Bluegreen Corporation Reports 2012 Third Quarter Financial Results

  Bluegreen Corporation Reports 2012 Third Quarter Financial Results

Q3 2012 Overview

  *Bluegreen Resorts (“Resorts”) system-wide sales of vacation ownership
    interests (“VOIs”) increased 19.9% to $109.1 million from $91.0 million in
    Q3 2011.
  *Sales of VOIs made on behalf of Resorts’ fee-based services clients, which
    are included in system-wide sales above, rose 22.7% to $41.7 million from
    $34.0 million in Q3 2011.
  *Income from continuing operations attributable to Bluegreen shareholders
    (defined as income from continuing operations after tax less net income
    attributable to non-controlling interest) rose 24.1% to $12.0 million, or
    $0.38 per diluted share, from $9.7 million, or $0.30 per diluted share, in
    Q3 2011.
  *Net income rose to $11.7 million, or $0.37 per diluted share, from net
    income of $7.1 million, or $0.22 per diluted share, in Q3 2011. Q3 2011
    included a loss from discontinued operations of $2.6 million, or $0.08 per
    diluted share, related to Bluegreen Communities, substantially all of the
    assets of which were sold in May 2012. Q3 2012 loss from discontinued
    operations of approximately $0.3 million, or $0.01 per diluted share, was
    related to expenses incurred to satisfy a portion of the obligations of
    Bluegreen Communities not assumed by the buyer.
  *Unrestricted cash and cash equivalents at September 30, 2012 of $100.2
    million.

Business Wire

BOCA RATON, Fla. -- November 15, 2012

Bluegreen Corporation (NYSE: BXG), a leading timeshare sales, marketing and
resort management company, today announced financial results for the quarter
and nine months ended September 30, 2012.

John M. Maloney Jr., President and Chief Executive Officer of Bluegreen,
commented, “We performed well in the third quarter of 2012, as evidenced by
growth at both our traditional VOI and fee-based services businesses, as well
as increases in sales tours and sale-to-tour conversion ratios. Our fee-based
services business represented approximately 39% and 37% of total system-wide
VOI sales for the three and nine months ended September 30, 2012,
respectively, up from approximately 37% and 34% in the same respective periods
last year. In September, we completed the sale of $100 million of
investment-grade timeshare loan-backed notes in a term securitization
transaction. This transaction allowed us to refinance at a 2.94% fixed
interest rate receivables that were previously pledged under certain of our
variable-rate credit facilities, and create approximately $60 million of
additional availability under existing receivable-backed credit facilities.
Through the first nine months of 2012, we generated free cash flow (defined as
cash flow from operating and investing activities) of $138.7 million
(including $27.8 million of proceeds from the sale of Bluegreen Communities,
prior to the payment of $22.7 million of Bluegreen Communities’ debt and
related fees) and reduced outstanding debt by approximately $107.3 million.”

Additional Q3 2012 operating highlights included:

  *In connection with its fee-based services business, Resorts sold $41.7
    million of third-party VOIs in Q3 2012, generating sales and marketing
    commissions of approximately $27.8 million. This compares to sales of
    $34.0 million of third-party VOIs in Q3 2011, which generated sales and
    marketing commissions of $23.5 million.
  *Total revenues from fee-based services rose 11.6% to $47.2 million in Q3
    2012 from $42.3 million in Q3 2011. Fee-based services contributed an
    estimated $16.5 million to Resorts operating profit in Q3 2012, compared
    to an estimated $14.5 million in Q3 2011. As of September 30, 2012,
    Bluegreen managed 46 timeshare resort properties compared to 45 as of
    September 30, 2011.

BLUEGREEN RESORTS

                                                                               
Supplemental Financial Data and Reconciliation of System-Wide Sales of VOIs to GAAP Gross Sales of VOIs
Three and Nine Months Ended September 30, 2012 and 2011
(In 000’s, except percentages) (Unaudited)
                                                                                                                                                   
                  Three Months Ended September 30, 2012                             Three Months Ended September 30, 2011
                                                              % of                                                         % of
                  Traditional     Fee-Based                         System-wide     Traditional      Fee-Based                         System-wide
                  Timeshare       Services                          sales of        Timeshare        Services                          sales of
                                                                    VOIs,                                                              VOIs,
                  Business        Business         Total            net ^(6)        Business         Business         Total            net ^(6)
System-wide
sales of          $ 67,421        $ 41,698         $ 109,119                          56,993         $ 33,983         $ 90,976                     
VOI’s ^(1)
Change in
sales
deferred                                                                                                                                           
under
timeshare
accounting         (2,095  )      -              (2,095   )                      (335    )       -              (335     )                 
rules
System-wide
sales of            65,326          41,698           107,024        100    %          56,658           33,983           90,641         100    %    
VOIs, net
^(1)
Less: Sales
of                 -             (41,698  )      (41,698  )     (39    )         -              (33,983 )       (33,983  )     (37    )    
third-party
VOIs
Gross sales         65,326          -                65,326         61                56,658           -                56,658         63          
of VOIs
Estimated
uncollectible
VOI
notes
receivable         (8,354  )      -              (8,354   )     (13    )         (10,770 )       -              (10,770  )     (19    )    
^(2)
Sales of VOIs       56,972          -                56,972         53                45,888           -                45,888         51          
Cost of VOIs       (12,590 )      -              (12,590  )     (22    )         (11,349 )       -              (11,349  )     (25    )    
sold ^(3)
Gross profit        44,382          -                44,382         78                34,539           -                34,539         75          
^(3)
Fee-based
sales               -               27,798           27,798         26                -                23,460           23,460         26          
commission
revenue
Other resort
fee-based           -               19,401           19,401         18                -                18,838           18,838         21          
services
revenues
Cost of other
resort              -               (9,083   )       (9,083   )     (8     )          -                (10,550 )        (10,550  )     (12    )    
fee-based
services
Net carrying
cost of VOI         (1,333  )                        (1,333   )     (1     )          (2,362  )        -                (2,362   )     (3     )    
inventory
Selling and
marketing           (30,375 )       (19,388  )       (49,763  )     (46    )          (25,462 )        (15,272 )        (40,734  )     (45    )    
expense ^(4)
Resorts G & A      (3,441  )      (2,196   )      (5,637   )     (5     )         (3,334  )       (2,000  )       (5,334   )     (6     )    
expense ^(4)
Bluegreen
Resorts           $ 9,234        $ 16,531        $ 25,765        24     %        $ 3,381         $ 14,476        $ 17,857        20          
operating
profit ^ (5)
                                                                                                                                                   
                                                                                                                                                   
                                                                                                                                                   
                  Nine Months Ended September 30, 2012                              Nine Months Ended September 30, 2011
                                                                    % of                                                               % of
                  Traditional     Fee-Based                         System-wide     Traditional      Fee-Based                         System-wide
                  Timeshare       Services                          sales of        Timeshare        Services                          sales of
                                                                    VOIs,                                                              VOIs,
                  Business        Business         Total            net ^(6)        Business         Business         Total            net ^ (6)
System-wide
sales of          $ 179,236       $ 100,813        $ 280,049                          150,755        $ 77,844         $ 228,599                    
VOI’s ^(1)
Change in
sales
deferred                                                                                                                                           
under
timeshare
accounting         (6,249  )      -              (6,249   )                      (1,639  )       -              (1,639   )                 
rules
System-wide
sales of            172,987         100,813          273,800        100    %          149,116          77,844           226,960        100    %    
VOIs, net
^(1)
Less: Sales
of                 -             (100,813 )      (100,813 )     (37    )         -              (77,844 )       (77,844  )     (34    )    
third-party
VOIs
Gross sales         172,987         -                172,987        63                149,116          -                149,116        66          
of VOIs
Estimated
uncollectible
VOI
notes
receivable         (21,448 )      -              (21,448  )     (12    )         (21,521 )       -              (21,521  )     (14    )    
^(2)
Sales of VOIs       151,539         -                151,539        55                127,595          -                127,595        56          
Cost of VOIs       (31,355 )      -              (31,355  )     (21    )         (32,003 )       -              (32,003  )     (25    )    
sold ^(3)
Gross profit        120,184         -                120,184        79                95,592           -                95,592         75          
^(3)
Fee-based
sales               -               66,279           66,279         24                -                52,532           52,532         23          
commission
revenue
Other resort
fee-based           -               57,091           57,091         21                -                53,325           53,325         23          
services
revenues
Cost of other
resort              -               (28,918  )       (28,918  )     (11    )          -                (28,286 )        (28,286  )     (12    )    
fee-based
services
Net carrying
cost of VOI         (6,435  )       -                (6,435   )     (2     )          (9,863  )        -                (9,863   )     (4     )    
inventory
Selling and
marketing           (77,937 )       (45,420  )       (123,357 )     (45    )          (68,514 )        (35,767 )        (104,281 )     (46    )    
expense ^(4)
Resorts G & A      (9,670  )      (5,635   )      (15,305  )     (6     )         (9,372  )       (4,893  )       (14,265  )     (6     )    
expense ^(4)
Bluegreen
Resorts           $ 26,142       $ 43,397        $ 69,539        25     %        $ 7,843         $ 36,911        $ 44,754        20     %    
operating
profit ^ (5)
                                                                                                                                                   

       Amounts for “Fee-Based Services Business” represent sales of VOIs made
       on behalf of third parties, which are transacted as sales of timeshare
^(1)  interests in the Bluegreen Vacation Club and through the same sales and
       marketing process as the sale of the Company’s VOI inventory included
       under “Traditional Timeshare Business.”
       
^(2)   Percentages for estimated uncollectible VOI notes receivable are
       calculated as a percentage of gross sales of VOIs.
       
^(3)   Percentages for cost of VOIs sold and the associated gross profit are
       calculated as a percentage of sales of VOIs.
       
^(4)   Selling and marketing expenses and Resorts ^ G&A expenses are allocated
       pro rata based on system-wide sales of VOIs, net.
       
       General and administrative expenses attributable to corporate overhead
       have been excluded from the table. Corporate general and administrative
^(5)   expenses totaled $13.5 million and $9.3 million for the three months
       ended September 30, 2012 and 2011, respectively, and $38.2 million and
       $28.5 million for the nine months ended September 30, 2012 and 2011,
       respectively.
       
^(6)   Unless otherwise indicated.

System-wide sales of VOIs rose to $109.1 million in Q3 2012 from $91.0 million
in Q3 2011. This reflects an increase in the number of total prospect tours
(55,825 in Q3 2012 from 48,773 in Q3 2011) along with an improved total
sale-to-tour conversion ratio (16.6% in Q3 2012, up from 15.7% in Q3 2011) .
Bluegreen also realized a higher average sales price per transaction ($11,976
for Q3 2012 as compared to $11,851 for Q3 2011). New prospect tours, included
in total prospect tours above, rose to 33,714 in Q3 2012 from 29,125 in Q3
2011.

System-wide sales also include Bluegreen’s sales of VOI inventory in
connection with a new category of sales, which we commenced during January
2012, requiring low levels of capital deployment whereby we acquire VOI
inventory from our resorts’ property owner associations (“POAs”) on a
non-committed basis, in close proximity to the timing of our selling of such
VOIs (“POA Sales”). These VOIs are typically obtained by the POAs through
foreclosure in connection with maintenance fee defaults and are generally
acquired by us at a discount. In the three and nine months ended September 30,
2012, POA Sales, which are included within the results of Bluegreen’s
Traditional Timeshare Business in the tables above, were $5.1 million and
$13.0 million, respectively.

Cost of VOIs sold represented 22% and 25% of sales of VOIs in Q3 2012 and Q3
2011, respectively. 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. Additionally, changes in assumptions, including estimated project
sales, future defaults, upgrades and estimated incremental revenue from the
resale of repossessed VOI inventory and the size of the point packages of the
VOIs sold (due to offered volume discounts, including consideration of
cumulative sales to existing owners) are reflected on a prospective basis in
the period the change occurs.

As a percentage of system-wide sales of VOIs, net, selling and marketing
expenses increased to 46% in Q3 2012 from 45% in Q3 2011. Sales to existing
Bluegreen owners as a percentage of system-wide sales of VOIs was 56% in Q3
2012 as compared to 55% Q3 2011. If Bluegreen shifts its marketing efforts
more to selling to new customers as opposed to existing owners, its marketing
expenses will increase as a percentage of sales.

Operating profit at Resorts rose to $25.8 million, or 24% of system-wide sales
of VOI’s, net, for Q3 2012 from operating profit of $17.9 million, or 20% of
system-wide sales of VOI’s, net, for Q3 2011.

INTEREST INCOME AND INTEREST EXPENSE

Net interest spread is the excess of interest income over interest expense.
Pre-tax income from net interest spread in Q3 2012 rose to $10.8 million from
$10.3 million in Q3 2011, due to a decrease in interest expense as Bluegreen
continues to reduce the level of debt on its balance sheet, partially offset
by lower interest income resulting from the continued decline in Bluegreen’s
VOI notes receivable portfolio due to both the maturing of the portfolio as
well as our efforts to increase cash sales and collect higher down payments on
those VOI sales that we do finance.

DISCONTINUED OPERATIONS

Bluegreen Communities, which is reported as discontinued operations in all
periods presented, marketed residential homesites, the majority of which were
sold directly to retail customers seeking to build a home generally in the
future, and operated daily-fee golf courses. As previously announced, on May
4, 2012, substantially all of the assets which comprised Bluegreen Communities
were sold to Southstar for a purchase price of $29.0 million in cash, the
majority of which was used to pay outstanding debt which was collateralized by
the Bluegreen Communities assets sold in the transaction. Bluegreen may also
receive certain contingent consideration based on Southstar’s sale, if any, of
two properties sold to Southstar as part of the transaction. Certain assets
relating to Bluegreen Communities, including primarily Bluegreen Communities’
notes receivable portfolio, were excluded from the sale.

ABOUT BLUEGREEN CORPORATION

Founded in 1966 and headquartered in Boca Raton, FL, Bluegreen Corporation
(NYSE:BXG) is a leading timeshare sales, marketing and resort management
company. Bluegreen manages, markets and sells the Bluegreen Vacation Club, a
flexible, points-based, deeded vacation ownership plan with more than 160,000
owners, over 59 owned or managed resorts, and access to more than 4,000
resorts worldwide. Bluegreen also offers a portfolio of comprehensive,
turnkey, fee-based service resort management, financial services, and sales
and marketing on behalf of third parties. For more information, visit
www.bluegreencorp.com.

Statements in this release may constitute forward-looking statements and are
made pursuant to the Safe Harbor Provision of the Private Securities
Litigation Reform Act of 1995. Forward looking statements are based largely on
expectations and are subject to a number of risks and uncertainties including,
but not limited to, the risks and uncertainties associated with economic,
credit market, competitive and other factors affecting the Company and its
operations, markets, products and services; the Company’s efforts to improve
its liquidity through cash sales and larger down payments on financed sales
may not be successful; the performance of the Company’s VOI notes receivable
may deteriorate, and the FICO^® score-based credit underwriting standards may
not have the expected effects on the performance of the receivables; the
Company may not be in a position to draw down on its existing credit lines or
may be unable to renew, extend, or replace such lines of credit; the Company
may require new credit lines to provide liquidity for its operations,
including facilities to sell or finance its notes receivable; the Company may
not be able to successfully securitize additional timeshare loans and/or
obtain adequate receivable credit facilities in the future; risks relating to
pending or future litigation, regulatory proceedings, claims and assessments;
sales and marketing strategies may not be successful; marketing costs may
increase and not result in increased sales; system-wide sales, including sales
on behalf of third parties and sales to existing owners, may not continue at
current levels or they may decrease; fee-based service initiatives may not be
successful and may not grow or generate profits as anticipated; POA Sales may
not continue at current levels or may decrease, and we may not be successful
in our efforts to enter into similar arrangements with third-party developers
in connection with our fee-based services business; risks related to other
financial trends discussed in this press release, including that the volume of
tours and the sale-to-tour conversion ratio may not continue at current levels
or decrease, the Company may be required to further increase its allowance for
loan losses in the future and record additional impairment charges as a result
of any such increase; selling and marketing expenses as a percentage of
system-wide sales of VOIs, net may not remain at current levels or they may
increase; and the Company’s indebtedness may increase in the future; and the
risks and other factors detailed in the Company’s SEC filings, including those
contained in the “Risk Factors” sections of such filings.

                                                               
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
(In 000's, except per share data)
(Unaudited)
                                                                            
                      For the Three Months Ended          For the Nine Months Ended
                      September 30,                       September 30,
                                                                            
                       2012            2011            2012            2011    
                                                                            
Revenues:
Gross sales of        $ 65,326          $ 56,658          $ 172,987         $ 149,116
VOI
Estimated
uncollectible          (8,354  )        (10,770 )        (21,448 )        (21,521 )
VOI notes
receivable
Sales of VOIs           56,972            45,888            151,539           127,595
                                                                            
Fee-based sales
commission              27,798            23,460            66,279            52,532
revenue
Other fee-based
services                19,401            18,838            57,091            53,325
revenue
Interest income         21,485            23,533            65,051            71,986
Other income,          377             -               759             -       
net
                       126,033         111,719         340,719         305,438 
                                                                            
Costs and
expenses:
Cost of VOIs            12,590            11,349            31,355            32,003
sold
Cost of other
resort                  10,416            12,912            35,353            38,149
fee-based
services
Selling,
general and             69,482            56,098            178,845           149,448
administrative
expenses
Interest                10,651            13,225            33,074            41,746
expense
Other expense,         -               -               -               910     
net
                       103,139         93,584          278,627         262,256 
                                                                            
Income before
non-controlling
interest,
provision for
income taxes,
and
discontinued            22,894            18,135            62,092            43,182
operations
Provision for          8,149           5,939           21,960          14,650  
income taxes
Income from
continuing              14,745            12,196            40,132            28,532
operations
Loss from
discontinued           (347    )        (2,626  )        (2,043  )        (40,389 )
operations, net
of income taxes
Net income              14,398            9,570             38,089            (11,857 )
(loss)
Less: Net
income
attributable to        2,738           2,520           7,519           5,261   
non-controlling
interest
Net income
(loss)
attributable to       $ 11,660         $ 7,050          $ 30,570         $ (17,118 )
Bluegreen
Corporation
                                                                            
Income (loss)
attributable to
Bluegreen
Corporation per
common share -
Basic
Earnings per
share from
continuing
operations
attributable to
Bluegreen             $ 0.38            $ 0.31            $ 1.04            $ 0.75
shareholders
Loss per share
from                   (0.01   )        (0.08   )        (0.07   )        (1.29   )
discontinued
operations
Earnings (loss)
per share
attributable to       $ 0.37           $ 0.23           $ 0.98           $ (0.55   )
Bluegreen
shareholders
                                                                            
Income (Loss)
attributable to
Bluegreen
Corporation per
common share -
Diluted
Earnings per
share from
continuing
operations
attributable to
Bluegreen             $ 0.38            $ 0.30            $ 1.03            $ 0.71
shareholders
Loss per share
from                   (0.01   )        (0.08   )        (0.06   )        (1.26   )
discontinued
operations
Earnings (loss)
per share
attributable to       $ 0.37           $ 0.22           $ 0.97           $ (0.53   )
Bluegreen
shareholders
                                                                            
Weighted
average number
of common
shares:
Basic                  31,347          31,245          31,288          31,211  
Diluted                31,605          32,429          31,554          32,156  
                                                                            
Comprehensive
income (loss)
attributable to       $ 11,660         $ 7,050          $ 30,570         $ (17,118 )
Bluegreen
Corporation
                                                                            

                                                           
Condensed Consolidated Balance Sheets
(In 000's, except per share data)
                                                                  
                                              September 30,       December 31,
                                              2012             2011
ASSETS                                        (Unaudited)
                                                                  
Unrestricted cash and cash equivalents        $   100,236         $  80,931
Restricted cash ($35,876 and $38,913 in
VIEs at September 30, 2012
and December 31, 2011, respectively)              60,148             51,125
Notes receivable, net ($370,121 and
$375,904 in VIEs
at September 30, 2012 and December 31,            489,440            512,517
2011, respectively)
Inventory                                         280,569            302,843
Prepaid expenses                                  8,563              4,120
Other assets                                      52,901             47,100
Property and equipment, net                       69,157             70,112
Assets held for sale                             —              28,625
Total assets                                  $   1,061,014    $  1,097,373
                                                                  
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable                              $   10,908          $  8,834
Accrued liabilities and other                     73,811             62,878
Deferred income                                   30,304             24,549
Deferred income taxes                             35,546             15,776
Receivable-backed notes payable -
recourse ($11,511 and $15,826 in
VIEs at September 30, 2012 and December           65,063             110,016
31, 2011, respectively)
Receivable-backed notes payable -                 373,385            369,314
non-recourse (in VIEs)
Lines-of-credit and notes payable                 20,396             86,817
Junior subordinated debentures                   110,827        110,827
Total liabilities                                 720,240         $  789,011
                                                                  
                                                                  
                                                                  
Shareholders' Equity
Preferred stock, $.01 par value, 1,000            —                  —
shares authorized; none issued
Common stock, $.01 par value, 140,000
shares authorized;
31,349 and 31,288 shares issued at
September 30, 2012 and December 31,               313                313
2011, respectively
Additional paid-in capital                        193,672            191,999
Retained earnings                                107,588        77,018
Total Bluegreen Corporation                       301,573            269,330
shareholders' equity
Non-controlling interest                         39,201         39,032
Total shareholders’ equity                       340,774        308,362
Total liabilities and shareholders'           $   1,061,014    $  1,097,373
equity
                                                                     

Contact:

Bluegreen Corporation
Tony Puleo, 561-912-8270
Chief Financial Officer
tony.puleo@bluegreencorp.com
-OR-
INVESTOR RELATIONS:
The Equity Group Inc.
Devin Sullivan, 212-836-9608
Senior Vice President
dsullivan@equityny.com
 
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