Bluegreen Vacations Holding Corporation Reports Simpler, “Pure” Holding Company Structure and Financials
FORT LAUDERDALE, Fla.–(BUSINESS WIRE)–Bluegreen Vacations Holding Corporation (NYSE: BVH) (OTCQX: BVHBB) (formerly BBX Capital Corporation) (“BVH” or the “Company”) reported today its financial results for the quarter and year ended December 31, 2020. As a result of the previously disclosed spin-off of BVH’s other businesses and investments on September 30, 2020 (which are now reported as discontinued operations), the primary asset of BVH is its ownership of approximately 93% of the outstanding common stock of Bluegreen Vacations Corporation (“Bluegreen”), a leading vacation ownership company that markets and sells vacation ownership interests (“VOIs”) and manages resorts in popular leisure and urban destinations.
Balance Sheet at December 31, 2020:
- Unrestricted cash of $221.1 million.
- Total consolidated assets of $1.3 billion.
- Total shareholders’ equity of $262.7 million.
- Fully diluted book value per share of $13.60. (1)
(1) Fully diluted book value per share is shareholders’ equity divided by the total number of shares of BVH’s Class A Common Stock and Class B Common Stock outstanding as of December 31, 2020.
“While Bluegreen Vacations Holding Corporation, formerly known as BBX Capital Corporation, had a long history of multiple diverse investments, the fourth quarter of 2020 marked a new beginning for BVH when its sole investment became its ownership of Bluegreen Vacations,” commented Alan B. Levan, Chairman and Chief Executive Officer of both Bluegreen Vacations Holding Corporation and Bluegreen Vacations. “Following the spin-off on September 30, 2020 of all non-hospitality related assets, BVH retained only its ownership interest of approximately 93% of Bluegreen Vacations. We believe that the spin-off reflected our commitment to the strategy of building long term value for our shareholders, and by creating essentially a ‘pure play’ holding company, offered us the opportunity to focus on maximizing the value of our investment in Bluegreen.
“Simply stated, we hope that BVH’s simpler, ‘pure,’ holdco structure and financials facilitates a clearer analysis for the investment community, and expect that as the market better understands BVH, its valuation will more closely track that of Bluegreen. For detailed information and financials, we invite readers to view the BVH and/or Bluegreen Form 10-K’s at their respective websites listed below in this release,” Levan concluded.
Fourth Quarter 2020 Highlights:
- Net income from continuing operations attributable to shareholders was $9.1 million.
- Earnings Per Share (“EPS”) from continuing operations was $0.47.
- Adjusted EBITDA from continuing operations attributable to shareholders was $17.9 million.
- Total revenue from continuing operations was $151.2 million.
- Bluegreen’s system-wide sales of vacation ownership interests (“VOIs”) increased to $112.2 million in the current year fourth quarter from $104.3 million in the third quarter of 2020, but decreased from $155.5 million in the prior year quarter.
- The current year quarter’s results were adversely affected by the economic impact of the COVID-19 pandemic. In response to the pandemic, Bluegreen had temporarily closed all of its VOI sales centers in the last week of March 2020 but by December 31, 2020, Bluegreen:
- was operating marketing kiosks at 98 Bass Pro Shops and Cabela’s stores, including 10 new Cabela’s locations;
- had reactivated the Choice Hotels call transfer program;
- had reopened all of its resorts (resort occupancy rates for the fourth quarter of 2020 at resorts with sales centers was approximately 71%, compared to 80% in the fourth quarter of 2019);
- and reopened all but two of its VOI sales centers.
- Bluegreen’s Average sale price per transaction increased 12% and average sales volume per guest (“VPG”) increased 8% in the current year quarter compared to the fourth quarter of 2019.
- Bluegreen completed a private offering and sale of approximately $131.0 million of VOI receivable-backed notes in October 2020.
- BVH’s corporate overhead including interest was $2.3 million in the fourth quarter of 2020.
Full Year 2020 Highlights can be found in the following tables below.
Bluegreen Reported
Alan B. Levan, Chairman, President and Chief Executive Officer of Bluegreen, commented, “We continue to be encouraged by the results of our ongoing focus on safely reopening our resorts and our sales and marketing operations after closing substantially all of these operations in March 2020 in response to the COVID-19 pandemic. We are very pleased with the pace of the rebound in our fourth quarter system-wide sales of VOIs, which at $112.2 million increased 7.6% from our system-wide sales of $104.3 million in the third quarter of 2020. In addition, our total revenue in the fourth quarter increased 4.6% from the third quarter of 2020. We believe that these were positive developments not only because they were achieved despite the continued impact of the COVID-19 pandemic, but also because the fourth quarter typically is a seasonally lower volume quarter than the third quarter. We believe that our consistent strategy for the past 27 years of having a primarily “drive-to” network of resorts has helped us achieve good levels of occupancy despite the pandemic, achieving a 71% total occupancy rate in the fourth-quarter 2020 at our resorts with sales centers, compared to 80% during the same period last year. Further, the Company posted its second quarter of consecutive profitability post-pandemic, generating $19.8 million in consolidated adjusted EBITDA attributable to shareholders and $7.0 million in net income attributable to shareholders in the fourth quarter. While there continues to be challenges ahead, these results are indicative of what we hope to continue to deliver through the “Bluegreen Renewal” initiative. Launched in fourth quarter of 2019, Bluegreen Renewal is a Company-wide initiative with the goal of revitalizing our sales and revenue growth and better managing our expenses. We believe that these initiatives have helped us navigate the ongoing COVID-19 pandemic and believe that this focus on growth and expense management positions us to profitably grow in the future after the impact of the pandemic subsides. However, it goes without saying that this continues to be an unprecedented event in the United States, and it is currently impossible to predict the duration or severity of the pandemic or if and when the economy and our business will return to pre-pandemic levels.”
Mr. Levan continued, “As discussed in more detail in a separate press release, starting in the fourth quarter of 2019 and throughout 2020, we have redesigned and enhanced our sales and marketing infrastructure as part of the Bluegreen Renewal initiative investing in refreshing the physical appearance of our sales centers and marketing materials throughout the Company and our strategy includes pursuing a regional focus with each region led by senior vice presidents, each of whom have over 20 years of timeshare sales and marketing experience. In addition, we relocated our national sales leadership to Knoxville, TN, a central hub to Bluegreen’s sales and marketing footprint, headed by industry-veteran, Dusty Tonkin, as Bluegreen’s Executive Vice President, Chief Sales and Marketing Officer. Most importantly, we believe this strategy has made Bluegreen more agile to take advantage of opportunities for sales and marketing expansion in each region as market conditions allow.”
Mr. Levan concluded, “We are also pleased to report the continuing rebound in our vacation package sales despite the COVID-19 pandemic. We sold over 43,000 vacation packages in the fourth quarter, compared to approximately 55,000 in the fourth quarter of 2019. We’ve recommenced our marketing operations at 98 Bass Pro Shops and Cabela’s stores, including opening marketing kiosks at 10 new Cabela’s stores, and anticipate operating marketing kiosks in over 120 Bass Pro and Cabela’s store locations by the end of 2021. The Bass Pro/Cabela’s vacation package program now exceeds pre-pandemic volumes in the aggregate, and we look forward to the growth in VOI sales that we hope will follow from the growth in package sales. We also value our relationship with Choice Hotels and the historically successful call-transfer program with Choice. While this program continues to run at volumes commensurate with lower travel due to COVID-19, we believe that volumes of vacation packages sold through this program will return to historical levels as travel recovers.”
The following table sets forth selected financial data (1) for Bluegreen for the three months and year ended December 31, 2020 (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| For the Three Months Ended |
|
| For the Year Ended |
|
| ||||||||||||
|
|
| 2020 |
| 2019 |
| % Change |
|
| 2020 |
| 2019 |
| % Change |
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Sales of vacation ownership interests (“VOIs”) |
| $ | 60.6 |
| $ | 69.0 |
| (12) | % | $ | 174.0 |
| $ | 255.4 |
| (32) | % | ||
| System-wide sales of VOIs |
| $ | 112.2 |
| $ | 155.5 |
| (28) | % | $ | 367.0 |
| $ | 619.1 |
| (41) | % | ||
| Fee-based sales commissions |
| $ | 25.3 |
| $ | 46.8 |
| (46) | % |
| $ | 90.0 |
| $ | 207.8 |
| (57) | % | |
| Other fee-based services revenue |
| $ | 28.3 |
| $ | 31.2 |
| (9) | % |
| $ | 111.8 |
| $ | 125.2 |
| (11) | % | |
| Income before non-controlling interest and provision for income taxes |
| $ | 12.5 |
| $ | 15.7 |
| (20) | % |
| $ | 18.8 |
| $ | 58.3 |
| (68) | % | |
| Adjusted EBITDA attributable to Bluegreen’s shareholders (2) |
| $ | 19.8 |
| $ | 30.0 |
| (34) | % |
| $ | 49.4 |
| $ | 121.8 |
| (59) | % | |
| Free cash flow (2) |
| $ | 24.8 |
| $ | 14.3 |
| 73 | % |
| $ | 70.8 |
| $ | 46.1 |
| 54 | % | |
(1) This Selected Financial Data reflects the financial results of Bluegreen and does not adjust any of the applicable financial metrics, such as Adjusted EBITDA Attributable to Shareholders, to account for the noncontrolling interest in Bluegreen reflected in BVH’s consolidated financial statements as a result of BVH’s approximate 93% ownership interest in Bluegreen.
(2) See the supplemental tables included in this release for a reconciliation of Bluegreen’s net income attributable to shareholders to Adjusted EBITDA attributable to Bluegreen’s shareholders and of Bluegreen’s free cash flow to net cash provided by operating activities.
| Bluegreen’s Segment Results | |||||||||||||||||
| Bluegreen’s Sales of VOIs and Financing Segment | |||||||||||||||||
| (dollars in millions, except per guest and per transaction amounts) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
| Year Ended December 31, |
| ||||||||||||
|
| 2020 |
| 2019 |
| Change |
| 2020 |
| 2019 |
| Change | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| System-wide sales of VOIs | $ | 112.2 |
| $ | 155.5 |
| (27.8) | % |
| $ | 367.0 |
| $ | 619.1 |
| (40.7) | % |
| Segment adjusted EBITDA | $ | 22.5 |
| $ | 35.2 |
| (36.1) | % |
| $ | 46.9 |
| $ | 143.6 |
| (67.3) | % |
| Sales offices |
| 24 |
|
| 26 |
| (7.7) | % |
|
| 24 |
|
| 26 |
| (7.7) | % |
| Sales offices selling to new prospects |
| 18 |
|
| 19 |
| (5.3) | % |
|
| 18 |
|
| 19 |
| (5.3) | % |
| Guest Tours |
| 37,779 |
|
| 56,662 |
| (33.3) | % |
|
| 120,801 |
|
| 235,842 |
| (48.8) | % |
| Average sales price per transaction | $ | 17,213 |
| $ | 15,359 |
| 12.1 | % |
| $ | 16,586 |
| $ | 15,307 |
| 8.4 | % |
| Selling and marketing expenses, as a % of system-wide sales of VOIs |
| 55.1% |
|
| 53.4% |
| 170 | bp |
|
| 59.2% |
|
| 51.9% |
| 730 | bp |
| Sales to tour conversion ratio |
| 17.3% |
|
| 18.0% |
| (70) | bp |
|
| 18.4% |
|
| 17.3% |
| 110 | bp |
| Sales volume per guest (“VPG”) | $ | 2,976 |
| $ | 2,758 |
| 7.9 | % |
| $ | 3,046 |
| $ | 2,642 |
| 15.3 | % |
| Number of Bass Pro and Cabela’s marketing locations |
| 98 |
|
| 83 |
| 18.1 | % |
|
| 98 |
|
| 83 |
| 18.1 | % |
| Number of vacation packages outstanding, beginning of the period (1) |
| 134,619 |
|
| 163,205 |
| (17.5) | % |
|
| 169,294 |
|
| 163,100 |
| 3.8 | % |
| Number of vacation packages sold |
| 43,632 |
|
| 54,898 |
| (20.5) | % |
|
| 131,970 |
|
| 205,161 |
| (35.7) | % |
| Number of vacation packages outstanding, end of the period (1) |
| 121,915 |
|
| 169,294 |
| (28.0) | % |
|
| 121,915 |
|
| 169,294 |
| (28.0) | % |
| Provision for loan losses |
| 17.5% |
|
| 19.0% |
| (150) | bp |
|
| 24.7% |
|
| 17.9% |
| 680 | bp |
| Cost of VOIs sold |
| 8.0% |
|
| 6.2% |
| 180 | bp |
|
| 7.8% |
|
| 8.6% |
| (80) | bp |
| Financing revenue, net of financing expense | $ | 15,226 |
| $ | 15,353 |
| (0.8) | % |
| $ | 61,883 |
| $ | 60,454 |
| 2.4 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes vacation packages sold to customers more than one year prior to the period presented and vacation packages sold to customers who had already toured but purchased an additional vacation package.
Bluegreen’s System-wide sales of VOIs
System-wide sales of VOIs were $112.2 million during the three months ended December 31, 2020. As discussed above, all of Bluegreen’s VOI sales centers were temporarily closed on March 23, 2020. By the fourth quarter of 2020, Bluegreen reopened all but two of its VOI sales centers and one of those two VOI sales centers was consolidated into another sales center due to local occupancy restrictions. System-wide sales of VOIs depend on the number of guests who attend a timeshare sale presentation, with each such guest counted as a “tour”, that Bluegreen can potentially convert into a sale of a VOI. The number of guest tours is driven by the number of existing owner guests Bluegreen has staying at a resort with a sales center and the number of new guest arrivals that agree to attend a sales presentation. As a result of the COVID-19 pandemic, the number of guests and owners willing to travel decreased significantly, which lowered the number of completed tours. As a result, the sales mix for the fourth quarter of 2020 was heavily weighted toward sales to existing owners at 63% of system-wide sales of VOIs.
Bluegreen’s Fee-based sales commission revenue
Fee-based sales commission revenue was $25.3 million, approximately 65% of third-party VOI sales during the current fourth year quarter. Third-party VOI sales were 35% of system-wide sales during the quarter, which was lower than is typical. Third-party VOI sales which are more often made at sales centers selling to new prospects were more significantly impacted by the COVID-19 pandemic.
Bluegreen’s Selling and Marketing Expenses
Selling and marketing expenses were 55% of system-wide sales of VOIs during the current year fourth quarter as compared to 53% during the prior year quarter. As of December 31, 2020, Bluegreen had recommenced marketing operations at 88 Bass Pro and Cabela’s locations and marketing operations commenced at 10 additional Cabela’s stores, for a total of 98 Bass Pro Shops and Cabela’s stores. These stores sell vacation packages to drive marketing guests to sales offices in the future. In addition, Bluegreen restarted its call transfer marketing program with Choice Hotels, although the volume of packages sold through the program continue to be adversely impacted by the COVID-19 pandemic.
During the fourth quarter of 2020, Bluegreen sold 43,632 vacation packages, compared to 54,898 vacation packages sold in the fourth quarter of 2019. This decrease reflects lower vacation package sales through the Choice program and other programs that were reduced or terminated, partially offset by an increase of 7% in vacation package sales through the Bass Pro and Cabela’s channel. The active pipeline of frontline vacation packages decreased to 121,915 at December 31, 2020 from 134,619 at September 30, 2020 and 169,294 at December 31, 2019, based on new vacation package sales during the quarter and net of vacation packages used or expired. Historically, approximately 42% of vacation packages resulted in a timeshare tour at one of Bluegreen’s resorts with a sales center within twelve months of purchase. In addition to the active pipeline discussed above, Bluegreen also has a pipeline of vacation packages from customers who have already toured but purchased an additional vacation package and over 100,000 vacation packages that were purchased over 12 months prior to December 31, 2020. Bluegreen has several programs in place to attempt to reactivate those vacation packages to promote future travel and in turn potential future VOI sales.
As recently announced, Bluegreen returned as the entitlement sponsor for The Bluegreen Vacations Duel At DAYTONA, a pair of 150-mile qualifying races for the DAYTONA 500 at Daytona International Speedway. Bluegreen believes that this sponsorship and other aspects of its relationship with NASCAR provide Bluegreen’s owners with experiences at NASCAR races that will be a driver of additional upgrade sales as well as to provide Bluegreen an opportunity to introduce its resorts and destinations to NASCAR fans.
Bluegreen’s Provision for Loan Losses
The provision for loan losses varies based on the amount of financed, non-fee-based sales during the period and changes in Bluegreen’s estimates of future notes receivable performance for existing and newly originated loans. The provision for loan losses as a percentage of gross sales of VOIs was 18% during the fourth quarter of 2020 compared to 19% during the 2019 quarter. The provision for new loans generated during the fourth quarter of 2020 was 24%, which was consistent with the prior year quarter.
The COVID-19 pandemic has had a material adverse impact on unemployment in the United States and economic conditions in general and the impact may continue for some time. Bluegreen believes that the COVID-19 pandemic will continue to have an impact on the collectability of its VOI notes receivable. Accordingly, Bluegreen increased its estimate of defaults for the 2021 year based on its historical experience, forbearance requests received from its customers, and other factors, including, but not limited to, the seasoning of the notes receivable and FICO scores of the customers; however there is no assurance that the allowance for loan losses will prove to be adequate.
Bluegreen continues to monitor and address the activity of so-called third-party timeshare exit firms and aggressively pursue its previously announced “zero tolerance strategy” in an effort to protect Bluegreen’s timeshare owners against the unscrupulous actions of these firms. Some of these firms have increased their activities during the COVID-19 pandemic and Bluegreen will continue to consider appropriate courses of action regarding this industry-wide issue. As previously announced, Bluegreen and the bankruptcy trustee for American Resort Management Group (“ARMG”), one of the so-called timeshare exit firms, ultimately entered into a court-approved settlement in connection with Bluegreen’s suit against ARMG, which allowed 100% of Bluegreen’s claims against ARMG in an amount in excess of one million dollars. Bluegreen and the Trustee consider this matter a victory for the timeshare owners. In this regard, Bluegreen has agreed to work with the timeshare owners defrauded by ARMG to take back or process transfers of their timeshare interests. Bluegreen has also agreed to subordinate its claims against ARMG to the claims against ARMG by the timeshare owners, who have sought refunds of the fees paid to ARMG.
Bluegreen’s Net Carrying Cost of Inventory
Net carrying cost of inventory increased $2.3 million or 45% in the fourth quarter of 2020 compared to the fourth quarter of 2019, primarily due to decreased rentals of developer inventory and decreased sampler stays due to decreased travel associated with the COVID-19 pandemic and increased maintenance fees and developer subsidies associated with our increase in VOI inventory as a result of reduced sales during the period.
Bluegreen’s General and Administrative Expense
General and Administrative Expense related to Bluegreen’s sales and marketing operations decreased $1.5 million or 15% as compared to the fourth quarter of 2019, primarily due to steps taken by Bluegreen to mitigate costs during this period of reduced sales.
Bluegreen’s Financing Revenue, net of Financing Expense
Interest income on VOI notes receivable decreased 3.7% to $19.3 million in the fourth quarter of 2020 compared to the fourth quarter of 2019, primarily reflecting lower notes receivable balances as a result of lower VOI sales due to the COVID-19 pandemic. Interest expense on receivable-backed notes payable decreased 17.7% to $4.2 million in the fourth quarter of 2020 compared to the fourth quarter of 2019, primarily due to lower outstanding receivable-backed debt balances and a lower weighted-average cost of borrowings due to lower market interest rates.
| Bluegreen’s Resort Operations and Club Management Segment | |||||||||||||||||
| (dollars in millions) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended December 31, |
| Year Ended December 31, | ||||||||||||||
|
| 2020 |
| 2019 |
| % Change |
| 2020 |
| 2019 |
| % Change | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Resort operations and club management revenue | $ | 43.7 |
| $ | 42.0 |
| 4.0 | % |
| $ | 168.6 |
| $ | 174.9 |
| (3.6) | % |
| Segment adjusted EBITDA | $ | 16.0 |
| $ | 14.9 |
| 7.4 | % |
| $ | 65.4 |
| $ | 59.9 |
| 9.2 | % |
| Resorts managed |
| 49 |
|
| 49 |
| — | % |
|
| 49 |
|
| 49 |
| — | % |
In the fourth quarter of 2020, resort operations and management club revenue increased by $1.7 million, or 4%, to $43.7 million from $42.0 million in the prior year quarter, due to an increase in cost reimbursement revenue while not impacting segment adjusted EBITDA. Net of cost reimbursement revenue, resort operations and club management revenues decreased 4% as a result of decreases in revenues from our Traveler Plus program, other owner programs, resort retail operations and third-party rental commissions largely, Bluegreen believes, as a result of lower activity due to the COVID-19 pandemic. However, segment adjusted EBITDA increased 7% to $16.0 million in the fourth quarter of 2020 from $14.9 million in the comparable prior year period, driven primarily by lower costs incurred during the fourth quarter of 2020 due to steps taken in the first quarter of 2020 to reduce costs and lower Traveler Plus program costs, costs of other owner programs and costs of resort retail operations.
Bluegreen’s Corporate and Other
Adjusted EBITDA related to Bluegreen’s Corporate and Other was 7% to $(18.7) million in the fourth quarter of 2020 compared to $(20.2) million in the fourth quarter of 2019, primarily due steps taken in the first quarter of 2020 to reduce costs.
Bluegreen’s Balance Sheet and Liquidity
As of December 31, 2020, Bluegreen’s unrestricted cash and cash equivalents totaled $203.7 million. Excluding receivable-backed notes payable, Bluegreen’s net debt-to-EBITDA ratio as of December 31, 2020 was 0.16.
Subject to eligible collateral and the terms of the facilities, Bluegreen had approximately $292.0 million of availability under its receivable-backed purchase and credit facilities, and corporate credit line as of December 31, 2020. During 2020, Bluegreen repaid the $60.0 million previously drawn down in March 2020 under its line-of credit as a precautionary measure to provide Bluegreen liquidity due to COVID-19. Further, in October 2020, Bluegreen completed a private offering and sale of approximately $131.0 million of VOI receivable-backed Notes (the “2020-A Term Securitization”). As a result of the 2020-A Term Securitization, availability under Bluegreen’s receivable-backed purchase and credit facilities and corporate credit line increased $82.1 million as of October 8, 2020, subject to eligible collateral and the terms of the facilities, as applicable.
Bluegreen’s Free cash flow, which Bluegreen defines as cash flow from operating activities less capital expenditures, was $70.8 million for 2020, compared to $46.1 million for 2019. The increase in free cash flow was primarily due to a decrease in the settlement payments made to Bass Pro pursuant to the agreement entered into in June 2019. Bluegreen paid Bass Pro a $20.0 million initial settlement payment in June 2019, as compared to a $4.0 million settlement installment payment made to Bass Pro in January 2020. In addition, income tax payments decreased $23.1 million, spending on the acquisition and development of inventory decreased $22.5 million and the purchase of property and equipment decreased $16.8 million during 2020 as compared to 2019. These increases in free cash flow were partially offset by lower cash sales and down payments from customers associated with the closure of VOI sales centers in response to the COVID-19 pandemic.
Contacts
Investor Relations: Leo Hinkley, Managing Director, Investor Relations Officer
Telephone: 954-399-7193 Email: [email protected]
