Bluegreen Vacations Holding Corporation (BVH) is a leading vacation ownership company that markets and sells vacation ownership interests (VOIs) and manages resorts in popular leisure and urban destinations. The company operates through two reportable segments: Sales of VOIs and Financing, and Resort Operations and Club Management.

Business Overview

In the Sales of VOIs and Financing segment, Bluegreen's primary business is the marketing and sale of deeded VOIs. Customers who purchase these VOIs receive an allotment of points, which can be redeemed for stays at one of Bluegreen's resorts or at 11,600 other hotels and resorts available through partnerships and exchange networks. Bluegreen also generates interest income by providing financing to qualified VOI purchasers.

The Resort Operations and Club Management segment includes management services activities for the Bluegreen Vacation Club and for a majority of the homeowners' associations (HOAs) of the resorts within the Vacation Club. Bluegreen earns fees for providing management services to those HOAs and the approximately 216,000 Vacation Club owners. These resort management services include providing oversight of front desk operations, housekeeping services, maintenance, and certain accounting and administrative functions.

Bluegreen has a diversified portfolio of 72 Club and Club Associate Resorts as of September 30, 2023, with a presence in popular leisure and urban destinations such as Orlando, Panama City Beach, Las Vegas, the Smoky Mountains, Myrtle Beach, Charleston, Branson, Nashville, and New Orleans, among others. The company's resorts are primarily located in high-volume, "drive-to" vacation locations, which has been a strategic advantage in the current environment.

Financials

For the full year 2022, Bluegreen reported annual net income of $64.4 million, annual revenue of $817.7 million, annual operating cash flow of -$12.9 million, and annual free cash flow of -$28.0 million. In the first nine months of 2023, the company generated net income of $67.4 million, revenue of $747.6 million, operating cash flow of -$60.4 million, and free cash flow of -$74.0 million.

The company's financial performance in 2023 has been impacted by a number of factors, including rising interest rates, inflationary pressures, and decreases in discretionary spending, which have affected consumer demand and the company's sales and marketing efforts. Bluegreen has responded by focusing on increasing the proportion of sales to existing owners, who generally require lower selling and marketing expenses, and by transitioning certain marketing operations to a more cost-effective, virtual format.

Despite these challenges, Bluegreen has continued to invest in its business, acquiring new resorts in Panama City Beach, Florida and Nashville, Tennessee during 2023. The company has also been actively managing its balance sheet, completing a $214.6 million term securitization in June 2023 and repaying $15.0 million of its note payable to BBX Capital in the third quarter.

Outlook

Looking ahead, Bluegreen expects the challenging macroeconomic environment to persist, with continued pressure on consumer demand and higher operating costs. The company has provided guidance for the fourth quarter of 2023, anticipating potential resort acquisition and development expenditures of $30.0 million to $35.0 million, and just-in-time and secondary market inventory acquisition expenditures of $3.0 million to $5.0 million.

Liquidity

Bluegreen's liquidity position remains strong, with $190.2 million in cash and cash equivalents and restricted cash as of September 30, 2023, and $271.2 million in available borrowing capacity under its various credit facilities. The company has been proactive in managing its debt maturities, with no significant debt coming due in the near term.

Risks and Challenges

One of the key risks facing Bluegreen is the ongoing impact of "timeshare-exit" firms, which have contributed to higher default rates on the company's VOI notes receivable. Bluegreen has taken legal action against several of these firms, but the long-term impact on its business remains a concern.

Another risk is the potential expiration of Bluegreen's exclusive marketing agreement with Bass Pro, which is scheduled to end in 2024. This relationship has been a significant source of new customer leads and sales for the company, and its loss could have a material adverse effect on Bluegreen's operations.

Conclusion

Despite these challenges, Bluegreen remains a well-diversified vacation ownership company with a strong portfolio of resorts, a loyal customer base, and a focus on operational efficiency and financial discipline. The company's management team has demonstrated its ability to navigate difficult market conditions, and Bluegreen's long-term growth prospects remain promising, particularly as economic conditions eventually improve.