BOCA RATON, Fla.–(BUSINESS WIRE)–Bluegreen Vacations Holding Corporation (NYSE: BVH) (OTCQX: BVHBB) (the “Company” or “Bluegreen”) reported today its financial results for the quarter ended September 30, 2023.
Key Highlights as of and for the Quarter Ended September 30, 2023:
- Net income attributable to shareholders decreased 10% to $20.7 million from $23.0 million in the prior year quarter.
- Diluted Earnings Per Share (“EPS”) increased 5% to $1.25 from $1.19 in the prior year quarter.
- Total revenue increased 7% to $267.9 million from $250.8 million in the prior year quarter.
- System-wide sales of vacation ownership interests (“VOIs”) increased 4% to $216.1 million from $206.9 million in the prior year quarter. (1)
- Number of guest tours were 69,524 compared to 69,490 in the prior year quarter.
- Vacation packages sold increased 13% to 45,919 compared to 40,595 in the prior year quarter.
- Vacation packages outstanding of 162,532 as of September 30, 2023, compared to 165,240 as of December 31, 2022 and 169,950 outstanding as of September 30, 2022.
- Adjusted EBITDA attributable to shareholders increased 2% to $42.6 million from $41.9 million in the prior year quarter. (2)
Key Highlights as of and for the Nine Months Ended September 30, 2023:
- Net income attributable to shareholders decreased 5% to $54.1 million from $56.7 million in the prior year period.
- Diluted EPS increased 18% to $3.31 from $2.81 in the prior year period.
- Total revenue increased 10% to $747.6 million from $681.5 million in the prior year period.
- System-wide sales of VOIs increased 5% to $583.7 million from $556.9 million in the prior year period.(1)
- Number of guest tours increased 2% to 188,207 from 184,816 in the prior year period.
- Vacation packages sold increased 9% to 133,813 compared to 122,980 in the prior year period.
- Adjusted EBITDA attributable to shareholders increased 5% to $113.4 million from $107.6 million in the prior year period.(2)
- Free cash flow was an outflow of $73.9 million in the nine months ended September 30, 2023, compared to an inflow of $59.3 million for the nine months ended September 30, 2022, primarily as a result of the acquisition and development of real estate, an increase in VOI notes receivable originations and timing of changes in working capital.(3)
|
(1) |
See appendix for reconciliation of system-wides sales of VOIs to gross sales of VOIs for each respective period. |
|
|
(2) |
See appendix for reconciliation of Adjusted EBITDA attributable to shareholders to net income attributable to shareholders for each respective period. |
|
|
(3) |
See appendix for reconciliation of free cash flow to net cash provided by operating activities. |
|
Financial Results |
||||||||||||||||||
|
(dollars in millions, except per guest and per transaction amounts) |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Q3 2023 vs |
|
Nine Months Ended |
|
YTD 2023 vs |
||||||||||
|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
267.9 |
|
$ |
250.8 |
|
7 |
% |
|
$ |
747.6 |
|
$ |
681.5 |
|
10 |
% |
|
Income before non-controlling interest and provision for income taxes |
|
$ |
33.3 |
|
$ |
36.2 |
|
(8) |
% |
|
$ |
87.7 |
|
$ |
89.6 |
|
(2) |
% |
|
Adjusted EBITDA Attributable to shareholders (1) |
|
$ |
42.6 |
|
$ |
41.9 |
|
2 |
% |
|
$ |
113.4 |
|
$ |
107.6 |
|
5 |
% |
|
(1) |
See Appendix for reconciliation of Bluegreen’s Adjusted EBITDA Attributable to shareholders to Net Income Attributable to shareholders. |
Adjusted EBITDA Attributable to Shareholders was $42.6 million for the quarter ended September 30, 2023, including $47.0 million generated by the Sales of VOIs and Financing Segment and $22.6 million produced by the Resort Operations and Club Management segment, partially offset by $22.2 million of corporate overhead and other expenses and $4.9 million of Adjusted EBITDA attributable to a third-party non-controlling interest in Bluegreen/Big Cedar Vacations LLC. Please see the discussion of Segment Results below for further information.
Adjusted EBITDA Attributable to Shareholders was $113.4 million for the nine months ended September 30, 2023, including $123.1 million generated by the Sales of VOIs and Financing Segment and $68.4 million produced by the Resort Operations and Club Management segment, partially offset by $64.6 million of corporate overhead and other expenses and $13.4 million of Adjusted EBITDA attributable to a third-party non-controlling interest in Bluegreen/Big Cedar Vacations LLC. Please see the discussion of Segment Results below for further information.
|
Sales of VOIs and Financing Segment |
||||||||||||||||||
|
(dollars in millions, except per guest and per transaction amounts) |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Q3 2023 vs |
|
Nine Months Ended |
|
YTD 2023 vs |
||||||||||
|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2023 |
|
% Change |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System-wide sales of VOIs |
|
$ |
216.1 |
|
$ |
206.9 |
|
4 |
% |
|
$ |
583.7 |
|
$ |
556.9 |
|
5 |
% |
|
Segment adjusted EBITDA |
|
$ |
47.0 |
|
$ |
44.0 |
|
7 |
% |
|
$ |
123.1 |
|
$ |
117.1 |
|
5 |
% |
|
Financing revenue, net of financing expense |
|
$ |
22.2 |
|
$ |
20.7 |
|
7 |
% |
|
$ |
64.8 |
|
$ |
58.7 |
|
10 |
% |
|
Key Data Regarding Bluegreen’s System-wide sales of VOIs |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Q3 2023 vs |
|
Nine Months Ended |
|
YTD 2023 vs |
||||||||||
|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System-wide sales of VOIs |
|
$ |
216.1 |
|
$ |
206.9 |
|
4 |
% |
|
$ |
583.7 |
|
$ |
556.9 |
|
5 |
% |
|
Number of total guest tours |
|
|
69,524 |
|
|
69,490 |
|
— |
% |
|
|
188,207 |
|
|
184,816 |
|
2 |
% |
|
Average sales price per transaction |
|
$ |
22,077 |
|
$ |
20,771 |
|
6 |
% |
|
$ |
21,814 |
|
$ |
20,545 |
|
6 |
% |
|
Sales to tour conversion ratio |
|
|
14% |
|
|
15% |
|
(100) |
bp |
|
|
14% |
|
|
15% |
|
(100) |
bp |
|
Sales volume per guest (“VPG”) |
|
$ |
3,131 |
|
$ |
3,005 |
|
4 |
% |
|
$ |
3,115 |
|
$ |
3,036 |
|
3 |
% |
|
Selling and marketing expenses, as a % of system-wide sales of VOIs |
|
|
54% |
|
|
56% |
|
(200) |
bp |
|
|
54% |
|
|
56% |
|
(200) |
bp |
|
Provision for loan losses |
|
|
17% |
|
|
17% |
|
— |
bp |
|
|
17% |
|
|
16% |
|
100 |
bp |
|
Cost of VOIs sold |
|
|
13% |
|
|
10% |
|
300 |
bp |
|
|
12% |
|
|
11% |
|
100 |
bp |
System-wide sales of VOIs increased 4% to $216.1 million during the three months ended September 30, 2023 from $206.9 million for the three months ended September 30, 2022. Sales volume per guest, or VPG, increased 4% in the 2023 third quarter compared to the 2022 third quarter, while the number of guest tours was approximately the same between the quarters. The VPG performance in the third quarter of 2023 was the result of our focus on increasing the proportion of tours by owners and higher VPGs for both existing owners and new customers. The increase in VPG overall reflects a 6% increase in average sales price per transaction, partially offset by a 100 basis-point decrease in the sale-to-tour conversion rate as Bluegreen continued to focus on larger transaction sizes.
System-wide sales of VOIs increased 5% to $583.7 million during the nine months ended September 30, 2023 from $556.9 million for the nine months ended September 30, 2022. The number of guest tours was 2% higher, while VPG increased 3% in the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. The VPG performance in the nine months ended September 30, 2023 was also a result of our focus on increasing the proportion of tours by owners and higher VPGs for both existing owners and new customers. This increase in VPG overall reflects a 6% increase in average sales price per transaction, partially offset by a 100 basis-point decrease in the sale-to-tour conversion rate.
Fee-based Sales Commission Revenue
VOI sales of third-party inventory, for which we earn a commission, represented 11% of System-wide Sales of VOIs during both the three and nine months ended September 30, 2023. Fee-based sales commission revenue on such sales was $15.7 million and $41.3 million during the three and nine months ended September 30, 2023, respectively, which represented a commission rate of approximately 66% during both periods.
VOI sales of third-party inventory, for which we earn a commission, are expected to be between 8% and 12% of system-wide sales of VOIs for the fourth quarter of 2023.
Provision for Loan Losses
The provision for loan losses as a percentage of gross sales of VOIs was approximately 17% during both the third quarter of 2023 and the third quarter of 2022. The provision for loan losses as a percentage of gross sales of VOIs was approximately 17% during the nine months ended September 30, 2023, and 16% during the nine months ended September 30, 2022. The increase in the provision for loan losses as a percentage of gross sales of VOIs during the nine months ended September 2023 as compared to the comparable prior year period is primarily a result of a higher proportion of VOI sales that were financed by us, as we actively seek to grow our VOI notes receivable portfolio to generate additional interest income.
The provision for loan losses is expected to be between 16% and 18% of gross sales of VOIs for the fourth quarter of 2023.
Cost of VOIs Sold
Cost of VOIs sold represented 13% and 10% of sales of VOIs in the third quarters of 2023 and 2022, respectively, and 12% and 11% of sales of VOIs during the nine months ended September 30, 2023 and 2022, respectively. Cost of VOIs sold as a percentage of sales of VOIs was higher for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022 primarily due to the relative mix of inventory being sold, partially offset by the timing of secondary market purchases and the timing of the reinstatement of certain equity trade programs in 2022.
Cost of VOIs sold is expected to be between 11% and 13% of sales of VOIs for the fourth quarter of 2023.
Net Carrying Cost of Inventory
The net carrying cost of inventory decreased 39% to $3.0 million in the third quarter of 2023 from $4.9 million in the third quarter of 2022. The net carrying cost of inventory decreased 2% to $12.7 million for the nine months ended September 30, 2023, from $13.0 million for the nine months ended September 30, 2022. The decrease in net carrying cost of inventory reflects lower maintenance fees paid by Bluegreen and higher marketing use of inventory, partially offset by higher developer subsidies paid by Bluegreen, lower rental revenue and lower sampler revenue. Recent and planned acquisitions of VOI inventory are expected to increase developer subsidies in the near future.
Selling and Marketing Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Q3 2023 vs |
|
Nine Months Ended |
|
YTD 2023 vs |
||||||||||
|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2023 |
|
% Change |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing expenses, as a % of system-wide sales of VOIs |
|
|
54% |
|
|
56% |
|
(200) |
bp |
|
|
54% |
|
|
56% |
|
(200) |
bp |
|
Percentage of sales of VOIs to new customers |
|
|
45% |
|
|
48% |
|
(300) |
bp |
|
|
43% |
|
|
46% |
|
(300) |
bp |
|
Number of Bass Pro and Cabela’s marketing locations (1) |
|
|
130 |
|
|
128 |
|
2 |
% |
|
|
130 |
|
|
128 |
|
2 |
% |
|
Number of total guest tours |
|
|
69,524 |
|
|
69,490 |
|
— |
% |
|
|
188,207 |
|
|
184,816 |
|
2 |
% |
|
Number of vacation packages sold |
|
|
45,919 |
|
|
40,595 |
|
13 |
% |
|
|
133,813 |
|
|
122,980 |
|
9 |
% |
|
Number of vacation packages outstanding, end of the period (2) |
|
|
162,532 |
|
|
169,950 |
|
(4) |
% |
|
|
162,532 |
|
|
169,950 |
|
(4) |
% |
|
(1) |
As of January 1, 2023, 23 of our Cabela’s marketing locations were converted to unmanned, virtual kiosks, 4 of which were restaffed during the nine months ended September 30, 2023. |
|
|
(2) |
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 and purchased VOIs. |
Selling and marketing expenses decreased 1% to $115.8 million in the third quarter of 2023 compared to $116.5 million in the third quarter of 2022, despite the 4% increase in system-wide sales during the 2023 quarter compared to the 2022 quarter. As a percentage of system-wide sales, selling and marketing expenses decreased to 54% in the third quarter of 2023 compared to 56% in the third quarter of 2022. The decrease in selling and marketing expenses as a percentage of system-wide sales was driven by decreases in our marketing costs and sales commissions expense and a higher proportion of sales to existing owners, which are generally more profitable than sales to new customers. Sales to existing owners increased to 55% of system-wide sales in the third quarter of 2023 from 52% in the third quarter of 2022.
Selling and marketing expenses increased 1% to $314.9 million for the nine months ended September 30, 2023, compared to $312.9 million for the nine months ended September 30, 2022, primarily driven by the 5% increase in system-wide sales during the 2023 period compared to the 2022 period. As a percentage of system-wide sales, selling and marketing expenses decreased to 54% for the nine months ended September 30, 2023, compared to 56% for the nine months ended September 30, 2022. The decrease in selling and marketing expenses as a percentage of system-wide sales was driven by decreases in our marketing cost and sales commissions expense, both as a percentage of system-wide sales. Sales to existing owners, which are generally more profitable than sales to new customers, increased to 57% of system-wide sales for the nine months ended September 30, 2023, from 54% for the nine months ended September 30, 2022.
Marketing expense decreased during the 2023 periods as a result of the previously disclosed transition of kiosks at certain Cabela’s stores to an unmanned, virtual format and exited certain kiosks at malls as of January 1, 2023. The operation of fewer locations lowered overall costs and allowed Bluegreen to focus on higher producing locations. As a result, even with fewer locations, Bluegreen increased the number of vacation packages sold in the third quarter and the first nine months of 2023 by 13% and 9%, respectively, over the prior periods. The active pipeline of vacation packages decreased to 162,532 at September 30, 2023 from 169,950 at September 30, 2022 based on vacation packages used or expired, net of new vacation package sales. During the second, third and fourth quarters of 2022, Bluegreen reorganized its retail marketing operations, which reduced temporarily reduced its package sales and hence its pipeline of vacation packages. While there is no assurance that this will continue to be the case, historically, approximately 40%-42% of vacation packages resulted in guest tours at one of Bluegreen’s resorts with a sales center within twelve months of purchase. In addition to this active pipeline, Bluegreen also has a pipeline of approximately 17,270 vacation packages held by customers who already toured and purchased a VOI who have indicated they would tour again.
Selling and marketing expenses are expected to be between 50% and 53% as a percentage of system-wide sales for the fourth quarter of 2023.
General & Administrative Expenses from Sales & Marketing Operations
General and administrative expenses representing expenses directly attributable to sales and marketing operations increased 8% to $14.5 million during the third quarter of 2023 from $13.4 million during the third quarter of 2022 and increased 10% to $41.0 million during the nine months ended September 30, 2023 from $37.4 million during the nine months ended September 30, 2022. As a percentage of system-wide sales of VOIs, general and administrative expenses attributable to sales and marketing operations were 7% and 6% during the third quarter of 2023 and 2022, respectively, and 7% during each of the nine months ended September 30, 2023 and 2022.
General and administrative expenses representing expenses directly attributable to sales and marketing operations (including sales leadership, support and regional offices) are expected to be between 6% and 8% of system-wide sales for the fourth quarter of 2023.
Financing Revenue and Financing Expense
Interest income on VOI notes receivable increased 23% to $31.4 million in the third quarter of 2023 compared to $25.5 million in the third quarter of 2022. Interest income on VOI notes receivable increased 25% to $88.6 million for the nine months ended September 30, 2023, compared to $71.0 million for the nine months ended September 30, 2022. The increase in interest income on VOI notes receivable reflects a higher balance of VOI notes receivable due to continued VOI sales growth and our efforts to increase the amount of VOI sales that we finance.
Interest expense on receivable-backed notes payable increased 92% to $9.2 million in the third quarter of 2023 compared to $4.8 million in the third quarter of 2022. Interest expense on receivable-backed notes payable increased 93% to $23.8 million for the nine months ended September 30, 2023, compared to $12.3 million for the nine months ended September 30, 2022. The increase in interest expense on receivable-backed notes payable reflect higher outstanding receivable-backed notes payable and an increased weighted-average cost of borrowing, associated with increases in interest rates. As of September 30, 2023, receivable-backed notes payable was $575.1 million and the average interest rate on such borrowings was 6.1% compared to $370.1 million and 4.3% as of September 30, 2022.
|
Resort Operations and Club Management Segment |
||||||||||||||||||
|
(dollars in millions) |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Q3 2023 vs |
|
Nine Months Ended |
|
YTD 2023 vs |
||||||||||
|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resort operations and club management revenue |
|
$ |
55.6 |
|
$ |
51.6 |
|
8 |
% |
|
$ |
166.3 |
|
$ |
143.3 |
|
16 |
% |
|
Segment adjusted EBITDA |
|
$ |
22.6 |
|
$ |
21.9 |
|
3 |
% |
|
$ |
68.4 |
|
$ |
63.4 |
|
8 |
% |
|
Managed Club Resorts and Club Associate Resorts |
|
|
53 |
|
|
50 |
|
6 |
% |
|
|
53 |
|
|
50 |
|
6 |
% |
The increases in Resort operations and club management revenue and Adjusted EBITDA in the three and nine months ended September 30, 2023 compared to the comparable prior year periods, primarily reflect an increase in management fees, higher reimbursed HOA resort operating costs and three additional resort management contracts.
Corporate Overhead, Administrative Expenses, Interest Expense and Other
Corporate General and Administrative Expenses
Corporate general and administrative expenses increased 14% to $25.5 million during the third quarter of 2023 from $22.3 million during the third quarter of 2022. Corporate general and administrative expenses increased 11% to $77.9 million during the nine months ended September 30, 2023, from $69.9 million during the nine months ended September 30, 2022. The increases in expenses during the 2023 periods as compared to the 2022 periods were primarily associated with higher compensation, legal fees, and medical and other insurance costs.
Interest Expense
Interest expense not related to receivable-backed debt was $10.2 million and $6.1 million during the third quarters of 2023 and 2022, respectively, and $29.9 million and $16.7 million during the nine months ended September 30, 2023 and 2022, respectively. These increases were primarily due to an increase in outstanding debt and a higher weighted-average cost of borrowing due to increased interest rates in the 2023 periods.
Announced Merger Agreement with Hilton Grand Vacations
On November 5, 2023, the Company entered into a merger agreement with Hilton Grand Vacations Inc. (“HGV”), pursuant to which HGV agreed to acquire the Company in an all-cash transaction. Subject to the terms and conditions of the merger agreement, upon the consummation of the transaction, HGV will acquire all of the shares of Bluegreen for $75.00 per share, representing a total enterprise value of approximately $1.5 billion, inclusive of net debt. As of September 30, 2023, approximately $0.5 million of transaction costs have been incurred related to the transaction and are included in Corporate General and Administrative Expenses. Closing of the transaction is subject to the approval of the Company’s stockholders and other customary closing conditions, including regulatory approvals. Subject to the satisfaction of the closing conditions, the transaction is expected to close during the first half of 2024.
Additional Information
For more complete and detailed information regarding the Company and its financial results, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 13, 2023, and its Quarterly Report on Form 10- Q for the three months ended September 30, 2023, which is expected to be filed with the SEC on or about November 6, 2023, and will be available on the SEC’s website, https://www.sec.gov, and on the Company’s website, www.BVHCorp.com.
Non-GAAP Financial Measures
The Company refers to certain non-GAAP financial measures in this press release, including EBITDA, Adjusted EBITDA, System-wide Sales of VOIs, and Free Cash Flow. Please see the supplemental tables herein for how these terms are defined and for reconciliations of such measures to the most comparable GAAP financial measures.
About Bluegreen Vacations:
Bluegreen Vacations Holding Corporation (NYSE: BVH; OTCQX: BVHBB) is a leading vacation ownership company that markets and sells vacation ownership interests and manages resorts in popular leisure and urban destinations. The Bluegreen Vacation Club is a flexible, points-based, deeded vacation ownership plan with 73 Club and Club Associate Resorts and access to nearly 11,600 other hotels and resorts through partnerships and exchange networks.
For further information, please visit us at:
Bluegreen Vacations Holding Corporation: www.BVHCorp.com
Forward Looking Statements
Certain statements in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, are forward-looking statements. Forward-looking statements are based on current expectations of management and can be identified by the use of words such as “believe”, “may”, “could”, “should”, “plans”, “anticipates”, “intends”, “estimates”, “expects”, and other words and phrases of similar import. 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, the risk that the Company is a holding company and, accordingly, will be largely dependent on dividends from Bluegreen to fund its expenses and obligations in future periods, and Bluegreen’s ability to pay dividends will depend on its results and may be limited by the terms of Bluegreen’s indebtedness; risks relating to Bluegreen’s business, operations, financial results, business strategy and prospects; risks related to general economic conditions, including increasing interest rates, inflationary trends, a potential recession and supply chain issues, and our ability to successfully navigate any adverse condition; risk that the level of cash may not be adequate in the event of a deep and/or prolonged downturn, competitive conditions; labor market conditions, including costs and shortages of labor, and its impact on Bluegreen’s operations and sales; risks related to changes made to our vacation package programs and their impact on sales, including that the goal of improving the efficiency of Bluegreen’s marketing expenditures may not result in the benefits anticipated; risks related to our investments in sales and marketing eff
Contacts
Bluegreen Vacations Holding Corporation Contact Info
Sharon Stennett
954-399-7193
Email: [email protected]