Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting

v3.22.2.2
Segment Reporting
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Segment Reporting 14. Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly reviewed by the chief operating decision maker (“CODM”) in assessing performance and deciding how to allocate resources. Reportable segments consist of one or more operating segments with similar economic characteristics, products and services, production processes, type of customer, distribution system or regulatory environment.

The Company reports its results through two reportable segments: (i) Sales of VOIs and Financing; and (ii) Resort Operations and Club Management.

The Sales of VOIs and Financing segment includes the Company’s marketing and sales activities related to the VOIs that are owned by the Company, VOIs it acquires under just-in-time and secondary market inventory arrangements, and sales of VOIs through fee-for-service arrangements with third-party developers, as well as consumer financing activities in connection with sales of VOIs owned by the Company, and title services operations.

The Resort Operations and Club Management segment includes management services activities for the Vacation Club and for a majority of the HOAs of the resorts within the Vacation Club. The Company also provides reservation services, services to owners and billing and collections services to the Vacation Club and certain HOAs, which are included in the resort operations and club management segment. Additionally, this segment includes revenue from the Traveler Plus program, food and beverage and other retail operations, rental services activities, and management of construction activities for certain fee-based developer clients.

The information provided for segment reporting is obtained from internal reports utilized by management. The CODM primarily uses adjusted earnings, or net income, before taking into account income taxes, interest income (excluding interest earned on VOI notes receivable), interest expense (excluding interest expense incurred on debt secured by VOI notes receivable), and depreciation and amortization (“Adjusted EBITDA”) to evaluate the reporting segments’ performance. See Management’s Discussion and Analysis of Financial Condition and Results of Operations for information regarding Adjusted EBITDA, including the definition of Adjusted EBITDA.

The presentation and allocation of results of operations may not reflect the actual economic costs of the segments as standalone businesses. Due to the nature of the Company’s business, assets are not allocated to a particular segment, and therefore management does not evaluate the balance sheet by segment. If a different basis of allocation were utilized, the relative contributions of the segments might differ but the relative trends in the segments’ operating results would, in management’s view, likely not be impacted.

The table below sets forth the Company’s revenue for its reportable segments for the three and nine months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended

Nine Months Ended

September 30,

September 30,

Revenues:

2022

2021

2022

2021

Sales of VOIs and financing

$

199,794

$

168,784

$

540,475

$

424,249

Resort operations and club management

30,860

28,190

88,337

82,392

Cost reimbursements (1)

20,719

18,699

54,950

50,859

Total segment revenues

251,373

215,673

683,762

557,500

Corporate and other

594

77

1,265

424

Eliminations

(1,131)

(1,232)

(3,564)

(3,815)

Total revenues

$

250,836

$

214,518

$

681,463

$

554,109

(1)Cost reimbursement revenue and expense net to zero and are excluded from the computation of adjusted EBITDA below.

The table below sets forth the Company’s Adjusted EBITDA for its reportable segments reconciled to net income for the three and nine months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended

Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

Adjusted EBITDA (1):

Sales of VOIs and financing

$

43,953

$

47,017

$

117,053

$

106,477

Resort operations and club management

21,895

21,638

63,369

58,897

Segment Adjusted EBITDA

65,848

68,655

180,422

165,374

General and administrative expenses (2)

(22,313)

(24,399)

(69,871)

(69,547)

Depreciation and amortization

(1,844)

(1,706)

(5,522)

(4,937)

Severance

-

(2,403)

-

(2,403)

Other (expense) income, net

296

(121)

774

157

Interest income (other than interest earned on VOI notes receivable)

298

77

491

267

Interest expense - corporate

(6,053)

(4,811)

(16,656)

(15,353)

Provision for income taxes

(8,586)

(7,975)

(20,948)

(16,858)

Net income

27,646

27,317

68,690

56,700

Less: Net income attributable to
‎ Non-controlling interests

(4,682)

(4,190)

(11,954)

(11,098)

Net income attributable to shareholders

$

22,964

$

23,127

$

56,736

$

45,602

(1)See Management’s Discussion and Analysis of Financial Condition and Results of Operations for information regarding Adjusted

EBITDA, including the definition of Adjusted EBITDA.

(2) Included in general and administrative expenses for the three and nine months ended September 30, 2022 is $0.8 million and $2.4 million, respectively, of share-based compensation. There was $0.5 million and $0.6 million of share-based compensation expense during the three and nine months ended September 30, 2021, respectively.