Reported contract sales for Q1 2024 were $631 million, with EBITDA at $270 million and margins at 24%.
Adjusted EBITDA, excluding certain items, was reported at $270 million.
Total revenue for the quarter, excluding cost reimbursements, reached $1.03 billion.
Real estate segment profit was $131 million with margins of 26%.
Financing segment profit stood at $65 million with margins of 63%.
Resort and club business segment profit was $112 million with margins of 68%.
Rental and ancillary revenues were $181 million with segment profit of $8 million and margins of 4%.
Adjusted free cash flow for the quarter was a use of $374 million.
The company repurchased 2.3 million shares for $99 million during the quarter.
Operational Highlights and Strategy
The quarter included over 2 months of results from the recently closed Bluegreen acquisition.
Tour growth showed positive momentum, particularly in March, driven by increased marketing activities and package activations.
Significant progress was made in the integration and rebranding efforts of Diamond and Bluegreen acquisitions.
Announced a new partnership with Great Wolf Lodge to create a new source of lead flow.
Combined contract sales would have been $656 million, assuming Bluegreen was owned for the entire quarter.
New buyers comprised 27% of legacy contract sales in the quarter.
The company achieved $11 million of Bluegreen cost synergies recognized during the quarter.
Financial Outlook and Guidance
The company reiterated its full-year adjusted EBITDA guidance of $1.2 billion to $1.26 billion.
Expected continued share repurchases of approximately $100 million per quarter.
Liquidity position at the end of Q1 2024 consisted of $355 million of unrestricted cash and $293 million of availability under the revolving credit facility.
Total debt at quarter-end was $5.1 billion in corporate debt and approximately $1.5 billion in nonrecourse debt.
Management Commentary
CEO Mark Wang highlighted the company’s positive momentum and ongoing integration efforts, expressing confidence in achieving year-end guidance.
President and CFO Daniel Mathewes provided detailed financial results and reaffirmed the company’s strategic direction and financial health.
Question and Answer
Bluegreen Acquisition Integration and Synergies
Question
How is the Bluegreen acquisition tracking compared to underwriting, and are the expected cost and revenue synergies still realistic?
Answer
The integration is progressing well, with nearly half of the $100 million cost savings target achieved on a run-rate basis.
Rebranding of sales centers and properties, as well as partnership development with Bass Pro, are key focus areas.
The $100 million cost synergy target is considered achievable, but not expected to increase beyond that.
Maui Update and Impact of Wildfire
Question
Can you provide an update on how Maui properties are recovering from the recent wildfire, and was there an earnings impact in the quarter?
Answer
The Maui Bay Villas property is operating normally with improving trends, while the Ka’anapali Beach property is still impacted.
Sales recovery is expected to lag occupancy recovery, and full recovery is anticipated in 2025.
Consumer Behavior and Sales Trends
Question
How has consumer hesitancy evolved throughout the first quarter, and what are the key drivers of sales trends?
Answer
There is stabilization in consumer behavior, with hesitancy primarily driven by uncertainty rather than negative trends.
New buyers are more cautious than existing owners, but tour flow is being increased while maintaining consumer quality.
The broader portfolio, including drive-to destinations and more affordable entry points, is seen as a positive factor.
Loan Loss Provisions and Bad Debt
Question
Why did loan loss provisions not increase significantly in the first quarter, and what are the expectations for this line item going forward?
Answer
Loan loss provisions are expected to escalate to the mid-teens range as the business matures.
While there was some escalation in the first quarter, factors such as propensity to borrow and mortgage levels influence the absolute dollar amount.
The bad debt headwind is consistent with previous expectations and is primarily related to Bluegreen.
Bluegreen Owner Hesitancy and HGV Max Rollout
Question
Is there any impact from the weather on Bluegreen’s drive-to owner base, and what is the timeline for introducing HGV Max to Bluegreen owners?
Answer
Weather had a minor impact, but the main factor is anticipation and hesitation among Bluegreen members regarding the HGV Max rollout and integration.
Fee-for-Service Business Performance
Question
How should we think about the fee-for-service business for the rest of the year, given the lower-than-expected performance in the first quarter?
Answer
Fee-for-service business accounted for 16% of contract sales in the first quarter and is expected to remain at a similar level for the rest of the year.
HGV Max Rollout to Bluegreen Owners and Bass Pro Partnership
Question
Can you elaborate on the technical and legal considerations delaying the HGV Max rollout to Bluegreen owners and the expected timeline for this integration?
Answer
The delay is due to the need for technology and legal structuring work, similar to the Diamond integration, and a rollout is expected to begin in the fourth quarter.
A significant increase in activity and transactions is anticipated once HGV Max is introduced to the Bluegreen owner base.
Sales and Marketing Operating Leverage
Question
What drove the increase in sales and marketing expenses in the first quarter, and how will the company achieve more operating leverage in this area moving forward?
Answer
The increase in the first quarter was partially due to a large Ultimate Access event.
Operating leverage will be achieved through seasonality, VPG improvement initiatives, and cost synergies on both the G&A and sales and marketing sides.
Owner Group Participation in Hawaii
Question
To what extent do the two acquired owner groups, Diamond and Bluegreen, participate in the Hawaii market compared to their mainland activities?
Answer
Diamond members were already participating in Hawaii, and Bluegreen members are particularly excited about the opportunity to experience Hawaii through the HGV Max program.
Hawaii occupancy levels are strong, and the presence of Hawaii properties is expected to drive upgrade activity among Bluegreen members.
Bass Pro Partnership and Joint Venture Plans
Question
Can you provide more details on the potential structure and benefits of the Bass Pro partnership, including any timeline for announcements?
Answer
The partnership includes both a marketing agreement and a JV agreement, with plans to create an experiential outdoor enthusiast brand.
Further details on JV properties and program developments within Bass Pro stores will be announced as plans progress.
