Bluegreen Vacations Corporation (NYSE: BXG) ("Bluegreen" or the
“Company") today reported its fourth quarter and full year 2019
financial results.
4Q19 Highlights:
- Net income attributable to shareholders was $10.6 million,
compared to $19.8 million in the prior year quarter. The 2019
quarter’s results were adversely impacted by a pretax $5.6 million
loss upon the transfer of certain resort amenities to a homeowners’
association and $4.3 million in pretax charges for severance
payments to certain executives and associates.
- Earnings Per Share (“EPS”) of $0.14, compared to $0.27 in the
prior year quarter.
- Adjusted EBITDA of $30.0 million, compared to $31.7 million in
the prior year quarter.
- Total revenue increased 5.9% to $183.9 million in the 2019
quarter from $173.7 million in the prior year quarter.
- System-wide Sales of vacation ownership interests (“VOIs”)
increased 6.5% to $155.5 million in the 2019 quarter from $146.0
million in the prior year quarter.
- Entered into a $225.0 million syndicated corporate credit
facility and renewed an $80.0 million syndicated VOI notes
receivable purchase facility.
- Alan B. Levan named President & Chief Executive Officer
(“CEO”), Raymond S. Lopez appointed Chief Operating Officer (“COO”)
in addition to his duties as Chief Financial Officer (“CFO”) and
Dusty Tonkin joined the Company as Chief Sales Officer
(“CSO”).
Full Year 2019
Highlights:
- Net income attributable to shareholders was $34.9 million,
compared to $88.0 million in the prior year. 2019 results were
adversely impacted by the issues with Bass Pro and the pretax loss
related to the settlement with Bass Pro of $39.1 million, the
pretax $5.6 million loss upon the transfer of certain resort
amenities to a homeowners’ association and $6.3 million in pretax
charges for severance payments to certain executives and
associates.
- EPS of $0.47, compared to $1.18 in the prior year.
- Adjusted EBITDA of $121.8 million, compared to $141.8 million
in the prior year.
- Total revenue increased 0.3% to $740.2 million in the current
year from $738.3 million in the prior year.
- System-wide Sales of VOIs of $619.1 million, compared to $624.1
million in the prior year.
“While we experienced a significant improvement in VOI sales in
the fourth quarter, we were very disappointed with the overall
performance of the Company in 2019,” said Alan B. Levan, Chairman,
CEO and President. “We believe that 2020 will be a period of
rebuilding with the goal of positioning the Company for future
growth. To this end, we will continue to focus significant
resources and management attention on increasing sales of VOIs and
vacation packages.”
Financial Results (dollars
in millions, except per share data)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
Change
2019
2018
Change
Total revenue
$
183.9
$
173.7
5.9
%
$
740.2
$
738.3
0.3
%
Income before non-controlling interest
and
provision for income taxes
$
15.7
$
26.2
(40.1)
%
$
58.3
$
128.9
(54.8)
%
Net income attributable to
shareholders
$
10.6
$
19.8
(46.5)
%
$
34.9
$
88.0
(60.3)
%
Earnings per share basic and diluted
$
0.14
$
0.27
(48.1)
%
$
0.47
$
1.18
(60.2)
%
Adjusted EBITDA
$
30.0
$
31.7
(5.4)
%
$
121.8
$
141.8
(14.1)
%
Capital-light revenue (1) as a percentage
of
total revenue
65.0%
69.3%
(430)
bps
67.7%
70.8%
(310)
bps
- 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 December 31, 2019
increased 5.9% to $183.9 million from $173.7 million in the prior
year quarter, primarily due to increases in VOI sales and growth in
resort operations and club management revenues partially offset by
a decrease in fee-based service commission revenue, as discussed
more fully under “Segment Results” below. Adjusted EBITDA decreased
to $30.0 million in the fourth quarter of 2019 from $31.7 million
in the fourth quarter of 2018, primarily due to higher selling and
marketing expense and higher net carrying cost of inventory
partially offset by higher gross profits on VOI sales and higher
profits from the Company’s Resort Operations and Club Management
Segment.
Segment Results
Sales of VOIs and Financing Segment (dollars in millions,
except per guest and per transaction amounts)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
Change
2019
2018
Change
System-wide sales of VOIs
$
155.5
$
146.0
6.5
%
$
619.1
$
624.1
(0.8)
%
Segment adjusted EBITDA
$
36.1
$
36.8
(1.9)
%
$
147.1
$
173.7
(15.3)
%
Number of total guest tours
56,662
55,958
1.3
%
235,842
238,141
(1.0)
%
Average sales price per transaction
$
15,359
$
16,085
(4.5)
%
$
15,307
$
15,692
(2.5)
%
Sales to tour conversion ratio
18.0%
16.3%
170
bps
17.3%
16.8%
50
bps
Sales volume per guest ("VPG")
$
2,758
$
2,624
5.1
%
$
2,642
$
2,642
—
%
Selling and marketing expenses, as a
% of system-wide sales of VOIs
52.8%
50.5%
230
bps
51.3%
49.3%
200
bps
Provision for loan losses
19.0%
20.7%
(170)
bps
17.9%
16.8%
110
bps
Cost of VOIs sold
6.2%
6.8%
(60)
bps
8.6%
9.4%
(80)
bps
System-wide sales of VOIs
During the fourth quarter of 2019, system-wide sales of VOIs
were $155.5 million, compared to $146.0 million in the fourth
quarter of 2018. The increase in system-wide sales of VOIs in the
2019 period was primarily due to an improved sale-to-tour
conversion ratio, which increased the average sales volume per
guest (“VPG”), and an increased number of guest tours. The number
of vacation packages sold in the fourth quarter of 2019 increased
approximately 5% compared to the fourth quarter of 2018 and
increased 6% for the second half of 2019 as compared to the
comparable prior year period.
Sales mix for the fourth quarter of 2019 was weighted toward
sales to existing owners at 56.1% of VOIs sold, compared to 53.4%
in the comparable prior year quarter.
Fee-based sales commission revenue was $46.8 million in the
fourth quarter of 2019, compared to $48.8 million in the fourth
quarter of 2018. This decrease was a result of lower sales of
third-party VOI inventory and slightly lower commission rates
during the 2019 quarter.
Provision for Loan Losses
Provision for loan losses during the fourth quarter of 2019
decreased slightly to 19.0% of gross VOI sales, compared to 20.7%
in the prior year fourth quarter. However, the provision for loan
losses increased to 17.9% of gross VOI sales during 2019, compared
to 16.8% during 2018. As previously disclosed, the Company’s
default rates in recent years have been adversely impacted by the
actions of “timeshare exit firms” which encourage VOI owners to
become delinquent and ultimately default on their obligations.
Defaults associated with such actions in the fourth quarter of 2019
were up 12% compared to the fourth quarter of 2018. In addition,
the Company believes the 26% increase in exit firm letters that it
received in 2019 as compared to 2018 was due, in part, to the
negative publicity at the beginning of the year relating to the
now-resolved disruption of our relationship with Bass Pro because
the increase in such defaults were primarily driven by higher
attorney default activity at the Company’s resorts and owners
located in Missouri, where Bass Pro is headquartered. The decrease
in the provision for loan losses in the fourth quarter of 2019 as
compared to the prior year quarter reflects that the Company
recognized a lower charge related to prior period originations in
the fourth quarter of 2019 compared to the fourth quarter of 2018.
The Company currently believes its provision for loan losses will
range between 17% and 20% in 2020.
Bluegreen intends to continue to aggressively deal with
timeshare exit firms, including by pursuing litigation and
encouraging state regulatory authorities to bring actions against
these firms by putting in place initiatives to help the Company’s
220,000 owners continue to enjoy their Bluegreen vacations, and by
improving channels to assist owners who have questions regarding
their ownership.
Net Carrying Cost of Inventory
Net carrying cost of inventory increased $0.7 million in the
fourth quarter of 2019 compared to the fourth quarter of 2018. The
increase in net carrying costs of VOI inventory was primarily
related to our acquisition of the Éilan Hotel and Spa during April
2018, increased maintenance fees and developer subsidies associated
with our increase in VOI inventory and decreased rentals of
developer inventory partially offset by increased net operating
profits from Bluegreen’s sampler program. In certain circumstances,
the Company offsets marketing costs by using its inventory for
marketing guest stays. The Company currently believes that its net
inventory carrying costs will continue to increase in 2020.
Selling and Marketing Expense
Selling and marketing expense increased to 53% of system-wide
sales of VOIs during the fourth quarter of 2019 as compared to 50%
during the fourth quarter of 2018. The increase in selling and
marketing expenses as a percentage of system-wide sales of VOIs is
primarily attributable to higher costs per guest tour, which
reflect higher fees to Bass Pro as well as a change in the timing
of expense recognition under the settlement agreement entered into
with Bass Pro in June 2019, additional costs related to 15 new
Cabela’s stores opened in 2019 and additional costs associated with
testing new digital marketing programs. In addition, selling and
marketing expenses for the fourth quarter of 2019 includes
severance charges of $0.6 million pursuant to an agreement entered
into with an executive during the quarter.
Resort Operations and Club Management Segment (dollars in
millions)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
% Change
2019
2018
% Change
Resort operations and club management
revenue
$
42.0
$
41.1
2.3
%
$
174.9
$
168.4
3.9
%
Segment adjusted EBITDA
$
14.0
$
12.5
12.0
%
$
56.4
$
50.6
11.5
%
Resorts managed
49
49
—
%
49
49
—
%
In the fourth quarter of 2019, resort operations and management
club revenue increased by $0.9 million, or 2.3%, to $42.0 million
from $41.1 million in the prior year quarter. Further, segment
adjusted EBITDA grew by 12.0% to $14.0 million. The increases were
driven primarily by the full period of management fees in 2019
related to managed resorts added during 2018.
Balance Sheet and
Liquidity
As of December 31, 2019, unrestricted cash and cash equivalents
totaled $190.0 million. Bluegreen had availability of approximately
$220.2 million under its receivable-backed purchase and credit
facilities, inventory lines of credit and corporate credit line as
of December 31, 2019, subject to eligible collateral and the terms
of the facilities, as applicable. Excluding receivable-backed notes
payable, the Company’s net debt-to-EBITDA ratio as of December 31,
2019 was 0.23.
As previously disclosed, on October 23, 2019, the Company
refinanced and expanded its syndicated corporate credit line from a
$100 million facility to a $225 million facility. The new facility
includes a $100 million term loan, which was fully funded at
closing, as well as a $125 million revolver, with only $30 million
borrowed under the revolving line at both closing and December 31,
2019. The interest rate on the new facility varies with the
Company’s leverage and ranges from LIBOR plus 2.00% to LIBOR plus
2.50%, which is a significant reduction from the rates in effect
for the previous facility. Proceeds from the new line were used to
repay the existing corporate credit line and other debt and are
expected to be used for general corporate purposes going
forward.
Free cash flow, which the Company defines as cash flow from
operating activities, less capital expenditures, was $46.1 million
for the year ended December 31, 2019, compared to $44.3 million for
the year ended December 31, 2018. Cash flows during 2019 reflected
decreased spending on the acquisition and development of inventory
and property and equipment and reduced income tax payments,
partially offset by the $20.0 million payment to Bass Pro in June
2019.
Management Updates
In November 2019, the Company announced that Shawn B. Pearson
resigned as President and CEO effective December 31, 2019. Alan B.
Levan, the Company’s Chairman of the Board of Directors, was
appointed as President and CEO effective upon Mr. Pearson’s
resignation. In addition, Raymond S. Lopez, the Company’s Chief
Financial Officer, was appointed to also serve as Chief Operating
Officer.
In October 2019, the Company named Dusty Tonkin as Chief Sales
Officer. Mr. Tonkin, since 2002, has worked in the vacation
ownership industry for more than 24 years. He comes to Bluegreen
from Wyndham Destinations, where he served in various sales
leadership roles, most recently as Executive Vice President of
Sales & Marketing where he led teams in six major regions.
Dividend
On January 22, 2020, Bluegreen’s Board of Directors declared a
quarterly common stock cash dividend of $0.13 per share. The
dividend is payable on February 20, 2020 to shareholders of record
as of the close of trading on February 6, 2020.
Outlook
The Company anticipates that 2020 will be a period of rebuilding
with the goal of positioning the Company for future growth.
The challenges of 2019 included the Bass Pro dispute and its impact
on the Company’s operations as well as the cost of investments in
the Company’s sales and marketing infrastructure. While the Company
will continue to be flexible moving forward, the Company currently
anticipates that it will reduce the percentage of its system-wide
sales devoted to selling fee-based service inventory to
approximately 35% to 40% of system-wide sales, with a view to
improving EBITDA growth. The Company believes it has access to
adequate inventory for its near term sales requirements and expects
to continue to operate in a favorable interest rate environment.
The Company also anticipates continued compression in its operating
margins, primarily as a result of i) increases in the cost of VOIs
sold (although it expects costs of VOIs sold to return to a more
normalized range of between 10% to 15% in 2020), ii) the net
carrying cost of inventory and iii) the marketing costs associated
with the anticipated growth in vacation package sales. While there
is a risk that public health issues, such as the recent coronavirus
outbreak, may impact leisure travel or otherwise adversely impact
our operating results or financial condition, to date we have not
experienced significant cancellations at our resorts but continue
to monitor the situation and cancellation activity closely . See
Forward Looking Statements below.
Forward-Looking
Statements:
Certain statements in this press release are "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements, other than statements of
historical fact, are forward-looking statements. Forward-looking
statements are based on current expectations of management and can
be identified by the use of words such as “believe”, “may”,
“could”, “should”, “plans”, “anticipates”, “intends”, “estimates”,
“expects”, and other words and phrases of similar impact.
Forward-looking statements involve risks, uncertainties and other
factors, many of which are beyond our control, that may cause
actual results or performance to differ from those set forth or
implied in the forward-looking statements. These risks and
uncertainties include, without limitation, risks relating to our
ability to achieve increases in VOI sales; 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 our current or future marketing
alliances, if any, will not contribute to growth or be profitable
and that we may not be successful in entering into new marketing
alliances or identifying or growing new sales channels; the risk
that our business relationship with Bass Pro under the revised
terms of our marketing agreement with Bass Pro may not be as
profitable as under the prior terms, or at all, or otherwise result
in the benefits anticipated; risks that our anticipated expansion
into Cabela’s stores will not be in the number or in the time
frames indicated, or at all; risks that the increases in package
sales may not continue and may not result in increased guest tours
in the timeframe anticipated or at all; risks that dividend
payments will not continue at current or previous levels, if at
all; 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 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, including that such
costs may increase beyond the level expected and may not result in
sales growth; risks that management changes may not lead to the
benefits anticipated; risks related to our indebtedness; risks that
public health issues, such as the recent coronavirus outbreak, and
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 is
expected to be filed on or before March 16, 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 popular leisure
and urban destinations. The Bluegreen Vacation Club is a flexible,
points-based, deeded vacation ownership plan with approximately
220,000 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 December 31, 2019. Bluegreen Vacations also
offers a portfolio of fee-based resort management, financial, and
sales and marketing services, to or on behalf of third parties.
Bluegreen is approximately 90% owned by BBX Capital Corporation
(NYSE: BBX) (OTCQX: BBXTB), a diversified holding company. For
further information, visit www.BluegreenVacations.com.
About BBX Capital
Corporation:
BBX Capital Corporation (NYSE: BBX) (OTCQX: BBXTB), is a
Florida-based diversified holding company whose activities include
its 90% ownership interest in Bluegreen Vacations Corporation
(NYSE: BXG) as well as its real estate and middle market divisions.
For additional information, please visit www.BBXCapital.com.
BLUEGREEN VACATIONS
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
AND COMPREHENSIVE
INCOME
(In thousands, except for per
share data)
For the Three Months
Ended
For the Years Ended
December 31,
December 31,
2019
2018
2019
2018
Unaudited
Revenue:
Gross sales of VOIs
$
85,242
$
74,192
$
311,076
$
305,530
Provision for loan losses
(16,218)
(15,379)
(55,701)
(51,305)
Sales of VOIs
69,024
58,813
255,375
254,225
Fee-based sales commission revenue
46,799
48,841
207,832
216,422
Other fee-based services revenue
31,229
28,552
125,244
118,024
Cost reimbursements
14,956
15,375
63,889
62,534
Interest income
21,938
22,143
87,902
85,914
Other income, net
—
—
—
1,201
Total revenue
183,946
173,724
740,242
738,320
Costs and expenses:
Cost of VOIs sold
4,304
3,975
21,845
23,813
Cost of other fee-based services
20,402
18,986
86,940
72,968
Cost reimbursements
14,956
15,375
63,889
62,534
Selling, general and administrative
expenses
113,815
99,867
468,856
415,403
Interest expense
9,583
9,239
39,538
34,709
Other expense, net
5,138
68
910
—
Total costs and expenses
168,198
147,510
681,978
609,427
Income before non-controlling interest
and
provision for income taxes
15,748
26,214
58,264
128,893
Provision for income taxes
3,016
3,544
12,140
28,541
Net income
12,732
22,670
46,124
100,352
Less: Net income attributable to
non-controlling interest
2,178
2,881
11,273
12,390
Net income attributable to
Bluegreen
Vacations Corporation
shareholders
$
10,554
$
19,789
$
34,851
$
87,962
Comprehensive income attributable
to
Bluegreen Vacations Corporation
shareholders
$
10,554
$
19,789
$
34,851
$
87,962
BLUEGREEN VACATIONS
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
AND COMPREHENSIVE
INCOME
(In thousands, except for per
share data)
For the Three Months
Ended
For the Years Ended
December 31,
December 31,
2019
2018
2019
2018
Unaudited
Earnings per share attributable
to
Bluegreen Vacations Corporation
shareholders - Basic and
diluted
$
0.14
$
0.27
$
0.47
$
1.18
Weighted average number of common
shares
outstanding:
Basic and diluted
74,418
74,644
74,439
74,712
Cash dividends declared per
share
$
0.13
$
0.15
$
0.64
$
0.60
BLUEGREEN VACATIONS
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOW
(In thousands)
For the Year Ended
December 31,
2019
2018
Operating activities:
Net income
$
46,124
$
100,352
Adjustments to reconcile net income to net
cash provided
by operating activities:
Depreciation and amortization
18,992
16,604
Loss on disposal of property and
equipment
3,909
179
Provision for loan losses
55,677
51,236
Provision for deferred income taxes
1,448
2,090
Changes in operating assets and
liabilities:
Notes receivable
(65,672)
(63,545)
Prepaid expenses and other assets
(2,920)
2,704
Inventory
(12,788)
(32,022)
Accounts payable, accrued liabilities and
other, and
deferred income
25,788
(764)
Net cash provided by operating
activities
70,558
76,834
Investing activities:
Purchases of property and equipment
(24,475)
(32,539)
Proceeds from sale of property and
equipment
4,880
—
Net cash used in investing activities
(19,595)
(32,539)
Financing activities:
Proceeds from borrowings
collateralized
by notes receivable
99,671
254,494
Payments on borrowings collateralized by
notes receivable
(137,468)
(216,023)
Proceeds from borrowings under
line-of-credit facilities
and notes payable
99,292
51,736
Payments under line-of-credit facilities
and notes payable
(86,784)
(43,066)
Payments of debt issuance costs
(3,332)
(3,010)
Repurchase and retirement of common
stock
(835)
(4,000)
Distributions to non-controlling
interest
(7,350)
(9,800)
Dividends paid
(47,645)
(44,841)
Net cash used in financing activities
(84,451)
(14,510)
Net (decrease) increase in cash and
cash equivalents
and restricted cash
(33,488)
29,785
Cash, cash equivalents and restricted cash
at the beginning of period
273,134
243,349
Cash, cash equivalents and restricted cash
at end of period
$
239,646
$
273,134
Supplemental schedule of operating cash
flow information:
Interest paid, net of amounts
capitalized
$
34,945
$
30,260
Income taxes paid
$
15,567
$
25,156
Supplemental schedule of non-cash
investing and financing activities:
Acquisition of inventory, property, and
equipment for notes payable
$
—
$
24,258
BLUEGREEN VACATIONS
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(In thousands, except for per
share data)
December 31,
December 31,
2019
2018
ASSETS
Cash and cash equivalents
$
190,009
$
219,408
Restricted cash ($22,534 and $28,400 in
VIEs at December 31, 2019
and December 31, 2018, respectively)
49,637
53,726
Notes receivable, net ($292,590 and
$341,975 in VIEs
at December 31, 2019 and December 31,
2018, respectively)
449,162
439,167
Inventory
346,937
334,149
Prepaid expenses
10,501
10,097
Other assets
52,137
49,796
Operating lease assets
20,858
—
Intangible assets, net
61,515
61,845
Loan to related party
80,000
80,000
Property and equipment, net
99,262
98,279
Total assets
$
1,360,018
$
1,346,467
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities
Accounts payable
$
16,653
$
19,515
Accrued liabilities and other
103,948
80,364
Operating lease liabilities
22,124
—
Deferred income
18,074
16,522
Deferred income taxes
92,504
91,056
Receivable-backed notes payable -
recourse
88,569
76,674
Receivable-backed notes payable -
non-recourse (in VIEs)
334,246
382,257
Lines-of-credit and notes payable
146,160
133,391
Junior subordinated debentures
72,081
71,323
Total liabilities
894,359
871,102
Commitments and Contingencies
Shareholders' Equity
Common stock, $0.01 par value, 100,000,000
shares authorized; 74,362,693
shares issued and outstanding at December
31, 2019 and 74,445,923 shares
issued and outstanding at December 31,
2018
744
744
Additional paid-in capital
269,534
270,369
Retained earnings
145,847
158,641
Total Bluegreen Vacations Corporation
shareholders' equity
416,125
429,754
Non-controlling interest
49,534
45,611
Total shareholders' equity
465,659
475,365
Total liabilities and shareholders'
equity
$
1,360,018
$
1,346,467
BLUEGREEN VACATIONS
CORPORATION
ADJUSTED EBITDA
RECONCILIATION
For the Three Months Ended
December 31,
For the Year Ended December
31,
(in thousands)
2019
2018
2019
2018
Net income attributable to
shareholder(s)
$
10,554
$
19,789
$
34,851
$
87,962
Net income attributable to the
non-controlling
interest in Bluegreen/Big Cedar
Vacations
2,178
2,881
11,273
12,390
Adjusted EBITDA attributable to the
non-
controlling interest in Bluegreen/Big
Cedar
Vacations
(2,330)
(2,947)
(11,670)
(12,468)
Loss (gain) on assets held for sale
5,802
(6)
3,656
3
Add: depreciation and amortization
3,661
3,303
14,114
12,392
Less: interest income (other than
interest
earned on VOI notes receivable)
(1,754)
(1,821)
(7,191)
(6,044)
Add: interest expense - corporate and
other
4,471
4,064
19,035
15,195
Add: franchise taxes
22
19
193
199
Add: provision for income taxes
3,016
3,544
12,140
28,541
Add: severance
4,343
2,899
6,267
3,650
Add: Bass Pro settlement
—
—
39,121
—
Total Adjusted EBITDA
$
29,963
$
31,725
$
121,789
$
141,820
BLUEGREEN VACATIONS
CORPORATION
SEGMENT ADJUSTED EBITDA
SUMMARY
For the Three Months Ended
December 31,
For the Year Ended December
31,
(in thousands)
2019
2018
2019
2018
Adjusted EBITDA - sales of VOIs and
financing
$
36,110
$
36,767
$
147,081
$
173,668
Adjusted EBITDA - resort operations and
club
management
14,020
12,517
56,378
50,561
Total Segment Adjusted EBITDA
50,130
49,284
203,459
224,229
Less: Corporate and other
(20,167)
(17,559)
(81,670)
(82,409)
Total Adjusted EBITDA
$
29,963
$
31,725
$
121,789
$
141,820
BLUEGREEN VACATIONS
CORPORATION
SALES OF VOIs AND FINANCING
SEGMENT- ADJUSTED EBITDA
For the Three Months Ended
December 31,
2019
2018
Amount
% of System- wide sales of
VOIs(5)
Amount
% of System- wide sales of
VOIs(5)
(dollars in thousands)
Developed VOI sales (1)
$
100,065
64%
$
68,450
47%
Secondary Market sales
64,209
41
46,715
32
Fee-Based sales
70,239
45
71,767
49
JIT sales
4,189
3
24,176
17
Less: Equity trade allowances (6)
(83,221)
(53)
(65,149)
(45)
System-wide sales of VOIs
155,481
100%
145,959
100%
Less: Fee-Based sales
(70,239)
(45)
(71,767)
(49)
Gross sales of VOIs
85,242
55
74,192
51
Provision for loan losses (2)
(16,218)
(19)
(15,379)
(21)
Sales of VOIs
69,024
44
58,813
40
Cost of VOIs sold (3)
(4,304)
(6)
(3,975)
(7)
Gross profit (3)
64,720
94
54,838
93
Fee-Based sales commission revenue (4)
46,799
67
48,841
68
Financing revenue, net of
financing expense
15,353
10
14,649
10
Other fee-based services -
title operations, net
2,014
1
1,846
1
Net carrying cost of VOI inventory
(4,963)
(3)
(4,284)
(3)
Selling and marketing expenses
(82,136)
(53)
(73,653)
(50)
General and administrative expenses -
sales and marketing
(9,435)
(6)
(6,979)
(5)
Other income, net
1,337
1
—
—
Operating profit - sales of VOIs
and financing
33,689
22%
35,258
24%
Add: Depreciation
1,541
1,413
Add: Severance
822
96
Add: Loss on assets held for sale
58
—
Adjusted EBITDA - sales of VOIs
and financing
$
36,110
$
36,767
- Developed VOI sales represent sales of VOIs acquired or
developed by us under our developed VOI business. Developed VOI
sales do not include Secondary Market sales, Fee-Based sales or JIT
sales.
- Provision for loan losses is calculated as a percentage of
gross sales of VOIs, which excludes Fee-Based sales (and not based
on system-wide sales of VOIs).
- Percentages for costs of VOIs sold and gross profit are
calculated as a percentage of sales of VOIs (and not based on
system-wide sales of VOIs).
- Percentages for Fee-Based sales commission revenue are
calculated as a percentage of Fee-Based sales (and not based on
system-wide sales of VOIs).
- Represents the applicable line item, calculated as a percentage
of system-wide sales of VOIs, unless otherwise indicated in the
above footnotes.
- Equity trade allowances are amounts granted to customers upon
trading in their existing VOIs in connection with the purchase of
additional VOIs.
BLUEGREEN VACATIONS
CORPORATION
SALES OF VOIs AND FINANCING
SEGMENT- ADJUSTED EBITDA
For the Years Ended December
31,
2019
2018
Amount
% of System- wide sales of
VOIs(5)
Amount
% of System- wide sales of
VOIs(5)
(dollars in thousands)
Developed VOI sales (1)
$
355,353
57%
$
287,292
46%
Secondary Market sales
248,780
40
232,562
37
Fee-Based sales
308,032
50
318,540
51
JIT sales
13,346
2
56,450
9
Less: Equity trade allowances (6)
(306,403)
(49)
(270,774)
(43)
System-wide sales of VOIs
619,108
100%
624,070
100%
Less: Fee-Based sales
(308,032)
(50)
(318,540)
(51)
Gross sales of VOIs
311,076
50
305,530
49
Provision for loan losses (2)
(55,701)
(18)
(51,305)
(17)
Sales of VOIs
255,375
41
254,225
41
Cost of VOIs sold (3)
(21,845)
(9)
(23,813)
(9)
Gross profit (3)
233,530
91
230,412
91
Fee-Based sales commission revenue (4)
207,832
67
216,422
68
Financing revenue, net of
financing expense
60,454
10
59,609
10
Other fee-based services -
title operations, net
7,274
1
7,614
1
Net carrying cost of VOI inventory
(23,816)
(4)
(11,358)
(2)
Selling and marketing expenses
(317,716)
(51)
(307,614)
(49)
General and administrative expenses -
sales and marketing
(70,258)
(11)
(27,848)
(4)
Other income, net
3,068
(1)
—
—
Operating profit - sales of VOIs
and financing
100,368
16%
167,237
27%
Add: Depreciation and amortization
6,118
6,335
Add: Severance
1,416
96
Add: Bass Pro Settlement
39,121
—
Add: Loss on assets held for sale
58
—
Adjusted EBITDA - sales of VOIs
and financing
$
147,081
$
173,668
- Developed VOI sales represent sales of VOIs acquired or
developed by us under our developed VOI business. Developed VOI
sales do not include Secondary Market sales, Fee-Based sales or JIT
sales.
- Provision for loan losses is calculated as a percentage of
gross sales of VOIs, which excludes Fee-Based sales (and not based
on system-wide sales of VOIs).
- Percentages for costs of VOIs sold and gross profit are
calculated as a percentage of sales of VOIs (and not based on
system-wide sales of VOIs).
- Percentages for Fee-Based sales commission revenue are
calculated as a percentage of Fee-Based sales (and not based on
system-wide sales of VOIs).
- Represents the applicable line item, calculated as a percentage
of system-wide sales of VOIs, unless otherwise indicated in the
above footnotes.
- Equity trade allowances are amounts granted to customers upon
trading in their existing VOIs in connection with the purchase of
additional VOIs.
BLUEGREEN VACATIONS
CORPORATION
SALES OF VOIs AND FINANCING
SEGMENT
SALES AND MARKETING
DATA
For the Three Months Ended
December 31,
For the Year Ended December
31,
2019
2018
% Change
2019
2018
% Change
(dollars in thousands)
Number of sales offices at period-end
26
26
—
26
26
—
Number of active sales arrangements
with third-party clients at period-end
15
15
—
15
15
—
Total number of VOI sales
transactions
10,173
9,128
11
40,703
40,087
2
Average sales price per transaction
$
15,359
$
16,085
(5)
$
15,307
$
15,692
(2)
Number of total guest tours
56,662
55,958
1
235,842
238,141
(1)
Sale-to-tour conversion ratio– total
marketing guests
18.0%
16.3%
10
17.3%
16.8%
3
Number of new guest tours
32,679
33,002
(1)
142,130
146,623
(3)
Sale-to-tour conversion ratio–
new marketing guests
14.6%
13.9%
5
14.1%
14.3%
(1)
Percentage of sales to existing owners
56.1%
53.4%
5
54.5%
51.6%
6
Average sales volume per guest
$
2,758
$
2,624
5
$
2,642
$
2,642
—
BLUEGREEN VACATIONS
CORPORATION
RESORT OPERATIONS AND CLUB
MANAGEMENT SEGMENT- ADJUSTED EBITDA
For the Three Months Ended
December 31,
For the Year Ended December
31,
(dollars in thousands)
2019
2018
2019
2018
Resort operations and club management
revenue
$
42,031
$
41,077
$
174,887
$
168,353
Resort operations and club management
expense
(34,142)
(29,072)
(125,928)
(119,553)
Operating profit - resort operations and
club
management
7,889
19%
12,005
29%
48,959
28%
48,800
29%
Add: Depreciation and amortization
244
470
1,294
1,719
Add: Loss on assets held for sale
5,887
—
5,887
—
Add: Severance
—
42
238
42
Adjusted EBITDA - resort operations
and
club management
$
14,020
$
12,517
$
56,378
$
50,561
BLUEGREEN VACATIONS
CORPORATION
CORPORATE AND OTHER - ADJUSTED
EBITDA
For the Three Months Ended
December 31,
For the Year Ended December
31,
(in thousands)
2019
2018
2019
2018
General and administrative expenses -
corporate and other
$
(22,684)
$
(18,964)
$
(81,829)
$
(79,687)
Adjusted EBITDA attributable to the
non-
controlling interest in Bluegreen/Big
Cedar
Vacations
(2,330)
(2,947)
(11,670)
(12,468)
Other income, net
(588)
(68)
1,909
1,201
Financing revenue -corporate and other
1,913
2,047
7,892
6,537
Interest income (other than interest
earned on
VOI notes receivable)
(1,754)
(1,821)
(7,191)
(6,044)
Franchise taxes
22
19
193
199
(Gain) loss on assets held for sale
(143)
(6)
(2,289)
3
Depreciation and amortization
1,876
1,420
6,702
4,338
Severance
3,521
2,761
4,613
3,512
Corporate and other
$
(20,167)
$
(17,559)
$
(81,670)
$
(82,409)
BLUEGREEN VACATIONS
CORPORATION
FREE CASH FLOW
RECONCILIATION
For the Years Ended December
31,
(in thousands)
2019
2018
Net cash provided by operating
activities
$
70,558
$
76,834
Purchases of property and equipment
(24,475)
(32,539)
Free Cash Flow
$
46,083
$
44,295
BLUEGREEN VACATIONS
CORPORATION
OTHER FINANCIAL DATA
For the Three Months Ended
December 31,
For the Year Ended December
31,
(in thousands)
2019
2018
2019
2018
Financing Interest Income
$
20,025
$
20,096
$
80,010
$
79,377
Financing Interest Expense
(5,112)
(5,175)
(20,503)
(19,514)
Non-Financing Interest Income
1,913
2,047
7,892
6,537
Non-Financing Interest Expense
(4,471)
(4,064)
(19,035)
(15,195)
Mortgage Servicing Income
1,602
1,581
6,223
5,951
Mortgage Servicing Expense
(1,162)
(1,853)
(5,276)
(6,205)
Title Revenue
4,154
2,850
14,246
12,205
Title Expense
(2,140)
(1,004)
(6,972)
(4,591)
BLUEGREEN VACATIONS
CORPORATION
SYSTEM-WIDE SALES OF VOIs
RECONCILIATION
For the Three Months Ended
December 31,
For the Year Ended December
31,
(in thousands)
2019
2018
2019
2018
Gross sales of VOIs
$
85,242
$
74,192
$
311,076
$
305,530
Add: Fee-based sales
70,239
71,767
308,032
318,540
System-wide sales of VOIs
$
155,481
$
145,959
$
619,108
$
624,070
BLUEGREEN VACATIONS CORPORATION
DEFINITIONS
Principal Components Affecting our Results of
Operations
Principal Components of Revenue Fee-Based Sales.
Represent sales of third-party VOIs where we are paid a
commission.
JIT Sales. Represent sales of VOIs acquired from third parties
in close proximity to when we intend to sell such VOIs.
Secondary Market Sales. Represent sales of VOIs acquired from
HOAs or other owners, typically in connection with HOA maintenance
fee defaults. This inventory is generally purchased at a greater
discount to retail price compared to developed VOI sales and JIT
sales.
Developed VOI Sales. Represent sales of VOIs in resorts that we
have developed or acquired (not including inventory acquired
through JIT and secondary market arrangements).
Financing Revenue. Represents revenue from the financing of VOI
sales, which includes interest income and loan servicing fees. This
also includes fees from certain third-party developers for
providing mortgage servicing of loans granted by them to purchasers
of their VOIs.
Resort Operations and Club Management Revenue. Represents
recurring fees from managing the Vacation Club and transaction fees
for certain resort amenities and certain member exchanges. We also
earn recurring management fees under our management agreements with
HOAs for day-to-day management services, including oversight of
housekeeping services, maintenance, and certain accounting and
administrative functions.
Other Fee-Based Services. Represents revenue earned from various
other services that produce recurring, predictable and long-term
revenue, such as title services.
Principal Components of Expenses
Cost of VOIs Sold. Represents the cost at which our owned VOIs
sold during the period were relieved from inventory. In addition to
inventory from our VOI business, our owned VOIs also include those
that were acquired by us under JIT and secondary market
arrangements. Compared to the cost of our developed VOI inventory,
VOIs acquired in connection with JIT arrangements typically have a
relatively higher associated cost of sales as a percentage of sales
while those acquired in connection with secondary market
arrangements typically have a lower cost of sales as a percentage
of sales as secondary market inventory is generally obtained from
HOAs at a significant discount to retail price. Cost of VOIs sold
as a percentage of sales of VOIs varies between periods based on
the relative costs of the specific VOIs sold in each period and the
size of the point packages of the VOIs sold (primarily due to
offered volume discounts, and taking into account consideration of
cumulative sales to existing owners). Additionally, the effect of
changes in estimates under the relative sales value method,
including estimates of projected sales, future defaults, upgrades
and incremental revenue from the resale of repossessed VOI
inventory, are reflected on a retrospective basis in the period the
change occurs. Cost of sales will typically be favorably impacted
in periods where a significant amount of secondary market VOI
inventory is acquired or actual defaults and equity trades are
higher and the resulting change in estimate is recognized. While we
believe that there is additional inventory that can be obtained
through the secondary market at favorable prices to us in the
future, there can be no assurance that such inventory will be
available as expected.
Net Carrying Cost of VOI Inventory. Represents the maintenance
fees and developer subsidies for unsold VOI inventory paid or
accrued to the HOAs that maintain the resorts. We attempt to offset
this expense, to the extent possible, by generating revenue from
renting our VOIs and by utilizing the inventory in our sampler
programs. We net such revenue from this expense item.
Selling and Marketing Expense. Represents costs incurred to sell
and market VOIs, including costs relating to marketing and
incentive programs, tours, and related wages and sales commissions.
Revenue from vacation package sales are netted against selling and
marketing expenses.
Financing Expense. Represents financing interest expense related
to our receivable-backed debt, amortization of the related debt
issuance costs and other expenses incurred in providing financing
and servicing loans, including administrative costs associated with
mortgage servicing activities for our loans and the loans of
certain third-party developers. Mortgage servicing activities
include, amongst other things, payment processing, reporting and
collection services.
Resort Operations and Club Management Expense. Represents costs
incurred to manage resorts and the Vacation Club, including payroll
and related costs and other administrative costs to the extent not
reimbursed by the Vacation Club or HOAs.
General and Administrative Expense. Primarily represents
compensation expense for personnel supporting our business and
operations, professional fees (including consulting, audit and
legal fees), and administrative and related expenses.
Key Business and Financial Metrics and Terms Used by
Management
Sales of VOIs. Represent sales of our owned VOIs, including
developed VOIs and those acquired through JIT and secondary market
arrangements, reduced by equity trade allowances and an estimate of
our provision for loan losses. In addition to the factors impacting
system-wide sales of VOIs, sales of VOIs are impacted by the
proportion of system-wide sales of VOIs sold on behalf of
third-parties on a commission basis, which are not included in
sales of VOIs.
System-wide Sales of VOIs. Represents all sales of VOIs, whether
owned by us or a third party immediately prior to the sale. Sales
of VOIs owned by third parties are transacted as sales of VOIs in
our Vacation Club through the same selling and marketing process we
use to sell our VOI inventory. We consider system-wide sales of
VOIs to be an important operating measure because it reflects all
sales of VOIs by our sales and marketing operations without regard
to whether we or a third party owned such VOI inventory at the time
of sale. System-wide sales of VOIs is not a recognized term under
GAAP and should not be considered as an alternative to sales of
VOIs or any other measure of financial performance derived in
accordance with GAAP or to any other method of analyzing our
results as reported under GAAP.
Guest Tours. Represents the number of sales presentations given
at our sales centers during the period.
Sale to Tour Conversion Ratio. Represents the rate at which
guest tours are converted to sales of VOIs and is calculated by
dividing the number of sales transactions by the number of guest
tours.
Average Sales Volume Per Guest (“VPG”). Represents the sales
attributable to 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.
Accordingly, amounts paid, accrued or incurred in connection with
the Bass Pro Settlement in June 2019 were excluded from the
computation of Adjusted EBITDA for 2019. For purposes of the
Adjusted EBITDA calculation, no adjustments were made for interest
income earned on our VOI notes receivable or the interest expense
incurred on debt that is secured by such notes receivable because
they are both considered to be part of the operations of our
business.
We consider our total Adjusted EBITDA and our Segment Adjusted
EBITDA to be an indicator of our operating performance, and it is
used by us to measure our ability to service debt, fund capital
expenditures and expand our business. Adjusted EBITDA is also used
by companies, lenders, investors and others because it excludes
certain items that can vary widely across different industries or
among companies within the same industry. For example, interest
expense can be dependent on a company’s capital structure, debt
levels and credit ratings. Accordingly, the impact of interest
expense on earnings can vary significantly among companies. The tax
positions of companies can also vary because of their differing
abilities to take advantage of tax benefits and because of the tax
policies of the jurisdictions in which they operate. As a result,
effective tax rates and provision for income taxes can vary
considerably among companies. Adjusted EBITDA also excludes
depreciation and amortization because companies utilize productive
assets of different ages and use different methods of both
acquiring and depreciating productive assets. These differences can
result in considerable variability in the relative costs of
productive assets and the depreciation and amortization expense
among companies.
Adjusted EBITDA is not a recognized term under GAAP and should
not be considered as an alternative to net income (loss) or any
other measure of financial performance or liquidity, including cash
flow, derived in accordance with GAAP, or to any other method or
analyzing our results as reported under GAAP. The limitations of
using Adjusted EBITDA as an analytical tool include, without
limitation, that Adjusted EBITDA does not reflect (i) changes in,
or cash requirements for, our working capital needs; (ii) our
interest expense, or the cash requirements necessary to service
interest or principal payments on our indebtedness (other than as
noted above); (iii) our tax expense or the cash requirements to pay
our taxes; (iv) historical cash expenditures or future requirements
for capital expenditures or contractual commitments; or (v) the
effect on earnings or changes resulting from matters that we
consider not to be indicative of our future operations or
performance. Further, although depreciation and amortization are
non-cash charges, the assets being depreciated and amortized will
often have to be replaced in the future, and Adjusted EBITDA does
not reflect any cash requirements for such replacements. In
addition, our definition of Adjusted EBITDA may not be comparable
to definitions of Adjusted EBITDA or other similarly titled
measures used by other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200309005701/en/
Bluegreen Vacations Corporation Investor Relations: Leo Hinkley
954-940-5336 Email: Leo.Hinkley@BluegreenVacations.com
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