Quarterly report pursuant to Section 13 or 15(d)

Organization And Basis Of Financial Statement Presentation

v3.21.2
Organization And Basis Of Financial Statement Presentation
6 Months Ended
Jun. 30, 2021
Organization And Basis Of Financial Statement Presentation [Abstract]  
Organization And Basis Of Financial Statement Presentation 1. Organization and Basis of Financial Statement Presentation Bluegreen Vacations Holding Corporation, together with its subsidiaries, including Bluegreen Vacations Corporation, are referred herein as “the Company” or “we” or “us” or “our” (unless stated to the contrary or the context otherwise requires). The Company has prepared the accompanying unaudited consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, it does not include all of the information and footnotes required by GAAP for complete financial statements. In the Company’s opinion, the financial information furnished herein reflects all adjustments consisting of normal recurring items necessary for a fair presentation of its financial position, results of operations, and cash flows for the interim periods reported in this Quarterly Report on Form 10-Q. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, actual results could differ from those estimates. Due to the unprecedented impact and uncertainties related to the Coronavirus Disease 2019 (“COVID-19”) pandemic, including its potential future impact and other factors, the results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or any other future interim or annual periods. The accompanying interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2020, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2021 (the “2020 Annual Report on Form 10-K”). Our Business On September 30, 2020, the Company completed its spin-off of BBX Capital, Inc. (“BBX Capital”). The former wholly owned subsidiary became a separate public company as a result of the spin-off and holds all of the historical business and investments other than the Company’s investment in Bluegreen Vacations Corporation (“Bluegreen”). As a result of the spin-off the Company is a “pure play” holding company whose sole asset is its wholly owned subsidiary Bluegreen. Prior to May 5, 2021, the Company beneficially owned approximately 93% of Bluegreen’s outstanding common stock. On May 5, 2021, the Company acquired all of the approximately 7% of the outstanding shares of Bluegreen’s common stock not previously beneficially owned by the Company through a statutory short-form merger under Florida law. In connection with the merger, Bluegreen’s shareholders (other than the Company) received 0.51 shares of the Company’s Class A Common Stock for each share of Bluegreen’s common stock that they held at the effective time of the merger (subject to rounding up of fractional shares). The Company issued approximately 2.66 million shares of its Class A Common Stock in connection with the merger. As a result of the completion of the merger, Bluegreen became a wholly owned subsidiary of the Company. The Company is a leading vacation ownership company that markets and sells vacation ownership interests (“VOIs”) and manages resorts in popular leisure and urban destinations. Our resorts are primarily located in high-volume, “drive-to” vacation locations, including Orlando, Las Vegas, Myrtle Beach, Charleston and New Orleans, among others. The resorts in which we market, sell, and manage VOIs were either developed or acquired by the Company, or were developed and are owned by third parties. The Company earns fees for providing sales and marketing services to third party developers and also earns fees for providing management services to the Bluegreen Vacation Club and homeowners’ associations (“HOAs”), mortgage servicing, VOI title services, reservation services, and construction design and development services. In addition, the Company provides financing to qualified VOI purchasers, which generates significant interest income. Basis of Financial Statement Presentation The Company’s unaudited consolidated financial statements include the accounts of its wholly owned subsidiaries, other entities in which the Company or its consolidated subsidiaries hold controlling financial interests, and any Variable Interest Entities (“VIEs”) in which the Company or one of its consolidated subsidiaries is deemed the primary beneficiary of the VIE. All significant inter-company accounts and transactions have been eliminated in consolidation. Impact of the COVID-19 pandemic Initial response and impact to 2020 The COVID-19 pandemic has caused, and continues to cause, an unprecedented disruption in the U.S. and global economies and the industries in which the Company operates due to, among other things, government ordered “shelter in place” and “stay at home” orders and advisories, travel restrictions, and restrictions on business operations, including government guidance with respect to travel, public accommodations, social gatherings, and related matters. These disruptions arising from the pandemic and the reaction of the general public to the pandemic had a significant adverse impact on the Company's financial condition and operations during the three and six months ended June 30, 2020 and through 2020. In response to the pandemic, during the last week of March 2020, the Company temporarily closed all of its VOI sales centers and marketing operations and took other measures with a goal of mitigating the impact of the pandemic and positioning Bluegreen to navigate the pandemic successfully. During the second quarter of 2020, we began a phased reopening of resorts and resumption of our business activities under new operating guidelines and with enhanced safety measures and occupancy restrictions. By June 30, 2020, 64 Bass Pro Shops and Cabela’s stores (out of the 89 that were open in March 2020) were open, we had reactivated our Choice Hotels call transfer program, virtually all of our resorts were open, and 21 of our 26 VOI sales centers were open for sales to existing owners and one sales center was selling to new prospects.  In response to the pandemic, we implemented several cost mitigating activities beginning in March 2020, including reductions in our workforce of over 1,600 positions and the placement of another approximately 3,200 of our associates on temporary furlough or reduced work hours. As of June 30, 2020, approximately 2,300 associates had returned to work on a full-time basis. During the three and six months ended June 30, 2020, we incurred $2.2 million and $6.7 million in severance, respectively, and $10.7 million and $11.6 million, respectively, of payroll and payroll benefit expense relating to employees on temporary furlough or reduced work hours. These payments and expenses are included in selling, general and administrative expenses in the unaudited consolidated statement of operations for the three and six months ended June 30, 2020. Also, in March 2020, Bluegreen drew down $60 million under its lines-of-credit and pledged or sold receivables under its various receivable backed facilities to increase its cash position. In June 2020, Bluegreen repaid $40 million under its syndicated line-of-credit and amended the agreements to modify the definition of certain customary covenants.  During the six months ended June 30, 2020, we recorded an additional allowance for loan losses of $12.0 million, which included our customary estimate of customer defaults as a result of the COVID-19 pandemic based on our historical experience, forbearance requests received from our customers, and other factors, including, but not limited to, the seasoning of the notes receivable and FICO scores of the customers. Impact to 2021 and outlook The Company continues to be adversely affected by the economic impact of the COVID-19 pandemic during 2021. The number of reported COVID -19 cases went down during the second quarter and as of June 30, 2021, we were operating marketing kiosks at 112 Bass Pro Shops and Cabela’s stores, including 13 new Cabela’s locations and one Bass Pro location opened during the six months ended June 30, 2021; the Choice Hotels call transfer program was close to pre-pandemic volume; all but two sales centers were operating and all of our resorts, except for one unrelated to COVID-19 in Surfside, FL, were open.  Further, resort occupancy rates were approximately 86% at resorts with sales centers in the second quarter of 2021 facilitated by our ‘drive-to’ network of resorts and we sold 56,000 vacation packages in the second quarter of 2021 compared to 8,000 in the second quarter of 2020. Further, during the second quarter of 2021, the Company experienced an increase in sales of VOIs, which we believe was a sign of improvement in general economic conditions. However, current levels of illness are rising and indicate that the pandemic and its impact on the Company are not over. The CDC recently issued new guidance regarding the use of masks and vaccinations are increasingly being required by government agencies and employers. Various state and local government officials may in the future issue new or revised orders that are different than the ones under which we are currently operating. Accordingly, there remains significant uncertainty as to the probable duration and severity of the pandemic and the likely impact of the pandemic on the Company’s future revenues, net income and other operating results. Use of Estimates The Company’s financial statements are prepared in conformity with GAAP, which requires it to make estimates based on assumptions about current and, for some estimates, future economic and market conditions which affect reported amounts and related disclosures in its financial statements. Although the Company’s current estimates contemplate current and expected future conditions, as applicable, actual conditions could differ from its expectations, which could materially affect its results of operations and financial position. In particular, a number of estimates have been and will continue to be affected by the ongoing COVID-19 pandemic. The severity, magnitude and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing and difficult to predict. As a result, accounting estimates and assumptions may change over time in response to COVID-19. Such changes could result in, among other adjustments, future impairments of intangibles and long-lived assets, incremental credit losses on VOI notes receivable, an increase in valuation allowances on deferred tax assets, or an increase in other obligations as of the time of a relevant measurement event.