Bluegreen Corporation (NYSE: BXG), a leading timeshare sales, marketing and resort management company, today announced financial results for the three and nine months ended September 30, 2011.
John M. Maloney Jr., President and Chief Executive Officer of Bluegreen, commented, “We believe that our results from continuing operations for the third quarter of 2011 validate our strategy of utilizing our core product, the points-based Bluegreen Vacation Club, as a platform to support three potential sources of revenue: our traditional timeshare (VOI) business; a growing fee-based services business; and a finance business. During the third quarter, we increased system-wide sales, generated higher income from continuing operations than in the comparable 2010 period, and produced Free Cash Flow of $41.1 million. During Q3 2011, fee-based services contributed 81% of total Resorts operating profit. Additionally, during the nine months ended September 30, 2011 we reduced our debt by more $100 million from December 31, 2010. We believe that our business model continues to move toward our goal of growing our fee-based services business, which has low capital requirements and which generates significant Free Cash Flow.”
Additional operating highlights included:
- In connection with its fee-based services business, Resorts sold $34.0 million of third-party VOI inventory in Q3 2011, generating sales and marketing commissions of approximately $23.5 million and contributing an estimated $6.2 million to Resorts operating profit. This compares to sales of $22.1 million of third-party VOI inventory, which generated sales and marketing commissions of $15.1 million and contributed an estimated $4.7 million to Resorts operating profit in Q3 2010. In Q3 2011, Bluegreen provided sales and marketing services to 7 resorts under fee-based service arrangements, as compared to 5 such arrangements during Q3 2010;
- Total revenues from fee-based services rose 30% to $42.3 million in Q3 2011. As of September 30, 2011, Bluegreen managed 45 timeshare resort properties and hotels compared to 43 as of September 30, 2010;
- Cash received from Resorts sales – either at closing or within 30 days of closing and including down payments received on financed sales – represented 55% of Resorts sales for the first nine months of 2011;
- Debt-to-equity (recourse and non-recourse) declined to 2.32:1 at September 30, 2011 from 2.58:1 at December 31, 2010. Debt-to-equity (recourse only) declined to 1.08:1 at September 30, 2011 from 1.22:1 at December 31, 2010;
- In September 2011, Bluegreen entered into a $30.0 million revolving timeshare receivables hypothecation facility with CapitalSource Bank; and
- In October 2011, Bluegreen amended, restated, and extended by one year its existing timeshare receivables purchase facility with BB&T. The amended revolving facility allows for maximum outstanding borrowings of $50.0 million. As of September 30, 2011, $20.6 million was outstanding under this facility. [member]
Income from continuing operations attributable to Bluegreen shareholders (defined as income from continuing operations less net income attributable to non-controlling interest) rose to $9.7 million, or $0.30 per diluted share, compared to a loss of $0.6 million, or $0.02 per diluted share in Q3 2010. Income from continuing operations for Q3 2010 included a non-cash charge of $24.5 million to increase the reserve for loan losses on VOI notes receivable generated prior to December 15, 2008 (the date Bluegreen implemented credit underwriting standards), partially offset by a related $8.7 million non-cash reduction of cost of sales.
As previously disclosed, Bluegreen’s Board of Directors made a determination during June 2011 to seek to sell Bluegreen Communities or all or substantially all of its assets. As a consequence, Bluegreen Communities is accounted for as a discontinued operation for all periods in the accompanying consolidated financial statements. On October 12, 2011, the Company entered into a Purchase and Sale Agreement (the “Agreement”) with a third-party (the “Buyer”), providing for the sale of substantially all of the assets that comprise Bluegreen Communities for a purchase price of i) $31.5 million in cash, and ii) a cash amount equal to 20% of the net proceeds (as calculated in accordance with the terms of the Agreement) the Buyer receives upon its sale, if any, of two specified parcels of real estate to be purchased by the Buyer under the Agreement. The Buyer has advised Bluegreen that they need to obtain debt and/or equity financing in order to close the transaction, but obtaining such financing is not a Buyer condition of closing. There can be no assurance that the transaction will be consummated on the contemplated terms, including the contemplated time frame, or at all. Additional information regarding this proposed transaction is available in Bluegreen’s filings with the Securities and Exchange Commission.
The loss from discontinued operations, net of income taxes, for Q3 2011 was $2.6 million, or $0.08 per diluted share, compared to a loss of $16.1 million, or $0.52 per diluted share, in Q3 2010. The loss from discontinued operations for Q3 2010 included non-cash pre-tax inventory impairment charges of $20.8 million.
As a result of the above-referenced items, net income for Q3 2011 was $7.1 million, or $0.22 per diluted share, as compared to a net loss of $16.7 million, or $0.54 per diluted share, in Q3 2010.
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