Company announces four new Drive Shack
locations and confirms three new venue openings in 2019
Has closed sales of 15 golf courses for $115
million and repaid $102 million of debt
Drive Shack Inc. (NYSE:DS), an owner and operator of golf
entertainment and dining venues and traditional golf courses, today
announced financial results for its fourth quarter and full-year
ended December 31, 2018.
Business Highlights
- Drive Shack
- Announced four new Drive Shack
locations in: Chicago, IL; Houston, TX; Newport Beach, CA; and
Portland, OR
- Awarded Drive Shack New York City in
Manhattan
- Drive Shack Orlando, which opened in
April 2018, generated $1.6 million of revenue in Q4 with spend per
visitor of $41, up 8% compared to Q3
- American Golf Corporation
- Golf course sales of $90 million from
13 courses in 2018, with a total of $115 million from 15 courses to
date
- American Golf Corporation full year
2018 revenue generation of $309 million
- Grew public course The Players Club
Members by 14% and private course average Full-Golf Membership Dues
Per Member by 4%, on a same-store basis over prior year
- Ken May appointed Chief Executive
Officer, following four years as CEO of Topgolf
- David Hammarley appointed Chief
Financial Officer, with two plus decades of hospitality experience
across such companies as sbe and Starwood Hotels & Resorts
“In 2018, we took a big step in our transition from a
traditional golf company to a full-fledged entertainment business
with great golf content. We now look forward to a transformative
2019, as we quadruple the number of our golf entertainment venues.
Expansion into dining and entertainment is our top priority, and we
continue to invest in identifying new Drive Shack locations,
building them quicker, and improving the customer experience for
our guests,” said Ken May, Chief Executive Officer.
“We generated $115 million in gross proceeds from the sale of 15
owned golf courses and repaid $102 million of debt. As we continue
to monetize our golf courses, these proceeds will serve as the
platform for growth for our entertainment golf business where we
are targeting 20 open units by 2022,” said David Hammarley, Chief
Financial Officer.
Development
Since third quarter of 2018, the Company signed 4 new locations
across Chicago, IL; Houston, TX; Newport Beach, CA; Portland, OR.
The company plans to open up 3 new Drive Shack site locations in
Raleigh, NC, West Palm Beach, FL, and Richmond, VA in the second
half of 2019.
Financial Outlook
Our FY 2019 expectations and stabilized targets are as
follows:
- Drive Shack Orlando site is targeted to
break even from a cash flow perspective in 2019 and continue to
ramp up its revenues and cash flow generation in 2020 onwards
- Raleigh, West Palm Beach, and Richmond
planned to open in the second half of 2019
- Plan to open 3 to 5 new sites in 2020
and 5 to 10 sites in 2021 and 2022
- Targeting over 20 sites by 2022
- Stabilized target Drive Shack
entertainment unit economics:
- Cost to build between $20 to $35
million across the varying markets and relevant venue formats
- Top-line revenues anticipated to be $15
to $25 million with target EBITDA margins of approximately
25%-30%
- Complete the remaining short-term
course sales by end of 2019 with total gross proceeds of
approximately $175 million from 24 of 26 owned courses
- Continue to explore the monetization of
the remaining 2 owned courses in 2019
- Stabilized traditional golf business to
generate revenue of approximately $175 million and target annual
free cash flow of over $10 million in 2020 and beyond
Preferred Stock Dividends
The Company will pay dividends on April 29, 2019 to holders of
record of preferred stock on April 1, 2019, for the period
beginning February 1, 2019 and ending April 30, 2019, in an amount
equal to $0.609375, $0.503125 and $0.523438 per share on the 9.750%
Series B, 8.050% Series C and 8.375% Series D preferred stock,
respectively.
Financial Results
Fourth Quarter 2018 compared to the
Fourth Quarter 2017 ($ in thousands, except for per share
data):
Three Months Ended December 31, 2018
2017 Total revenues $ 69,286
$ 70,402 Loss applicable to common stockholders $
(4,905 ) $ (25,467 ) Loss applicable to common stockholders
Per Basic Share $ (0.07 ) $ (0.38 ) Loss applicable to common
stockholders Per Diluted Share $ (0.07 ) $ (0.38 )
Full year 2018 compared to the full
year 2017:
Year Ended December 31, 2018
2017 Total revenues $ 314,369 $ 292,594
Loss applicable to common stockholders $ (44,263 ) $ (47,781 )
Loss applicable to common stockholders Per Basic Share $
(0.66 ) $ (0.71 ) Loss applicable to common stockholders Per
Diluted Share $ (0.66 ) $ (0.71 )
Conference Call Today
Management will hold a conference call to discuss these results
today at 9:00 a.m. Eastern Time. The conference call can be
accessed over the phone by dialing 1-866-913-6930 (from within the
U.S.) or 1-409-983-9881 (from outside of the U.S.) ten minutes
prior to the scheduled start of the call; please reference
conference ID “2396776.”
A copy of the earnings release will be posted to the Investor
Relations section of Drive Shack Inc.’s website,
http://ir.driveshack.com.
A simultaneous webcast of the conference call will be available
to the public on a listen-only basis at http://ir.driveshack.com.
Please allow extra time prior to the call to visit the website and
download any necessary software required to listen to the internet
broadcast.
A telephonic replay of the conference call will also be
available two hours following the call’s completion through 11:30
P.M. Eastern Time on Thursday, March 28, 2019 by dialing
1-800-585-8367 (from within the U.S.) or 1-404-537-3406 (from
outside of the U.S.); please reference conference ID “2396776.”
Additional Information
For additional information that management believes to be useful
for investors, please refer to the presentation posted on the
Investor Relations section of the Company’s website,
http://ir.driveshack.com. For consolidated information, please
refer to the Company’s most recent Quarterly Report on Form 10-Q or
Annual Report on Form 10-K, which are available on the Company’s
website, http://ir.driveshack.com.
About Drive Shack
Drive Shack Inc. is a leading owner and operator of golf-related
leisure and entertainment businesses.
Forward-Looking Statements: Certain items in this Press
Release may constitute forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including, but not limited to, statements regarding Drive Shack
Inc.’s (NYSE: DS; “DS Inc.” or the “Company” and “we,” “us” and
“our,” as applicable) (a) statements relating to returns on our
investments, (b) anticipated future sales of selected owned golf
properties, including without limitation statements relating to the
timing and amount of anticipated proceeds, (c) our plans and
expectations to optimize the operation of, and grow, our existing
leased and managed golf properties, (d) redeployment of cash from
our generated liquidity, (e) targeted multiples, yields and
returns, (f) our ability to terminate or restructure leases and (g)
the Company’s current business plan and expectations relating to
our Drive Shack venues, including (i) the number of venues that we
may be able to develop, (ii) timing and frequency for opening
venues, (iii) financial performance of these venues and capital
expenditure costs, (iv) the growth of the golf, golf entertainment,
and eatertainment industry and business, and (v) our ability to
enhance technology. These statements are based on management's
current expectations and beliefs and are subject to a number of
risks, trends and uncertainties that could cause actual results to
differ materially from those described in the forward-looking
statements, many of which are beyond our control. We cannot give
any assurances that management’s current expectations will be
attained. For a discussion of some of the risks and important
factors that could cause actual results to differ materially from
such forward-looking statements, see the sections entitled “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the Company’s periodic
reports filed with the Securities and Exchange Commission (“SEC”),
which are available on the Company’s website
(http://ir.driveshack.com). In addition, new risks and
uncertainties emerge from time to time, and it is not possible to
predict or assess the impact of every factor that may cause actual
results to differ from those contained in any forward-looking
statements. Accordingly, you should not place undue reliance on any
forward-looking statements contained in this Press Release.
Forward-looking statements speak only as of the date of this Press
Release. We expressly disclaim any obligation to release publicly
any updates or revisions to any forward-looking statements
contained herein to reflect any change in expectations with regard
thereto or change in events, conditions or circumstances on which
any statement is based.
Past Performance; No Offer; No Reliance: Past performance
is not a reliable indicator of future results and should not be
relied upon as the basis for making an investment decision. This
Press Release does not constitute an offer to sell, or a
solicitation of an offer to buy, any security. Any such offer would
only be made by means of formal offering documents, the terms of
which would govern in all respects. You should not rely on this
Press Release as the basis upon which to make any investment
decision.
The Company has not reconciled its EBITDA or free cash flow
targets set forth in this press release to net income (loss) or
cash from operations, as items that impact such measures are out of
the Company’s control and/or cannot be reasonably predicted.
Accordingly, a reconciliation is not available without unreasonable
effort.
Cautionary Note regarding Estimated / Targeted Returns and
Growth: Targeted returns and growth represent management’s view
and are estimated based on current and projected future operating
performance of our location in Orlando and other targeted
locations, comparable companies in our industry and a variety of
other assumptions, many of which are beyond our control, that could
prove incorrect. As a result, actual results may vary materially
with changes in our liquidity or ability to obtain financing,
changes in market conditions and additional factors described in
our reports filed with the SEC, which we encourage you to review.
We undertake no obligation to update these estimates. See above for
more information on forward-looking statements.
Consolidated Balance Sheets
December 31, 2018
2017 Assets Current Assets Cash and cash
equivalents $ 79,235 $ 167,692 Restricted cash 3,326 5,178 Accounts
receivable, net 7,518 8,780 Real estate assets, held-for-sale, net
75,862 2,000 Real estate securities, available-for-sale 2,953 2,294
Other current assets 20,505 21,568
Total Current Assets 189,399 207,512 Restricted cash, noncurrent
258 818 Property and equipment, net of accumulated depreciation
132,605 241,258 Intangibles, net of accumulated amortization 48,388
57,276 Other investments 22,613 21,135 Other assets 8,684
8,649
Total Assets $
401,947 $ 536,648
Liabilities and Equity Current Liabilities Obligations under
capital leases $ 5,489 $ 4,652 Membership deposit liabilities 8,861
8,733 Accounts payable and accrued expenses 45,284 36,797 Deferred
revenue 18,793 31,207 Real estate liabilities, held-for-sale 2,947
— Other current liabilities 22,285 22,596
Total Current Liabilities 103,659 103,985 Credit facilities
and obligations under capital leases 10,489 112,105 Junior
subordinated notes payable 51,200 51,208 Membership deposit
liabilities, noncurrent 90,684 86,523 Deferred revenue, noncurrent
6,016 6,930 Other liabilities 5,232 4,846
Total Liabilities $ 267,280
$ 365,597 Commitments and contingencies
Equity Preferred stock, $0.01 par value, 100,000,000
shares authorized,1,347,321 shares of 9.75% Series B Cumulative
Redeemable Preferred Stock,496,000 shares of 8.05% Series C
Cumulative Redeemable Preferred Stock, and620,000 shares of 8.375%
Series D Cumulative Redeemable Preferred Stock, liquidation
preference $25.00 per share, issued and outstanding as of December
31, 2018 and 2017 $ 61,583 $ 61,583 Common stock, $0.01 par value,
1,000,000,000 shares authorized, 67,027,104 and 66,977,104 shares
issued and outstanding at December 31, 2018 and 2017, respectively
670 670 Additional paid-in capital 3,175,843 3,173,281 Accumulated
deficit (3,105,307 ) (3,065,853 ) Accumulated other comprehensive
income 1,878 1,370
Total Equity
$ 134,667 $ 171,051
Total Liabilities and Equity $ 401,947
$ 536,648
Consolidated Statements of
Operations
Three Months Ended December 31, Year Ended December
31, 2018 2017
2018 2017
Revenues Golf operations $ 53,014 $ 52,768 $ 244,646 $
221,737 Sales of food and beverages 16,272
17,634 69,723 70,857 Total
revenues 69,286 70,402 314,369
292,594
Operating costs Operating
expenses 57,043 56,876 251,794 232,796 Cost of sales - food and
beverages 4,740 5,197 20,153 20,959 General and administrative
expense 8,951 8,679 38,560 31,413 Management fee and termination
payment to affiliate — 13,378 — 21,410 Depreciation and
amortization 5,346 6,352 19,704 24,304 Pre-opening costs 435 129
2,483 320 Impairment 2,595 — 8,240 60 Realized and unrealized
(gain) loss on investments 152 (118 )
(131 ) 6,243 Total operating costs 79,262
90,493 340,803 337,505
Operating loss (9,976 ) (20,091
) (26,434 ) (44,911 ) Other
income (expenses) Interest and investment income 412 461 1,794
23,162 Interest expense, net (3,699 ) (4,246 ) (16,639 ) (19,581 )
Other income (loss), net 10,037 (278 )
2,880 94 Total other income (loss)
6,750 (4,063 ) (11,965 ) 3,675
Loss before income tax (3,226 ) (24,154 ) (38,399 ) (41,236 )
Income tax expense 284 (82 ) 284
965 Net loss (3,510 ) (24,072 ) (38,683 ) (42,201 )
Preferred dividends (1,395 ) (1,395 ) (5,580 )
(5,580 )
Loss Applicable To Common Stockholders
$ (4,905 ) $ (25,467 )
$ (44,263 ) $ (47,781 )
Loss Applicable to Common Stock, per share Basic $
(0.07 ) $ (0.38 ) $ (0.66 ) $ (0.71 ) Diluted $ (0.07 ) $ (0.38 ) $
(0.66 ) $ (0.71 )
Weighted Average Number of Shares of
Common Stock Outstanding Basic 67,027,104
66,963,297 66,993,543 66,903,457
Diluted 67,027,104 66,963,297
66,993,543 66,903,457
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version on businesswire.com: https://www.businesswire.com/news/home/20190314005301/en/
For Investor Relations Inquiries:Austin PruittDrive Shack
Inc.516-268-7460IR@driveshack.com
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