Bluegreen Vacations(US:BVH)2021-11-03 21:11markdown PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for Bluegreen Vacations Holding Corporation as of September 30, 2021, and for the three and nine months then ended, including balance sheets, statements of operations, equity, and cash flows, along with detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $1.28 billion as of September 30, 2021, from $1.25 billion at year-end 2020, driven by a rise in net notes receivable, while total liabilities remained stable and total equity grew to $298.6 million Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $216,567 | $221,118 | | Notes receivable, net | $436,737 | $409,349 | | Total assets | $1,283,657 | $1,250,119 | | **Liabilities & Equity** | | | | Total liabilities | $985,104 | $987,389 | | Total equity | $298,553 | $262,730 | | Total liabilities and equity | $1,283,657 | $1,250,119 | [Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) The company reported a significant turnaround, with net income attributable to shareholders of $23.1 million for Q3 2021, compared to a net loss of $25.3 million in Q3 2020, driven by a 49% increase in total revenues, primarily from higher sales of Vacation Ownership Interests (VOIs) Key Performance Indicators (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $214,518 | $144,244 | $554,109 | $368,427 | | Income (loss) from continuing operations | $27,317 | $(24,884) | $56,700 | $(57,414) | | Net income (loss) attributable to shareholders | $23,127 | $(25,322) | $45,602 | $(89,432) | | Diluted EPS from continuing operations | $1.06 | $(1.51) | $2.21 | $(3.35) | [Consolidated Statements of Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Equity) Total equity increased from $262.7 million at the end of 2020 to $298.6 million by September 30, 2021, driven by net income and the issuance of 2.66 million Class A shares for the Bluegreen merger, partially offset by stock repurchases - On May 5, 2021, the company acquired the remaining **~7%** of Bluegreen's common stock it did not own, making Bluegreen a wholly-owned subsidiary, achieved by issuing approximately **2.66 million** shares of Class A Common Stock[31](index=31&type=chunk)[17](index=17&type=chunk) - The company repurchased and retired **988,309** Class A and **18,996** Class B shares for an aggregate cost of **$20.9 million** during the quarter[17](index=17&type=chunk)[109](index=109&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2021, net cash provided by operating activities significantly improved to $86.1 million from $3.2 million in the prior-year period, while net cash used in financing activities decreased due to the absence of the BBX Capital spin-off cash transfer, resulting in a net cash increase of $4.1 million Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $86,072 | $3,161 | | Net cash used in investing activities | $(11,478) | $(12,183) | | Net cash used in financing activities | $(70,460) | $(151,066) | | **Net increase (decrease) in cash** | **$4,134** | **$(160,088)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's transformation into a 'pure play' vacation ownership holding company after the BBX Capital spin-off and the Bluegreen merger, providing disaggregated revenue, notes receivable composition, debt facilities, ongoing litigation, and segment performance - The company completed its spin-off of BBX Capital, Inc. on September 30, 2020, becoming a 'pure play' holding company for its subsidiary, Bluegreen[30](index=30&type=chunk) - On May 5, 2021, the company acquired the remaining non-owned shares of Bluegreen, making it a wholly-owned subsidiary[31](index=31&type=chunk) - As of September 30, 2021, marketing operations were active at **123** Bass Pro Shops and Cabela's stores, and resort occupancy rates were approximately **84%** at resorts with sales centers in Q3 2021, indicating a strong recovery from the COVID-19 pandemic's impact[36](index=36&type=chunk) - The company is actively pursuing legal action against several timeshare exit firms, alleging deceptive advertising and tortious interference with its contracts with VOI owners[97](index=97&type=chunk)[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant year-over-year improvement in financial results to the recovery from the COVID-19 pandemic, with total revenues increasing 49% to $214.5 million and net income attributable to shareholders reaching $23.1 million in Q3 2021, alongside strong system-wide VOI sales growth and sufficient liquidity System-Wide Sales of VOIs (in thousands) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | System-wide sales of VOIs | $180,564 | $104,308 | $451,053 | $254,796 | Key Sales Metrics | Metric | Q3 2021 | Q3 2020 | Change | | :--- | :--- | :--- | :--- | | Number of total guest tours | 62,449 | 36,268 | 72% | | Sale-to-tour conversion ratio | 16.6% | 16.9% | (30)bp | | Average sales volume per guest | $2,910 | $2,889 | 1% | - The company's business and results generally improved during the nine months ended September 30, 2021, despite continued risks from the COVID-19 Delta variant[165](index=165&type=chunk) - Fee-based sales of VOIs comprised **29%** of system-wide sales in Q3 2021, down from **32%** in Q3 2020, as the company increases its focus on developed VOI and secondary market sales[168](index=168&type=chunk) - As of September 30, 2021, the company had approximately **$257.7 million** available under its various credit facilities, subject to eligible collateral and terms[73](index=73&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that its exposure to market risks, primarily interest rate risk and risks related to inflation, has not materially changed from its 2020 Annual Report on Form 10-K, noting that financial market instability could adversely impact its ability to finance VOI-backed notes receivable - The company's exposure to market risk, including interest rate and inflation risk, has not materially changed from the year ended December 31, 2020[266](index=266&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the third quarter of 2021 - The CEO and CFO concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective[267](index=267&type=chunk) - No changes in internal control over financial reporting occurred during Q3 2021 that have materially affected, or are reasonably likely to materially affect, internal controls[268](index=268&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material changes in its legal proceedings from those disclosed in its 2020 Annual Report on Form 10-K, other than the updates provided in Note 9 of this quarterly report - There have been no material changes in legal proceedings from the 2020 Annual Report, except as described in Note 9 to the financial statements[271](index=271&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors it faces since the disclosure in its 2020 Annual Report on Form 10-K - There have been no material changes to the company's risk factors from those disclosed in the 2020 Annual Report on Form 10-K[272](index=272&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unrestricted%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In August 2021, the company's board approved a new share repurchase program for up to $40.0 million, under which 1,007,305 shares were repurchased for $20.9 million during the third quarter, leaving $19.1 million available Share Repurchases (Q3 2021) | Period | Total Shares Purchased | Average Price Per Share | Total Cost (approx.) | | :--- | :--- | :--- | :--- | | Aug 1 - Aug 31, 2021 | 809,984 | $20.17 | $16.3M | | Sep 1 - Sep 30, 2021 | 197,321 | $23.00 | $4.5M | | **Total** | **1,007,305** | **$20.72** | **$20.9M** | - A new share repurchase program was approved in August 2021, authorizing up to **$40.0 million** in repurchases of Class A and Class B Common Stock[274](index=274&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications under the Sarbanes-Oxley Act and XBRL data files - Exhibits filed with the report include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and XBRL interactive data files (101 series)[277](index=277&type=chunk)