Last evening Bluegreen Vacations (BXG) priced its 6.5 million share IPO at $14.00 per share, below the expected range of $16-$18. The stock will begin trading at the NYSE today.
Bluegreen Vacations is a Florida-based company that sells vacation ownership interests (VOIs), also known as timeshares, and manages resorts in leisure and urban destinations.
The company's resort network features 43 Club Resorts where owners in the club have the right to use most of the units as part of their ownership. The company also has 24 Club Associate Resorts, where owners have the right to use a limited number of units in connection with their ownership.
Most of Bluegreen's Club Resorts and Club Associate Resorts are located in popular, high-volume, "drive-to" destinations like Orlando, Las Vegas, Myrtle Beach, and Charleston, among others.
The company has approximately 211,000 owners who use points to reserve stays at any company-operated units. The owners also have access to almost 11,000 other hotels and resorts through the company's partnership and exchange networks.
Bluegreen's sales and marketing platform is supported by exclusive marketing relationships with brands like Bass Pro and Choice Hotels. Through these relationships, the company targets its core demographic, which is defined as households with an average annual income of about $75,000, below the industry average of $90,000.
Until 2009, VOIs were only sold in resorts that were developed or acquired by the company. Since 2009, the company has also sold VOIs owned by third-party developers and VOIs that were acquired under just-in-time arrangements with third-party developers. The company receives a commission for these sales. The company also offers fee-based services like resort management, mortgage servicing, title management, and construction management for resorts and resort developers. The company offers financing to VOI purchasers, generating interest income.
At the end of September, the company's vacation club had approximately 211,000 members, up from 170,000 members at the end of 2012. The number of owners in the company's Vacation Club has increased at a 5.0% compound annual growth rate between 2012 and 2016.
The company believes that its resort portfolio represents a significant competitive advantage while its capital-efficient business model makes for another strength.
In 2016, the company derived 26.0% of its revenue from Developed VOI sales while 14.0% came from consumer financing. The remaining 60.0% came from capital-light businesses. Capital-light VOI sales accounted for 45.0% of 2016 revenue while Management and other Fee-based Services made up 16.0% of revenue.
For the nine months ended in September, the company reported revenue of $501 million, up 0.9% year-over-year. A 16.5% increase in fee-based sales commission revenue (to $179.05 million) offset a 12.1% decline in sales of VOIs ($172.84 million). Total number of sale transactions declined 13.5% to 30,638 while average sales volume per guest increased 9.0% to $2,442.
For 2016, the company's revenue totaled $662.65 million, up 7.3% year-over-year. Sales of VOIs increased 2.7% to $266.14 million while Fee-based sales commission revenue rose 16.2% to $201.83 million. Other fee-based services revenue rose 6.1% to $103.45 million while interest income also increased 6.1% to $89.51 million.
Starting in the first quarter of 2018, the company intends to pay a quarterly cash dividend of $0.15 per share.
The company intends to use the net proceeds from the offering for working capital, potential acquisitions and development of VOI properties, sales and marketing activities, general administrative expenses, and general corporate purposes.