Bluegreen Corporation Reports 2008 First Quarter Financial Results
¶ Q1 2008 Highlights Compared to Q1 2007 ¶ -- Bluegreen Resorts Sales of $90.3 Million, a First Quarter
Record
¶ -- Bluegreen Communities Field Operating Profit of $3.9 Million;
Bluegreen Communities Sales Declined
Posted on Thu, May. 08, 2008
BOCA RATON, Fla. --
Bluegreen Corporation (NYSE: BXG), a leading provider of Colorful
Places to Live and Play(R), today announced financial results for the
first quarter ended March 31, 2008 (see attached tables).
Total sales in the first quarter of 2008 were $111.3 million, as
compared to total sales of $121.8 million in the first quarter of
2007. Although vacation ownership ("Resorts") sales rose 4% to $90.3
million in the first quarter of 2008 from $86.9 million in the first
quarter of 2007, homesite ("Bluegreen Communities") sales declined by
40% to $20.9 million from $34.9 million.
Field Operating Profit (1) at Bluegreen Resorts decreased 25% to
$5.8 million, or 6% of sales, from $7.7 million, or 9% of sales, in
the first quarter of 2007. This decrease was primarily due to an
approximately $5.0 million increase in estimated uncollectible
vacation ownership interest ("VOI") notes receivable during the 2008
quarter compared to the same period last year. While generating lower
sales, Bluegreen Communities generated Field Operating Profit of $3.9
million, or 19% of sales, as compared to Field Operating Profit of
$8.8 million, or 25% of sales, in the same period last year. Net
income in the first quarter of 2008 was $1.4 million, or $0.04 per
diluted share, as compared to net income of $5.3 million, or $0.17 per
diluted share, in the first quarter of 2007. The decline in earnings
per share was due primarily to lower sales and profits at Bluegreen
Communities, which accounted for a $0.10 per share decline, as well as
the recognition of a $0.05 per share charge for the impairment of
retained interests in notes receivable sold, which is reflected as a
reduction of interest income. The impairment was the result of the
higher discount rate used in the valuation of the retained interests,
reflective of current interest rates in the securitization market, as
well as higher estimated defaults.
(1) We define Field Operating Profit as operating profit prior to
the allocation of corporate overhead, interest income, other income
(expense), interest expense, income taxes, and minority interest.
BLUEGREEN RESORTS
Higher Resorts sales were primarily attributable to a significant
increase in sales to existing Bluegreen Vacation Club(R) owners as
compared to the first quarter of 2007; these sales comprised 46% of
Resorts sales for the first quarter of 2008 as compared to 38% of
Resorts sales during the comparable prior year period. Higher Resorts
sales also reflected increased same-resort sales, led by increases in
sales at The Fountains(TM) sales office in Orlando, Florida, Carolina
Grande(TM) sales office in Myrtle Beach, South Carolina, and an
offsite sales office in Las Vegas, Nevada. Higher sales were also
attributable to an 8% system-wide price increase that went into effect
during January 2008.
Results for the first quarter of 2008 also included a gain on
sales of notes receivable of $8.2 million realized in connection with
the private offering and sale of $60.0 million of timeshare
loan-backed securities on March 31, 2008. This compares to an $8.0
million gain on sales of notes receivable in the first quarter of
2007.
Resorts cost of sales, as a percentage of gross sales (prior to
the impact of estimated uncollectible VOI notes receivable and gain on
sales of notes receivable), was 21% in both the first quarter of 2008
and the first quarter of 2007.
In accordance with Statement of Financial Accounting Standards No.
152, "Accounting for Real Estate Time-sharing Transactions" ("SFAS
152"), as of March 31, 2008 approximately $29.7 million and $17.5
million of Resorts sales and profits, respectively, were deferred
because the contracted sales had not yet met the requirements for
revenue recognition. These amounts compare to $24.6 million and $14.3
million of Resorts sales and profits, respectively, which were
deferred as of December 31, 2007. Deferred amounts are expected to be
recognized in future periods. Therefore, net amounts of revenues and
profits deferred under SFAS 152 in the first quarter of 2008 totaled
$5.1 million and $3.2 million, respectively, compared to a net
deferral of $5.5 million of revenues and $3.0 million of profits in
the 2007 first quarter. In addition, SFAS 152 requires that Resorts
sales be reduced by estimated uncollectible VOI notes receivable,
which were estimated to be $16.4 million for the first quarter of 2008
and $11.4 million for the first quarter of 2007.
John M. Maloney Jr., President and Chief Executive Officer of
Bluegreen, commented, "We believe the Bluegreen Vacation Club(R) is
being well-received by existing members and new owners, as evidenced
by an owner base of approximately 186,500 at March 31, 2008 and
continued success in our owner upgrade program. Our vacation ownership
receivables portfolio also continues to perform within historical
norms. Delinquencies over 30 days on the entire serviced portfolio at
March 31, 2008 were 3.9%, down from 4.5% at December 31, 2007, which
we believe is consistent with historical seasonal patterns. Average
annual default rate for the twelve months ended March 31, 2008 was
7.9%, up from 7.3% for the twelve months ended March 31, 2007, but
down from 8.5% in 2004 and 2005. While we continue to closely monitor
our receivables performance, we believe that the fundamentals of our
business remain strong."
"We recently announced our entry into the Atlantic City market
with the purchase of 1,200 VOIs and timeshare operations at the
beachfront Royal Suites at Atlantic Palace, located on the
world-famous Atlantic City Boardwalk. We plan to renovate
approximately 16,000 square feet of the resort in order to establish a
sales preview center. Bluegreen Vacation Club sales in Atlantic City
are expected to begin in the second quarter of 2008. We also recently
expanded our agreement with Cedar Fair Theme Parks, one of the largest
regional amusement park operators in the world. This new agreement
expands Bluegreen's on-site sales presence from three Cedar Fair
locations to 11 parks across the United States and Canada, as well as
four adjacent hotel properties. We commenced selling three-day,
two-night introductory vacation packages at five Cedar Fair parks to a
demographic population that we believe mirrors our Bluegreen Vacation
Club members, and we anticipate being active in all of the Cedar Fair
locations pursuant to our expanded agreement by Memorial Day 2008."
Mr. Maloney continued, "In addition to monitoring the impact of
the overall economy, we are closely watching the commercial credit
markets. We have been pleased with our ability to continue to access
the credit markets to date, and believe that it reflects the quality
of our receivables, the historically resilient nature of the vacation
ownership industry during periods of economic slow down, and our
long-standing financial relationships. To date this year, we have
completed the following Resorts financings: a $60.0 million term
securitization with Branch Banking & Trust Company ("BB&T") as initial
purchaser; a $150.0 million renewal and expansion of a timeshare
receivables purchase facility with BB&T and a $75.0 million
Acquisition, Development and Construction credit facility with Textron
Financial Corporation. We further strengthened our balance sheet by
the March 31, 2008 repayment, in full, of our $55.0 million, 10.5%
Senior Secured Notes plus all accrued interest, immediately prior to
the maturity of the Notes on April 1, 2008. The related annual
interest on these Notes was approximately $5.8 million."
BLUEGREEN COMMUNITIES
Lower sales at Bluegreen Communities reflected the slowdown in the
residential real estate market coupled with reduced inventory levels
due to the substantial sellout of two communities prior to December
31, 2007. Sales in the 2007 first quarter also included the
recognition of $7.1 million in 2006 sales previously deferred as the
related property did not receive final platting until the 2007
quarter.
Bluegreen Communities' cost of sales, as a percentage of sales, in
the first quarter of 2008 declined to 49.0% from 51.2% in the same
period one year ago, resulting from a favorable mix in property sold
in 2008.
Mr. Maloney commented, "We are extremely satisfied that we were
able to maintain profitability at Bluegreen Communities during the
continued down turn in the residential real estate market. We continue
to focus our efforts on aligning the operations of our Communities
business to current market demand."
As of March 31, 2008, approximately $10.8 million and $4.2 million
of Bluegreen Communities sales and profits, respectively, were
deferred under the percentage-of-completion method of accounting. It
is expected that these amounts will be recognized in future periods
ratably with the development of Communities projects. These amounts
compare to $13.2 million and $5.5 million of sales and profits,
respectively, deferred as of December 31, 2007. Therefore, net
recognition in the first quarter of 2008 of revenue and profits
previously deferred under the percentage of completion method of
accounting totaled $2.4 million and $1.4 million, respectively.
SELECTED OTHER FINANCIAL INFORMATION
---------------------------------------------------------------------- As of or for the three months ended
March 31, December 31,
2008 2007
-----------------------------------
Unrestricted cash (2) $ 75.4 million $ 125.5 million
Net interest spread (3) (4) $ 5.0 million $ 4.7 million
Book value $ 12.37 per share $ 12.34 per share
Debt-to-equity ratio (2) 0.95:1 1.03:1
(2) reflects repayment, in full, of $55 million, 10.5% Senior Secured
Notes plus all accrued interest on March 31, 2008
(3) interest income minus interest expense
(4) the three months ended March 31, 2008 has been reduced by the $2.7
million impairment of the Company's retained interests in notes
receivables sold
The Company is continuing to review its capital needs. While
Bluegreen previously announced that it was considering pursuing a
common stock rights offering, the Company intends to broaden its
sources of potential capital. Accordingly, Bluegreen plans to file a
"shelf" registration statement which would, in the future, permit it
to raise long-term capital through the issuance of common stock,
preferred stock, debt and/or convertible debt. In the event such an
offering were ultimately consummated, the purpose would be to further
strengthen Bluegreen's balance sheet and to support growth, including
growth through acquisitions. We recognize that a common stock offering
would be highly dilutive at our current stock price and, as such, we
have no immediate plans to pursue an offering of our common stock.
MANAGEMENT REMARKS
Management's pre-recorded remarks regarding the 2008 first quarter
financial results will be available beginning Friday, May 9, 2008 at
8:30 am Eastern Time. There will be no question and answer session
following management's prepared remarks. To access management's
remarks, dial (888) 286-8010 (Domestic) or (617) 801-6888
(International) and use the code 26223976. The telephonic recording
will be available until May 16, 2008. Management's remarks will also
be accessible at Bluegreen's corporate web site,
www.bluegreencorp.com, for approximately 90 days.
ABOUT BLUEGREEN CORPORATION
Bluegreen Corporation (NYSE: BXG) is a leading provider of
Colorful Places to Live and Play(R) through two principal operating
divisions. With more than 186,500 owners, Bluegreen Resorts markets a
flexible, real estate-based vacation ownership plan that provides
access to over 40 resorts and an exchange network of over 3,700
resorts and other vacation experiences such as cruises and hotel
stays. Bluegreen Communities has sold over 56,300 planned residential
and golf community homesites in 32 states since 1985. Founded in 1966,
Bluegreen is headquartered in Boca Raton, Fla., and currently employs
over 6,000 associates. More information about Bluegreen is available
at 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, competitive and
other factors affecting the Company and its operations, markets,
products and services, as well as the risk that growth and
profitability will not occur as anticipated; the Company may be unable
to sell notes receivable on satisfactory terms, if at all, adversely
impacting the Company's liquidity and profitability; the performance
of the Company's vacation ownership notes receivables may deteriorate
in the future; the Company may not be in a position to draw down on
its existing credit lines or may be unable to renew or replace such
lines of credit; real estate inventories, notes receivable, retained
interests in notes receivable sold or other assets will be determined
to be impaired in the future; risks relating to pending or future
litigation, claims and assessments; that the Company will not be able
to acquire land or identify new projects, as anticipated; sales and
marketing strategies related to new Resorts and Communities properties
will not be as successful as anticipated; new Resort and Communities
properties will not open when expected, will cost more to develop or
may not be as successful as anticipated; the relationship with Cedar
Fair Theme Parks will not be put in place or be as successful as
anticipated; retail prices and homesite yields for Communities
properties will be below the Company's estimates; cost of sales will
not be as expected; sales to existing owners will not continue at
current levels; deferred sales will not be recognized to the extent or
at the time anticipated; and the risks and other factors detailed in
the Company's SEC filings, including its most recent Annual Report on
Form 10-K filed on March 3, 2008.
Matters discussed in this press release contain forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933, as amended (the "Securities Act") and Section 21E of the
Securities Exchange Act of 1934, as amended the ("Exchange Act"), that
involve substantial risks and uncertainties, including but not limited
to the risk that because of business, economic or market conditions
Bluegreen may decide not to pursue an offering of its securities or
that the offering may not be made in the amounts contemplated, if at
all. In addition to the risks and uncertainties identified above,
reference is also made to other risks and uncertainties detailed in
reports filed by Bluegreen with the Securities and Exchange
Commission. The Company cautions that the foregoing factors are not
exclusive.
BLUEGREEN CORPORATION
Condensed Consolidated Statements of Income
(In 000's, Except Per Share Data) Three Months Ended
-------------------
March 31, March 31,
2008 2007
--------- ---------
(Unaudited)
REVENUES:
--------------------------------------------------
Vacation ownership sales $ 90,347 $ 86,924
Homesite sales 20,909 34,874
--------- ---------
Total sales 111,256 121,798
Other resort and communities operations revenue 17,870 15,018
Interest income 9,961 9,842
Other income, net 265 -
--------- ---------
Total operating revenues 139,352 146,658
--------- ---------
EXPENSES:
--------------------------------------------------
Cost of sales:
Vacation ownership cost of sales 20,714 18,877
Homesite cost of sales 10,244 17,855
--------- ---------
Total cost of sales 30,958 36,732
Cost of other resort and communities operations 12,687 12,419
Selling, general and administrative expenses 87,669 81,393
Interest expense 4,949 5,151
Other expense - 727
--------- ---------
Total operating expenses 136,263 136,422
--------- ---------
Income before minority interest and provision for
income taxes 3,089 10,236
Minority interest in income of consolidated
subsidiary 838 1,634
--------- ---------
Income before provision for income taxes 2,251 8,602
Provision for income taxes 855 3,269
--------- ---------
Net income $ 1,396 $ 5,333
========= =========
Net income per share:
Basic $ 0.04 $ 0.17
========= =========
Diluted $ 0.04 $ 0.17
========= =========
Weighted average number of common and common
equivalent shares:
Basic 31,241 30,889
========= =========
Diluted 31,490 31,294
========= =========
BLUEGREEN CORPORATION
Supplemental Segment Financial Data
Three- Month Periods Ended March 31, 2008 and March 31, 2007
(In 000's, except percentages)BLUEGREEN RESORTS
----------------------------------
% of % of
Gross Gross
Q1 2008 Sales Q1 2007 Sales
----------- ----- ----------- -----
(unaudited) (unaudited)
Gross sales of real estate $ 98,469 100 $ 90,370 100
Estimated uncollectible VOI notes
receivable (16,367) (17) (11,413) (13)
Gain on sales of notes receivable 8,245 8 7,967 9
----------- ----- ----------- -----
Sales of real estate 90,347 92 86,924 96
Cost of sales on real estate (20,714) (21) (18,877) (21)
----------- ----- ----------- -----
Gross profit on real estate 69,633 71 68,047 75
Sales of other services 13,962 14 12,838 14
Cost of sales of other services (9,751) (10) (10,029) (11)
----------- ----- ----------- -----
Gross profit on other services 4,211 2,809
Selling and marketing expense (60,669) (62) (55,301) (61)
Field G & A expense (7,378) (7) (7,807) (9)
----------- ----- ----------- -----
Total field operating expense (68,047) (63,108)
----------- -----------
Field operating profit $ 5,797 6 $ 7,748 9
=========== ===== =========== =====
BLUEGREEN COMMUNITIES
----------------------------------
% of % of
Q1 2008 Sales Q1 2007 Sales
----------- ----- ----------- -----
(unaudited) (unaudited)
Sales of real estate $ 20,909 100 $ 34,874 100
Cost of sales of real estate (10,244) (49) (17,855) (51)
----------- ----- ----------- -----
Gross profit on real estate 10,665 51 17,019 49
Sales of other services 3,908 19 2,180 6
Cost of sales of other services (2,936) (14) (2,390) (7)
----------- ----- ----------- -----
Gross profit on other services 972 (210)
Selling and marketing expense (5,135) (25) (5,068) (15)
Field G & A expense (2,633) (13) (2,933) (8)
----------- ----- ----------- -----
Total field operating expense (7,768) (8,001)
----------- -----------
Field operating profit $ 3,869 19 $ 8,808 25
=========== ===== =========== =====
BLUEGREEN CORPORATION
Reconciliation of Field Operating Profit to Income Before
Minority Interest and Provision for Income Taxes
(In 000's) Three Months Ended
-----------------------
March 31, March 31,
----------- -----------
2008 2007
----------- -----------
(unaudited) (unaudited)
Field operating profit for Bluegreen Resorts $ 5,797 $ 7,748
Field operating profit for Bluegreen
Communities 3,869 8,808
Interest Income 9,961 9,842
Other income (expense), net 265 (727)
Corporate general and administrative expenses (11,854) (10,284)
Interest expense (4,949) (5,151)
----------- -----------
Income before minority interest and provision
for income taxes $ 3,089 $ 10,236
=========== ===========
BLUEGREEN CORPORATION
Condensed Consolidated Balance Sheets
(In 000's) March 31, December 31,
2008 2007
------------ ------------
ASSETS (unaudited)
Cash and cash equivalents (unrestricted) $ 75,351 $ 125,513
Cash and cash equivalents (restricted) 21,740 19,460
------------ ------------
Total cash and cash equivalents 97,091 144,973
Contracts receivable, net 23,270 20,532
Notes receivable, net 151,022 160,665
Prepaid expenses 18,899 14,824
Other assets 24,003 23,405
Inventory, net 459,694 434,968
Retained interests in notes receivable sold 142,029 141,499
Property and equipment, net 95,582 94,421
Goodwill 4,291 4,291
------------ ------------
Total assets $ 1,015,881 $ 1,039,578
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 38,454 $ 38,901
Accrued liabilities and other 66,144 60,421
Deferred income 38,410 36,559
Deferred income taxes 98,359 98,362
Receivable-backed notes payable 44,327 54,999
Lines-of-credit and notes payable 210,163 176,978
10.50% senior secured notes - 55,000
Junior subordinated debentures 110,827 110,827
------------ ------------
Total liabilities 606,684 632,047
Minority interest 23,261 22,423
Total shareholders' equity 385,936 385,108
------------ ------------
Total liabilities and shareholders' equity $ 1,015,881 $ 1,039,578
============ ============
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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