Provides Business & Financial Liquidity
Update
Drive Shack Inc. (the “Company”) (NYSE: DS) today reported its
financial results for the third quarter ended September 30, 2020.
The Company also provided an update on the business, as well as
measures it has taken to sustain liquidity.
“We are pleased with our third quarter results as we see our
venues and courses continue to build momentum over the year. Both
of these businesses delivered positive financial results in the
quarter, even with the challenges we continue to face with local
restrictions and mandates with large group gatherings,” said Chief
Executive Officer Hana Khouri. “Over the past several months, we
have aggressively managed costs to strengthen our financial
position and implemented measures to preserve cash and sustain our
liquidity. We also delivered on a large strategic goal with closing
the sale of our Rancho San Joaquin traditional golf course in
October for nearly $34 million in net cash proceeds. We’ve taken
actions to re-stabilize our business amid the current environment
and believe we are positioned to advance the growth plans we laid
out earlier this year.”
Khouri continued, “Our teams have been highly engaged in
innovating and developing new promotional offers geared towards
smaller group gatherings in our Drive Shack venues to help drive
traffic and generate increased revenue. We debuted our new 2-bay
package in mid-September to encourage small event bookings in all
Drive Shack locations and since our launch, the early response by
our guests has been positive. We plan to further this momentum by
launching our online reservation platform in December. We are also
excited to announce that we have developed a plan to reopen our
Orlando venue next month. I look forward to sharing more details on
our upcoming earnings call.”
Business Update
The strong momentum and demand for traditional golf continued
throughout the third quarter. New full golf membership sales
increased 48% and member rounds increased 36% on our five private
courses compared to the third quarter 2019. During the same period,
green and cart fee revenue increased 15% on our 31 public courses
compared to the third quarter 2019, despite available tee times
decreasing due to locally mandated restrictions. Overall, our
traditional golf business generated total revenue of $60 million in
the third quarter 2020, which includes $15 million of managed
course expense reimbursements. AGC’s total revenue decreased by $11
million compared to the third quarter 2019, largely due to event
revenue, which decreased by almost $11 million during the same
period.
The Company’s entertainment golf venues in West Palm Beach,
Richmond and Raleigh reopened during the second quarter and
remained open throughout the third quarter. Despite venue capacity
restrictions and group size limitations, the three venues generated
total revenue of approximately $6 million during the third quarter.
The Company expects to reopen its Orlando venue in December
2020.
Financial Liquidity Update
As of October 31, 2020, the Company had approximately $44
million of unrestricted cash on hand compared to approximately $12
million as of July 31, 2020. This increase is primarily due to the
sale of the traditional golf course, which generated cash proceeds
of $33.6 million. The Company maintained initiatives put in place
earlier this year, including a re-positioned labor model designed
to improve operational and financial performance, which yielded
significant benefits in the third quarter as our operations
generated positive cash flows at both the venue and course
level.
The Company continues to focus on strengthening its financial
position to ensure it has ample liquidity and flexibility to
successfully execute its growth initiatives for 2021.
Third Quarter Financial Results
(unaudited)
Three Months and Nine Months
Ended September 30, 2020
compared to the Three Months and
Nine Months Ended September 30, 2019
($ in thousands, except for per
share data):
Three Months Ended
Nine Months Ended
September 30, 2020
September 30, 2019
September 30, 2020
September 30, 2019
Total revenues
$
66,465
$
74,682
$
159,700
$
200,249
Loss applicable to common stockholders
$
(10,807
)
$
(13,414
)
$
(70,485
)
$
(43,763
)
Loss applicable to common stock, per
share
Basic
$
(0.16
)
$
(0.20
)
$
(1.05
)
$
(0.65
)
Diluted
$
(0.16
)
$
(0.20
)
$
(1.05
)
$
(0.65
)
For the three months ended September 30, 2020, the Company
reported a loss of approximately $11 million, or ($0.16) per share,
compared to a loss of approximately $13 million, or ($0.20) per
share, in the corresponding period of the prior year.
For the nine months ended September 30, 2020, the Company
reported a loss of approximately $70 million, or ($1.05) per share,
compared to a loss of approximately $44 million, or ($0.65) per
share, in the corresponding period of the prior year.
2020 Third Quarter Earnings Conference Call Details
Management will host a conference call to discuss these results
on Wednesday, November 4th at 9:00 a.m. Eastern Time. The
conference call can be accessed approximately ten minutes prior to
the scheduled start of the call by dialing 1-866-913-6930 (from
within the U.S.) or 1-409-983-9881 (from outside of the U.S.) and
referencing conference ID “6882066.”
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 Wednesday, November 18, 2020 by dialing
1-800-585-8367 (from within the U.S.) or 1-404-537-3406 (from
outside of the U.S.) and referencing conference ID “6882066.”
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 statements regarding
Drive Shack Inc. (together with its subsidiaries, “Drive Shack”,
“we” or “us”) in this earnings release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. You can identify these
forward-looking statements by the use of forward-looking words such
as “outlook,” “believes,” “expects,” “by”, “approaches”, “nearly”,
“potential”, “continues”, “may”, “will”, “should”, “could”,
“seeks”, “approximately”, “predicts”, “intends”, “plans”,
“estimates”, “anticipates”, “target”, “goal”, “projects”,
“contemplates” or the negative version of those words or other
comparable words. Any forward-looking statements contained in this
presentation, including statements regarding the expected
development schedule and timing of specific milestones for our
facilities, including The Puttery and Drive Shack venues, our
expected and the remaining cost for our development projects (both
individually and in the aggregate), the expected capabilities of
our development projects once completed, our intentions to make use
of capital or free cash flow and our future financial position and
liquidity are based upon our limited historical performance and on
our current plans, estimates and expectations in light of
information (including industry data) currently available to us.
The inclusion of this forward-looking information should not be
regarded as a representation by the Company or any other person
that the future plans, estimates or expectations contemplated by us
will be achieved. These statements are subject to a number of
factors that could cause actual results to differ materially from
those described in the forward-looking statements, many of which
are beyond our control. We can give no assurance that its
expectations regarding any forward-looking statements will be
attained. Accordingly, you should not place undue reliance on any
forward-looking statements made in this earnings release. Factors
that could cause or contribute to such differences include, but are
not limited to, the risk that our construction schedules will take
longer than we expect, that our expectations about the consumer
demand for our product will not prove accurate, that our operating
or other costs will increase or our expected remaining costs for
development projects underway increases. Such forward-looking
statements speak only as of the date of this earnings 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 the Company's expectations with regard
thereto or change in events, conditions or circumstances on which
any statement is based.
Consolidated Balance
Sheets
(dollars in thousands, except
share data)
(Unaudited) September 30,
2020
December 31, 2019
Assets
Current assets
Cash and cash equivalents
$
13,314
$
28,423
Restricted cash
2,904
3,103
Accounts receivable, net of
allowance of $899 and $1,082, respectively
3,670
5,249
Real estate assets,
held-for-sale, net
17,016
16,948
Real estate securities,
available-for-sale
3,027
3,052
Other current assets
14,861
17,521
Total current assets
54,792
74,296
Restricted cash, noncurrent
286
438
Property and equipment, net of
accumulated depreciation
175,014
179,641
Operating lease right-of-use
assets
198,458
215,308
Intangibles, net of accumulated
amortization
15,329
17,565
Other investments
0
24,020
Other assets
5,610
4,723
Total assets
$
449,489
$
515,991
Liabilities and Equity
Current liabilities
Obligations under finance
leases
6,583
6,154
Membership deposit
liabilities
14,815
10,791
Accounts payable and accrued
expenses
38,964
25,877
Deferred revenue
15,351
26,268
Real estate liabilities,
held-for-sale
5
4
Other current liabilities
30,452
23,964
Total current
liabilities
106,170
93,058
Credit facilities and obligations
under finance leases - noncurrent
12,435
13,125
Operating lease liabilities -
noncurrent
171,592
187,675
Junior subordinated notes
payable
51,185
51,192
Membership deposit liabilities,
noncurrent
97,943
95,805
Deferred revenue, noncurrent
7,385
6,283
Other liabilities
3,154
3,278
Total liabilities
$
449,864
$
450,416
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, and 620,000 shares
of 8.375% Series D Cumulative Redeemable Preferred Stock,
liquidation preference $25.00 per share, issued and outstanding as
of September 30, 2020 and December 31, 2019
61,583
61,583
Common stock, $0.01 par value,
1,000,000,000 shares authorized, 67,227,944 and 67,068,751 shares
issued and outstanding at September 30, 2020 and December 31, 2019,
respectively
672
671
Additional paid-in capital
3,178,319
3,177,183
Accumulated deficit
(3,242,337
)
(3,175,572
)
Accumulated other comprehensive
income
1,388
1,710
Total equity
$
(375
)
$
65,575
Total liabilities and
equity
$
449,489
$
515,991
Consolidated Statements of Operations
(unaudited)
(dollars in thousands, except share
data)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Revenues
Golf operations
$
58,766
$
60,797
$
137,066
$
162,889
Sales of food and beverages
7,699
13,885
22,634
37,360
Total revenues
66,465
74,682
159,700
200,249
Operating costs
Operating expenses
54,993
63,454
142,584
169,897
Cost of sales - food and beverages
2,170
3,856
6,654
10,458
General and administrative expense
7,916
12,755
24,102
37,981
Depreciation and amortization
6,853
5,723
20,329
15,769
Pre-opening costs
227
4,350
1,049
7,229
(Gain) loss on lease terminations and
impairment
302
1,872
(2,031
)
6,077
Total operating costs
72,461
92,010
192,687
247,411
Operating loss
(5,996
)
(17,328
)
(32,987
)
(47,162
)
Other income (expenses)
Interest and investment income
135
191
400
799
Interest expense, net
(2,896
)
(2,061
)
(8,232
)
(6,008
)
Other income (loss), net
(157
)
7,341
(24,212
)
12,955
Total other income (expenses)
(2,918
)
5,471
(32,044
)
7,746
Loss before income tax
(8,914
)
(11,857
)
(65,031
)
(39,416
)
Income tax expense
498
162
1,269
162
Net Loss
(9,412
)
(12,019
)
(66,300
)
(39,578
)
Preferred dividends
(1,395
)
(1,395
)
(4,185
)
(4,185
)
Loss Applicable to Common
Stockholders
$
(10,807
)
$
(13,414
)
$
(70,485
)
$
(43,763
)
Loss Applicable to Common Stock, per
share
Basic
$
(0.16
)
$
(0.20
)
$
(1.05
)
$
(0.65
)
Diluted
$
(0.16
)
$
(0.20
)
$
(1.05
)
$
(0.65
)
Weighted Average Number of Shares of
Common Stock Outstanding
Basic
67,212,532
67,040,692
67,131,827
67,032,519
Diluted
67,212,532
67,040,692
67,131,827
67,032,519
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201103005816/en/
Investor Relations (646) 585-5591 ir@driveshack.com
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