BLUEGREEN VACATIONS HOLDING A You should read the following discussion and analysis together with the Company's audited consolidated financial statements and related notes included in Item 8 of this Annual Report on Form 10-K. The following discussion contains forward-looking statements, including those that reflect or imply strategies, plans, estimates and beliefs. Actual results could differ materially from those discussed in or implied by the forward-looking statements. Factors that could cause or contribute to these differences include, without limitation, those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements." This section of this Annual Report on Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 . Such reports and other information filed by the Company with theSEC are available free of charge on our website at www.bvhcorp.com and on theSEC's website at www.sec.gov. Company Overview The Company is a holding company for Bluegreen, which became a wholly owned subsidiary of the Company duringMay 2021 . Prior to the merger, the Company held approximately 93% of Bluegreen's common stock. Bluegreen is a leading vacation ownership company that markets and sells VOIs and manages resorts in popular leisure and urban destinations. OnSeptember 30, 2020 , the Company completed its spin-off of BBX Capital, Inc. ("BBX Capital "). BBX Capital was a wholly owned subsidiary of the Company prior to the spin-off and became a separate public company as a result of the spin-off. BBX Capital holds all of the historical business and investments of the Company other than the Company's investment in Bluegreen. As a result of the spin-off, all of the Company's operations and activities relate to the operations and activities of Bluegreen. BBX Capital and its subsidiaries are presented as discontinued operations in the Company's financial statements. In connection with the spin-off, the Company's name was changed from BBX Capital Corporation toBluegreen Vacations Holding Corporation . The Company also issued a$75.0 million note payable to BBX Capital (of which$50.0 million remained outstanding atDecember 31, 2022 ). The note accrues interest at a rate of 6% per annum and requires payments of interest on a quarterly basis. Under the terms of the note, the Company has the option in its discretion to defer interest payments under the note, with interest on the entire outstanding balance thereafter to accrue at a cumulative, compounded rate of 8% per annum until such time as the Company is current on all accrued payments under the note, including deferred interest. All remaining outstanding amounts under the note will become due and payable in inSeptember 2025 or earlier upon the occurrence of certain events. OnMay 5, 2021 , the Company acquired all of the approximately 7% of the outstanding shares of Bluegreen's common stock not previously owned by the Company through a statutory short-form merger underFlorida 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 and its common stock is no longer publicly traded. InJuly 2020 , the Company effected a one-for-five reverse split of its Class A Common Stock and Class B Common Stock. Share and per share amounts set forth herein have been retroactively adjusted to reflect the one-for-five reverse stock split as if it had occurred as ofJanuary 1, 2020 .
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As ofDecember 31, 2022 , the Company had total consolidated assets of approximately$1.4 billion and shareholders' equity of approximately$243.9 million . Summary of Consolidated Results of OperationsThe Company reports the results of its business activities through the following reportable segments: Sales of VOIs and Financing; andResort Operations and Club Management. Information regarding income before income taxes by reportable segment is set forth in the table below: For the Years Ended December 31, 2022 2021 2020 (in thousands) Sales of VOIs and financing$ 145,121 $ 129,574 $ 35,670 Resort operations and club management 83,140 78,069 63,240 Corporate and other (111,991) (99,345) (80,081) BVH corporate (8,832) (9,702) (65,603) Income (loss) before income taxes from continuing operations 107,438 98,596 (46,774) (Provision) benefit for income taxes (26,187) (26,664) 2,368 Net income (loss) from continuing operations 81,251 71,932 (44,406) Discontinued operations, net - 900 (32,759) Net income (loss) 81,251 72,832 (77,165) Less: Net income attributable to noncontrolling interest - continued operations 16,866 14,102 8,186 Less: Net (loss) attributable to noncontrolling interest - discontinued operations - - (4,822) Net income (loss) attributable to shareholders$ 64,385 $ 58,730 $ (80,529) Executive Overview Bluegreen is a leading vacation ownership company that markets and sells VOIs and manages resorts in popular leisure and urban destinations. Bluegreen's resort network includes 46Club Resorts (resorts in which owners in theBluegreen Vacation Club ("Vacation Club ") have the right to use most of the units in connection with their VOI ownership) and 23Club Associate Resorts (resorts in which owners in theVacation Club have the right to control and use only a limited number of units in connection with their VOI ownership).These Club Resorts andClub Associate Resorts are primarily located in high-volume, "drive-to" vacation locations, includingOrlando ,Las Vegas ,Myrtle Beach ,Charleston andNew Orleans , among others. In addition, inOctober 2022 Bluegreen purchased a resort located inPanama City Beach, Florida . Bluegreen expects this resort to be available for use byBluegreen Vacation Club owners in 2023. Through Bluegreen's points-based system, the approximately 218,000 owners in theVacation Club have the flexibility to stay at units available at any of Bluegreen's resorts and have access to over 11,400 other hotels and resorts through partnerships and exchange networks. Bluegreen's sales and marketing platform is currently supported by marketing relationships with nationally-recognized consumer brands, such asBass Pro and Choice Hotels. The Company believes these marketing relationships have helped generate sales within its core demographic, as described below. The COVID-19 pandemic caused significant disruptions in international andU.S. economies and markets, and had an unprecedented impact on the travel and hospitality industries, including a material adverse impact on Bluegreen's results, especially during 2020 and to a lesser extent in 2021, as previously described in the Company's filings with theSEC . Bluegreen believes that the increase in sales of VOIs in 2022 reflect the recovery from the pandemic and high demand for domestic travel despite ongoing COVID-19 cases and higher interest rates and inflationary trends. While we hope that improvements in the travel and leisure industry continue, the impact economic challenges and public health concerns on the Bluegreen's business and operating results is uncertain.
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VOI Sales and Financing Bluegreen's primary business is the marketing and selling of deeded VOIs. Customers who purchase these VOIs receive an allotment of points, which can be redeemed for stays at one of the Bluegreen's resorts or at 11,400 other hotels and resorts available through partnerships and exchange networks. Bluegreen's goal is to employ a flexible model with a mix of sales of our owned, acquired or developed VOIs and sales of VOIs on behalf of third-party developers, as determined by management to be appropriate from time to time based on market and economic conditions, available cash, and other factors. When sales of VOIs are made on behalf of third-party developers, Bluegreen generally receives fees from the sale and marketing of their VOIs without incurring the upfront capital investment generally associated with resort acquisition or development. While fee-based sales typically do not require an initial investment or involve development financing risk, sales of Bluegreen owned inventory typically result in a greater contribution to EBITDA and Adjusted EBITDA. Both Bluegreen owned VOI sales and fee-based VOI sales result in recurring, incremental and long-term fee streams by adding owners to theBluegreen Vacation Club and new resort management contracts. Fee-based sales of VOIs comprised 14% and 31% of system-wide sales of VOIs during the years endedDecember 31, 2022 and 2021, respectively, reflecting management's decision to increase its focus on developed VOI sales. In connection with sales of VOIs, Bluegreen also generates interest income by providing financing to qualified purchasers. Collateralized by the underlying VOIs, Bluegreen's loans are generally structured as 10-year, fully-amortizing loans with a fixed interest rate ranging from approximately 12% to approximately 18% per annum. As ofDecember 31, 2022 , the weighted-average interest rate on the Company's VOI notes receivable was 15.3%. In addition, the Company earns fees for various other services, including title and escrow services in connection with the closing of VOI sales, and mortgage servicing. Resort Operations and Club Management Bluegreen enters into management agreements with the HOAs that maintain most of the resorts inBluegreen's Vacation Club and earns fees for providing management services to those HOAs and the approximately 218,000Vacation Club owners. These resort management services include providing or oversight of front desk operations, housekeeping services, maintenance, and certain accounting and administration functions. Bluegreen's management contracts generally yield recurring cash flows and do not have the traditional risks associated with hotel management contracts that are generally linked to daily rate or occupancy. Bluegreen's management contracts are typically structured as "cost-plus," with an initial term of three years and automatic one year renewals. In connection with the management services provided to theVacation Club , Bluegreen manages the reservation system and provides owner, billing and collection services. Principal Components Affecting Our Results of Operations Principal Components of Revenue Bluegreen Owned VOI Sales. Represent sales of VOIs in resorts that Bluegreen has developed or acquired, VOIs acquired from HOAs or other owners, typically in connection with maintenance fee defaults, or secondary market sales. VOI inventory acquired from HOAs or other timeshare owners are generally purchased at a greater discount to retail price compared to developed VOI sales and VOIs purchased by Bluegreen for sale as part of its just-in-time ("JIT") sales activities. Fee-Based Sales. Represent sales of third-party VOIs where Bluegreen is paid a commission. Financing Revenue. Represents revenue from the financing of VOI sales, which includes interest income and loan servicing fees. Bluegreen also earns fees from providing loan servicing to certain third-party developers relating to VOI receivables sold by them. Resort Operations and Club Management Revenue. Represents recurring fees from managing theVacation Club and transaction fees for Traveler Plus and other member services. Bluegreen also earns recurring management fees under its management agreements with HOAs for day-to-day management services, including oversight of housekeeping services, maintenance, and certain accounting and administrative functions.
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Other Fee-Based Services. Represents revenue earned from various other services that produce recurring, predictable and long-term revenue, such as title services. Principal Components of Costs and Expenses Cost of VOIs Sold. Represents the cost at which Bluegreen owned VOIs sold during the period were relieved from inventory. Compared to the cost of Bluegreen developed VOI inventory, VOIs acquired in connection with JIT arrangements typically have a relatively higher associated cost of sales as a percentage of sales while those acquired in connection with secondary market arrangements typically have a lower cost of sales as a percentage of sales as secondary market inventory is generally obtained from HOAs at a significant discount to retail price. 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 and the size of the point packages of the VOIs sold (primarily due to offered volume discounts, and taking into account consideration of cumulative sales to existing owners). Additionally, the effect of changes in estimates under the relative sales value method, including estimates of projected sales, future defaults, upgrades and incremental revenue from the resale of repossessed VOI inventory, are reflected on a retrospective basis in the period the change occurs. Cost of sales is typically favorably impacted in periods where a significant amount of secondary market VOI inventory is acquired and actual defaults and equity trades are higher and the resulting change in estimate is recognized. While Bluegreen believes that there is additional inventory that can be obtained through the secondary market at favorable prices to Bluegreen in the future, there is no assurance that such inventory will be available. Net Carrying Cost of VOI Inventory. Represents the maintenance fees and developer subsidies for unsold VOI inventory paid or accrued to the HOAs that maintain the resorts. Bluegreen attempts to offset this expense, to the extent possible, by generating revenue from renting its VOIs and through utilizing them in Bluegreen's sampler programs. Bluegreen may also house marketing guests in unsold VOIs in which case the cost of such unit is recognized as sales and marketing expense. Bluegreen nets such revenue from this expense item. Selling and Marketing Expense. Represents costs incurred to sell and market VOIs, including costs relating to marketing and incentive programs, tours, and related wages and sales commissions. Revenue from vacation package sales are netted against selling and marketing expenses. Financing Expense. Represents financing interest expense related to Bluegreen's receivable-backed debt, amortization of the related debt issuance costs and other expenses incurred in providing financing and servicing loans, including administrative costs associated with mortgage servicing activities for Bluegreen's loans and the loans of certain third-party developers. Mortgage servicing activities include, among other things, payment processing, reporting and collection services. Resort Operations and Club Management Expense. Represents costs incurred to manage resorts and theVacation Club , including payroll and related costs and other administrative costs to the extent not reimbursed by theVacation Club or HOAs. General and Administrative Expense. Primarily represents compensation expense for personnel supporting Bluegreen's business and operations, professional fees (including consulting, audit and legal fees), and administrative and related expenses. Key Business and Financial Metrics Used by Management Operating Metrics Sales of VOIs. Represent sales of Bluegreen owned VOIs, including developed VOIs and those acquired through JIT and secondary market arrangements, reduced by equity trade allowances and an estimate of uncollectible VOI notes receivable. In addition to the factors impacting system-wide sales of VOIs (as described below), sales of VOIs are impacted by the proportion of system-wide sales of VOIs sold on behalf of third-parties on a commission basis, which are not included in sales of VOIs. System-wide Sales of VOIs. Represents all sales of VOIs, whether owned by Bluegreen or a third party immediately prior to the sale. Sales of VOIs owned by third parties are transacted as sales of VOIs in theVacation Club through
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the same selling and marketing process Bluegreen uses to sell Bluegreen owned
VOI inventory. Bluegreen considers system-wide sales of VOIs to be an important
operating measure because it reflects all sales of VOIs by Bluegreen's sales and
marketing operations without regard to whether Bluegreen or a third party owned
such VOI inventory at the time of sale. System-wide sales of VOIs is not a
recognized term under GAAP and should not be considered as an alternative to
sales of VOIs or any other measure of financial performance derived in
accordance with GAAP or to any other method of analyzing Bluegreen's results as
reported under GAAP.
Guest Tours. Represents the number of sales presentations given at Bluegreen's
sales centers during the period.
Sale to Tour Conversion Ratio. Represents the rate at which guest tours are
converted to sales of VOIs and is calculated by dividing guest tours by number
of VOI sales transactions.
Average Sales Volume Per Guest ("VPG"). Represents the sales attributable to
tours at Bluegreen's sales locations and is calculated by dividing VOI sales by
guest tours. Bluegreen considers VPG to be an important operating measure
because it measures the effectiveness of Bluegreen's sales process, combining
the average transaction price with the sale-to-tour conversion ratio.
For further information see Item 8. Financial Statements and Supplementary Data
- Note 2: Basis of Presentation and Recently Issued Accounting Pronouncements
EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Shareholders
The Company defines EBITDA as earnings, or net income, before taking into
account income tax, 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. The Company
defines Adjusted EBITDA as EBITDA, adjusted to exclude amounts of loss (gain) on
assets held for sale, share-based compensation expense, and items that the
Company believes are not representative of ongoing operating results, including
severance costs and, for 2022, costs related to the reorganization of certain
resort marketing operations. Adjusted EBITDA Attributable to Shareholders is
Adjusted EBITDA excluding amounts attributable to the non-controlling interest
in Bluegreen/Big Cedar Vacations (in which Bluegreen owns a 51% interest). For
purposes of the calculation of EBITDA, Adjusted EBITDA and Adjusted EBITDA
Attributable to Shareholders, no adjustments were made for interest income
earned on VOI notes receivable or the interest expense incurred on debt that is
secured by such notes receivable because they are both considered to be part of
the ordinary operations of the Company's business.
The Company considers EBITDA, Adjusted EBITDA, and Adjusted EBITDA Attributable
to Shareholders to be indicators of operating performance, and they are used by
the Company to measure its ability to service debt, fund capital expenditures
and expand its business. EBITDA and Adjusted EBITDA are also used by companies,
lenders, investors and others because they exclude certain items that can vary
widely across different industries or among companies within the same industry.
For example, interest expense can be dependent on a company's capital structure,
debt levels and credit ratings. Accordingly, the impact of interest expense on
earnings can vary significantly among companies. The tax positions of companies
can also vary because of their differing abilities to take advantage of tax
benefits and because of the tax policies of the jurisdictions in which they
operate. As a result, effective tax rates and provision for income taxes can
vary considerably among companies. EBITDA, Adjusted EBITDA and Adjusted EBITDA
Attributable to Shareholders also exclude depreciation and amortization because
companies utilize productive assets of different ages and use different methods
of both acquiring and depreciating productive assets. These differences can
result in considerable variability in the relative costs of productive assets
and the depreciation and amortization expense among companies.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Shareholders are not
recognized terms under GAAP and should not be considered as an alternative to
net income or any other measure of financial performance or liquidity, including
cash flow, derived in accordance with GAAP, or to any other method or analyzing
results as reported under GAAP. The limitations of using EBITDA, Adjusted EBITDA
or Adjusted EBITDA Attributable to Shareholders as an analytical tool include,
without limitation, that EBITDA, Adjusted EBITDA and Adjusted EBITDA
Attributable to Shareholders do not reflect (i) changes in, or cash requirements
for, working capital needs; (ii) interest expense, or the cash requirements
necessary to service interest or principal payments on indebtedness (other than
as noted above); (iii) tax expense or the cash requirements to pay taxes; (iv)
historical cash expenditures
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or future requirements for capital expenditures or contractual commitments; or (v) the effect on earnings or changes resulting from matters that the Company does not believe to be indicative of future operations or performance. Further, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often have to be replaced in the future, and EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Shareholders do not reflect any cash that may be required for such replacements. In addition, the Company's definition of Adjusted EBITDA or Adjusted EBITDA Attributable to Shareholders may not be comparable to definitions of Adjusted EBITDA, Adjusted EBITDA Attributable to Shareholders or other similarly titled measures used by other companies. Reportable Segments Results of Operations Adjusted EBITDA Attributable to Shareholders for the years endedDecember 31, 2022 , 2021 and 2020 The Company considers Segment Adjusted EBITDA in connection with its evaluation of its business segments as described in Note 17: Segment Reporting to the Company's audited consolidated financial statements included in Item 8 of this Annual Report on Form 10-K. See above for a discussion of the Company's definition of Adjusted EBITDA and related measures, how management uses it to manage its business and material limitations on its usefulness. The following tables set forth Segment Adjusted EBITDA, Adjusted EBITDA, Adjusted EBITDA Attributable to Shareholders, EBITDA and a reconciliation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Attributable to Shareholders to net income, the most comparable GAAP financial measure: For the Years Ended December 31, 2022 2021 2020 (in thousands) Adjusted EBITDA - sales of VOIs and financing $ 159,304$ 138,078 $ 46,909 Adjusted EBITDA - resort operations and club management 83,821 78,914 65,435 Total Segment Adjusted EBITDA 243,125 216,992 112,344 Less: Bluegreen's Corporate and other (84,281) (77,159) (55,500) Less: BVH Corporate and other (1,931) (2,513) (59,147) Adjusted EBITDA 156,913 137,320 (2,303) Less: Adjusted EBITDA attributable to non-controlling interest (17,101) (15,286) (11,043) Total Adjusted EBITDA attributable to shareholders $ 139,812$ 122,034 $ (13,346) ? 51
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FOOT
For the Years Ended December 31,
2022 2021 2020
(in thousands)
Net income (loss) attributable to its
shareholders $ 64,385 $ 57,830 $ (52,592)
Net income attributable to the
non-controlling interest
continuing operations 16,866 14,102 8,186
Net Income (loss) 81,251 71,932 (44,406)
Add: Depreciation and amortization 15,889 15,653 15,563
Less: Interest income (other than interest
earned on
VOI notes receivable) (1,710) (368) (4,367)
Add: Interest expense - corporate and
other 25,042 19,842 22,369
Add: Provision (benefit) for income taxes 26,187 26,664 (2,368)
EBITDA 146,659 133,723 (13,209)
Add: Share - based compensation expense
(1) 3,384 1,036 -
Loss on assets held for sale 230 158 1,247
Add: Severance and other (2) 1,600 2,403 9,659
Add: Retail marketing reorganization (3) 5,040 - -
Adjusted EBITDA 156,913 137,320 (2,303)
Adjusted EBITDA attributable to the
non-controlling interest (17,101) (15,286) (11,043)
Adjusted EBITDA attributable to
shareholders $ 139,812 $
122,034
(1)Share-based compensation expense for the years endedDecember 31, 2022 and 2021 related to restricted stock awards granted inJune 2021 ,January 2022 andOctober 2022 . (2)Amounts for the year endedDecember 31, 2022 and 2021 consisted of severance costs. Amounts for the year endedDecember 31, 2020 consisted of severance, net of employee retention credits, of$5.5 million , a special bonus paid to all non-executive employees totaling$3.3 million and COVID-19 incremental costs of$0.9 million . (3)Retail marketing reorganization expense for the year endedDecember 31, 2022 consisted of approximately$5.0 million in lease termination costs in connection with a reorganization of retail marketing operations inDecember 2022 . System-wide sales of VOIs include Bluegreen owned VOIs and fee-based VOI sales. The following table reconciles system-wide sales of VOIs to gross sales of VOIs, the most comparable GAAP financial measure. For the Years Ended December 31, 2022 2021 2020 (in thousands) Gross sales of VOIs$ 636,156 $ 426,556 $ 230,938 Add: Fee-based sales 107,238 191,054 136,060 System-wide sales of VOIs$ 743,394 $ 617,610 $ 366,998 ? 52
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For the year endedDecember 31, 2022 compared to the year endedDecember 31, 2021 Sales of VOIs and Financing For the Years Ended December 31, 2022 2021 % of % of Amount ?System- Amount ?System- ?wide sales ?wide sales ?of VOIs(5) ?of VOIs(5) (dollars in thousands) Bluegreen owned VOI sales (1)$ 636,156 86$ 426,556 69 Fee-Based VOI sales 107,238 14 191,054 31 System-wide sales of VOIs 743,394 100 617,610 100 Less: Fee-Based sales (107,238) (14) (191,054) (31) Gross sales of VOIs 636,156 86 426,556 69 Provision for loan losses (2) (100,431) (16) (72,788) (17) Sales of VOIs 535,725 72 353,768 57 Cost of VOIs sold (3) (58,665) (11) (29,504) (8) Gross profit (3) 477,060 89 324,264 92 Fee-Based sales commission revenue (4) 72,647 68 128,321 67 Financing revenue, net of financing expense 78,281 11 65,569 11 Other expense - 0 (145) 0 Other fee-based services, title operations and other, net 9,029 1 8,837 1 Net carrying cost of VOI inventory (18,706) (3) (22,339) (4) Selling and marketing expenses (423,007) (57) (338,269) (55) General and administrative expenses - sales and marketing (50,183) (7) (36,664) (6) Operating profit - sales of VOIs and financing 145,121 20% 129,574 21% Add: Depreciation and amortization 7,273
5,956
Add: Severance and other 1,600
2,403
Add: Retail marketing reorganization 5,040
-
Add: Loss on assets held for sale 270
145
Adjusted EBITDA - sales of VOIs and financing$ 159,304 $
138,078
(1)Bluegreen owned VOI sales represent sales of VOIs acquired or developed by Bluegreen. (2)Percentages for provision for loan losses are calculated as a percentage of gross sales of VOIs, which excludes Fee-Based sales (and not of system-wide sales of VOIs). (3)Percentages for costs of VOIs sold and gross profit are calculated as a percentage of sales of VOIs (and not based on system-wide sales of VOIs). (4)Percentages for Fee-Based sales commission revenue are calculated as a percentage of Fee-Based sales (and not based on system-wide sales of VOIs). (5)Represents the applicable line item, calculated as a percentage of system-wide sales of VOIs, unless otherwise indicated in the above footnotes. System-wide sales of VOIs. System-wide sales of VOIs were$743.4 million and$617.6 million during the years endedDecember 31, 2022 and 2021, respectively. System-wide sales of VOIs are driven by the number of guests attending a timeshare sale presentation (a "guest tour") and our ability to convert such guest tours into purchases of VOIs. The number of guest tours is driven by the number of existing owner guests Bluegreen has staying at a resort with a sales center who agree to attend a sales presentation and the number of new guest arrivals, the majority of which are utilizing a vacation package. During the year endedDecember 31, 2022 , we experienced increases in both the number of existing owner tours and new guest tours, which resulted in an increase in the total number of guest tours of 14%, compared to year endedDecember 31, 2021 . In addition, the average sales volume per guest increased 6%, during the year endedDecember 31, 2022 compared to the year endedDecember 31, 2021 . The average sales volume per guest increase in 2022 was driven by an increase in the average sales price per transaction of 17% compared to the year endedDecember 31, 2021 , partially offset by a 150 basis-point decrease in the sale-to-tour conversion rate during the year endedDecember 31, 2022 compared to 2021.
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Included in system-wide sales are Fee-Based Sales and Bluegreen-owned sales. Sales by category are tracked based on which deeded VOI is conveyed in each transaction. The individual VOIs sold is based on several factors, including the needs of fee-based clients, the Company's debt service requirements and default resale requirements under term securitizations and similar transactions. These factors and business initiatives contribute to fluctuations in the amount of sales by category from period to period. Sales of VOIs. Sales of VOIs were$535.7 million and$353.8 million during the years endedDecember 31, 2022 and 2021, respectively. Sales of VOIs were impacted by the factors described in the discussion of system-wide sales of VOIs above and the proportion of Fee-Based VOI sales and the provision for loan losses. Gross sales of VOIs were reduced by$100.4 million and$72.8 million during the years endedDecember 31, 2022 and 2021, respectively, for the provision for loan losses. The provision for loan losses varies based on the amount of financed, non-fee based sales during the period and changes in estimates of future notes receivable performance for existing and newly originated loans. The percentage of sales which were realized in cash within 30 days from sale was 40% during the year endedDecember 31, 2022 , and 41% during the year endedDecember 31, 2021 . The provision for loan losses as a percentage of gross sales of VOIs was 16% and 17% during the years endedDecember 31, 2022 and 2021, respectively. The average annual default rates and delinquency rates (more than 30 days past due) on our VOI notes receivable were as follows: Year Ended December 31, 2022 2021 Average annual default rates (1) 8.45% 8.44% As of December 31, 2022 2021 Delinquency rates (1) 3.71% 2.85% (1)The average default rates in the table above includes VOIs which have been defaulted but had not yet charged off due to the provisions of certain of our receivable-backed notes payable transactions, as well as certain VOI loans over 127 days past due where we received cease and desist letters from attorneys and other third-party exit firms. Accordingly, these are excluded for purposes of calculating the delinquency rates above. The following table sets forth certain information for system-wide sales of VOIs for 2022 and 2021: For the Year Ended December 31, 2022 2021 % Change Number of sales centers open at period-end 24 24 - % Total number of VOI sales transactions 36,163 35,088 3 % Average sales price per transaction$ 20,689 $ 17,696 17 % Number of total guest tours 243,448 213,599 14 % Sale-to-tour conversion ratio- total marketing guests 14.9% 16.4% (150) bp Number of existing owner guest tours 113,835 96,025 19 % Sale-to-tour conversion ratio- existing owners 16.9% 19.3% (240) bp Number of new guest tours 129,613 117,574 10 % Sale-to-tour conversion ratio- new marketing guests 13.1% 14.1% (100) bp Percentage of sales to existing owners 54.0% 54.1% (10) bp Average sales volume per guest$ 3,073 $ 2,907
6 %
Cost of VOIs Sold. During the years endedDecember 31, 2022 and 2021, cost of VOIs sold was$58.7 million and$29.5 million , respectively, and represented 11% and 8% of sales of VOIs for the years endedDecember 31, 2022 and 2021, 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 and the size of the point packages of the VOIs sold (due to offered volume discounts, including consideration of cumulative sales to existing owners). Additionally, the effect of changes in estimates under the relative sales value method, including estimates of sales, future defaults, upgrades and incremental revenue from the resale of repossessed VOI inventory, are reflected on a retrospective basis in the period
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the change occurs. During 2022, true ups favorably impacted cost of VOIs sold by approximately$4.8 million , as compared to an unfavorable impact of approximately$1.3 million during 2021. In 2022, we reinstated certain equity trade programs that were discontinued during 2020 that allow owners to use the equity in an existing VOI towards the purchase of additional VOI inventory. Cost of sales is typically favorably impacted in periods where a significant amount of Secondary Market VOI inventory is acquired or actual defaults and equity trades are higher than anticipated and the resulting change in estimate is recognized. Cost of VOIs sold as a percentage of sales of VOIs was higher for the year endedDecember 31, 2022 as compared to the year endedDecember 31, 2021 primarily due to the relative mix of inventory being sold, partially offset by the timing of secondary market VOI purchases and the reinstatement of certain equity trade programs in 2022 as described above. Fee-Based Sales Commission Revenue. During the years endedDecember 31, 2022 and 2021, Bluegreen sold$107.2 million and$191.1 million , respectively, of third-party VOI inventory under commission arrangements and earned sales and marketing commissions of$72.6 million and$128.3 million , respectively, in connection with those sales. The decrease in sales of third-party developer inventory on a commission basis during 2022 was due to Bluegreen's increased focus on selling Bluegreen owned VOIs. Bluegreen earned an average sales and marketing commission of 68% and 67% during the years endedDecember 31, 2022 and 2021, respectively, which is net of a reserve for commission refunds in connection with early defaults and cancellations pursuant to the terms of certain fee-based service arrangements. Bluegreen typically recognizes a sales and marketing commission between 65% and 68% on sales of third-party VOI inventory. Financing Revenue, Net of Financing Expense - Sales of VOIs. Interest income on notes receivable was$98.0 million and$81.3 million during the years endedDecember 31, 2022 and 2021, respectively, which was partially offset by interest expense on receivable-backed debt of$17.9 million and$15.5 million , respectively. The increase in finance revenue, net of finance expense during 2022 as compared to 2021 is primarily due to higher VOI notes receivable balances as a result of higher sales of VOIs in 2022 partially offset by higher outstanding receivable-backed debt balances and higher interest rates. Other Fee-Based Services - Title Operations, net. During the years endedDecember 31, 2022 and 2021, revenue from title operations was$13.7 million and$12.2 million , respectively, which was partially offset by expenses directly related to title operations of$4.6 million and$3.4 million , respectively. Resort title fee revenue varies based on VOI sales volumes as well as the relative title costs in the jurisdictions where the inventory being sold is located. The increase for the year endedDecember 31, 2022 compared to 2021 is primarily due to the increase in system-wide sales of VOIs, as described above. Net Carrying Cost of VOI Inventory. The gross carrying cost of VOI inventory was$43.2 million and$42.2 million during the years endedDecember 31, 2022 and 2021, respectively, which was partially offset by rental and sampler revenue of$24.5 million and$19.9 million , respectively. The decrease in net carrying costs of VOI inventory was primarily related to increased rentals of developer inventory, partially offset by increased maintenance fees and developer subsidies associated with the increase in VOI inventory. In certain circumstances, marketing costs are offset by using inventory for marketing guest stays. Selling and Marketing Expenses. Selling and marketing expenses were$423.0 million and$338.3 million during the years endedDecember 31, 2022 and 2021, respectively. As a percentage of system-wide sales of VOIs, selling and marketing expenses were 57% and 55% during the years endedDecember 31, 2022 and 2021, respectively. The increase in selling and marketing expenses during the year endedDecember 31, 2022 compared to the year endedDecember 31, 2021 is primarily attributable to selling commissions associated with the increase in system-wide sales, higher cost per tour and higher expenses associated with fulfilling guest tours in 2022, the cost of expanded marketing operations, and the costs related to the reorganization of Bluegreen's retail marketing operations in 2022 as discussed below. To a lesser extent, selling and marketing expenses were also impacted by start-up costs associated with preparing for the start of sales operations atBluegreen's Bayside Resort & Spa inPanama City Beach, FL , where we commenced VOI sales inJanuary 2023 . We utilize our marketing operations at Bass Pro andCabela's stores to sell vacation packages to customers for future travel which require the customers to attend a timeshare presentation. Further, we have invested in various local and national marketing programs in an effort to attract new customers. These program changes may not be successful or generate a sufficient number of prospects to offset the program costs incurred.
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Bluegreen's vacation package marketing programs generated 168,982 vacation packages during 2022. As compared to 2021, this reflects a decrease of approximately 20% in vacation package sales, which we believe is due primarily to the challenging labor market, which impacted staffing levels and turnover at our kiosks, the lower traffic in the retail operations in which we operate, as well as certain changes to our package program in an effort to improve the quality of the packages. In connection with this objective, inDecember 2022 , Bluegreen reorganized certain of its marketing operations, including the elimination of lower performing marketing programs at various locations and transitioned its kiosks at certain lower volumeCabela's stores to an unmanned, virtual format as ofJanuary 1, 2023 . As a result of this reorganization, Bluegreen incurred$5.0 million in one-time lease termination costs and$1.6 million of severance costs. The following table sets forth certain new customer marketing information, excluding sampler and other returning owner vacation packages, for 2022 and 2021: For the Year Ended December 31, 2022 2021 % Change Number ofBass Pro andCabela's marketing locations at period-end 129 128
1
Number of vacation packages outstanding, beginning of the period (1)
187,244 121,915 54
Number of vacation packages sold 168,982 211,364
(20)
Number of vacation packages outstanding, end of the period (1) 165,240 187,244
(12)
% of Bass Pro vacation packages at period end 44% 47%
(6)
% of
(5)
% of Choice Hotel vacation packages at period end 28% 23%
22
% of Other vacation packages at period end 10% 11%
(9)
(1)Excludes vacation packages sold to customers more than one year prior to the period presented and vacation packages sold to customers who had already toured and purchased a VOI. In addition to vacation packages sold to new prospects, we also sell vacation packages to customers who have already toured and purchased a VOI and have indicated they would tour again. As ofDecember 31, 2022 , the pipeline of such packages was approximately 15,800. There is no assurance that such packages will convert to sales at historical or expected levels. General and Administrative Expenses - Sales and Marketing Operations. General and administrative expenses, representing expenses directly attributable to sales and marketing operations, were$50.2 million and$36.7 million during the years endedDecember 31, 2022 and 2021, respectively. As a percentage of system-wide sales of VOIs, general and administrative expenses directly attributable to sales and marketing operations were 7% and 6% during the years endedDecember 31, 2022 and 2021, respectively. This increase was primarily due to increased compensation costs and other related administrative costs due to in anticipation of future sales growth and the expansion of our sales and marketing support operations in anticipation of future sales growth. Resort Operations and Club Management For the Years Ended December 31, 2022 2021 (dollars in thousands) Resort operations and club management revenue$ 195,642 $ 180,317 Resort operations and club management expense (112,502)
(102,248)
Operating profit - resort operations and club management 83,140 42% 78,069 43% Add: Depreciation and amortization 676
770
Add: Loss on assets held for sale 5 75 Adjusted EBITDA - resort operations and club management $ 83,821
Resort Operations and Club Management Revenue. Resort operations and club management revenue increased 8% during the year endedDecember 31, 2022 as compared to the year endedDecember 31, 2021 . Cost reimbursement revenue, which consists of payroll and other operating expenses which we incur and pass through to the HOAs, increased 12% during the year endedDecember 31, 2022 , as compared to the year endedDecember 31, 2021 . The increase in cost reimbursement revenue was primarily attributable to an increase in headcount and higher wages.
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Excluding cost reimbursement revenue, resort operations and club management revenue increased 6% during the year endedDecember 31, 2022 , as compared to the year endedDecember 31, 2021 primarily due to an increase in management fees commensurate with higher HOA resort operating costs and an additional resort management contract, partially offset by higher labor cost of providing such services. Our resort network included a total of 69 and 68 Club andClub Associate Resorts as ofDecember 31, 2022 and 2021, respectively. We managed 50 and 49 resort properties as ofDecember 31, 2022 and 2021, respectively. Resort Operations and Club Management Expense. Excluding cost reimbursement expense, resort operations and club management expense increased 6% during the year endedDecember 31, 2022 , as compared to year endedDecember 31, 2021 . The increase was primarily due to increased compensation costs incurred during 2022 as a result of higher staffing levels and the competitive labor market. Bluegreen Corporate and Other For the Years Ended ?December 31, 2022 2021 (in thousands) General and administrative expenses - corporate and other$ (97,427) $ (87,990) Other income, net 1,867
930
Add: Share - based compensation expense 3,384
1,036
Loss (gain) on assets held for sale (45)
(62)
Add: Depreciation and amortization 7,940
8,927
Adjusted EBITDA - Corporate and other$ (84,281) $
(77,159)
General and Administrative Expenses - Corporate and Other. General and administrative expenses directly attributable to corporate overhead were$97.4 million and$88.0 million during the years endedDecember 31, 2022 and 2021, respectively. The increase was primarily due higher legal fees associated with exit firms and other litigation as described further in Note 12 to the Company's Consolidated Financial Statement included in Item 8, as well as higher information technology costs. Interest Expense. Interest expense unrelated to receivable-backed debt was$18.2 million and$12.6 million during the years endedDecember 31, 2022 and 2021, respectively. The increase in such interest expense during the year endedDecember 31, 2022 was primarily due to higher outstanding debt balances and a higher weighted-average cost of borrowing. The weighted average cost of borrowing excluding receivable-backed debt as ofDecember 31, 2022 was approximately 8.4% compared to approximately 5.6% as ofDecember 31, 2021 . Net Income Attributable to Non-Controlling Interest inBluegreen/Big Cedar Vacations . The Company includes in its consolidated financial statements the results of operations and financial condition ofBluegreen/Big Cedar Vacations , Bluegreen's 51%-owned subsidiary. Net income attributable to non-controlling interest is the portion ofBluegreen/Big Cedar Vacations' that is attributable toBig Cedar LLC , which holds the remaining 49% interest inBluegreen/Big Cedar Vacations . Net income attributable to the non-controlling interest inBluegreen/Big Cedar Vacations was$16.9 million and$13.2 million during the years endedDecember 31, 2022 and 2021, respectively. The increase in net income attributable to the non-controlling interest inBluegreen/Big Cedar Vacations in 2022 compared to 2021 primarily reflects higher sales of VOIs and operating profit atBluegreen/Big Cedar Vacations . ?
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BVH Corporate and Other BVH Corporate and Other primarily includes the following: ?BVH's corporate general and administrative expenses; ?Interest expense associated with Woodbridge's junior subordinated debentures and the note payable to BBX Capital; and ?Interest income on interest-bearing cash accounts. Corporate General and Administrative Expenses BVH's corporate general and administrative expenses were$2.1 million and$2.6 million for the years endedDecember 31, 2022 and 2021, respectively, and consist primarily of costs associated with BVH being a publicly traded company (including, but not limited to, executive compensation, shareholder relations, and legal and audit expenses). Interest Expense BVH's interest expense was$6.9 million and$7.2 million for the years endedDecember 31, 2022 and 2021, respectively. Interest expense for the year endedDecember 31, 2022 includes$3.0 million of interest expense on the note payable to BBX Capital issued in connection with the spin-off of BBX Capital inSeptember 2020 . The decrease in interest expense was primarily due to the$25.0 million repayment on the note to BBX Capital inDecember 2021 , partially offset by higher interest rates on the Woodbridge debentures. Provision for Income Taxes from Continuing Operations The provision for income taxes was$26.2 million and$26.7 million for the years endedDecember 31, 2022 and 2021, respectively. The Company's effective income tax rate was approximately 29% and 31% for the years endedDecember 31, 2022 and 2021, respectively. The effective income tax rate differed from the expected federal income tax rate of 21% due to the impact of the Company's nondeductible executive compensation and state income taxes. Changes in Financial Condition The following table summarizes the Company's cash flows for the years endedDecember 31, 2022 and 2021 (in thousands): For the Years Ended
2022 2021
Cash flows (used in) provided by operating activities $ (12,893)
76,966
Cash flows used in investing activities (15,098)
(13,598)
Cash flows provided by (used in) financing activities 71,440
(137,393)
Net increase (decrease) in cash, cash equivalents and restricted cash $ 43,449
(74,025)
Cash Flows from Operating Activities The Company's operating cash flow decreased$89.9 million during 2022 compared to 2021 primarily reflecting the following: ?the acquisition of VOI inventory inVail, Colorado of$18.6 million ; ?the acquisition of VOI inventory inPanama City Beach, Florida of$78.0 million ; and ?an increase in our VOI notes receivable portfolio; ?partially offset by increased operating profit in 2022 reflecting the stronger 2022 performance; and ?decreased cash paid for income taxes. Cash Flows in Investing Activities Cash used in investing activities was$15.1 million and$13.6 million during the years endedDecember 31, 2022 and 2021, respectively, and consisted primarily of spending on IT equipment and sales office expansions and renovations.
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Cash Flows from Financing Activities Cash provided by financing activities was$208.8 million higher during the year endedDecember 31, 2022 compared to 2021, primarily due to a$266.2 million increase in net borrowings in 2022 which was attributable in large part to the 2022 Term Securitization discussed below, the acquisition loan for the new resort inPanama City Beach, Florida , additional borrowings under the syndicated warehouse facility, and$60.0 million of net borrowings on the Fifth-Third Line of Credit. These increased borrowings were partially offset by$76.1 million of cash used in connection with the cash tender offer in 2022, an increase of$27.2 million in repurchases of shares under the Company's share repurchase program, and$9.0 million of dividends paid during 2022 with no such dividends in 2021. For additional information on the availability of cash from existing credit facilities, as well as repayment obligations, see "Liquidity and Capital Resources" below.
Seasonality
The Company has historically experienced, and expects to continue to experience, seasonal fluctuations in its revenues and results of operations. This seasonality has resulted, and may continue to result, in fluctuations in quarterly operating results. Due to consumer travel patterns, we typically experience more tours and higher VOI sales volume during the second and third quarters. Liquidity and Capital ResourcesBVH Parent Company The Company, at its parent company level, is a holding company with limited operations. It currently expects to incur approximately$2.0 million annually in executive compensation expenses and public company costs as well as annual interest expense of approximately$7.0 million to$7.5 million associated with Woodbridge's junior subordinated debentures and the note payable to BBX Capital, each as described below. These amounts are based on current expectations and assumptions, currently available information and, with respect to interest expense on Woodbridge's junior subordinated debentures, interest rates as ofDecember 31, 2022 . Such assumptions and expectations may not prove to be accurate, interest rates may continue to increase and, accordingly or otherwise, actual expenses may exceed the amounts expected. As ofDecember 31, 2022 , the Company, excluding its subsidiaries, had cash, cash equivalents, and short-term investments of approximately$4.3 million . Its primary source of liquidity for the foreseeable future is expected to be its available cash, cash equivalents, and short-term investments and distributions from Bluegreen. BVH is dependent on the payment of distributions from Bluegreen to fund its operations and debt service requirements. There is no assurance that Bluegreen will pay distributions in the amounts required to fund BVH's needs or at all. In connection with the spin-off of BBX Capital inSeptember 2020 , BVH issued a$75.0 million note payable to BBX Capital that accrues interest at a rate of 6% per annum and requires payments of interest on a quarterly basis. Under the terms of the note, BVH has the option in its discretion to defer interest payments under the note, with interest on the entire outstanding balance thereafter to accrue at a cumulative, compounded rate of 8% per annum until such time as all accrued payments under the note are brought current, including deferred interest. InDecember 2021 , BVH repaid$25.0 million on the note payable to BBX Capital. As ofDecember 31, 2022 , the outstanding principal balance on the note was$50.0 million . All outstanding amounts under the note will become due and payable inSeptember 2025 or earlier upon the occurrence of certain events. The Company's wholly owned subsidiary, Woodbridge, had$65.4 million in junior subordinated debentures outstanding as ofDecember 31, 2022 . Woodbridge's junior subordinated debentures accrue interest at a rate of 3-month LIBOR plus a spread ranging from 3.80% to 3.85%, mature between 2035 and 2036, and require interest payments on a quarterly basis. Except as otherwise noted, the debts and obligations of Bluegreen are not direct obligations of BVH and generally are non-recourse to BVH. Similarly, the assets of Bluegreen are not available to BVH absent a distribution. Furthermore,
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certain of Bluegreen's credit facilities contain terms which could limit the payment of distributions without the lender's consent or waiver. BVH may also seek additional liquidity in the future from outside sources, including traditional bank financing, secured or unsecured indebtedness, or the issuance of equity and/or debt securities. However, these alternatives may not be available to BVH on attractive terms, or at all. The inability to raise funds through such sources when or to the extent needed would have a material adverse effect on the Company's business, results of operations, and financial condition. InAugust 2021 , the Company's board of directors approved a share repurchase program which authorized the repurchase of the Company's Class A Common Stock and Class B Common Stock at an aggregate cost of up to$40.0 million . InMarch 2022 , the Company's board of directors approved a$50.0 million increase in the aggregate cost of the Company's Class A Common Stock and Class B Common Stock that may be repurchased under the program. The Company repurchased and retired 1,911,980 shares of Class A Common Stock under the share repurchase program during the year endedDecember 31, 2022 for an aggregate purchase price of$54.4 million . The Company repurchased and retired 1,182,339 shares of Class A Common Stock and 18,996 shares of Class B Common Stock under the share repurchase program during the year endedDecember 31, 2021 for an aggregate purchase price of$27.3 million . As ofDecember 31, 2022 ,$8.3 million remained available for the repurchase of shares under the Company's share repurchase program. During each of the second, third and fourth quarters of 2022, the Company paid a quarterly cash dividend on its Class A and Class B Common Stock of$0.15 per share which totaled$3.1 million ,$2.9 million , and$3.0 million , respectively, and$9.0 million in the aggregate. OnFebruary 15, 2023 , the Company's board of directors declared a quarterly cash dividend of$0.20 per share on its Class A and Class B Common Stock, which totaled$3.2 million in the aggregate, and is payable onMarch 20, 2023 to shareholders of record as of the close of trading onMarch 6, 2023 . The Company did not pay any dividends during 2021. In addition to share repurchases under the Company's share repurchase program, duringDecember 2022 , the Company completed a cash tender offer pursuant to which it purchased and retired 3,040,882 shares of its Class A Common Stock at a purchase price of$25.00 per share, or an aggregate purchase price of$76.0 million , excluding fees and expenses related to the tender offer. Bluegreen Bluegreen believes that it has sufficient liquidity from the sources described below to fund its operations, including its anticipated working capital, capital expenditure, and debt service requirements for the foreseeable future, subject to the success of its operations and initiatives and the ongoing availability of credit. Bluegreen's primary sources of funds from internal operations are: (i) cash sales; (ii) down payments on VOI sales which are financed; (iii) proceeds from borrowings collateralized by notes receivable; (iv) cash from finance operations; and (v) net cash generated from sales and marketing fee-based services and other fee-based services, including resort management operations. The ability to borrow against notes receivable from VOI buyers has been critical to Bluegreen's continued liquidity. A financed VOI buyer is generally only required to pay a minimum of 10% of the purchase price in cash at the time of sale; however, selling, marketing and administrative expenses attributable to the sale are primarily cash expenses that generally exceed a buyer's minimum required down payment. Accordingly, having financing facilities available to borrow against Bluegreen's VOI notes receivable has been critical to its ability to meet its short and long-term cash needs. Bluegreen has attempted to maintain a number of diverse financing facilities. Historically, Bluegreen has relied on the term securitization market in order to generate liquidity and create capacity in its receivable facilities. In addition, maintaining adequate VOI inventory to sell and pursue growth into new markets requires Bluegreen to use cash on hand or incur debt for the acquisition, construction and development of new resorts. InJuly 2022 , the Company purchased 46 one-bedroom units at a resort inVail, Colorado for$18.6 million . InOctober 2022 , the Company purchased a resort located inPanama City Beach, Florida for approximately$78.0 million . In connection with thePanama City Beach acquisition, Bluegreen received an Acquisition and Renovation Loan, as described below. We expect to spend between$65.0 million and$70.0 million on improvements to theVail andPanama City Beach resorts over the next 1- 3 years. Bluegreen continues to pursue opportunities for new resort or land acquisitions. Development
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expenditures in 2023 are expected to range between$190.0 million to$200.0 million . There is no assurance that any resort, land or development activity or acquisition will be completed or be successful. Bluegreen has entered into agreements with third-party developers that allow Bluegreen to buy VOI inventory, typically on a non-committed basis, prior to when it intends to sell such VOIs. Bluegreen also enters into secondary market arrangements with certain HOAs and others generally on a non-committed basis, which allows Bluegreen to acquire VOIs generally at a significant discount, as such VOIs are typically obtained by the HOAs through foreclosure in connection with maintenance fee defaults. Acquisition of JIT and secondary market inventory, both of which are considered Bluegreen-owned inventory, is expected to range between$10.0 million to$15.0 million in 2023. As described above, Bluegreen's ability to borrow against its VOI notes receivable has historically been a critical factor in Bluegreen's liquidity. If Bluegreen is unable to renew credit facilities or obtain new credit facilities, Bluegreen's business, results of operations, liquidity, or financial condition would be materially, adversely impacted. InApril 2022 , Bluegreen completed a private offering and sale of$172.0 million of VOI receivable-backed notes (the "2022 Term Securitization"). The 2022 Term Securitization consisted of the issuance of three tranches of VOI receivable-backed notes (collectively, the "Notes") as follows:$71.0 million of Class A Notes,$56.5 million of ClassB Notes , and$44.5 million of ClassC Notes . The interest rates on the Class A Notes, ClassB Notes and ClassC Notes are 4.12%, 4.61% and 5.35%, respectively, which blends to an overall weighted average note interest rate of approximately 4.60%. The gross advance rate for this transaction was 88.3%. The Notes mature inSeptember 2037 . Approximately$194.7 million of VOI receivables were sold toBXG Receivables Note Trust 2022-A (the "Trust") in the transaction. The gross proceeds of such sales to the Trust were$171.9 million . A portion of the proceeds were used to: repay$53.2 million under the Syndicated Warehouse Facility, representing all amounts outstanding under the facility at that time; repay$11.0 million under the Liberty Bank Facility; repay$16.1 million under thePacific Western Bank Facility; capitalize a reserve fund; and pay fees and expenses associated with the transaction. Prior to the closing of the 2022 Term Securitization, Bluegreen, as servicer, funded$4.9 million in connection with the servicer redemption of the notes related to the 2013 Term Securitization and certain of the VOI notes in such trust were sold to the Trust in connection with the 2022 Term Securitization. The remainder of the gross proceeds from the 2022 Term Securitization were used for general corporate purposes. Subject to performance of the collateral, Bluegreen will receive any excess cash flows generated by the receivables transferred under the 2022 Term Securitization (excess meaning after payments of customary fees, interest and principal under the 2022 Term Securitization) on a pro-rata basis as borrowers make payments on their VOI loans. While ownership of the VOI receivables included in the 2022 Term Securitization is transferred and sold for legal purposes, the transfer of these receivables is accounted for as a secured borrowing for financial accounting purposes. Accordingly, no gain or loss was recognized as a result of this transaction. Bluegreen has$25.7 million of required contractual obligations due to be paid within one year and one facility with advance periods scheduled to expire within one year. While there is no assurance that Bluegreen will be successful, Bluegreen intends to seek to renew or extend its debt and extend its advance periods on certain facilities. Bluegreen's level of debt and debt service requirements have several important effects on its operations and in turn on the Company, including that: (i) significant debt service cash requirements reduce the funds available for operations and future business opportunities and increase Bluegreen's vulnerability to adverse economic and industry conditions, as well as conditions in the credit markets, generally; (ii) Bluegreen's leverage position increases its vulnerability to economic and competitive pressures; (iii) the financial covenants and other restrictions contained in indentures, credit agreements and other agreements relating to its indebtedness require Bluegreen to meet certain financial tests and may restrict Bluegreen's ability to, among other things, pay dividends, borrow additional funds, dispose of assets or make investments; and (iv) Bluegreen's leverage position may limit funds available for acquisitions, working capital, capital expenditures, dividends and other general corporate purposes. Certain of Bluegreen's competitors may operate on a less leveraged basis and may have greater operating and financial flexibility than Bluegreen does. Credit Facilities for Receivables with Future Availability
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Bluegreen maintains various credit facilities with financial institutions which allow it to borrow against or sell its VOI notes receivable. As ofDecember 31, 2022 , Bluegreen had the following credit facilities with future availability, all of which are subject to terms and conditions during the advance period (dollars in thousands): Advance Borrowing Outstanding Period Borrowing ?Limit ?Balance Availability Expiration; Rate; Rate ?as of ?as of ?as of ?Borrowing as of ?December 31, ?December 31, ?December 31, 2022 Maturity as December 31, 2022 2022 of December ?2022 31, 2022 Prime - Liberty Bank 40,000$ 9,907 $ 30,093 June 2024; 0.50%; floor Facility ?June 2026 of 3.00%; $ 6.50% (1) 30 day NBA Receivables September LIBOR+2.25%; Facility 70,000 30,866
39,134 2023; ? floor of
?March 2028 3.00%; 6.62%
(2)
September 1-month SOFR
Pacific Western 2024; +2.50%;
Facility 50,000 5,841 44,159 ?September floor of
2027 2.75% (3);
6.82%
1-month SOFR
September +1.75%;
Syndicated Warehouse 250,000 104,953 145,047 2025; interest
Facility ?September rate floor
2026 of 2.00%
(4); 5.87%
$ 410,000 $ 151,567 $ 258,433
(1)Recourse is limited to $5.0 million , subject to certain exceptions.
(2)Borrowings accrue interest at one-month LIBOR plus 2.25% (with an interest
rate floor of 3.00%). Recourse to Bluegreen/Big Cedar Vacations is limited to
$10.0 million , subject to certain exceptions.
(3)Recourse is limited to $7.5 million , subject to certain exceptions.
(4)Borrowings accrue interest at a rate equal to one-month SOFR plus 1.75%. The
interest rate will increase to the applicable rate plus 2.75% upon the
expiration of the advance period.
See Note 10 to the Company's Consolidated Financial Statements included in Item
8 for additional information with respect to Bluegreen's receivable-backed notes
payable facilities.
Other Credit Facilities
Fifth Third Syndicated Line-of-Credit and Fifth Third Syndicated Term Loan.
Bluegreen's has a corporate credit facility which included a $100.0 million term
loan (the "Fifth Third Syndicated Loan") with quarterly amortization
requirements and a $125.0 million revolving line of credit (the "Fifth Third
Syndicated LOC") as of December 31, 2021 . In February 2022 , Bluegreen amended
the facility, which included a $75.0 million increase to the revolving line.
Borrowings generally bear interest at a rate of term SOFR plus 1.75-2.50% and a
0.05%-0.10% credit spread adjustment, depending on Bluegreen's leverage ratio.
The amendment also extended the maturity date from October 2024 to February
2027 . Borrowings are collateralized by certain VOI inventory, sales center
buildings, management fees, short-term receivables and cash flows from residual
interests relating to certain term securitizations. As of December 31, 2022 ,
outstanding borrowings under the facility totaled $166.3 million , including
$96.3 million under the Fifth Third Syndicated Term Loan with an interest rate
of 5.40%, and $70.0 million under the Fifth Third Syndicated Line of Credit with
an interest rate of 5.92%.
Panama City Beach Acquisition Loan. In October 2022 , Bluegreen purchased the
property and other assets of a resort located in Panama City Beach, Florida for
approximately $78.0 million . In connection with this acquisition, Bluegreen
entered into a non-revolving acquisition loan (the "Panama City Beach
Acquisition Loan") with National Bank of
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Arizona ("NBA") for the acquisition and renovation of the resort. The Panama City Beach Acquisition Loan provides for advances of up to$96.6 million , provided, however, that the total advances may not exceed 70% of the acquisition and renovation costs. Advances may be made during a 36-month advance period. Approximately$54.5 million was advanced at closing for the acquisition of the resort. The remainder of the purchase price was paid in cash. Principal payments will be effected through release payments from sales of the completed VOIs, subject to a minimum amortization schedule, with the remaining balance due at maturity inOctober 2027 . Borrowings under the Panama City Beach Acquisition Loan bear interest at an annual rate equal to one-month term SOFR plus 2.25%, subject to a floor of 2.40%. Recourse is limited to 30% of the principal and interest outstanding, with decreases based on achieving certain milestones and subject to certain exceptions. As ofDecember 31, 2022 , outstanding borrowings under the facility totaled$54.5 million . Bluegreen also has outstanding obligations under various securitizations that have no remaining future availability as the advance periods have expired. Commitments The following table summarizes the contractual minimum principal and interest payments required on all of the Company's outstanding debt and non-cancelable operating leases by period due date, as ofDecember 31, 2022 (in thousands): Payments Due by Period Less than 1 - 3 4 - 5 After 5 Unamortized
Contractual Obligations ?1 year ?Years ?Years ?Years Debt Issuance Total
Costs
Receivable-backed notes $ -$ 4,630 $ 136,836 $ 325,287 $ (5,131) $ 461,622 payable Bluegreen notes payable and 16,000 50,000 154,750 - (2,012) 218,738 other borrowings BVH note payable to BBX - 50,000 - - - 50,000 Capital, Inc. Jr. subordinated debentures - - - 170,897 (914) 169,983 (1) Noncancelable operating 5,781 5,719 3,813 21,977 - 37,290 leases (2) Bass Pro Settlement (3) 4,000 - - - - 4,000 Contractual interest (4) 51,366 99,194 72,123 216,778 - 439,461 Total contractual$ 77,147 $ 209,543 $ 367,522 $ 734,939 $ (8,057) $ 1,381,094 obligations (1)Amounts do not include purchase accounting adjustments for junior subordinated debentures of$34.0 million . (2)Amounts represent the cash payment for leases and includes interest of$9.6 million . (3)Amounts represent the$4.0 million annual cash payment toBass Pro due in 2024 pursuant to theJune 2019 settlement agreement. (4)Assumes that the scheduled minimum principal payments are made in accordance with the table above and the interest rate on variable rate debt remains the same as the rate atDecember 31, 2022 . The future commitments of BVH relate to Woodbridge's junior subordinated debentures and the note payable to BBX Capital, including interest thereon. BVH will rely primarily on cash on hand and cash equivalents, as well as dividends, if any, that may be paid by Bluegreen in the future, in order to satisfy the principal payments required on its contractual obligations. As discussed above, while BVH believes that it will have sufficient cash and cash equivalents to fund its operations for the foreseeable future, it will be dependent on the payment of distributions by Bluegreen to fund its operations and debt service requirements in future periods. There is no assurance that Bluegreen will pay distributions in amounts required to fund BVH's needs or at all. In lieu of paying maintenance fees for unsold VOI inventory, Bluegreen may enter into subsidy agreements with certain HOAs. During the years endedDecember 31, 2022 and 2021, Bluegreen made payments related to such subsidies of$27.5 million and$24.9 million , respectively, which are included within cost of other fee-based services in the Company's consolidated statements of operations and comprehensive income for such years. As ofDecember 31, 2022 and 2021, Bluegreen had$0.6 million and$0.2 million , respectively, accrued for such subsidies, which are included in accrued liabilities and other in the audited consolidated balance sheet as of such dates.
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Bluegreen intends to use cash on hand and cash flow from operations, including cash received from the sale or pledge of VOI notes receivable, and cash received from new borrowings under existing or future credit facilities in order to satisfy the principal and interest payments required on contractual obligations. Bluegreen believes that its existing cash, anticipated cash generated from operations, anticipated future permitted borrowings under existing or future credit facilities, and anticipated future sales of notes receivable under existing, future or replacement purchase facilities will be sufficient to meet its anticipated working capital, capital expenditure and debt service requirements, including the contractual payment of the Bluegreen obligations set forth above, for the foreseeable future subject to the success of its ongoing business strategies, the ongoing availability of credit and the impact of general economic conditions, including supply chain constraints, labor shortages, inflation, and increasing interest rates. Bluegreen will continue its efforts to renew, extend or replace any credit and receivables purchase facilities that have expired or that will expire in the near term. Bluegreen may, in the future, also obtain additional credit facilities and may issue corporate debt. Any debt incurred or issued may be secured or unsecured, bear interest at fixed or variable rates and may be subject to such terms as the lender may require and management believes acceptable. There can be no assurance that Bluegreen's efforts to renew or replace credit facilities or receivables purchase facilities which have expired or which are scheduled to expire in the near term will be successful or that sufficient funds will be available from operations or under existing, proposed or future revolving credit or other borrowing arrangements or receivables purchase facilities to meet Bluegreen's cash needs, including debt service obligations. To the extent Bluegreen is unable to sell notes receivable or borrow under such facilities, its ability to satisfy its obligations would be materially adversely affected. Bluegreen's receivables purchase facilities, credit facilities, indentures and other outstanding debt instruments include what Bluegreen believes to be customary conditions to funding, eligibility requirements for collateral, cross-default and other acceleration provisions and certain financial and other affirmative and negative covenants, including, among others, limits on the incurrence of indebtedness, payment of dividends, investments in joint ventures and other restricted payments, the incurrence of liens and transactions with affiliates, as well as covenants concerning net worth, fixed charge coverage requirements, debt-to-equity ratios, portfolio performance requirements and cash balances, and events of default or termination. In the future, Bluegreen may be required to seek waivers of such covenants, but may not be successful in obtaining waivers, and such covenants may limit its ability to raise funds, sell receivables or satisfy or refinance its obligations, or otherwise adversely affect its financial condition and results of operations, as well as its ability to pay distributions. Bluegreen's future operating performance and ability to meet its financial obligations will be subject to future economic conditions and to financial, business and other factors, many of which may be beyond its control. As previously disclosed, Bluegreen has an exclusive marketing agreement through 2024 withBass Pro that provides the Company with the right to market and sell vacation packages at kiosks in each ofBass Pro's retail locations and through other means. Bluegreen entered into a settlement agreement and revised marketing arrangement withBass Pro and its affiliates duringJune 2019 . Pursuant to the Settlement Agreement, Bluegreen agreed to make five annual payments toBass Pro of$4.0 million , which commenced inJanuary 2020 . Additionally, in lieu of the previous commission arrangement, Bluegreen agreed to payBass Pro a fixed annual fee for eachBass Pro andCabela's retail store that Bluegreen accessed or was required to access and an amount per net vacation package sold. As ofDecember 31, 2022 , Bluegreen had sales and marketing operations at a total of 129Bass Pro Shops andCabela's Stores. InDecember 2022 , Bluegreen reorganized certain of its marketing operations, including the elimination of lower performing marketing programs and transitioned its kiosks at certain lower volumeCabela's stores to an unmanned, virtual format as ofJanuary 1, 2023 . During the years endedDecember 31, 2022 and 2021, Bluegreen paid$8.3 million and$7.4 million , respectively, which is included in selling, marketing, and general expenses on the consolidated statements of operations and comprehensive income for such years. As ofDecember 31, 2022 , Bluegreen paid Bass Pro$8.3 million in payment of the 2023 fixed fee, which is included in prepaid expenses in the Company's consolidated balance sheet as ofDecember 31, 2022 . Off-balance-sheet Arrangements As ofDecember 31, 2022 and 2021, the Company did not have any "off-balance sheet" arrangements.
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Critical Accounting Policies and Estimates The Company's discussion and analysis of results of operations and financial condition are based upon its consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires it to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of commitments and contingencies. On an ongoing basis, the Company evaluates its estimates, including those that relate to the estimated future sales value of inventory, the recognition of revenue and its allowance for loan losses. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates if different assumptions and conditions were utilized. If actual results differ significantly from its estimates, its results of operations and financial condition could be materially, adversely impacted. Revenue Recognition for Sales of VOIsThe Company generally offers qualified purchasers financing for up to 90% of the purchase price of VOIs. The typical financing provides for a term of ten years and a fixed interest rate, is fully amortizing in equal installments and may be prepaid without penalty. For sales of VOIs for which the Company provides financing, it has reduced the transaction price for expected loan losses, which it considers to be variable consideration. To the extent the Company determines that it is probable that a significant reversal of cumulative revenue recognized may occur, it records an estimate of variable consideration as a reduction to the transaction price of the sales of VOIs until the uncertainty associated with the variable consideration is resolved. The Company's estimate of variable consideration is based on the results of its static pool analysis, which relies on historical payment data for similar VOI notes receivable and tracks uncollectibles for each period's sales over the entire life of the VOI notes receivable. The Company also considers whether historical economic conditions are comparable to then current economic conditions, as well as variations in underwriting standards. The Company's policies regarding the estimation of variable consideration on its notes receivable are discussed in further detail under "Allowance for Loan Losses on VOI Notes Receivable" below. Allowance for Loan Losses on VOI Notes Receivable The allowance for loan losses is related to the notes receivable generated in connection with financing the Company's VOI sales. The Company holds large amounts of homogeneous VOI notes receivable and assess uncollectibility based on pools of receivables as there are no significant concentrations of credit risk with any individual counterparty or groups of counterparties. In estimating future loan losses, the Company does not use a single primary indicator of credit quality but instead evaluates its VOI notes receivable based upon a static pool analysis that incorporates the age of the respective receivables, default trends and prepayment rates by origination year, as well as the FICO scores of the borrowers and the mix of new versus existing owner loans. Inventory and Cost of Sales The Company carries its completed inventory at the lower of: (i) cost, including costs of improvements and amenities incurred subsequent to acquisition, capitalized interest, real estate taxes and other costs incurred during construction, or (ii) estimated fair market value, less costs to sell. The Company uses the relative sales value method for establishing the cost of its VOI sales and relieving inventory, which requires it to make estimates subject to significant uncertainty. Under the relative sales value method required by timeshare accounting rules, cost of sales is calculated as a percentage of net sales using a cost-of-sales percentage based on the ratio of total estimated development costs to total estimated VOI revenue, including the estimated incremental revenue from the resale of VOI inventory repossessed, generally as a result of the default of the related receivable. Also, pursuant to timeshare accounting rules, the Company does not relieve inventory for VOI cost of sales related to anticipated loan losses. Accordingly, no adjustment is made when inventory is reacquired upon default of the related receivable. The effect of changes in estimates under the relative sales value method, including estimates of projected sales, future defaults, upgrades and incremental revenue from the resale of repossessed VOI inventory, are reflected on a retrospective basis in the period the change occurs.
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