BFC Financial Corporation Reports Financial Results for the Second Quarter, 2016

Source:  BFC Financial Corporation



BFC Financial Corporation ("BFC" or the "Company") (OTCQB: BFCF) (OTCQB: BFCFB) reported financial results for the three and six month periods ended June 30, 2016.

Overview and Highlights:

BFC Selected Financial Data (Consolidated)Second Quarter 2016 Compared to Second Quarter 2015:

• Total consolidated revenues of $193.0 million vs. $191.0 million
• Net income attributable to BFC of $0.2 million vs. $84.3 million ⁽¹⁾
• Diluted earnings per share of $0.0 vs. $0.97
• "Free cash flow" (cash flow from operating activities less capital expenditures) was $23.4 million compared to $17.5 million

BFC Selected Financial Data (Consolidated)Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015:

• Total consolidated revenues of $358.6 million vs. $341.0 million
• Net income attributable to BFC of $5.7 million vs. $86.2 million ⁽¹⁾
• Diluted earnings per share of $0.07 vs. $0.99
• "Free cash flow" (cash flow from operating activities less capital expenditures) was $38.4 million compared to $10.0 million

^{(1) Net income attributable to BFC for the three and six month ended June 30, 2015 included a benefit for income taxes of $92.3 million due to the release of a portion of BFC's valuation allowance on its net deferred tax asset.}
As of June 30, 2016, BFC had total consolidated assets of $1.4 billion, shareholders' equity attributable to BFC of $385.0 million, and total consolidated equity of $495.9 million. At June 30, 2016, BFC's book value per share was $4.61 compared to $4.08 at June 30, 2015.

"BFC and BBX Capital Corporation ("BBX Capital" or "BBX") (NYSE: BBX) recently announced that they entered into a definitive merger agreement between the companies. As discussed in more detail below, BFC has held a meaningful stake in BBX since 1987, and if the proposed merger is consummated, BBX will be a wholly owned subsidiary of BFC. The proposed merger of BFC and BBX is anticipated to simplify our corporate structure and intended to consolidate and streamline the combined companies. Also discussed in more detail below, BFC announced that its Board declared a quarterly cash dividend on BFC's Common Stock during the quarter and, subject to declaration by the Board each quarter, anticipates paying regular quarterly dividends in the future," commented Jarett S. Levan, Acting Chairman and Chief Executive Officer of BFC Financial.

On July 27, 2016, BFC and BBX Capital entered into a definitive merger agreement between the companies. Under the terms of the merger agreement, which was unanimously approved by a special committee comprised of BBX's independent directors as well as the boards of directors of both companies, BBX's shareholders other than BFC will be entitled to receive, at their election, 5.4 shares of BFC's Class A Common Stock or $20.00 in cash for each share of BBX's Class A Common Stock held by them. BBX Capital's shareholders will have the right to elect to make different elections with respect to different shares held by them so they may elect to receive all cash, all stock, or a combination of cash and stock in exchange for their shares. If the merger is consummated, BBX will be a wholly owned subsidiary of BFC.

On June 8, 2016, the Company announced that its Board of Directors had declared a cash dividend payment of $0.005 per share on its Class A and Class B Common Stock. The dividend was paid on July 20, 2016, to all shareholders of record at the close of trading on June 20, 2016. BFC has indicated its intention to, subject to declaration by its Board, pay regular quarterly dividends of $0.005 per share on its Class A and Class B Common Stock (an aggregate of $0.02 per share annually).

The results of operations and financial condition of the companies in which BFC holds a controlling financial interest, including BBX Capital Corporation and Woodbridge Holdings, LLC ("Woodbridge"), the parent company of Bluegreen, are consolidated in BFC's financial statements. BFC currently holds an approximate 81% ownership interest in BBX Capital. Woodbridge is owned 54% by BFC and 46% by BBX Capital. Woodbridge's principal asset is its 100% ownership interest in Bluegreen.

The following selected information relates to the operating activities of Bluegreen and BBX Capital. See the supplemental tables below for the consolidating statements of operations for the three and six month periods ended June 30, 2016 and 2015.

Bluegreen Corporation

Bluegreen is a sales, marketing, and management company focused on the vacation ownership industry. Bluegreen markets, sells and manages vacation ownership interests ("VOIs)" in resorts, which are generally located in popular, high-volume, "drive-to" vacation destinations. The resorts in which Bluegreen markets, sells or manages VOIs were either developed or acquired by Bluegreen, or were developed and are owned by third parties. Bluegreen earns fees for providing sales and marketing services to these third party developers. Bluegreen also earns fees by providing management services to the Bluegreen Vacation Club and property owners associations ("POAs"), mortgage servicing, VOI title services, reservation services, and construction design and development services. In addition, Bluegreen provides financing to individual purchasers of VOIs.
During the three month period ended June 30, 2016, Bluegreen paid cash dividends of $15.0 million to Woodbridge, Bluegreen's parent company, and Woodbridge in turn paid $7.6 million of cash dividends to BFC and $6.5 million of cash dividends to BBX Capital. During the six month period ended June 30, 2016, Bluegreen paid cash dividends of $25.0 million to Woodbridge, and Woodbridge in turn paid $12.6 million of cash dividends to BFC and $10.7 million of cash dividends to BBX Capital.

Bluegreen Selected Financial DataSecond Quarter 2016 Compared to Second Quarter 2015:

• System-wide sales of VOIs, net of equity trade allowances ⁽²⁾, were $159.7 million vs. $139.9 million. Included in system-wide sales are sales of VOIs made as part of Bluegreen's "capital-light" business strategy⁽¹⁾, which were $125.8 million vs. $111.0 million, gross of equity trade allowances⁽²⁾:
  • Sales of third party VOIs on a commission basis were $77.6 million vs. $70.9 million and generated sales and marketing commissions of $54.2 million vs. $48.0 million
  • Sales of secondary market VOIs were $26.8 million vs. $24.2 million
  • Sales of just-in-time VOIs were $21.4 million vs. $15.9 million
• Average sales price per transaction was $13,293 versus $12,325
• Sales volume per guest averaged $2,239 vs. $2,328
• Tours increased 19% compared to prior year quarter
• Other fee-based services revenue was $26.1 million vs. $24.9 million
• Net income attributable to Bluegreen was $14.0 million vs. $17.9 million. Excluding special bonuses totaling $10.0 million paid to certain employees, Bluegreen's net income would have been $20.1 million for the three months ended June 30, 2016.
• EBITDA was $25.1 million vs. $32.2 million ⁽³⁾. Excluding the special bonuses discussed above, EBITDA would have been $35.1 million for the three months ended June 30, 2016.
• "Free cash flow" (cash flow from operating activities less capital expenditures) was $28.7 million compared to $18.2 million

Bluegreen Selected Financial DataSix Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015:

• System-wide sales of VOIs, net of equity trade allowances ⁽²⁾, were $286.7 million vs. $249.1 million. Included in system-wide sales are sales of VOIs made under Bluegreen's "capital-light" business strategy⁽¹⁾, which were $224.4 million vs. $189.4 million, gross of equity trade allowances⁽²⁾:
  • Sales of third party VOIs on a commission basis were $137.7 million vs. $119.9 million and generated sales and marketing commissions of $94.3 million vs. $80.6 million
  • Sales of secondary market VOIs were $61.0 million vs. $46.8 million
  • Sales of just-in-time VOIs were $25.7 million vs. $22.7 million
• Average sales price per transaction was $13,265 vs. $12,390
• Sales volume per guest averaged $2,268 vs. $2,355
• Tours increased 21% compared to prior year period
• Other fee-based services revenue was $51.6 million vs. $48.7 million
• Net income attributable to Bluegreen was $31.5 million vs. $33.9 million. Excluding special bonuses totaling $10.0 million paid to certain employees, Bluegreen's net income would have been $37.6 million for the six months ended June 30, 2016.
• EBITDA was $55.5 million vs. $63.0 million ⁽³⁾. Excluding the special bonuses discussed above, EBITDA would have been $65.5 million for the six months ended June 30, 2016.
• "Free cash flow" (cash flow from operating activities less capital expenditures) was $60.0 million compared to $30.1 million

(1)		Bluegreen's sales of VOIs under its capital-light business strategy include sales of VOIs under fee-based sales and marketing arrangements, just-in-time inventory acquisition arrangements, and secondary market arrangements. Under "just-in-time" arrangements, Bluegreen enters into agreements with third party developers that allow Bluegreen to buy VOI inventory from time to time in close proximity to the timing of when Bluegreen intends to sell such VOIs. Bluegreen also acquires VOI inventory from resorts' POA and other third parties close to the time Bluegreen intends to sell such VOIs. Such VOIs are typically obtained by the POAs through foreclosure in connection with maintenance fee defaults, and are generally acquired by Bluegreen at a significant discount. Bluegreen refers to sales of inventory acquired through these arrangements as "Secondary Market Sales."
(2)		Equity trade allowances are amounts granted to customers upon trading in their existing VOIs in connection with the purchase of additional VOIs.
(3)		See the supplemental tables included in this release for a reconciliation of EBITDA to net income.

Bluegreen Summary for the Three and Six Months Ended June 30, 2016

System-wide sales of VOIs were $159.7 million and $286.7 million during the three and six months ended June 30, 2016, respectively, and $139.9 million and $249.1 million during the three and six months ended June 30, 2015, respectively. The growth in system-wide sales during the three and six months ended June 30, 2016 is primarily attributable to an increase of 19% and 21%, respectively, in the number of total prospect tours, which included an increase of 27% and 29%, respectively, in the number of new prospect tours, and an increase of 8% and 7%, respectively, in the average sales price per transaction. These increases were partially offset by a decrease of 11% and 10%, respectively, in the sale to tour conversion ratio for total prospects and a decrease of 11% and 9%, respectively, in the sale to tour conversion ratio for new prospects.

Fee-based sales commission revenue was $54.2 million and $48.0 million during the three months ended June 30, 2016 and 2015, respectively, and $94.3 million and $80.6 million during the six months ended June 30, 2016 and 2015, respectively. The increase in the sales of third-party developer inventory during the 2016 periods were due primarily to the factors described above related to the increase in system-wide sales of VOIs. In addition, Bluegreen earned an average sales and marketing commission of 70% and 69% during the three and six months ended June 30, 2016, respectively, as compared to 68% and 67% during the three and six months ended June 30, 2015, respectively. The increase in the second quarter of 2016 included an incentive commission of $1.7 million earned as a result of the achievement of certain sales thresholds pursuant to the terms and conditions of the applicable contractual arrangement.

Other fee-based services revenue increased 4% to $26.1 million for the three months ended June 30, 2016 and 6% to $51.6 million for the six months ended June 30, 2016. Fee-based management services revenues increased during the 2016 periods compared to the 2015 periods primarily as a result of cumulative increases in the number of owners in the Bluegreen Vacation Club.
Net interest spread was $13.9 million and $12.6 million during the three months ended June 30, 2016 and 2015, respectively, and $28.2 million and $22.0 million during the six months ended June 30, 2016 and 2015, respectively. The increase in net interest spread during the three and six months ended June 30, 2016 is primarily due to additional interest income of $0.4 million and $2.4 million recognized by Bluegreen during the three and six months ended June 30, 2016, respectively, related to an $80.0 million loan made to BFC during April 2015.

Bluegreen generated "free cash flow" (cash flow from operating activities less capital expenditures) of $60.0 million during the six months ended June 30, 2016 compared to $30.1 million during the six months ended June 30, 2015. The increase for the 2016 period is primarily due to decreased spending on the acquisition and development of inventory. During the first six months of 2016, Bluegreen paid $5.2 million for development expenditures primarily related to the Bluegreen/Big Cedar Vacations Joint Venture, as compared to $19.7 million in the 2015 period. Additionally, Bluegreen paid $2.7 million for Just-in-Time inventory purchases during the first six months of 2016 as compared to $9.9 million during the same 2015 period. This increase was partially offset by the impact of a decrease in cash realized within 30 days of sale to 41% during the six months ended June 30, 2016 from 47% during the six months ended June 30, 2015.

BBX Capital Corporation

BBX Capital is involved in the acquisition, ownership and management of joint ventures and investments in real estate and real estate development projects, as well as investments in and management of middle market operating businesses, in each case directly or indirectly through subsidiaries or joint ventures.

BBX Selected Financial DataSecond Quarter 2016 Compared to Second Quarter 2015:

• Total consolidated revenues of $24.0 million vs. $38.6 million
• Net loss attributable to BBX Capital of ($2.2) million vs. net income of $4.1 million
• Equity in income of Woodbridge Holdings, LLC of $5.1 million vs. loss of ($10.2) million

BBX Selected Financial DataSix Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015:

• Total consolidated revenues of $47.7 million vs. $60.3 million
• Net loss attributable to BBX Capital of ($2.5) million vs. net income of $5.2 million
• Diluted loss per share of ($0.15) vs. diluted earnings per share of $0.31
• Equity in income of Woodbridge Holdings, LLC of $11.8 million vs. net loss of ($4.4) million

As of June 30, 2016, BBX Capital had total consolidated assets of $390.5 million, shareholders' equity attributable to BBX Capital of $335.5 million, and total consolidated equity of $337.4 million. At June 30, 2016, BBX Capital's book value per share was $20.47 vs. $19.63 at June 30, 2015.
For more detailed information regarding BBX Capital and its financial results, business, operations and risks, please see BBX Capital's financial results press release for the quarter ended June 30, 2016, BBX Capital's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, and BBX Capital's Annual Report on Form 10-K for the year ended December 31, 2015, which are available to view on the SEC's website, www.sec.gov, and on BBX Capital's website, www.BBXCapital.com.
For more complete and detailed information regarding BFC and its financial results, business, operations and risks, and Bluegreen Corporation, please see BFC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, and BFC's Annual Report on Form 10-K for the year ended December 31, 2015, which are available on the SEC's website, www.sec.gov, and on BFC's website, www.BFCFinancial.com.

About BFC Financial Corporation:BFC (OTCQB: BFCF) (OTCQB: BFCFB) is a holding company whose principal holdings include an 81% ownership interest in BBX Capital Corporation (NYSE: BBX) and its indirect ownership interest in Bluegreen Corporation. BFC owns a 54% equity interest in Woodbridge, the parent company of Bluegreen. BBX Capital owns the remaining 46% equity interest in Woodbridge. As of June 30, 2016, BFC had total consolidated assets of $1.4 billion, shareholders' equity attributable to BFC of $385.0 million, and total consolidated equity of $495.9 million. BFC's book value per share at June 30, 2016 was $4.61.

About Bluegreen Corporation:Founded in 1966 and headquartered in Boca Raton, FL, Bluegreen is a sales, marketing and resort management company, focused on the vacation ownership industry and pursuing a capital-light business strategy. Bluegreen manages, markets and sells the Bluegreen Vacation Club, a flexible, points-based, deeded vacation ownership plan with more than 200,000 owners, 66 owned or managed resorts, and access to more than 4,500 resorts worldwide. Bluegreen also offers a portfolio of comprehensive, turnkey, fee-based services, including resort management services, financial services, and sales and marketing services, to or on behalf of third parties.

About BBX Capital Corporation:BBX Capital (NYSE: BBX) is involved in the acquisition, ownership and management of joint ventures and investments in real estate and real estate development projects, as well as acquisitions, investments and management of middle market operating businesses. In addition, BBX Capital and its controlling shareholder, BFC Financial Corporation, have a 46% and 54% respective ownership interest in Bluegreen Corporation. As a result of their ownership interests, BBX Capital and BFC together own 100% of Bluegreen. As of June 30, 2016, BBX Capital had total consolidated assets of $390.5 million, shareholders' equity attributable to BBX Capital of $335.5 million, and total consolidated equity of $337.4 million. BBX Capital's book value per share at June 30, 2016 was $20.47.

For further information, please visit our family of companies:BFC Financial Corporation: www.BFCFinancial.comBluegreen Corporation: www.BluegreenVacations.comBBX Capital: www.BBXCapital.com

Additional Information and Where to Find it:BFC will file with the SEC a Registration Statement on Form S-4 that will include a prospectus of BFC and a proxy statement of BBX Capital relating to the proposed merger between the companies discussed in this press release. The proxy statement/prospectus will be sent to the shareholders of BBX. Investors and shareholders will be able to obtain a copy of the proxy statement/prospectus and other documents filed with the SEC containing information about BFC and BBX Capital free-of-charge from the SEC's website at www.sec.gov. Copies of documents filed with the SEC by BFC will be made available free-of-charge on BFC's website at www.bfcfinancial.com, under the "Investor Relations" tab, or by written request to BFC Financial Corporation, 401 East Las Olas Boulevard, Suite 800, Fort Lauderdale, Florida 33301, Attention: Investor Relations, or by phone at 954-940-4900. Copies of documents filed with the SEC by BBX Capital will be made available free-of-charge on BBX Capital's website at www.bbxcapital.com, under the "Investor Relations" tab, or by written request to BBX Capital Corporation, 401 East Las Olas Boulevard, Suite 800, Fort Lauderdale, Florida 33301, Attention: Investor Relations, or by phone at 954-940-4000. Investors and shareholders are advised to read the proxy statement/prospectus when it is available because it will contain important information.

BFC, BBX and certain of their respective directors and executive officers may, under the rules of the SEC, be deemed to be "participants" in the solicitation of proxies from BBX's shareholders in connection with the proposed merger. Information about the directors and executive officers of BFC is set forth in BFC's Proxy Statement on Schedule 14A for its 2016 Annual Meeting of Shareholders, which was filed with the SEC on April 28, 2016. Information about the directors and executive officers of BBX Capital is set forth in BBX Capital's Proxy Statement on Schedule 14A for its 2016 Annual Meeting of Shareholders, which was filed with the SEC on April 25, 2016. These documents can be obtained free-of-charge from the sources indicated above. Information concerning the interests of the persons who may be considered "participants" in the solicitation will be set forth in the proxy statement/prospectus relating to the merger when it becomes available.