Bluegreen Corporation Reports Record 2005 First Quarter Financial Results
biz.yahoo.com
Tuesday April 26, 8:37 am ET
BOCA RATON, Fla.--(BUSINESS WIRE)--April 26, 2005--Bluegreen Corporation
Q1 2005 Highlights Versus Q1 2004
Net income increased 37.4% to $6.5 million, or $.21 per diluted share
Bluegreen Resorts sales up 23.5% to $65.6 million
Bluegreen Communities sales rose 16.1% to $38.4 million
Book value increased to $8.98 at March 31, 2005 from $8.76 at December 31, 2004
Bluegreen Corporation, a leading provider of leisure products and lifestyle choices, today announced financial results for the first quarter ended March 31, 2005 (see attached tables).
George F. Donovan, President and Chief Executive Officer of Bluegreen®, commented, "We are pleased with our financial results for the first quarter of 2005, which reflected same-Resort growth at many of our timeshare properties, a solid performance from our new off-site Resort sales offices and continued profitability at our Communities business."
Net income for the first quarter of 2005 increased 37.4% to $6.5 million, or $.21 per diluted share, on approximately 31.3 million weighted average common and common equivalent shares outstanding ("shares outstanding"), compared to net income of $4.7 million, or $.17 per diluted share, on approximately 30.3 million shares outstanding for the first quarter of 2004.
Total sales increased 20.7% to $104.0 million from $86.2 million in the same period last year, reflecting higher sales at both the Resorts and Communities business segments. Total operating revenues rose 21.4% to $130.0 million from $107.1 million in the first quarter of 2004. This increase was due to higher total sales of real estate, a 33.1% rise in other resort and communities operations revenue, and a 30.3% rise in interest income. These increases were offset by a 39.5% decrease in gain on sale of notes receivable, due primarily to increases in the related cost of funds and other relevant variables in the first quarter of 2005 as compared to the prior year period.
Bluegreen Resorts
Resorts sales in the first quarter of 2005 increased 23.5% to a first quarter record $65.6 million from $53.1 million in the same period last year. This increase was primarily attributable to double-digit same-Resort sales increases at many of the Company's sales offices, most notably at The Fountains(TM) Resort in Orlando, FL, but also at Grande Villas at World Golf Village® in St. Augustine, FL; MountainLoft(TM) in Gatlinburg, TN; Mountain Run at Boyne(TM) in Boyne, MI; Shore Crest® Vacation Villas in Myrtle Beach, SC; and Christmas Mountain Village® in Wisconsin Dells, WI. New sales sites in Dallas, TX and The Hammocks at Marathon(TM) in Marathon, FL also contributed to higher sales during the first quarter of 2005.
Resort cost of sales declined slightly to 20.1% of sales from 20.4% in the same period last year, reflecting a favorable product mix. Lower cost of sales during the 2005 quarter was primarily due to the additional construction of units and consequently increased sales of vacation ownership interests in The Fountains Resort, which has a relatively low associated product cost. As previously disclosed, resort cost of sales has more typically ranged from 23% to 25%, and Bluegreen expects that it will be at that level in the future.
Mr. Donovan noted that Bluegreen is continuing to develop or acquire new Resort properties in order to satisfy anticipated sales growth in 2005, including:
the purchase of 80 acres of land in Gatlinburg, Tennessee to further expand Bluegreen's vacation ownership presence in the Smoky Mountain region. Bluegreen expects to construct a minimum of 250 vacation ownership units and additional amenities on this tract of land, which is adjacent to its MountainLoft(TM) Resort. Phase I construction will include the development of 3, 5-story mid-rise villas (60 vacation ownership units), which are expected to be completed in the first half of 2006, and 54 cabins (114 vacation ownership units), which are expected to be completed in the beginning of 2007. Sales through the Bluegreen Vacation Club® are expected to begin in 2006.
the purchase of a 4-acre tract of land adjacent to the Harbour Lights(TM) resort in Myrtle Beach, South Carolina. The Company has commenced construction of a 3-story, 12-unit vacation ownership residence, which should be completed by the end of 2005. Sales through the Bluegreen Vacation Club® are expected to commence in 2006. Bluegreen can also construct additional vacation ownership units on this property in the future.
Bluegreen Communities
Communities sales in the first quarter of 2005 increased 16.1% to a first quarter record $38.4 million from $33.0 million in the same period last year. This increase was due primarily to strong same-site sales at Sanctuary Cove at St. Andrews Sound(TM), a Bluegreen Golf Community located among Georgia's Golden Isles; Traditions at Braselton(TM), a Bluegreen Golf Community in Braselton, GA; and Mountain Springs Ranch(TM), in the Texas Hill Country. Strong sales were also generated at Chapel Ridge(TM), a Bluegreen Golf Community in Chatham County, NC that commenced sales in July 2004, and SugarTree on the Brazos located near Fort Worth, TX, which commenced sales in January 2005.
As previously announced, because of the significant sales achieved in the Communities segment during 2004 and in the 2005 quarter, several of the Company's properties substantially sold out either during or prior to the first quarter of 2005. Others are expected to sell out earlier in 2005 than previously forecasted. Bluegreen Communities is currently exploring the acquisition of several properties in markets where it currently conducts business and in new regions of the country in order to replace these sold-out projects.
Communities cost of sales declined to 51.3% from 55.6% in the same period last year, due primarily to a higher percentage of total Communities sales being comprised of golf properties, which generally have higher associated gross margins.
As of March 31, 2005, approximately $37.2 million and $15.4 million of Communities sales and profits, respectively, were deferred under the percentage-of-completion method of accounting. It is expected that these amounts will be recognized in future periods ratably with the development of the projects.
FINANCIAL METRICS
Total positive net interest spread (interest income less interest expense) was $3.3 million in the first quarter of 2005 as compared to $1.0 million in the first quarter of 2004. Interest income increased primarily as a result of a higher average portfolio of vacation ownership notes receivable during the first quarter of 2005 compared to the same period one year ago, while interest expense declined primarily as a result of lower average debt outstanding and more interest being capitalized due to increased construction activity.
Selling, general and administrative expenses ("S,G&A") as a percentage of total sales increased to 59.6% from 59.0% in the first quarter of 2004 in connection with the additional costs of implementing the requirements associated with the Sarbanes-Oxley Act of 2002, and higher IT expenses. S,G&A as a percentage of total operating revenues was 47.7% in the first quarter of 2005 compared to 47.4% in the first quarter of 2004.
Provision for loan losses decreased $723,000 to $147,000 for the first quarter of 2005 from $870,000 for the first quarter of 2004. Due to the sale of $44.9 million of notes receivable without recourse to Branch Banking and Trust Company in March 2005, the Company's notes receivable balance at March 31, 2005 decreased to $107.1 million from $121.9 million at December 31, 2004, and consequently the Company's provision for loan losses was favorably impacted. The Company's allowance for loan losses decreased as a percentage of outstanding notes receivable to 7.2% from 7.9% at March 31, 2005 and December 31, 2004, respectively.
FINANCIAL POSITION
Bluegreen's balance sheet at December 31, 2004 reflected a book value of $8.98 per share compared to a book value of $8.76 per share at December 31, 2004, and a debt-to-equity ratio of 0.88:1 as compared to 0.85:1 at December 31, 2004. Unrestricted cash at March 31, 2005 increased to $94.5 million, the highest level in Bluegreen's history.
As outlined in the Company's Annual Report on Form 10-K for the year ended December 31, 2004, Bluegreen formed a statutory business trust ("Trust") for the purpose of issuing Trust Preferred Securities ("trust preferred securities") and investing the proceeds thereof in its junior subordinated debentures. On March 15, 2005, the Trust issued $22.5 million of trust preferred securities, the proceeds of which, along with the Company's capital contribution to the Trust, were used to purchase an identical amount of junior subordinated debentures from the Company. Interest on the junior subordinated debentures and distributions on the trust preferred securities will be payable quarterly in arrears at a fixed rate of 9.16% through March 30, 2010 and thereafter at a floating rate of 4.90% over 3-month LIBOR until March 30, 2035, when all of the principal is due. The issuance of trust preferred securities was part of a larger pooled trust securities offering which was not registered under the Securities Act of 1933. Proceeds will be used by the Company for general corporate purposes. Subject to market conditions, the Company also expects to create similar trusts and participate in other pooled trust preferred securities transactions in the future as a source of additional financing or debt repayment |
