,250
bp
Cost of VOIs sold
9.1%
7.4%
170
bp
System-wide sales of VOIs
System-wide sales of VOIs were $137.4 million and $129.7 million
during the three months ended March 31, 2020 and 2019,
respectively. System-wide sales of VOIs increased during the first
quarter compared to the comparable prior year quarter due to an
increase in the sale-to-tour conversion ratio and higher average
sales volume per guest, partially offset by a decrease in guest
tours. As previously disclosed, the Company temporarily closed all
of its VOI sales offices on March 23, 2020 associated with the
COVID-19 pandemic. The closures of all marketing operations and VOI
sales centers as a result of the COVID-19 pandemic is expected to
significantly impact system-wide sales of VOIs during the remainder
of 2020, however the actual impact, including the extent and
duration of the impact, cannot be predicted at this time.
Sales mix for the first quarter of 2020 was weighted toward
sales to existing owners at 59.7% of system-wide sales of VOIs,
compared to 56.9% in the comparable prior year quarter.
Fee-based sales commission revenue was $41.4 million during the
current year quarter, compared to $45.2 million in the prior year
quarter. This decrease was a result of the previously announced
shift of more of Bluegreen’s system-wide sales away from sales of
third-party VOI inventory and slightly lower commission rates
during the current year quarter. Sales of third-party VOI inventory
were 45.1% of system-wide sales in the current year quarter,
compared to 51.5% in the prior year quarter.
Provision for Loan Losses
The provision for loan losses varies based on the amount of
financed, nonfee-based sales during the period and changes in our
estimates of future notes receivable performance for existing and
newly originated loans. Our provision for loan losses as a
percentage of gross sales of VOIs was 40% and 18% during the
current year quarter compared to the prior year quarter,
respectively. The percentage of our sales which were realized in
cash within 30 days from sale was 43% during the current year
quarter and 44% during the prior year quarter.
While the impact of COVID-19 pandemic on our borrowers was not
reflected in our default or delinquency rates as of March 31, 2020,
we believe that the COVID-19 pandemic will have a significant
impact on our VOI notes receivable. Accordingly, as of March 31,
2020, we recorded an additional allowance for loan losses of $12.0
million, which includes our estimate of customer defaults as a
result of the COVID–19 pandemic based on our historical experience,
forbearance requests received from our customers, and other
factors, including but not limited to, the seasoning of the notes
receivable and FICO scores of the customers. The Company is working
with its owners with mortgages on a case-by-case basis with a view
to mitigating defaults, however there can be no assurances that
these efforts will be successful or that the allowances for loan
losses taken to date will prove to be adequate.
In addition to the COVID-19 pandemic impact discussed above, the
provision for loan losses was impacted by an increase in the
average annual default rates, which we believe was due in large
part to the receipt of letters from third parties and attorneys who
purport to represent certain VOI owners and who have encouraged
such owners to become delinquent and ultimately default on their
obligations. Defaults associated with such letters in the current
year quarter increased 51.9% compared to the prior year
quarter.
Selling and Marketing Expense
Selling and marketing expense increased to 54.0% of system-wide
sales of VOIs during the current year quarter as compared to 50.3%
during the prior year quarter primarily attributable to higher
costs per guest tour, higher fees to Bass Pro as well as a change
in the timing of expense recognition under the 2019 settlement
agreement with Bass Pro, additional costs related to our marketing
operations in 21 new Cabela’s stores and additional costs
associated with the COVID-19 pandemic.
As previously described, during the last week of March 2020 we
temporarily closed all of our marketing operations and VOI sales
centers in response to the COVID-19 pandemic. Our current plan is
to reopen these operations including accepting guests as of May 16
and reopen VOI sales centers and marketing operations beginning
June 1 on a phased schedule. Further, we implemented several cost
mitigating activities including terminating certain marketing
employees and placing a significant number of our sales, sales
support and corporate associates on temporary furlough and reduced
work hours. As of March 31, 2020, we had incurred $1.9 million in
severance and $0.7 million of payroll to sales and marketing
employees on temporary furlough or reduced work hours as a result
of the impact of the COVID-19.
Resort Operations and Club Management Segment (dollars in
millions)
Three Months Ended March
31,
2020
2019
% Change
Resort operations and club
management revenue
$
45.7
$
43.9
4.2
%
Segment adjusted EBITDA
$
14.6
$
13.2
10.2
%
Resorts managed
49
49
—
%
In the first quarter of 2020, resort operations and management
club revenue increased by $1.8 million, or 4.2%, to $45.7 million
from $43.9 million in the prior year quarter. Further, segment
adjusted EBITDA grew by 10.2% to $14.6 million. The increase in
segment adjusted EBITDA was driven primarily by lower costs
incurred during the first quarter of 2020, excluding severance and
other costs associated with the Company’s response to the COVID-19
pandemic, as well as severance costs incurred in connection with
the January 2020 reduction in force.
Balance Sheet and
Liquidity
As of March 31, 2020, unrestricted cash and cash equivalents
totaled $241.5 million. Bluegreen had availability of approximately
$124.5 million under its receivable-backed purchase and credit
facilities, inventory lines of credit and corporate credit line as
of March 31, 2020, subject to eligible collateral and the terms of
the facilities, as applicable. In March 2020, the Company borrowed
$60 million under its syndicated corporate credit line, as well as
executed borrowings/receivable sales under its receivable-backed
debt and purchase facilities, in part to increase its cash on hand
to respond to the economic impacts of the COVID-19 pandemic.
Excluding receivable-backed notes payable, the Company’s net
debt-to-EBITDA ratio as of March 31, 2020 was 0.51.
Free cash flow, which the Company defines as cash flow from
operating activities, less capital expenditures, was $(16.8)
million for the three months ended March 31, 2020, compared to $3.4
million for the three months ended March 31, 2019. Cash flows
during 2020 reflected a $4.0 million payment made to Bass Pro in
January 2020 pursuant to the settlement agreement entered into in
June 2019, lower escrow deposits from customers associated with the
closure of VOI sales centers resulting from the COVID-19 pandemic
and a reduction in working capital, partially offset by a reduction
in income tax payments and $3.5 million in decreased spending on
the acquisition and development of inventory and the purchase of
property and equipment during the 2020 period as compared to the
2019 period.
Stock Repurchase and
Dividend
In March 2020, the Company purchased approximately 1.9 million
shares of its common stock in a private transaction for $6.25 per
share.
On April 22, 2020, our board of directors determined to suspend
quarterly cash dividends on our common stock until further notice
associated with the impact of the COVID-19 pandemic.
COVID-19 Response and
Outlook
For further information regarding the Company’s COVID-19
Response and Outlook please see the Quarterly Report on Form 10-Q
for the three months ended March 31, 2020 filed with the Securities
and Exchange Commission on May 11, 2020.
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 required 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; 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 our current or future marketing alliances may not be
available to us in the future; risks that default rates may
increase and exceed the Company’s expectations; 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 ability to pay
dividends in the future, including that dividends may not be paid
at historical rates or at all; the impact of the CARES Act and our
ability to obtain certain of the relief provided thereof; 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; risks that the Company’s
efforts to address the actions of timeshare exit firms and the
increase in default rates may not be successful and default rates
may exceed the Company’s expectations; our ability to achieve
increases in VOI sales once sales operations resume; 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, net carrying cost of inventory, overhead
expenses and provision for loan losses will not be within the
expected ranges; risks related to our indebtedness; 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 recent coronavirus 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. Bluegreen cautions that the foregoing
factors are not exclusive. You should not place undue reliance on
any forward-looking statement, which speaks only as of the date
made. Bluegreen does not undertake, and specifically disclaims any
obligation, to update or supplement any forward-looking
statements.
Non-GAAP Financial
Measures
The Company refers to certain non-GAAP financial measures in
this press release, including system-wide sales of VOIs, Adjusted
EBITDA and free cash flow. Please see the supplemental tables and
definitions attached herein for additional information and
reconciliation of such non-GAAP financial measures.
About Bluegreen Vacations
Corporation
Bluegreen Vacations Corporation (NYSE: BXG) is a leading
vacation ownership company that markets and sells vacation
ownership interests (VOIs) and manages resorts in top leisure and
urban destinations. The Bluegreen Vacation Club is a flexible,
points-based, vacation ownership plan with approximately 221,000
owners, 68 Club and Club Associate Resorts and access to more than
11,350 other hotels and resorts through partnerships and exchange
networks as of March 31, 2020. Bluegreen Vacations also offers a
portfolio of comprehensive, fee-based resort management, financial,
and sales and marketing services, to or on behalf of third parties.
Bluegreen is approximately 93% 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 approximate 93% 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.
BLUEGREEN VACATIONS
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
AND COMPREHENSIVE INCOME
(UNAUDITED)
(In thousands, except for per
share data)
For the Three Months
Ended
March 31,
2020
2019
Revenue:
Gross sales of VOIs
$
75,481
$
62,884
Provision for loan losses
(30,353)
(11,153)
Sales of VOIs
45,128
51,731
Fee-based sales commission
revenue
41,365
45,212
Other fee-based services
revenue
29,314
29,568
Cost reimbursements
19,120
17,044
Interest income
21,866
22,008
Other income, net
133
89
Total revenue
156,926
165,652
Costs and expenses:
Cost of VOIs sold
4,099
3,848
Cost of other fee-based
services
22,711
22,868
Cost reimbursements
19,120
17,044
Selling, general and
administrative expenses
101,197
90,214
Interest expense
8,818
9,506
Total costs and expenses
155,945
143,480
Income before non-controlling
interest and
provision for income taxes
981
22,172
Provision for income taxes
44
5,303
Net income
937
16,869
Less: Net income attributable to
non-controlling interest
736
1,716
Net income attributable to
Bluegreen
Vacations Corporation
shareholders
$
201
$
15,153
Comprehensive income
attributable to
Bluegreen Vacations
Corporation
shareholders
$
201
$
15,153
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
March 31,
2020
2019
Earnings per share
attributable to Bluegreen Vacations Corporation shareholders -
Basic and diluted
$
0.00
$
0.20
Weighted average number of
common shares outstanding:
Basic and diluted
74,066
74,446
Cash dividends declared per
share
$
0.13
$
0.17
BLUEGREEN VACATIONS
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(In thousands)
For the Three Months
Ended
March 31,
2020
2019
Operating activities:
Net income
$
937
$
16,869
Adjustments to reconcile net
income to net cash (used in)
provided by operating
activities:
Depreciation and amortization
4,792
4,486
(Gain) Loss on disposal of
property and equipment
(44)
10
Provision for loan losses
30,353
11,153
(Benefit) Provision for deferred
income taxes
(176)
2,281
Changes in operating assets and
liabilities:
Notes receivable
(11,778)
(7,698)
Prepaid expenses and other
assets
(8,452)
(9,048)
Inventory
(356)
(8,237)
Accounts payable, accrued
liabilities and other, and
deferred income
(29,102)
1,126
Net cash (used in) provided by
operating activities
(13,826)
10,942
Investing activities:
Purchases of property and
equipment
(2,966)
(7,507)
Proceeds from sale of property
and equipment
147
—
Net cash used in investing
activities
(2,819)
(7,507)
Financing activities:
Proceeds from borrowings
collateralized
by notes receivable
32,568
13,487
Payments on borrowings
collateralized by notes receivable
(36,059)
(34,968)
Proceeds from borrowings
collateralized
by line-of-credit facilities and
notes payable
80,000
—
Payments under line-of-credit
facilities and notes payable
(2,411)
(8,168)
Payments of debt issuance
costs
(76)
(105)
Repurchase and retirement of
common stock
(11,741)
—
Dividends paid
(9,667)
(12,655)
Net cash provided by (used in)
financing activities
52,614
(42,409)
Net increase (decrease) in
cash and cash equivalents
and restricted cash
35,969
(38,974)
Cash, cash equivalents and
restricted cash at beginning of period
239,646
273,134
Cash, cash equivalents and
restricted cash at end of period
$
275,615
$
234,160
Supplemental schedule of
operating cash flow information:
Interest paid, net of amounts
capitalized
$
8,317
$
8,271
Income taxes paid
$
199
$
812
BLUEGREEN VACATIONS
CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except for per
share data)
March 31,
December 31,
2020
2019
ASSETS
Cash and cash equivalents
$
241,525
$
190,009
Restricted cash ($17,456 and
$22,534 in VIEs at March 31, 2020
and December 31, 2019,
respectively)
34,090
49,637
Notes receivable
585,159
589,198
Less: Allowance for loan
losses
(155,166)
(140,630)
Notes receivable, net ($288,435
and $292,590 in VIEs
at March 31, 2020 and December
31, 2019, respectively)
429,993
448,568
Inventory
347,293
346,937
Prepaid expenses
27,805
10,501
Other assets
43,674
52,731
Operating lease assets
22,329
20,858
Intangible assets, net
61,494
61,515
Loan to related party
80,000
80,000
Property and equipment, net
98,248
99,262
Total assets
$
1,386,451
$
1,360,018
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities
Accounts payable
$
14,664
$
16,653
Accrued liabilities and other
79,553
103,948
Operating lease liabilities
23,608
22,124
Deferred income
15,343
18,074
Deferred income taxes
92,328
92,504
Receivable-backed notes payable -
recourse
80,473
88,569
Receivable-backed notes payable -
non-recourse (in VIEs)
339,224
334,246
Lines-of-credit and notes
payable
223,785
146,160
Junior subordinated
debentures
72,285
72,081
Total liabilities
941,263
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
March 31, 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
136,381
145,847
Total Bluegreen Vacations
Corporation shareholders' equity
394,918
416,125
Non-controlling interest
50,270
49,534
Total shareholders' equity
445,188
465,659
Total liabilities and
shareholders' equity
$
1,386,451
$
1,360,018
BLUEGREEN VACATIONS
CORPORATION
ADJUSTED EBITDA
RECONCILIATION
For the Three Months Ended
March 31,
(in thousands)
2020
2019
Net income attributable to
shareholders
$
201
$
15,153
Net income attributable to the
non-controlling interest in Bluegreen/Big Cedar Vacations
736
1,716
Adjusted EBITDA attributable to
the non-controlling interest in Bluegreen/Big Cedar Vacations
(906)
(1,781)
(Gain) loss on assets held for
sale
(44)
9
Add: Depreciation and
amortization
3,899
3,365
Less: Interest income (other than
interest earned on VOI notes receivable)
(1,718)
(1,846)
Add: Interest expense - corporate
and other
4,154
4,244
Add: Franchise taxes
17
34
Add: Provision for income
taxes
44
5,303
Add: Severance
4,496
—
Add: COVID-19 incremental
costs
106
—
Total Adjusted EBITDA
$
10,985
$
26,197
BLUEGREEN VACATIONS
CORPORATION
SEGMENT ADJUSTED EBITDA
SUMMARY
For the Three Months
Ended
March 31,
(in thousands)
2020
2019
Adjusted EBITDA - sales of VOIs
and financing
$
13,376
$
31,131
Adjusted EBITDA - resort
operations and club management
14,588
13,234
Total Segment Adjusted EBITDA
27,964
44,365
Less: Corporate and other
(16,979)
(18,168)
Total Adjusted EBITDA
$
10,985
$
26,197
BLUEGREEN VACATIONS
CORPORATION
SALES OF VOIs AND FINANCING
SEGMENT- ADJUSTED EBITDA
For the Three Months Ended
March 31,
2020
2019
Amount
% of System- wide sales of
VOIs (5)
Amount
% of System- wide sales of
VOIs (5)
(in thousands)
Developed VOI sales (1)
$
87,577
64%
$
68,153
53%
Secondary Market sales
67,916
49
59,153
45
Fee-Based sales
61,908
45
66,794
52
JIT sales
3,100
2
2,234
2
Less: Equity trade allowances
(6)
(83,112)
(60)
(66,656)
(52)
System-wide sales of VOIs
137,389
100%
129,678
100%
Less: Fee-Based sales
(61,908)
(45)
(66,794)
(52)
Gross sales of VOIs
75,481
55
62,884
48
Provision for loan losses (2)
(30,353)
(40)
(11,153)
(18)
Sales of VOIs
45,128
33
51,731
40
Cost of VOIs sold (3)
(4,099)
(9)
(3,848)
(7)
Gross profit (3)
41,029
91
47,883
93
Fee-Based sales commission
revenue (4)
41,365
67
45,212
68
Financing revenue, net of
financing expense
15,659
11
14,865
11
Other fee-based services - title
operations, net
1,253
1
1,518
1
Net carrying cost of VOI
inventory
(7,914)
(6)
(7,687)
(6)
Selling and marketing
expenses
(74,140)
(54)
(65,222)
(50)
General and administrative
expenses - sales and marketing
(7,998)
(6)
(6,974)
(5)
Operating profit - sales of VOIs
and financing
9,254
7%
29,595
23%
Add: Depreciation and
amortization
1,559
1,536
Add: Severance
2,563
—
Adjusted EBITDA - sales of VOIs
and financing
$
13,376
$
31,131
(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.
BLUEGREEN VACATIONS
CORPORATION
SALES OF VOIs AND FINANCING
SEGMENT
SALES AND MARKETING
DATA
For the Three Months Ended
March 31,
2020
2019
Change
(dollars in thousands)
Number of sales offices at
period-end (1)
26
26
—
%
Number of active sales
arrangements with third-party clients at period-end
15
15
—
%
Total number of VOI sales
transactions
8,686
8,243
5
%
Average sales price per
transaction
$
15,873
$
15,796
—
%
Number of total guest tours
40,665
48,138
(16)
%
Sale-to-tour conversion
ratio–total marketing guests
21.4%
17.1%
430
bp
Number of new guest tours
22,136
28,064
(21)
%
Sale-to-tour conversion ratio–new
marketing guests
17.3%
13.9%
340
bp
Percentage of sales to existing
owners
59.7%
56.9%
280
bp
Average sales volume per
guest
$
3,390
$
2,705
25
%
(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.
BLUEGREEN VACATIONS
CORPORATION
RESORT OPERATIONS AND CLUB
MANAGEMENT SEGMENT- ADJUSTED EBITDA
For the Three Months Ended
March 31,
(dollars in thousands)
2020
2019
Resort operations and club
management revenue
$
45,711
$
43,884
Resort operations and club
management expense
(32,447)
(31,015)
Operating profit - resort
operations and club management
13,264
29%
12,869
29%
Add: Depreciation and
amortization
190
365
Add: Severance
1,134
—
Adjusted EBITDA - resort
operations and club management
$
14,588
$
13,234
BLUEGREEN VACATIONS
CORPORATION
CORPORATE AND OTHER - ADJUSTED
EBITDA
For the Three Months Ended
March 31,
(dollars in thousands)
2020
2019
General and administrative
expenses - corporate and other
$
(19,234)
$
(17,983)
Adjusted EBITDA attributable to
the non-controlling interest in Bluegreen/Big Cedar Vacations
(906)
(1,781)
Other income, net
133
89
Franchise taxes
17
34
(Gain) loss on assets held for
sale
(44)
9
Add: Depreciation and
amortization
2,150
1,464
Add: Severance
799
—
Add: COVID-19 incremental
costs
106
—
Adjusted EBITDA - Corporate and
other
$
(16,979)
$
(18,168)
BLUEGREEN VACATIONS
CORPORATION
FREE CASH FLOW
RECONCILIATION
For the Three Months Ended
March 31,
(in thousands)
2020
2019
Net cash (used in) provided by
operating activities
$
(13,826)
$
10,942
Purchases of property and
equipment
(2,966)
(7,507)
Free Cash Flow
$
(16,792)
$
3,435
BLUEGREEN VACATIONS
CORPORATION
OTHER FINANCIAL DATA
For the Three Months Ended
March 31,
2020
2019
Financing Interest Income
$
20,148
$
20,017
Financing Interest Expense
(4,664)
(5,262)
Non-Financing Interest Income
1,718
1,991
Non-Financing Interest
Expense
(4,154)
(4,244)
Mortgage Servicing Income
1,595
1,490
Mortgage Servicing Expense
(1,420)
(1,380)
Title Revenue
2,723
2,728
Title Expense
(1,470)
(1,210)
BLUEGREEN VACATIONS
CORPORATION
SYSTEM-WIDE SALES OF VOIs
RECONCILIATION
For the Three Months Ended
March 31,
(in thousands)
2020
2019
Gross sales of VOIs
$
75,481
$
62,884
Add: Fee-Based sales
61,908
66,794
System-wide sales of VOIs
$
137,389
$
129,678
BLUEGREEN VACATIONS
CORPORATION
TRAILING TWELVE MONTH ADJUSTED
EBITDA
(In thousands)
For the Twelve Months
Ended
(in thousands)
March 31, 2020
Net income attributable to
shareholder(s)
$
19,899
Net income attributable to the
non-controlling interest in Bluegreen/Big Cedar Vacations
10,293
Adjusted EBITDA attributable to
the non-controlling interest in Bluegreen/Big Cedar Vacations
(10,795)
Loss on assets held for sale
3,603
Add: Depreciation and
amortization
14,648
Less: Interest income (other than
interest earned on VOI notes receivable)
(7,063)
Add: Interest expense - corporate
and other
18,945
Add: Franchise taxes
176
Add: Provision for income
taxes
6,881
Add: Severance
10,763
Add: COVID-19 incremental
costs
106
Add: Bass Pro settlement
39,121
Total Adjusted EBITDA
$
106,577
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.
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,
including charges severance plus incremental costs associated with
COVID-19. For purposes of the Adjusted EBITDA calculation 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 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.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200512005327/en/
Bluegreen Vacations Corporation Investor Relations: Leo Hinkley
954-940-5336 Email: Leo.Hinkley@BluegreenVacations.com
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