Bluegreen Vacations Corporation Reports Second Quarter 2019 Results

BOCA RATON, Fla.--()--Bluegreen Vacations Corporation (NYSE: BXG) ("Bluegreen" or the “Company") today reported its second quarter 2019 financial results.

2Q19 Highlights:

  • (Loss) Earnings per Share (“EPS”) of $(0.15), compared to $0.36 in the prior year quarter.
  • Net loss attributable to shareholders was $(11.2 million), compared to net earnings of $26.7 million in the prior year quarter.
  • Included in this quarter’s results are expenses related to our settlement with Bass Pro of $39.1 million, or $0.39 per share
  • Adjusted EBITDA of $28.7 million, compared to $41.9 million in the prior year quarter.
  • Total revenue of $195.6 million, compared to $194.9 million in the prior year quarter.
  • System-wide Sales of Vacation Ownership Interests (“VOIs”) of $163.6 million, compared to $172.0 million in the prior year quarter.

“We are pleased that during the quarter we came to a resolution of our differences with our long-time partner, Bass Pro Shops. The settlement agreement not only reinstated all of our marketing activities in Bass Pro retail stores, but resolved the issues which were delaying the expansion of our network into Cabela’s retail stores, which we believe positions us to reach an even broader audience,” said Shawn B. Pearson, Chief Executive Officer and President. “We also saw early indications of progress in our efforts to combat third-party exit firms as we realized lower default rates and provisions for loan losses in the quarter. We are eager to refocus our attention on enhancing engagement with our current owners and new owners, both through our existing sales channels as well as with new prospective marketing partners. Bluegreen offers attractive and affordable vacation options in popular, high-volume, ‘drive-to’ locations, which we believe will continue to resonate with consumers. We anticipate that our efforts will take some time to flow through to our results, but we are confident that the actions we are taking today will translate into enhanced performance over time.”

Financial Results

(dollars in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

$

195.6

 

$

194.9

 

0.3

%

 

$

364.4

 

$

362.5

 

0.5

%

(Loss) income before non-controlling interest and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(benefit) provision for income taxes

$

(10.0)

 

$

39.4

 

(125.4)

%

 

$

12.2

 

$

70.2

 

(82.6)

%

Net (loss) income attributable to shareholders

$

(11.2)

 

$

26.7

 

(141.9)

%

 

$

4.0

 

$

47.7

 

(91.6)

%

(Loss) earnings per share basic and diluted

$

(0.15)

 

$

0.36

 

(141.7)

%

 

$

0.05

 

$

0.64

 

(92.2)

%

Adjusted EBITDA

$

28.7

 

$

41.9

 

(31.6)

%

 

$

54.9

 

$

75.2

 

(27.0)

%

Capital-light revenue(1) as a percentage of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

total revenue

 

65.4%

 

 

70.0%

 

(460)

bp

 

 

68.0%

 

 

72.3%

 

(430)

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 June 30, 2019 was $195.6 million, compared to $194.9 million in the prior year period, primarily due to increases in resort operations and club management revenue and interest income, and a decrease in the provision for loan loss, partially offset by a decrease in VOI sales as discussed more fully under “Segment Results” below. Adjusted EBITDA was $28.7 million in the second quarter of 2019 compared to $41.9 million in the second quarter of 2018, primarily due to lower VOI sales and higher cost of VOI sales and net carrying cost of inventory, partially offset by a lower provision for loan losses and higher profit on resort operations and club management operations.

In terms of segment results, decreased results in the Sales of VOIs and Financing segment were partially offset by growth in the Resort Operations and Club Management segment, as more fully described below.

Segment Results

Sales of VOIs and Financing Segment
(dollars in millions, except per guest and per transaction amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System-wide sales of VOIs

$

163.6

 

$

172.0

 

(4.9)

%

 

$

293.3

 

$

304.8

 

(3.8)

%

Segment adjusted EBITDA

$

36.2

 

$

48.3

 

(25.0)

%

 

$

67.3

 

$

92.0

 

(26.8)

%

Guest tours

 

65,167

 

 

65,570

 

(0.6)

%

 

 

113,305

 

 

115,767

 

(2.1)

%

Average sales price per transaction

$

15,432

 

$

15,442

 

(0.1)

%

 

$

15,591

 

$

15,351

 

1.6

%

Sales to tour conversion ratio

 

16.4%

 

 

17.1%

 

(4.1)

%

 

 

16.7%

 

 

17.3%

 

(3.5)

%

Sales volume per guest ("VPG")

$

2,528

 

$

2,646

 

(4.5)

%

 

$

2,603

 

$

2,653

 

(1.9)

%

Selling and marketing expenses, as a

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of system-wide sales of VOIs

 

50.7%

 

 

48.5%

 

220

bp

 

 

50.5%

 

 

48.9%

 

160

bp

Provision for loan losses

 

14.9%

 

 

16.4%

 

(150)

bp

 

 

16.1%

 

 

14.7%

 

140

bp

Cost of VOIs sold

 

15.5%

 

 

9.9%

 

560

bp

 

 

12.0%

 

 

6.9%

 

510

bp

During the second quarter of 2019, system-wide sales of VOIs were $163.6 million, compared to $172.0 million in the second quarter of 2018. The year over year change in sales was primarily driven by a lower sale-to-tour conversion ratio, which resulted in a lower average sales volume per guest (“VPG”), in part due to disruptions at sales offices related to the Bass Pro matter, which has subsequently been resolved as described under Bass Pro Settlement below. Package sales volumes in the second quarter of 2019 increased approximately 7% compared to the second quarter of 2018 following an 8% increase in the first quarter, and these increases are expected to result in increased guest tours over the next six to 18 months. However, the growth in package sales occurred in channels that are typically not as efficient as Bass Pro, in which the Company experienced a decrease in package sales during the quarter due to the period of time we were denied access to the Bass Pro stores.

Provision for loan losses decreased to 14.9% of gross VOI sales, compared to 16.4% in the prior year second quarter. As previously disclosed, the Company’s default rates in recent years have been adversely impacted by the actions of “timeshare exist firms” which had been encouraging some VOI owners to become delinquent and ultimately default on their obligations. The Company believes that the improvement in its default rates in the second quarter of 2019 compared to the second quarter of 2018 is in part due to its zero-tolerance strategy and ongoing steps to address this issue, which has resulted in a reduction of cease and desist letters received and a reduction in average annual default rates and correspondingly the provision for loan losses in the second quarter of 2019. The Company’s provision for loan losses has recently ranged between 14.9% and 20.7%, and expectations for the remainder of 2019 are below the midpoint of that range.

Fee-based sales commission revenue was $55.3 million in the second quarter of 2019, compared to $60.1 million in the second quarter of 2018. The period over period change reflected lower sales of third-party VOI inventory, due to lower system-wide sales as described above, as well as an average fee-based sales commission of 66% during the second quarter of 2019 as compared to 67% during the comparable prior year period.

In the second quarter of 2019, cost of VOIs sold represented 15.5% of sales of VOIs compared to 9.9% in the second quarter of 2018. 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. During the second quarter of 2018, the cost of sales benefited from VOI sales of relatively lower cost VOIs as to compared to the second quarter of 2019 where VOI sales were of relatively higher cost VOIs. Cost of VOIs sold is expected to range from 10% to 15% for the remainder of 2019.

Net carrying cost of inventory increased $3.6 million in the second quarter of 2019 compared to the second quarter of 2018, primarily due to the carrying cost associated with the Éilan Hotel and Spa, which was acquired in April 2018 and increased maintenance fees and developer subsidies associated with the increase in VOI inventory as well as decreased net operating profits from the Company’s sampler program.

Selling and marketing expense increased to 51% of system-wide sales of VOIs during the second quarter of 2019 as compared to 48% during the second 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 and a lower VPG, due in part to decreased sales associated with disruptions in the Company’s sales offices as a result of the recently resolved Bass Pro dispute, as well as changes in our yield management program during the 2019 period.

Resort Operations and Club Management Segment
(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2019

 

2018

 

% Change

 

2019

 

2018

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Resort operations and club management revenue

$

45.0

 

$

41.3

 

9.1

%

 

$

92.1

 

$

82.8

 

11.2

%

Segment adjusted EBITDA

$

14.5

 

$

13.8

 

5.4

%

 

$

27.7

 

$

25.8

 

7.3

%

Resorts managed

 

49

 

 

49

 

%

 

 

49

 

 

49

 

%

In the second quarter of 2019, resort operations and management club revenue increased by $3.7 million, or 9.1%, to $45.0 million from the prior year quarter. The increase was driven primarily by the full period of management fees in 2019 related to managed resorts added during 2018 and higher third-party rental commissions. Segment adjusted EBITDA grew by 5.4% to $14.5 million.

Bass Pro Settlement

As previously disclosed, on April 17, 2019, Bass Pro and its affiliates brought an action against the Company, alleging that the Company failed to pay certain commissions due it under the parties’ marketing agreement, amongst other alleged breaches. On May 24, 2019, the Company received notice from Bass Pro and its affiliates that it was terminating the marketing agreement based on the failure to cure the alleged breaches. Subsequently, the Company filed a counter claim against Bass Pro and its affiliates.

On June 13, 2019, the Company entered into a settlement agreement which resolved the action filed by Bass Pro and reinstated and amended the marketing agreement. Pursuant to the terms of the settlement agreement, Bass Pro agreed to reinstate the Company’s access to Bass Pro’s marketing channels, including Bass Pro and Cabela’s retail stores. Additionally, with no admission of any wrongdoing, the Company paid Bass Pro $20 million within 15 days after the execution of the settlement agreement; the Company agreed to pay Bass Pro $4 million on each January 1 from 2020 through 2024; and the Company agreed that Bass Pro would keep the remaining $1.5 million of an amount prepaid to them earlier in 2019 under the marketing agreement. Additionally, in lieu of the previous commission arrangement, the Company agreed to pay Bass Pro a fixed annual fee of $70,000 for each Bass Pro and Cabela’s retail store that it accesses (excluding retail stores which are designated to provide tours to Bluegreen/Big Cedar Vacations, or “Bluegreen/Big Cedar Feeder Stores”) plus $32 per net vacation package sold (less cancellations and refunds within 45 days of sale), excluding sales at Bluegreen/Big Cedar Feeder Stores. The fixed annual fee will be prorated for the remainder of 2019. Subject to the terms and conditions of the settlement agreement, the Company will generally be required to pay the fixed annual fee with respect to at least 60 Bass Pro retail stores and a minimum number of Cabela’s retail stores that increases over time to a total of at least 60 Cabela’s retail stores by the end of 2021. Notwithstanding the foregoing, the minimum number of Bass Pro and Cabela’s retail stores for purposes of the fixed annual fee may be reduced under certain circumstances set forth in the settlement agreement, including as a result of a reduction of traffic in the stores in excess of 25% year-over-year. The Company also agreed to contribute to the Wonders of Wildlife Foundation $5.00 per net package sold (less cancellations and refunds within 45 days of sale), subject to an annual minimum of $700,000 which was not prorated for 2019. The parties executed mutual waivers and releases and agreed to the dismissal of the litigation.

Balance Sheet and Liquidity

As of June 30, 2019, unrestricted cash and cash equivalents totaled $180.2 million. Bluegreen had availability of approximately $150.6 million under its receivable-backed purchase and credit facilities and corporate credit line as of June 30, 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 June 30, 2019 was .23.

Free cash flow, which the Company defines as cash flow from operating activities, less capital expenditures, was $(2. 9) million for the six months ended June 30, 2019, compared to $8.1 million for the six months ended June 30, 2018. The decrease in free cash flow was primarily attributable to the $20.0 million payment to Bass Pro in June 2019, partially offset by decreased spending on the acquisition and development of inventory in the 2019 period.

Dividend

On July 30, 2019, Bluegreen’s Board of Directors declared a quarterly common stock cash dividend of $0.17 per share. The dividend is payable on August 27, 2019 to shareholders of record as of the close of trading on August 13, 2019.

Second Quarter 2019 Webcast

The Company has provided a pre-recorded business update and management presentation via webcast link, indicated below, in the Investor Relations section of its website at ir.bluegreenvacations.com. A transcript will also be available simultaneously with the webcast. The webcast and supplemental management presentation can be accessed on the Investor Relations section of Bluegreen Vacations’ website at ir.bluegreenvacations.com. The pre-recorded presentation can also be accessed at 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and entering pin number 1135129. The business update via dial-in will be available through midnight Sunday, September 1, 2019. A transcript will also be available simultaneously with the webcast.

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 including new owner sales; our ability to successfully implement our strategic plans and initiatives, generate earnings and long-term growth; risks that our marketing alliances will not contribute to growth or be profitable; 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 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 levels, if at all; risks that the Company’s costs, including costs of VOIs sold, for the remainder of 2019 will not be within the expected ranges; risks that the Company’s efforts to address the increase in default rates may not be successful and default rates may not decrease and may exceed the Company’s expectations; 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, 2018 and those described in Bluegreen’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, which is expected to be filed on or about August 6, 2019. 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, deeded vacation ownership plan with approximately 217,000 owners, 69 Club and Club Associate Resorts and access to more than 11,300 other hotels and resorts through partnerships and exchange networks as of June 30, 2019. 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 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 principal investments include Bluegreen Vacations Corporation (NYSE: BXG), BBX Capital Real Estate, Renin Holdings, and IT’SUGAR. 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

 

For the Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross sales of VOIs

 

$

80,221

 

$

82,027

 

$

143,105

 

$

146,187

 

Estimated uncollectible VOI notes receivable

 

 

(11,919)

 

 

(13,454)

 

 

(23,072)

 

 

(21,473)

 

Sales of VOIs

 

 

68,302

 

 

68,573

 

 

120,033

 

 

124,714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-based sales commission revenue

 

 

55,343

 

 

60,086

 

 

100,555

 

 

105,940

 

Other fee-based services revenue

 

 

30,703

 

 

30,391

 

 

60,271

 

 

58,415

 

Cost reimbursements

 

 

17,358

 

 

14,059

 

 

37,594

 

 

30,260

 

Interest income

 

 

21,875

 

 

21,118

 

 

43,883

 

 

42,240

 

Other income, net

 

 

1,993

 

 

710

 

 

2,082

 

 

891

 

Total revenue

 

 

195,574

 

 

194,937

 

 

364,418

 

 

362,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of VOIs sold

 

 

10,572

 

 

6,789

 

 

14,420

 

 

8,601

 

Cost of other fee-based services

 

 

19,924

 

 

16,634

 

 

42,792

 

 

34,045

 

Cost reimbursements

 

 

17,358

 

 

14,059

 

 

37,594

 

 

30,260

 

Selling, general and administrative expenses

 

 

147,668

 

 

109,580

 

 

237,882

 

 

203,129

 

Interest expense

 

 

10,061

 

 

8,495

 

 

19,567

 

 

16,262

 

Total costs and expenses

 

 

205,583

 

 

155,557

 

 

352,255

 

 

292,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income before non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

and (benefit) provision for income taxes

 

 

(10,009)

 

 

39,380

 

 

12,163

 

 

70,163

 

(Benefit) provision for income taxes

 

 

(3,957)

 

 

9,353

 

 

1,346

 

 

16,554

 

Net (loss) income

 

 

(6,052)

 

 

30,027

 

 

10,817

 

 

53,609

 

Less: Net income attributable to

 

 

5,131

 

 

3,317

 

 

6,847

 

 

5,924

 

non-controlling interest

Net (loss) income attributable to Bluegreen

 

 

 

 

 

 

 

 

 

 

 

 

 

Vacations Corporation shareholders

 

$

(11,183)

 

$

26,710

 

$

3,970

 

$

47,685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive (loss) income attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

Bluegreen Vacations Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

shareholders

 

$

(11,183)

 

$

26,710

 

$

3,970

 

$

47,685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (UNAUDITED)

(In thousands, except for share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

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

 

$

(0.15)

 

$

0.36

 

$

0.05

 

$

0.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares
outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

74,446

 

 

74,734

 

 

74,446

 

 

74,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

0.17

 

$

0.15

 

$

0.34

 

$

0.30

 

BLUEGREEN VACATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

June 30,

 

 

2019

 

2018

Operating activities:

 

 

 

 

 

 

Net income

 

$

10,817

 

$

53,609

Adjustments to reconcile net income to net cash provided

 

 

 

 

 

 

by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

9,056

 

 

7,597

Gain on disposal of property and equipment

 

 

(1,945)

 

 

Provision for loan losses

 

 

23,055

 

 

21,447

(Benefit) provision for deferred income taxes

 

 

(10,041)

 

 

2,215

Changes in operating assets and liabilities:

 

 

 

 

 

 

Notes receivable

 

 

(24,742)

 

 

(24,236)

Prepaid expenses and other assets

 

 

(11,674)

 

 

(16,122)

Inventory

 

 

(8,071)

 

 

(25,770)

Accounts payable, accrued liabilities and other, and

 

 

 

 

 

 

deferred income

 

 

25,157

 

 

4,475

Net cash provided by operating activities

 

 

11,612

 

 

23,215

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(14,516)

 

 

(15,105)

Proceeds from sale of property and equipment

 

 

1,820

 

 

Net cash used in investing activities

 

 

(12,696)

 

 

(15,105)

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

Proceeds from borrowings collateralized

 

 

 

 

 

 

by notes receivable

 

 

45,095

 

 

73,706

Payments on borrowings collateralized by notes receivable

 

 

(66,769)

 

 

(68,531)

Proceeds from borrowings collateralized

 

 

 

 

 

 

by line-of-credit facilities and notes payable

 

 

20,386

 

 

50,042

Payments under line-of-credit facilities and notes payable

 

 

(17,407)

 

 

(24,671)

Payments of debt issuance costs

 

 

(132)

 

 

(187)

Dividends paid

 

 

(25,312)

 

 

(22,420)

Net cash (used in) provided by financing activities

 

 

(44,139)

 

 

7,939

Net (decrease) increase in cash and cash equivalents

 

 

 

 

 

 

and restricted cash

 

 

(45,223)

 

 

16,049

Cash, cash equivalents and restricted cash at beginning of period

 

 

273,134

 

 

243,349

Cash, cash equivalents and restricted cash at end of period

 

$

227,911

 

$

259,398

 

 

 

 

 

 

 

Supplemental schedule of operating cash flow information:

 

 

 

 

 

 

Interest paid, net of amounts capitalized

 

$

16,871

 

$

14,250

Income taxes paid

 

$

14,357

 

$

14,618

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 (UNAUDITED)

(In thousands, except for per share data)

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2019

 

2018

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

180,166

 

$

219,408

Restricted cash ($19,018 and $28,400 in VIEs at June 30, 2019

 

 

 

 

 

 

and December 31, 2018, respectively)

 

 

47,745

 

 

53,726

Notes receivable, net ($308,042 and $341,975 in VIEs

 

 

 

 

 

 

at June 30, 2019 and December 31, 2018, respectively)

 

 

440,854

 

 

439,167

Inventory

 

 

342,220

 

 

334,149

Prepaid expenses

 

 

14,946

 

 

10,097

Other assets

 

 

57,970

 

 

49,796

Operating lease assets

 

 

23,395

 

 

Intangible assets, net

 

 

61,556

 

 

61,845

Loan to related party

 

 

80,000

 

 

80,000

Property and equipment, net

 

 

102,361

 

 

98,279

Total assets

 

$

1,351,213

 

$

1,346,467

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Accounts payable

 

$

18,270

 

$

19,515

Accrued liabilities and other

 

 

102,183

 

 

80,364

Operating lease liabilities

 

 

24,584

 

 

Deferred income

 

 

17,668

 

 

16,522

Deferred income taxes

 

 

81,015

 

 

91,056

Receivable-backed notes payable - recourse

 

 

86,820

 

 

76,674

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

 

 

351,316

 

 

382,257

Lines-of-credit and notes payable

 

 

136,796

 

 

133,391

Junior subordinated debentures

 

 

71,691

 

 

71,323

Total liabilities

 

 

890,343

 

 

871,102

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

Common stock, $.01 par value, 100,000,000 shares authorized; 74,445,923

 

 

 

 

 

 

shares issued and outstanding at June 30, 2019 and December 31, 2018

 

 

744

 

 

744

Additional paid-in capital

 

 

270,369

 

 

270,369

Retained earnings

 

 

137,299

 

 

158,641

Total Bluegreen Vacations Corporation shareholders' equity

 

 

408,412

 

 

429,754

Non-controlling interest

 

 

52,458

 

 

45,611

Total shareholders' equity

 

 

460,870

 

 

475,365

Total liabilities and shareholders' equity

 

$

1,351,213

 

$

1,346,467

BLUEGREEN VACATIONS CORPORATION

ADJUSTED EBITDA RECONCILIATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

(in thousands)

 

2019

 

2018

 

2019

 

2018

Net (loss) income attributable to shareholders

 

$

(11,183)

 

$

26,710

 

$

3,970

 

$

47,685

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

 

 

5,131

 

 

3,317

 

 

6,847

 

 

5,924

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

 

 

(5,193)

 

 

(3,292)

 

 

(6,974)

 

 

(5,884)

(Gain) loss on assets held for sale

 

 

(1,989)

 

 

11

 

 

(1,980)

 

 

(9)

Add: depreciation and amortization

 

 

3,504

 

 

2,989

 

 

6,870

 

 

5,917

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

 

 

(1,792)

 

 

(1,381)

 

 

(3,638)

 

 

(2,816)

Add: interest expense - corporate and other

 

 

4,991

 

 

3,873

 

 

9,235

 

 

6,930

Add: franchise taxes

 

 

25

 

 

43

 

 

60

 

 

124

Add: (benefit) provision for income taxes

 

 

(3,957)

 

 

9,353

 

 

1,346

 

 

16,554

Add: corporate realignment cost

 

 

 

 

275

 

 

 

 

751

Add: Bass Pro settlement

 

 

39,121

 

 

 

 

39,121

 

 

Total Adjusted EBITDA

 

$

28,658

 

$

41,898

 

$

54,857

 

$

75,176

BLUEGREEN VACATIONS CORPORATION

SEGMENT ADJUSTED EBITDA SUMMARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

(in thousands)

 

2019

 

2018

 

2019

 

2018

Adjusted EBITDA - sales of VOIs
and financing

 

$

36,197

 

$

48,255

 

$

67,327

 

$

91,981

Adjusted EBITDA - resort operations
and club management

 

 

14,490

 

 

13,750

 

 

27,726

 

 

25,829

Total Segment Adjusted EBITDA

 

 

50,687

 

 

62,005

 

 

95,053

 

 

117,810

Less: corporate and other

 

 

(22,029)

 

 

(20,107)

 

 

(40,196)

 

 

(42,634)

Total Adjusted EBITDA

 

$

28,658

 

$

41,898

 

$

54,857

 

$

75,176

BLUEGREEN VACATIONS CORPORATION

SALES OF VOIs AND FINANCING SEGMENT- ADJUSTED EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30,

 

 

2019

 

2018

 

 

Amount

 

% of
System-
wide sales
of VOIs (5)

 

Amount

 

% of
System-
wide sales
of VOIs (5)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Developed VOI sales (1)

 

$

99,271

 

61%

 

$

80,715

 

47%

Secondary Market sales

 

 

53,337

 

33

 

 

55,258

 

32

Fee-Based sales

 

 

83,352

 

51

 

 

89,934

 

52

JIT sales

 

 

2,418

 

1

 

 

15,314

 

9

Less: Equity trade allowances (6)

 

 

(74,805)

 

(46)

 

 

(69,260)

 

(40)

System-wide sales of VOIs

 

 

163,573

 

100%

 

 

171,961

 

100%

Less: Fee-Based sales

 

 

(83,352)

 

(51)

 

 

(89,934)

 

(52)

Gross sales of VOIs

 

 

80,221

 

49

 

 

82,027

 

48

Provision for loan losses (2)

 

 

(11,919)

 

(15)

 

 

(13,454)

 

(16)

Sales of VOIs

 

 

68,302

 

42

 

 

68,573

 

40

Cost of VOIs sold (3)

 

 

(10,572)

 

(15)

 

 

(6,789)

 

(10)

Gross profit (3)

 

 

57,730

 

85

 

 

61,784

 

90

Fee-Based sales commission revenue (4)

 

 

55,343

 

66

 

 

60,086

 

67

Financing revenue, net of financing expense

 

 

15,225

 

9

 

 

15,160

 

9

Other fee-based services - title operations, net

 

 

1,941

 

1

 

 

2,060

 

1

Net carrying cost of VOI inventory

 

 

(5,288)

 

(3)

 

 

(1,650)

 

(1)

Selling and marketing expenses

 

 

(83,001)

 

(51)

 

 

(83,323)

 

(48)

General and administrative expenses - sales and
marketing

 

 

(46,408)

 

(28)

 

 

(7,511)

 

(4)

Operating profit - sales of VOIs and financing

 

 

(4,458)

 

-3%

 

 

46,606

 

27%

Add: Depreciation and amortization

 

 

1,534

 

 

 

 

1,649

 

 

Add: Bass Pro Settlement

 

 

39,121

 

 

 

 

 

 

Adjusted EBITDA - sales of VOI and financing

 

$

36,197

 

 

 

$

48,255

 

 

BLUEGREEN VACATIONS CORPORATION

SALES OF VOIs AND FINANCING SEGMENT- ADJUSTED EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30,

 

 

2019

 

2018

 

 

Amount

 

% of
System-
wide sales
of VOIs (5)

 

Amount

 

% of
System-
wide sales
of VOIs (5)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Developed VOI sales (1)

 

$

167,424

 

57%

 

$

128,246

 

42%

Secondary Market sales

 

 

112,490

 

38

 

 

131,547

 

43

Fee-Based sales

 

 

150,146

 

51

 

 

158,618

 

52

JIT sales

 

 

4,652

 

2

 

 

18,683

 

6

Less: Equity trade allowances (6)

 

 

(141,461)

 

(48)

 

 

(132,289)

 

(43)

System-wide sales of VOIs

 

 

293,251

 

100%

 

 

304,805

 

100%

Less: Fee-Based sales

 

 

(150,146)

 

(51)

 

 

(158,618)

 

(52)

Gross sales of VOIs

 

 

143,105

 

49

 

 

146,187

 

48

Provision for loan losses (2)

 

 

(23,072)

 

(16)

 

 

(21,473)

 

(15)

Sales of VOIs

 

 

120,033

 

41

 

 

124,714

 

41

Cost of VOIs sold (3)

 

 

(14,420)

 

(12)

 

 

(8,601)

 

(7)

Gross profit (3)

 

 

105,613

 

88

 

 

116,113

 

93

Fee-Based sales commission revenue (4)

 

 

100,555

 

67

 

 

105,940

 

67

Financing revenue, net of financing expense

 

 

30,090

 

10

 

 

29,923

 

10

Other fee-based services - title operations, net

 

 

3,459

 

1

 

 

3,506

 

1

Net carrying cost of VOI inventory

 

 

(12,976)

 

(4)

 

 

(4,167)

 

(1)

Selling and marketing expenses

 

 

(148,223)

 

(51)

 

 

(149,006)

 

(49)

General and administrative expenses - sales and
marketing

 

 

(53,382)

 

(18)

 

 

(13,644)

 

(4)

Operating profit - sales of VOIs and financing

 

 

25,136

 

9%

 

 

88,665

 

29%

Add: Depreciation and amortization

 

 

3,070

 

 

 

 

3,316

 

 

Add: Bass Pro Settlement

 

 

39,121

 

 

 

 

 

 

Adjusted EBITDA - sales of VOIs and financing

 

$

67,327

 

 

 

$

91,981

 

 

(1)

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.

(2)

Provision for loan losses is calculated as a percentage of gross sales of VOIs, which excludes Fee-Based sales (and not of system-wide sales of VOIs).

(3)

Percentages for costs of VOIs sold and gross profit are calculated as a percentage of sales of VOIs (and not of system-wide sales of VOIs).

(4)

Percentages for Fee-Based sales commission revenue are calculated as a percentage of Fee-Based sales (and not 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
June 30,

 

For the Six Months Ended
June 30,

 

 

2019

 

2018

 

% Change

 

2019

 

2018

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of sales offices at period-end

 

 

26

 

 

24

 

8

 

 

26

 

 

24

 

8

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

 

 

15

 

 

14

 

7

 

 

15

 

 

14

 

7

Total number of VOI sales transactions

 

 

10,674

 

 

11,235

 

(5)

 

 

18,917

 

 

20,004

 

(5)

Average sales price per transaction

 

$

15,432

 

$

15,442

 

 

$

15,591

 

$

15,351

 

2

Number of total guest tours

 

 

65,167

 

 

65,570

 

(1)

 

 

113,305

 

 

115,767

 

(2)

Sale-to-tour conversion ratio–
total marketing guests

 

 

16.4%

 

 

17.1%

 

(4)

 

 

16.7%

 

 

17.3%

 

(3)

Number of new guest tours

 

 

40,473

 

 

41,628

 

(3)

 

 

68,537

 

 

71,507

 

(4)

Sale-to-tour conversion ratio–
new marketing guests

 

 

13.6%

 

 

14.8%

 

(8)

 

 

13.7%

 

 

14.8%

 

(7)

Percentage of sales to existing owners

 

 

53.0%

 

 

49.0%

 

8

 

 

54.7%

 

 

51.2%

 

7

Average sales volume per guest

 

$

2,528

 

$

2,646

 

(4)

 

$

2,603

 

$

2,653

 

(2)

 

BLUEGREEN VACATIONS CORPORATION

RESORT OPERATIONS AND CLUB MANAGEMENT SEGMENT- ADJUSTED EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

(dollars in thousands)

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

 

Resort operations and
club management revenue

 

$

45,021

 

 

 

$

41,275

 

 

 

$

92,097

 

 

 

$

82,812

 

 

Resort operations and club management expense

 

 

(30,895)

 

 

 

 

(27,928)

 

 

 

 

(65,101)

 

 

 

 

(57,781)

 

 

Operating profit - resort
operations and club management

 

 

14,126

 

31%

 

 

13,347

 

32%

 

 

26,996

 

29%

 

 

25,031

 

30%

Add: Depreciation

 

 

364

 

 

 

 

403

 

 

 

 

730

 

 

 

 

798

 

 

Adjusted EBITDA - resort operations
and club management

 

$

14,490

 

 

 

$

13,750

 

 

 

$

27,726

 

 

 

$

25,829

 

 

 

BLUEGREEN VACATIONS CORPORATION

CORPORATE AND OTHER - ADJUSTED EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

(dollars in thousands)

 

2019

 

2018

 

2019

 

2018

General and administrative expenses -
corporate and other

 

$

(18,629)

 

$

(18,870)

 

$

(36,757)

 

$

(40,462)

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

 

 

(5,193)

 

 

(3,292)

 

 

(6,974)

 

 

(5,884)

Other income, net

 

 

1,993

 

 

710

 

 

2,082

 

 

891

Add: Financing revenue - corporate and other

 

 

1,950

 

 

1,460

 

 

3,941

 

 

2,968

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

 

 

(1,792)

 

 

(1,381)

 

 

(3,638)

 

 

(2,816)

Franchise taxes

 

 

25

 

 

43

 

 

60

 

 

124

(Gain) Loss on assets held for sale

 

 

(1,989)

 

 

11

 

 

(1,980)

 

 

(9)

Depreciation and amortization

 

 

1,606

 

 

937

 

 

3,070

 

 

1,803

Corporate realignment cost

 

 

 

 

275

 

 

 

 

751

Corporate and other

 

$

(22,029)

 

$

(20,107)

 

$

(40,196)

 

$

(42,634)

 

BLUEGREEN VACATIONS CORPORATION

FREE CASH FLOW RECONCILIATION

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30,

(in thousands)

 

2019

 

2018

Net cash provided by operating activities

 

$

11,612

 

$

23,215

Purchases of property and equipment

 

 

(14,516)

 

 

(15,105)

Free Cash Flow

 

$

(2,904)

 

$

8,110

 

BLUEGREEN VACATIONS CORPORATION

OTHER FINANCIAL DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

2019

 

2018

 

 

2019

 

2018

Financing Interest Income

 

$

19,925

 

$

19,658

 

 

$

39,942

 

$

39,272

Financing Interest Expense

 

 

(5,070)

 

 

(4,622)

 

 

 

(10,332)

 

 

(9,332)

Non-Financing Interest Income

 

 

1,950

 

 

1,460

 

 

 

3,941

 

 

2,968

Non-Financing Interest Expense

 

 

(4,991)

 

 

(3,873)

 

 

 

(9,235)

 

 

(6,930)

Mortgage Servicing Income

 

 

1,544

 

 

1,471

 

 

 

3,034

 

 

2,916

Mortgage Servicing Expense

 

 

(1,174)

 

 

(1,347)

 

 

 

(2,554)

 

 

(2,933)

Title Revenue

 

 

3,040

 

 

3,175

 

 

 

5,768

 

 

5,863

Title Expense

 

 

(1,099)

 

 

(1,115)

 

 

 

(2,309)

 

 

(2,357)

 

BLUEGREEN VACATIONS CORPORATION

SYSTEM-WIDE SALES OF VOIs RECONCILIATION

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

(in thousands)

 

2019

 

2018

 

2019

 

2018

Gross sales of VOIs

 

$

80,221

 

$

82,027

 

$

143,105

 

$

146,187

Add: Fee-Based sales

 

 

83,352

 

 

89,934

 

 

150,146

 

 

158,618

System-wide sales of VOIs

 

$

163,573

 

$

171,961

 

$

293,251

 

$

304,805

 

BLUEGREEN VACATIONS CORPORATION

TRAILING TWELVE MONTH ADJUSTED EBITDA

(In thousands)

 

 

 

 

 

 

 

For the Twelve Months Ended

 

 

 

June 30, 2019

Net income attributable to shareholders

 

$

44,247

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

 

 

13,313

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

 

 

(13,558)

(Gain) on assets held for sale

 

 

(1,968)

Add: depreciation and amortization

 

 

13,345

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

 

 

(6,866)

Add: interest expense - corporate and other

 

 

17,500

Add: franchise taxes

 

 

135

Add: provision for income taxes

 

 

13,333

Add: corporate realignment cost

 

 

2,899

Add: Bass Pro settlement

 

 

39,121

Total Adjusted EBITDA

 

$

121,501

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 each guest tour 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 (loss), 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 $39.1 million of expenses incurred during the three and six months ended June 30, 2019 in connection with the Bass Pro Settlement. 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.

Contacts

Bluegreen Vacations Corporation
Investor Relations:
Nikki Sacks, 203-682-8263
or
Evelyn Infurna, 203-682-8265
Email: bluegreenvac@icrinc.com

Contacts

Bluegreen Vacations Corporation
Investor Relations:
Nikki Sacks, 203-682-8263
or
Evelyn Infurna, 203-682-8265
Email: bluegreenvac@icrinc.com