Bluegreen Vacations Holding Corp. (BVH) 22Q1 Update

2022 first quarter net income from continuing operations attributable to shareholders was $16.0 million or $0.76 per diluted share, compared with 21Q1’s $3.1 million or $0.16 per share.  Revenues improved to $195.1 million from $146.4 million.

System-wide sales of vacation ownership interests (VOIs) were $151.5 million in 22Q1, up 41.6% from $107.0 million in 22Q1.  Although system-wide sales were comparable to pre-pandemic levels, this was the second consecutive quarter of decline from the recent peak of $180.5 million achieved in 21Q3.  At least some of the strength in sales over the past 21 months has been due to pent-up demand caused by the pandemic.  Bluegreen has also benefited from a refocusing by U.S. consumers on domestic vacations, also a consequence of the pandemic.  Yet, it seems that pent-up demand is waning and the risk of recession, due to interest rate increases and geopolitical developments, has risen significantly this year.  Since the purchase of VOIs is highly discretionary, Bluegreen’s sales and profitability are likewise at risk.

In 2021, BVH hired Ernst & Young as its auditor, in place of Grant Thornton.  Along with that change, there have been some changes in its financial reporting, especially in the segment note disclosures, which make it more difficult to track its performance.  In addition, BVH has withdrawn certain helpful MD&A disclosures.  Although the company continues to provide significant details about its operations, the changes place an additional burden on users of its financial statements who seek to monitor and forecast its performance.

Based upon recent results, I have set a 2022 earnings estimate of $2.90 per share (up from $2.28 in my August 2021 report) and set a 2023 estimate of $3.01.  These projections are below consensus.  They anticipate slowing growth but do not factor in the potential impact of an economic recession in the U.S.  I am also resetting my rating on the stock to neutral and maintaining my price target at $25.  With the recent changes in financial reporting and the economic outlook, I have lowered my safety rating on the stock by two notches from “C-” to “D.” 

This is a summary of my recent update report on Bluegreen Vacations Holding Corp. (BVH). Reach out to me to receive a copy of the full report.

June 19, 2022

Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250

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