Bluegreen Vacations Holding Corporation (NYSE: BVH) (OTCQX: BVHBB) (the “Company" or “Bluegreen”) reported today its financial results for the quarter ended June 30, 2023.
Key Highlights as of and for the Quarter Ended June 30, 2023:
- Net income attributable to shareholders increased 23% to $21.9 million from $17.8 million in the prior year quarter.
- Diluted Earnings Per Share (“EPS”) increased 54% to $1.34 from $0.87 in the prior year quarter.
- Total revenue increased 11% to $260.6 million from $235.6 million in the prior year quarter.
- System-wide sales of vacation ownership interests (“VOIs”) increased 1% to $200.7 million from $198.5 million in the prior year quarter.(1)
- Number of guest tours increased 1% to 66,916 from 66,376 in the prior year quarter.
- Vacation packages sold increased 17% to 47,114 compared to 40,395 in the prior year quarter.
- Vacation packages outstanding of 166,686 as of June 30, 2023, compared to 165,240 as of December 31, 2022 and 184,782 outstanding as of June 30, 2022.
- Adjusted EBITDA attributable to shareholders increased 17% to $40.7 million from $34.7 million in the prior year quarter. (2)
- In April 2023, Bluegreen/Big Cedar Vacations LLC, a joint venture between the Company and Bass Pro Shops, acquired Branson Cedars Resort, an 80-acre property adjacent to the joint venture’s Wilderness Club at Big Cedar Resort.
- In May 2023, Bluegreen acquired an existing property in Nashville, Tennessee, to be converted into a 15-story timeshare resort.
- In June 2023, Bluegreen completed a private offering and sale of approximately $214.6 million of VOI receivable-backed notes.
Key Highlights as of and for the Six Months Ended June 30, 2023:
- Net income attributable to shareholders decreased 1% to $33.4 million from $33.8 million in the prior year period.
- Diluted Earnings Per Share (“EPS”) increased 26% to $2.05 from $1.63 in the prior year period.
- Total revenue increased 11% to $479.7 million from $430.6 million in the prior year period.
- System-wide sales of vacation ownership interests (“VOIs”) increased 5% to $367.7 million from $350.1 million in the prior year period.(1)
- Number of guest tours increased 3% to 118,671 from 115,237 in the prior year period.
- Vacation packages sold increased 7% to 87,894 compared to 82,385 in the prior year period.
- Adjusted EBITDA attributable to shareholders increased 8% to $70.8 million from $65.7 million in the prior year period.(2)
- Free cash flow was an outflow of $58.5 million in the six months ended June 30, 2023, compared to an inflow of $61.1 million for the six months ended June 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. |
Alan B. Levan, Chairman and Chief Executive Officer of Bluegreen Vacations Holding Corporation, commented, “We continue to be excited by our overall performance, which drove a 17% increase in Adjusted EBITDA in the second quarter of 2023. We believe that the results in the second quarter reflect our dual focus on achieving growth while at the same time improving our profit margin. Not only did we achieve a second quarter record $200.7 million of system-wide sales, but we achieved this while also reducing our selling and marketing costs to 53% of system-wide sales in the second quarter of 2023 compared to 57% in the second quarter of 2022. Our focus on improving the efficiency of our vacation package marketing programs drove marketing costs down, while also producing a 17% increase in vacation package sales in the second quarter of 2023 compared to the second quarter of 2022. In addition, we realized lower sales commission expense as a percentage of system-wide sales during the 2023 quarter compared to the 2022 quarter.”
“Our system-wide sales were 1% higher in the second quarter of 2023 as compared to the second quarter of 2022. This increase reflected the impact of a 1% increase in guest tours over the prior year quarter, at a consistent sales volume per guest of approximately $3,013. Had it not been for the out of service units in certain Florida properties because of hurricanes in 2022, we believe we would have achieved greater efficiencies and sales of VOIs and we expect to continue to increase efficiency as more of these units are returned to our system in the coming months. We continue to improve our average sales price per transaction, which increased 4% to $21,456 during the 2023 quarter compared to the 2022 quarter.”
“Our sales of VOIs are driven by the success of our marketing programs, and Bluegreen’s marketing to new customers generally begins with the sale of a vacation package to a prospect. During the second quarter of 2023, we sold 47,114 vacation packages, a 17% increase from the 40,395 we sold in the second quarter of 2022. This increase was despite closing or going ‘virtual’ at 52 marketing locations on January 1, 2023. During the second quarter, we reopened four of these locations and are pleased with the early results.”
“We continue to see high demand for leisure travel and specifically for the Bluegreen Vacation Club, and we are pursuing a strategy to expand the offerings of vacation experiences for our owners in some of the most desirable locations in the country. In April 2023, Bluegreen/Big Cedar Vacations LLC, our joint venture with Bass Pro Shops, acquired the Branson Cedars Resort in Branson, Missouri, an 80-acre property with existing “tiny home” cottages, cabins, treehouses, and resort amenities, and with future development planned. In May 2023, we acquired a 15-story hotel in the historic Printers Alley district of Nashville, Tennessee. These acquisitions are the latest new properties added by Bluegreen in the last year, in addition to adding Presidential Suites and other units at certain of our existing resorts. While we expect that these expansion initiatives will in the future produce higher revenues and earnings, in the short-term the increased inventory carrying costs and start-up costs put pressure on our operating margin, as well as involve increased or higher acquisition and development expenditures which adversely impacted our free cash flow during 2023 to date.”
“Our strategy of increasing our note receivable portfolio from financed sales of VOIs is also contributing to Adjusted EBITDA. Net interest spread, which is the excess of interest income from VOI notes receivable over the interest expense from pledging and selling those VOI notes receivable in the capital markets, increased 11% to $21.5 million in the second quarter of 2023 from $19.3 million in the second quarter of 2022.”
“We were also pleased that our Adjusted EBITDA at Resort Management and Club Operations increased by 11% in the second quarter of 2023, to a record $23.1 million from $20.9 million in the second quarter of 2022. We believe that the results of this segment are important to our continued goal of generating recurring free cash flow and earnings.”
“We believe that, from a balance sheet perspective, we are well positioned to navigate uncertain economic conditions by virtue of our approximately $178.7 million of unrestricted cash on hand and $500.4 million of conditional availability under our lines of credit and receivable purchase facilities as of June 30, 2023. We also believe we have a level of protection from rising interest rates as 54% of our outstanding debt at June 30, 2023 bear interest rates that are currently fixed. We were pleased to complete a private offering and sale of $214.6 million of VOI receivable-backed notes in June 2023, which we believe evidences our continued ability to raise capital in the securitization markets. Our plan is to maintain what we believe to be a healthy balance sheet, while continuing our focus on growth and profitability over the long term.” Mr. Levan concluded.
Financial Results (dollars in millions, except per guest and per transaction amounts) | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2023 | 2022 | Q2 2023 vs Q2 2022 % Change | 2023 | 2022 | YTD 2023 vs YTD 2022 % Change | ||||||||||||
Total revenue | $ | 260.6 | $ | 235.6 | 11 | % | $ | 479.7 | $ | 430.6 | 11 | % | |||||
Income before non-controlling interest and provision for income taxes | $ | 34.5 | $ | 28.0 | 23 | % | $ | 54.4 | $ | 53.4 | 2 | % | |||||
Adjusted EBITDA Attributable to shareholders (1) | $ | 40.7 | $ | 34.7 | 17 | % | $ | 70.8 | $ | 65.7 | 8 | % | |||||
(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 $40.7 million for the quarter ended June 30, 2023, including $41.4 million generated by the Sales of VOIs and Financing Segment and $23.1 million produced by the Resort Operations and Club Management segment, partially offset by $19.2 million of corporate overhead and other expenses and $4.6 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 $70.8 million for the six months ended June 30, 2023, including $76.1 million generated by the Sales of VOIs and Financing Segment and $45.7 million produced by the Resort Operations and Club Management segment, partially offset by $42.4 million of corporate overhead and other expenses and $8.6 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 June 30, | Six Months Ended June 30, | ||||||||||||||||
2023 | 2022 | Q2 2023 vs Q2 2022 % Change | 2023 | 2022 | YTD 2023 vs YTD 2022 % Change | ||||||||||||
System-wide sales of VOIs | $ | 200.7 | $ | 198.5 | 1 | % | $ | 367.7 | $ | 350.1 | 5 | % | |||||
Segment adjusted EBITDA | $ | 41.4 | $ | 37.4 | 11 | % | $ | 76.1 | $ | 73.1 | 4 | % | |||||
Provision for loan losses | 16.3% | 15.5% | 80 | bp | 16.6% | 15.1% | 150 | bp | |||||||||
Cost of VOIs sold | 11.6% | 12.6% | (100) | bp | 11.9% | 12.4% | (50) | bp | |||||||||
Financing revenue, net of financing expense | $ | 21.5 | $ | 19.3 | 11 | % | $ | 42.6 | $ | 38.0 | 12 | % | |||||
Key Data Regarding Bluegreen’s System-wide sales of VOIs | ||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
2023 | 2022 | Q2 2023 vs Q2 2022 % Change | 2023 | 2022 | YTD 2023 vs YTD 2022 % Change | |||||||||||||||
System-wide sales of VOIs | $ | 200.7 | $ | 198.5 | 1 | % | $ | 367.7 | $ | 350.1 | 5 | % | ||||||||
Number of total guest tours | 66,916 | 66,376 | 1 | % | 118,671 | 115,237 | 3 | % | ||||||||||||
Average sales price per transaction | $ | 21,456 | $ | 20,552 | 4 | % | $ | 21,661 | $ | 20,410 | 6 | % | ||||||||
Sales to tour conversion ratio | 14.0% | 14.7% | (70) | bp | 14.3% | 15.0% | (70) | bp | ||||||||||||
Sales volume per guest ("VPG") | $ | 3,013 | $ | 3,016 | — | % | $ | 3,105 | $ | 3,056 | 2 | % | ||||||||
Selling and marketing expenses, as a % of system-wide sales of VOIs | 53.1% | 56.7% | (360) | bp | 54.2% | 56.1% | (190) | bp | ||||||||||||
Provision for loan losses | 16.3% | 15.5% | 80 | bp | 16.6% | 15.1% | 150 | bp | ||||||||||||
Cost of VOIs sold | 11.6% | 12.6% | (100) | bp | 11.9% | 12.4% | (50) | bp | ||||||||||||
System-wide sales of VOIs increased 1% to $200.7 million during the three months ended June 30, 2023 from $198.5 million for the three months ended June 30, 2022. The number of guest tours was 1% higher in the 2023 second quarter compared to the 2022 second quarter, while sales volume per guest, or VPG, was relatively consistent between the quarters. The VPG performance in the second quarter of 2023 was driven by a 4% increase in average sales price per transaction, partially offset by a 70 basis-point decrease in the sale-to-tour conversion rate as we continued to focus on larger transaction sizes.
System-wide sales of VOIs increased 5% to $367.7 million during the six months ended June 30, 2023 from $350.1 million for the six months ended June 30, 2022. The number of guest tours was 3% higher, while VPG was relatively flat in the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. The VPG performance in the six months ended June 30, 2023 was driven by a 6% increase in average sales price per transaction, partially offset by a 70 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 10% and 11% of System-wide Sales of VOIs during the three and six months ended June 30, 2023, respectively. Fee-based sales commission revenue on such sales was $13.9 million and $25.6 million during the three and six months ended June 30, 2023, respectively, which represented a commission rate of approximately 66% and 65% during those respective periods.
VOI sales of third-party inventory, for which we earn a commission, are expected to be between 9% and 12% of system-wide sales of VOIs for the remainder of 2023.
Provision for Loan Losses
The provision for loan losses as a percentage of gross sales of VOIs was approximately 16% during both the second quarter of 2023 and the second quarter of 2022. The provision for loan losses as a percentage of gross sales of VOIs was approximately 17% during the six months ended June 30, 2023, and 15% during the six months ended June 30, 2022. The increase in the provision for loan losses as a percentage of gross sales of VOIs during the first half of 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 during the remainder of 2023.
Cost of VOIs Sold
Cost of VOIs sold represented 12% and 13% of sales of VOIs in the second quarters of 2023 and 2022 and 12% of sales of VOIs during both six months ended June 30, 2023 and 2022, respectively.
Cost of VOIs sold is expected to be between 11% and 13% of sales of VOIs for the remainder of 2023.
Net Carrying Cost of Inventory
The net carrying cost of inventory increased 18% to $4.7 million in the second quarter of 2023 from $4.0 million in the second quarter of 2022. The net carrying cost of inventory increased 20% to $9.7 million for the six months ended June 30, 2023, from $8.1 million for the six months ended June 30, 2022. The increase in net carrying cost of inventory reflects lower rental and sampler revenue, partially offset by lower maintenance fees and developer subsidies based on the timing of acquisitions of VOI inventory. Recent and planned acquisitions of VOI inventory are expected to increase developer subsidies in the near future.
Selling and Marketing Expenses
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2023 | 2022 | Q2 2023 vs Q2 2022 % Change | 2023 | 2022 | YTD 2023 vs YTD 2022 % Change | ||||||||||||
Selling and marketing expenses, as a % of system-wide sales of VOIs | 53.1% | 56.7% | (360) | bp | 54.2% | ||||||||||||
