SOURCE: BBX Capital Corporation

BBX Capital Corporation

SOURCE: Bluegreen Vacations Corporation

Bluegreen Vacations Corporation

March 06, 2018 19:33 ET

Bluegreen Vacations Reports Fourth Quarter and Full Year 2017 Results

FORT LAUDERDALE, FL--(Marketwired - March 06, 2018) - BBX Capital Corporation (NYSE: BBX) (OTCQX: BBXTB) ("BBX Capital"), announced that Bluegreen Vacations Corporation (NYSE: BXG), which is 90% owned by BBX Capital, reported its Financial Results for the Fourth Quarter and Full Year, 2017 in a press release issued earlier today.

About BBX Capital Corporation: BBX Capital Corporation (NYSE: BBX) (OTCQX: BBXTB), is a Florida-based diversified holding company whose activities include its 90 percent ownership interest in Bluegreen Vacations Corporation (NYSE: BXG) as well as its real estate and middle market divisions. For additional information, please visit www.BBXCapital.com.

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 213,000 owners, 67 Club and Club Associate Resorts and access to more than 11,000 other hotels and resorts through partnerships and exchange networks as of December 31, 2017. 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 90% owned by BBX Capital Corporation (NYSE: BBX) (OTCQX: BBXTB), a diversified holding company. For further information, visit www.BluegreenVacations.com.

The Bluegreen Vacations press release follows below:

Bluegreen Vacations Corporation Reports Fourth Quarter and Full Year 2017 Results

BOCA RATON, Florida (March 6, 2018) - Bluegreen Vacations Corporation (NYSE: BXG) ("Bluegreen" or the "Company") today reported its fourth quarter and full year 2017 financial results.

Shawn B. Pearson, Chief Executive Officer and President said, "Following our successful initial public offering in November, we are pleased to report our fourth quarter earnings, which included a 5% increase in system-wide sales of vacation ownership interests ("VOIs"), net, and $66.5 million of net income attributable to our shareholders. We also continue to realize net new owner growth, which was 2% for the year ended December 31, 2017 as compared to December 31, 2016. Our Bluegreen Vacation Club offering, which delivers authentic local experiences to our owners and guests, continues to attract the differentiated and largest target demographic of middle America, with a focus on the Millennial generation. The vacation ownership industry is one of the fastest growing segments of the travel and tourism sector. We believe that we are well positioned to execute on our growth initiatives to provide long-term value for our shareholders with our flexible points-based vacation ownership product and a robust sales and marketing platform supported by our exclusive relationships with nationally-recognized brands such as Bass Pro Shops, Inc ("Bass Pro") and Choice Hotels."

Fourth Quarter 2017 Highlights:

  • Net income attributable to shareholders for the fourth quarter 2017 was $66.5 million, compared to $25.6 million for the same period in 2016;
  • EPS was $0.91, compared to $0.36 for the same period in 2016;
  • Total Adjusted EBITDA was $35.6 million, compared to $35.8 million for the same period in 2016;
  • Increased system-wide sales of VOIs, net by 5% to $154.0 million from $146.0 million during the fourth quarter of 2016;
  • Grew resort operations and club management revenue by 14% to $24.6 million from $21.6 million for the same period in 2016;
  • Capital-light revenue (1) was 67% of total revenue for the three months ended December 31, 2017, compared to 63% for the three months ended December 31, 2016;
  • Selling and marketing expenses, as a percentage of system-wide sales of VOIs, net, were 51% during the three months ended December 31, 2017, compared to 52% for the three months ended December 31, 2016;
  • Income tax benefit from the reduction of deferred tax liabilities as of December 31, 2017 as a result of the Tax Cuts and Jobs Act of 2017 was $47.7 million, or $0.66 per share.

Full Year 2017 Highlights:

  • Net income attributable to shareholders was $125.5 million for 2017, compared to net income of $75.0 million for 2016;
  • EPS was $1.76 for 2017, compared to $1.06 EPS for 2016;
  • Total Adjusted EBITDA grew 8% to $148.6 million for 2017, compared to $137.9 million for 2016;
  • Increased system-wide sales of VOIs, net by 2% to $616.7 million from $605.4 million during 2016;
  • Grew resort operations and club management revenue by 8% to $97.1 million from $89.6 million for 2016;
  • Capital-light revenue (1) was 67% of total revenue during 2017, compared to 60% for 2016;
  • Selling and marketing expenses, as a percentage of system-wide sales of VOIs, net, were 52% during 2017, which was consistent with 2016;
  • Income tax benefit from the reduction of deferred tax liabilities as of December 31, 2017 as a result of the Tax Cuts and Jobs Act of 2017 was $47.7 million, or $0.67 per share.

(1) Bluegreen's "capital-light" revenue include revenues 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 its other fee-based services revenue.

Financial Results - Fourth Quarter of 2017

For the three months ended December 31, 2017, net income attributable to shareholders was $66.5 million, or $0.91 per share, compared to $25.6 million, or $0.36 per share for the three months ended December 31, 2016. The increase is primarily attributable to a $47.7 million income tax benefit in the fourth quarter of 2017, as deferred tax liabilities were reduced as a result of the Tax Cuts and Job Act of 2017 (the "Act"). The Act reduced the statutory Federal income tax rate to 21% from 35%. As a result, the Company expects to pay lower income taxes on its deferred tax items in future years and is required to recognize the benefit for those lower taxes in the period when the new tax rates were enacted. The Company provisionally estimates that its effective combined Federal and state income tax rate will decrease from its typical historical rate of 39% to a range of 26% to 28% in 2018.

Income before non-controlling interest and provision for income tax was $29.0 million for the fourth quarter of 2017, a decrease of 23%, compared to $37.6 million for the fourth quarter of 2016. This decrease is primarily a result of:

  • A $4.8 million payment to Bass Pro in connection with an issue raised by Bass Pro regarding the computation of prior sales commissions paid to Bass Pro pursuant to our marketing relationship. While we believe the amount of commissions originally paid was consistent with the terms and intent of the parties' agreement and intend to continue discussions with Bass Pro regarding such payment, we made the $4.8 million payment and recognized the payment as a general administrative expense during the fourth quarter of 2017. The resolution of this issue could result in an increase to our marketing expense in the future.

  • A $2.2 million expense for severance costs related to a Company-wide initiative to streamline and realign operations to facilitate future growth and investment in innovation (the "Corporate Realignment Initiative"). The Corporate Realignment Initiative is expected to result in an estimated reduction in the Company's annual salaries and benefits expense of $19.5 million. The Company expects to apply a portion of this savings to additional associates and expenditures for growth-driving initiatives in 2018.

  • A $6.6 million increase in estimated uncollectable VOI notes receivable. This increase was due to increased gross sales of VOIs and a $1.0 million charge for an increase in estimated uncollectable VOI notes receivable related to prior years' sales in the fourth quarter of 2017 compared to a $3.4 million benefit for a reduction in estimated uncollectable VOI notes receivable in the fourth quarter of 2016.

  • The factors described above were partially offset by:
    • The income associated with a 5% increase in system-wide sales, net;
    • A reduction in selling and marketing costs as a percentage of system-wide sales of VOIs, net, to 51% from 52% in the three months ended December 31, 2016;
    • A 14% increase in resort operations and club management revenue and a 10% increase in pre-tax profits from such activities during the three months ended December 31, 2017 compared to the same period in 2016.

Financial Results - Full Year 2017

For the year ended December 31, 2017, net income attributable to shareholders was $125.5 million, or $1.76 per share, compared to $75.0 million, or $1.06 per share, for the year ended December 31, 2016. The increase is primarily attributable to the $47.7 million income tax benefit recognized in connection with the Act, as discussed above.

Income before non-controlling interest and provision for income tax was $135.3 million for 2017, an increase of 8%, compared to $124.9 million for 2016. This increase is primarily the result of:

  • The income associated with a 2% increase in sales;
  • An 8% increase in resort operations and club management revenue and a 2% increase in pre-tax profits from such activities during 2017 compared to 2016;
  • A reduction in cost of VOIs sold to 7% of sales of VOIs in 2017 from 10% in 2016;
  • These factors were partially offset by:
    • The $4.8 million payment to Bass Pro discussed above;
    • Expense of $5.8 million related to severance costs associated with the Corporate Realignment Initiative and severance costs associated with the retirement of an executive in September 2017; and
    • An increase in estimated uncollectable VOI notes receivable to 16% of gross sales of VOIs in 2017 from 14% in 2016.

Segment Results - Fourth Quarter 2017

Sales of VOIs and Financing

System-wide sales of VOIs, net were $154.0 million and $146.0 million during the three months ended December 31, 2017 and 2016, respectively. This increase was driven by an 11% increase in sales volume per guest ("VPG"), partially offset by a 7% reduction in sales tours. During 2017, we began screening the credit qualifications of potential marketing guests, resulting in the higher VPG and the lower number of tours in the three months ended December 31, 2017. The Company believes that this screening should result in improved efficiencies in its sales process and intends to continue refining its methodology. The VPG increased as the sale-to-tour conversion ratio increased 2%, partially offset by a 9% decrease in the average sales price per transaction for the three months ended December 31, 2017 compared to the three months ended December 31, 2016. In the second quarter of 2017, the Company reintroduced sales of low-pointed, introductory packages, which the Company had previously eliminated in 2016. The sales of these introductory packages improved VPG by increasing conversion rates, partially offset by lower average sales prices per transaction.

During the three months ended December 31, 2017 and 2016, financing revenue, net of financing expense related to the sale of VOIs was $15.4 million and $16.1 million, respectively. The decrease was primarily attributable to the lower weighted-average interest rate on our notes receivable of approximately 15.3% at December 31, 2017 compared to 15.7% at December 31, 2016. The decrease in the weighted-average interest rate was primarily attributable to our introduction of "risk-based pricing" pursuant to which borrowers' interest rates are determined based on their FICO score at the point of sale. As a result, the Company realized 2017 loan originations (after 30 day pay-offs, same as cash) with a weighted-average FICO score of 724 compared to 716 for 2016.

Operating profit for the Sales of VOIs and Financing segment was $37.0 million and $43.0 million for the fourth quarter of 2017 and 2016, respectively.

Adjusted EBITDA for the Sales of VOIs and Financing segment was $44.6 million for both the three months ended December 31, 2017 and 2016. Adjusted EBITDA for this segment was also impacted by the variance in estimated uncollectable VOI notes receivable, discussed above.

Resort Operations and Club Management

During the three months ended December 31, 2017 and 2016, resort operations and club management revenue was $24.6 million and $21.6 million, respectively, an increase of 14%. The resort properties Bluegreen manages increased from 46 as of December 31, 2016 to 48 as of December 31, 2017, due to new resorts under management in Charleston, South Carolina and Banner Elk, North Carolina.

Operating profit for the Resort Operations and Club Management segment was $9.9 million and $9.0 million for the fourth quarter of 2017 and 2016, respectively.

During the three months ended December 31, 2017 and 2016, Adjusted EBITDA for the Resort Operations and Club Management segment was $10.5 million and $9.4 million, respectively, an increase of 12%.

Segment Results - Full Year 2017

Sales of VOIs and Financing

System-wide sales of VOIs, net were $616.7 million and $605.4 million during the year ended December 31, 2017 and 2016, respectively, an increase of 2%. This increase was driven by a 10% increase in VPG, partially offset by an 8% reduction in sales tours. These changes reflect the impact of screening of potential marketing guests, discussed above. The VPG increased as the average sales price per transaction increased by 12%, partially offset by a 2% decrease in the sale-to-tour conversion ratio for the year ended December 31, 2017 compared to the year ended December 31, 2016.

During the years ended December 31, 2017 and 2016, financing revenue, net of financing expense related to the sale of VOIs was $61.7 million and $60.3 million, respectively. The increase is a result of a lower weighted-average cost of borrowing and an increase in our VOI notes receivable portfolio in 2017 as compared to 2016.

Operating profit for the Sales of VOIs and Financing segment was $164.9 million and $162.7 million for the years ended December 31, 2017 and 2016, respectively.

Adjusted EBITDA of Sales of VOIs and Financing was $180.3 million and $169.1 million for the years ended December 31, 2017 and 2016, respectively, an increase of approximately 7%. Adjusted EBITDA for this segment was also impacted by the decreased cost of VOIs sold and increased estimated uncollectable VOI notes receivable, discussed above.

Resort Operations and Club Management

During the years ended December 31, 2017 and 2016, resort operations and club management revenue was $97.1 million and $89.6 million, respectively, an increase of 8%.

Operating profit for the Resort Operations and Club Management segment was $37.7 million and $37.1 million for the years ended December 31, 2017 and 2016, respectively.

During the years ended December 31, 2017 and 2016, Adjusted EBITDA for the Resort Operations and Club Management segment was $39.6 million and $38.5 million, respectively, an increase of approximately 3%.

Balance Sheet and Liquidity

As of December 31, 2017, unrestricted cash and cash equivalents totaled $197.3 million. Bluegreen had availability of approximately $219.6 million under its receivable-backed purchase and credit facilities, inventory lines of credit and corporate credit line as of December 31, 2017, subject to eligible collateral and the terms of the facilities, as applicable.

Free cash flow, which the Company defines as cash flow from operating activities, less capital expenditures, was $51.9 million for the year ended December 31, 2017, compared to $94.5 million for the year ended December 31, 2016. The decrease in free cash flow is primarily attributable to higher inventory expenditures, including the acquisition of secondary market and just-in-time inventory, as well as higher income tax payments in 2017. The Company believes the Act will have a favorable impact on income tax payments in the future.

Initial Public Offering
On November 17, 2017, the initial public offering of Bluegreen Vacations' common stock was consummated. Bluegreen sold 3,736,723 shares in the intial public offering and BBX Capital Corporation (NYSE: BBX) (OTCQX: BBXTB) sold 3,736,722 shares as selling shareholder including 974,797 shares sold during December 2017 in connection with the underwriters exercise of its option to purchase additional shares. Bluegreen's net proceeds from the offering were approximately $47.3 million, after deducting underwriting discounts and commissions and offering expenses. Bluegreen did not receive any proceeds from the sale of shares by BBX Capital. Bluegreen's common stock began trading on the New York Stock Exchange on November 17, 2017 under the symbol "BXG". BBX Capital now owns approximately 90% of Bluegreen's outstanding common stock.

Dividend Establishment
On January 3, 2018, Bluegreen announced that its Board of Directors declared a cash dividend payment of $0.15 per share of common stock. The dividend was paid on January 23, 2018 to shareholders of record on the close of trading on January 16, 2018. Bluegreen currently intends to continue to pay quarterly cash dividends on its common stock of $0.15 per share, but such dividends are at the discretion of the Board of Directors and are dependent on many factors, including provisions of Bluegreen's debt.

Fourth Quarter 2017 Webcast
The Company has provided a pre-recorded business update and management presentation via webcast link, listed below, on the Investor Relations section of its website at ir.bluegreenvacations.com. A transcript will also be available simultaneously with the webcast.

Webcast link: https://services.choruscall.com/links/bxg180306.html

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, 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, 2016. 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 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 213,000 owners, 67 Club and Club Associate Resorts and access to more than 11,000 other hotels and resorts through partnerships and exchange networks as of December 31, 2017. 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 90% owned by BBX Capital Corporation (NYSE: BBX) (OTCQX: BBXTB), a diversified holding company.

About BBX Capital Corporation:
BBX Capital Corporation (NYSE: BBX) (OTCQX: BBXTB), is a diversified holding company whose activities include its 90% ownership interest in Bluegreen Vacations Corporation (NYSE: BXG) as well as its Real Estate and Middle Market Divisions. For additional information, please visit www.BBXCapital.com.

 
 
BLUEGREEN VACATIONS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(In thousands, except per share data)
          
   For the Three Months Ended December 31,  
   2017   2016  
            
Revenues:           
Gross sales of VOIs  $80,882   $76,942  
Estimated uncollectible VOI notes receivable   (14,059 )  (7,454 )
Sales of VOIs   66,823    69,488  
            
Fee-based sales commission revenue   50,343    48,111  
Other fee-based services revenue   28,377    25,027  
Interest income   21,203    22,579  
Other income, net   432    1,383  
Total revenues   167,178    166,588  
            
Costs and expenses:           
Cost of VOIs sold   6,702    7,936  
Cost of other fee-based services   16,786    15,835  
Selling, general and administrative expenses   108,455    98,523  
Interest expense   6,198    6,392  
Other expense, net   -    256  
Total costs and expenses   138,141    128,942  
            
Income before non-controlling interest and provision           
for income taxes   29,037    37,646  
(Benefit) Provision for income taxes   (40,818 )  8,830  
Net income   69,855    28,816  
  Less: Net income attributable to non-controlling interest   3,386    3,248  
Net income attributable to Bluegreen Vacations           
Corporation Shareholders  $66,469   $25,568  
            
Earnings per share attributable to           
Bluegreen Vacation Corporation shareholders - Basic and diluted (1)  $0.91   $0.36  
            
Weighted average number of common shares:           
  Basic and diluted (1)   72,804,499    70,997,732  
  1. The calculation of basic and diluted earnings per share and weighted average number of common shares reflects the shares issued in connection with our initial public offering during November 2017 and gives effect to the stock split effected in connection therewith as if the stock split was effected on January 1, 2016.
  
  
  
  
BLUEGREEN VACATIONS CORPORATION 
CONSOLIDATED STATEMENTS OF INCOME 
AND COMPREHENSIVE INCOME 
(In thousands, except per share data) 
          
   For the Years Ended December 31,  
   2017   2016  
            
Revenues:           
Gross sales of VOIs  $285,796   $310,570  
Estimated uncollectible VOI notes receivable   (46,134 )  (44,428 )
Sales of VOIs   239,662    266,142  
            
Fee-based sales commission revenue   229,389    201,829  
Other fee-based services revenue   111,819    103,448  
Interest income   86,876    89,510  
Other income, net   312    1,724  
Total revenues   668,058    662,653  
            
Costs and expenses:           
Cost of VOIs sold   17,439    27,346  
Cost of other fee-based services   68,336    64,479  
Selling, general and administrative expenses   416,970    415,027  
Interest expense   29,977    30,853  
Total costs and expenses   532,722    537,705  
            
Income before non-controlling interest and           
provision for income taxes   135,336    124,948  
(Benefit) Provision for income taxes   (2,974 )  40,172  
Net income   138,310    84,776  
 Less: Net income attributable to non-controlling interest   12,784    9,825  
Net income attributable to Bluegreen Vacations Corporation Shareholders  $125,526   $74,951  
            
Earnings per share attributable to Bluegreen Vacations Corporation shareholders - Basic and diluted (1)  $1.76   $1.06  
            
Weighted average number of common shares:           
 Basic and diluted (1)   71,448,186    70,997,732  
  1. The calculation of basic and diluted earnings per share and weighted average number of common shares reflects the shares issued in connection with our initial public offering during November 2017 and gives effect to the stock split effected in connection therewith as if the stock split was effected on January 1, 2016.
  
  
  
  
BLUEGREEN VACATIONS CORPORATION 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(In thousands) 
          
   For the Years Ended December 31,  
   2017   2016  
Operating activities:           
Net income  $138,310   $84,776  
Adjustments to reconcile net income to net cash provided by operating activities:           
 Depreciation and amortization   14,110    14,272  
 Loss (Gain) on disposal of property and equipment   524    (1,046 )
 Provision for credit losses   46,149    44,337  
 (Benefit) Provision for deferred income taxes   (42,650 )  15,147  
Changes in operating assets and liabilities:           
 Notes receivable   (47,470 )  (59,219 )
 Prepaid expenses and other assets   (7,103 )  5,280  
 Inventory   (42,757 )  (18,323 )
 Accounts payable, accrued liabilities and other, and deferred income   6,857    16,644  
Net cash provided by operating activities   65,970    101,868  
            
Investing activities:           
 Purchases of property and equipment   (14,115 )  (9,605 )
 Proceeds from sale of property and equipment   -    2,253  
Net cash used in investing activities   (14,115 )  (7,352 )
            
Financing activities:           
 Proceeds from borrowings collateralized by notes receivable   203,001    238,521  
 Payments on borrowings collateralized by notes receivable   (195,919 )  (227,163 )
 Proceeds from borrowings under line-of-credit facilities and notes payable   36,426    45,243  
 Payments under line-of-credit facilities and notes payable   (34,851 )  (46,269 )
 Payments of debt issuance costs   (3,390 )  (4,608 )
 Gross proceeds from public offering   48,652    -  
 Payments of public offering costs   (1,383 )  -  
 Distributions to non-controlling interest   (11,270 )  (12,250 )
 Dividends paid   (40,000 )  (70,000 )
Net cash provided by (used in) financing activities   1,266    (76,526 )
Net increase in cash and cash equivalents and restricted cash   53,121    17,990  
Cash, cash equivalents and restricted cash at beginning of period   190,228    172,238  
Cash, cash equivalents and restricted cash at end of period  $243,349   $190,228  
 
 
 
 
BLUEGREEN VACATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
       
   For the Years Ended December 31,
   2017  2016
Supplemental schedule of operating cash flow information:        
 Interest paid, net of amounts capitalized  $26,244  $27,511
 Income taxes paid  $41,035  $26,769
 
 
 
 
BLUEGREEN VACATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
       
   As of December 31,
   2017  2016
         
ASSETS        
Cash and cash equivalents  $197,337  $144,122
Restricted cash ($19,488 and $21,894 in VIEs at December 31, 2017 and December 31, 2016, respectively)   46,012   46,106
Notes receivable, net ($282,599 and $287,012 in VIEs at December 31, 2017 and December 31, 2016, respectively)   431,801   430,480
Inventory   281,291   238,534
Prepaid expenses   10,743   8,745
Other assets   52,506   48,099
Intangible assets, net   61,978   61,749
Loan to related party   80,000   80,000
Property and equipment, net   74,756   70,797
  Total assets  $1,236,424  $1,128,632
         
LIABILITIES AND SHAREHOLDER'S EQUITY        
Liabilities        
Accounts payable  $22,955   21,769
Accrued liabilities and other   77,317   70,947
Deferred income   36,311   37,015
Deferred income taxes   83,628   126,278
Receivable-backed notes payable - recourse   84,697   87,631
Receivable-backed notes payable - non-recourse (in VIEs)   336,421   327,358
Lines-of-credit and notes payable   100,194   98,382
Junior subordinated debentures   70,384   69,044
  Total liabilities   811,907   838,424
         
Commitments and Contingencies        
         
Shareholders' Equity        
Common stock, $.01 par value, 100,000,000 shares authorized; 74,734,455 shares issued and outstanding at December 31, 2017 and 70,997,732 shares issued and outstanding at December 31, 2016 (1)   747   710
Additional paid-in capital   274,366   227,134
Retained earnings   107,118   21,592
 Total Bluegreen Vacations Corporation shareholders' equity   382,231   249,436
Non-controlling interest   42,286   40,772
 Total shareholders' equity   424,517   290,208
  Total liabilities and shareholders' equity  $1,236,424  $1,128,632
  1. The number of shares issued and outstanding reflects the shares issued in connection with our initial public offering during November 2017 and gives effect to the stock split effected in connection therewith as if the stock split was effected on January 1, 2016.
  
  
  
  
BLUEGREEN VACATIONS CORPORATION 
ADJUSTED EBITDA RECONCILIATION 
(In thousands) 
          
   For the Three Months Ended December 31,  
   2017   2016  
Net income attributable to shareholders  $66,469   $25,568  
Net income attributable to the non-controlling interest in Bluegreen/Big Cedar Vacations   3,386    3,248  
Adjusted EBITDA attributable to the non-controlling interest in Bluegreen/Big Cedar Vacations   (3,348 )  (3,189 )
Loss (gain) on assets held for sale   2    (1,386 )
Add: Depreciation   2,541    2,400  
Less: Interest income (other than interest earned on VOI notes receivable)   (1,387 )  (2,061 )
Add: Interest expense - corporate and other   1,753    2,255  
Add: Franchise taxes   51    98  
Add: (Benefit) provision for income taxes   (40,818 )  8,830  
Add: Corporate realignment cost   2,157    -  
Add: One-time payment to Bass Pro   4,781    -  
Total Adjusted EBITDA  $35,587   $35,763  
            
         
         
    For the Years Ended December 31,  
    2017    2016  
Net income attributable to shareholders  $125,526   $74,951  
Net income attributable to the non-controlling interest in Bluegreen/Big Cedar Vacations   12,784    9,825  
Adjusted EBITDA attributable to the non-controlling interest in Bluegreen/Big Cedar Vacations   (12,509 )  (9,705 )
Loss (gain) on assets held for sale   46    (1,423 )
Add: One-time special bonus   -    10,000  
Add: Depreciation   9,632    9,536  
Less: Interest income (other than interest earned on VOI notes receivable)   (6,874 )  (8,167 )
Add: Interest expense - corporate and other   12,168    12,505  
Add: Franchise taxes   178    186  
Add: Provision for income taxes   (2,974 )  40,172  
Add: Corporate realignment cost   5,836    -  
Add: One-time payment to Bass Pro   4,781    -  
Total Adjusted EBITDA  $148,594   $137,880  
  
  
  
  
BLUEGREEN VACATIONS CORPORATION 
SEGMENT ADJUSTED EBITDA SUMMARY 
(In thousands) 
          
   For the Three Months Ended December 31,  
   2017   2016  
Adjusted EBITDA - sales of VOIs and financing  $44,645   $44,581  
Adjusted EBITDA - resort operations and club management   10,538    9,378  
Total Segment Adjusted EBITDA   55,183    53,959  
Less: Corporate and other   (19,596 )  (18,196 )
Total Adjusted EBITDA  $35,587   $35,763  
            
         
         
   For the Years Ended December 31,  
   2017   2016  
Adjusted EBITDA - sales of VOIs and financing  $180,307   $169,068  
Adjusted EBITDA - resort operations and club management   39,574    38,517  
Total Segment Adjusted EBITDA   219,881    207,585  
Less: Corporate and other   (71,287 )  (69,705 )
Total Adjusted EBITDA  $148,594   $137,880  
 
 
 
 
BLUEGREEN VACATIONS CORPORATION
SALES OF VOIs AND FINANCING SEGMENT - ADJUSTED EBITDA
(In thousands)
               
   For the three months Ended December 31,
   2017  2016
   Amount   % of
System-
wide sales
of VOIs, net(5)
 Amount   % of
System-
wide sales
of VOIs, net(5)
                 
Developed sales (1)  $84,706   55%  $78,044   53%
Secondary Market sales   64,397   42   58,581   40
Fee-Based sales   73,098   47   69,059   47
JIT sales   8,608   6   2,851   2
Less: equity trade allowances (6)   (76,829 ) (50)   (62,534 ) (43)
System-wide sales of VOIs, net   153,980   100%   146,001   100%
Less: Fee-Based sales   (73,098 ) (47)   (69,059 ) (47)
Gross sales of VOIs   80,882   53   76,942   53
Estimated uncollectible VOI notes receivable (2)   (14,059 ) (17)   (7,454 ) (10)
Sales of VOIs   66,823   43   69,488   48
Cost of VOIs sold (3)   (6,702 ) (10)   (7,936 ) (11)
Gross profit (3)   60,121   90   61,552   89
Fee-Based sales commission revenue (4)   50,343   69   48,111   70
Financing revenue, net of financing expense   15,428   10   16,134   11
Other fee-based services - title operations, net   2,714   2   2,299   2
Net carrying cost of VOI inventory   (1,002 ) (1)   (2,097 ) (1)
Selling and marketing expenses   (78,026 ) (51)   (75,975 ) (52)
General and administrative expenses - sales and marketing   (12,613 ) (8)   (7,001 ) (5)
Operating profit - sales of VOIs and financing   36,965   24%   43,023   29%
Depreciation   1,664       1,558    
Corporate realignment cost   1,235       -    
One-time payment to Bass Pro   4,781       -    
Adjusted EBITDA - sales of VOIs and financing  $44,645      $44,581    
  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. Percentages for estimated uncollectible VOI notes receivable are calculated as a percentage of gross sales of VOIs, which excludes Fee-Based sales (and not of system-wide sales of VOIs, net).
  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, net).
  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, net).
  5. Represents the applicable line item, calculated as a percentage of system-wide sales of VOIs, net, 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.
           
           
           
               
   For the Years Ended December 31,
   2017  2016
   Amount   % of
System-
wide sales
of VOIs, net(5)
 Amount   % of
System-
wide sales
of VOIs, net(5)
                 
Developed sales (1)  $296,486   48%  $394,745   65%
Secondary Market sales   182,108   30   164,991   27
Fee-Based sales   330,854   54   294,822   49
JIT sales   45,982   7   39,626   7
Less: equity trade allowances (6)   (238,780 ) (39)   (288,792 ) (48)
System-wide sales of VOIs, net   616,650   100%   605,392   100%
Less: Fee-Based sales   (330,854 ) (54)   (294,822 ) (49)
Gross sales of VOIs   285,796   46   310,570   51
Estimated uncollectible VOI notes receivable (2)   (46,134 ) (16)   (44,428 ) (14)
Sales of VOIs   239,662   39   266,142   44
Cost of VOIs sold (3)   (17,439 ) (7)   (27,346 ) (10)
Gross profit (3)   222,223   93   238,796   90
Fee-Based sales commission revenue (4)   229,389   69   201,829   68
Financing revenue, net of financing expense   61,659   10   60,290   10
Other fee-based services - title operations, net   9,963   2   8,722   1
Net carrying cost of VOI inventory   (4,220 ) (1)   (6,847 ) (1)
Selling and marketing expenses   (319,211 ) (52)   (314,039 ) (52)
General and administrative expenses - sales and marketing   (34,869 ) (6)   (26,024 ) (4)
Operating profit - sales of VOIs and financing   164,934   27%   162,727   27%
Depreciation   6,270       6,341    
Corporate realignment cost   4,322       -    
One-time payment to Bass Pro   4,781       -    
Adjusted EBITDA - sales of VOIs and financing  $180,307      $169,068    
  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. Percentages for estimated uncollectible VOI notes receivable are calculated as a percentage of gross sales of VOIs, which excludes Fee-Based sales (and not of system-wide sales of VOIs, net).
  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, net).
  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, net).
  5. Represents the applicable line item, calculated as a percentage of system-wide sales of VOIs, net, 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 December 31,  
   2017   2016   % Change  
                
Number of sales offices at period-end   23    23   -  
Number of active sale arrangements with third-party clients at period-end   16    18   (11 )
Total number of VOI sales transactions   10,067    8,811   14  
Average sales price per transaction  $15,135   $16,706   (9 )
Number of total guest tours   58,570    62,885   (7 )
Sale-to-tour conversion ratio- total marketing guests   15.0 %  14.7 % 2  
Number of new guest tours   36,410    42,116   (14 )
Sale-to-tour conversion ratio- new marketing guests   14.5 %  10.3 % 41  
Percentage of sales to existing owners   51.3 %  47.0 % 9  
Sales volume per guest  $2,601   $2,341   11  
                
     
     
   For the Year Ended December 31,  
   2017   2016   % Change  
                
Number of sales offices at period-end   23    23   -  
Number of active sale arrangements with third-party clients at period-end   16    18   (11 )
Total number of VOI sales transactions   40,705    45,340   (10 )
Average sales price per transaction  $15,365   $13,727   12  
Number of total guest tours   252,257    274,987   (8 )
Sale-to-tour conversion ratio- total marketing guests   16.1 %  16.5 % (2 )
Number of new guests tours   162,083    190,235   (15 )
Sale-to-tour conversion ratio- new marketing guests   13.4 %  13.5 % (1 )
Percentage of sales to existing owners   49.4 %  46.0 % 7  
Sales volume per guest  $2,479   $2,263   10  
 
 
 
 
BLUEGREEN VACATIONS CORPORATION
RESORT OPERATIONS AND CLUB MANAGEMENT SEGMENT - ADJUSTED EBITDA
(In thousands)
               
               
   For the Three Months Ended December 31,
   2017      2016    
Resort operations and club management revenue  $24,562      $21,608    
Resort operations and club management expense   (14,683 )     (12,617 )  
Operating profit - resort operations and club management   9,879   40%   8,991   42%
Depreciation   404       387    
Corporate realignment cost   255       -    
Adjusted EBITDA - resort operations and club management  $10,538      $9,378    
                 
             
   For the Years Ended December 31,
   2017      2016    
Resort operations and club management revenue  $97,077      $89,610    
Resort operations and club management expense   (59,337 )     (52,516 )  
Operating profit - resort operations and club management   37,740   39%   37,094   41%
Depreciation   1,579       1,423    
Corporate realignment cost   255       -    
Adjusted EBITDA - resort operations and club management  $39,574      $38,517    
  
  
  
  
BLUEGREEN VACATIONS CORPORATION 
CORPORATE AND OTHER - ADJUSTED EBITDA 
(In thousands) 
          
   For the Three Months Ended December 31,  
   2017   2016  
General and administrative expenses - corporate and other  $(17,961 ) $(15,366 )
Adjusted EBITDA attributable to the non-controlling interest in Bluegreen/Big Cedar Vacations   (3,348 )  (3,189 )
Other income, net   432    1,127  
Add: financing revenue -corporate and other   1,475    2,127  
Less: interest income (other than interest earned on VOI notes receivable)   (1,387 )  (2,061 )
Franchise taxes   51    98  
Loss (gain) on assets held for sale   2    (1,386 )
Depreciation   473    454  
Corporate realignment cost   667    -  
Corporate and other  $(19,596 ) $(18,196 )
            
         
         
   For the Years Ended December 31,  
   2017   2016  
General and administrative expenses - corporate and other  $(62,701 ) $(72,652 )
Adjusted EBITDA attributable to the non-controlling interest in Bluegreen/Big Cedar Vacations   (12,509 )  (9,705 )
Other income, net   312    1,724  
Add: one-time special bonus   -    10,000  
Add: financing revenue -corporate and other   7,219    8,560  
Less: interest income (other than interest earned on VOI notes receivable)   (6,874 )  (8,167 )
Franchise taxes   178    186  
Loss (gain) on assets held for sale   46    (1,423 )
Depreciation   1,783    1,772  
Corporate realignment cost   1,259    -  
Corporate and other  $(71,287 ) $(69,705 )
  
  
  
  
BLUEGREEN VACATIONS CORPORATION 
FREE CASH FLOW RECONCILIATION 
(In thousands) 
          
   For the Years Ended December 31,  
   2017   2016  
Net cash provided by operating activities  $65,970   $101,868  
Purchases of property and equipment   (14,115 )  (9,605 )
Proceeds from sale of property and equipment   -    2,253  
Free Cash Flow  $51,855   $94,516  
         
         
         

BLUEGREEN VACATIONS CORPORATION
DEFINITIONS

Principal Components Affecting our Results of Operations

Principal Components of Revenues

Fee-Based Sales. Represent sales of third-party VOIs where we are paid a commission.

JIT Sales. Represent sales of VOIs acquired from third parties in close proximity to when we intend to sell such VOIs.

Secondary Market Sales. Represent sales of VOIs acquired from HOAs or other owners, typically in connection with maintenance fee defaults. This inventory is generally purchased at a greater discount to retail price compared to developed VOI sales and 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. We also earn fees from providing mortgage servicing to certain third-party developers 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 and the resulting change in estimate is recognized. While we believe that there is additional inventory that can be obtained through the secondary market at favorable prices to us in the future, there can be no assurance that such inventory will be available as expected.

Net Carrying Cost of VOI Inventory. Represents the maintenance fees and developer subsidies for unsold VOI inventory paid or accrued to the HOAs that maintain the resorts. We attempt to offset this expense, to the extent possible, by generating revenue from renting our VOIs and through utilizing them in our sampler programs. We net such revenue from this expense item.

Selling and Marketing Expense. Represents costs incurred to sell and market VOIs, including costs relating to marketing and incentive programs, tours, and related wages and sales commissions. Revenues from vacation package sales are netted against selling and marketing expenses.

Financing Expense. Represents financing interest expense related to our receivable-backed debt, amortization of the related debt issuance costs and other expenses incurred in providing financing and servicing loans. Additionally, financing expense includes the 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 collections.

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 uncollectible VOI notes receivable. In addition to the factors impacting system-wide sales of VOIs, net, sales of VOIs are impacted by the proportion of system-wide sales of VOIs, net sold on behalf of third-parties on a commission basis, which are not included in sales of VOIs.

System-wide Sales of VOIs, net. 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, net 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, net is not a recognized term under GAAP and should not be considered as an alternative to sales of VOIs or any other measure of financial performance derived in accordance with GAAP or to any other method of analyzing our results as reported under GAAP.

Guest Tours. Represents the number of sales presentations given at our sales centers during the period.

Sale to Tour Conversion Ratio. Represents the rate at which guest tours are converted to sales of VOIs and is calculated by dividing guest tours by number of VOI sales transactions.

Average Sales Volume Per Guest ("VPG"). Represents the sales attributable to tours at our sales locations and is calculated by dividing VOI sales by guest tours. We consider VPG to be an important operating measure because it measures the effectiveness of our sales process, combining the average transaction price with the sale-to-tour conversion ratio.

Adjusted EBITDA. We define Adjusted EBITDA as earnings, or net income, before taking into account interest income (excluding interest earned on VOI notes receivable), interest expense (excluding interest expense incurred on debt secured by our VOI notes receivable), income and franchise taxes, loss (gain) on assets held for sale, depreciation and amortization, amounts attributable to the non-controlling interest in Bluegreen/Big Cedar Vacations (in which we own a 51% interest), and items that we believe are not representative of ongoing operating results. 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.

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