Reported Total Company Revenue of $61.1
Million, Flat Compared to First Quarter 2020
Operating Loss of $7.9 Million, an Improvement
of $7.0 Million, or 47%, Compared to First Quarter 2020
Delivered Positive Adjusted EBITDA of $2.7
Million, an Increase of $7.4 Million Compared to First Quarter
2020
Drive Shack Inc. (the “Company”) (NYSE: DS), a leading owner and
operator of golf-related leisure and entertainment businesses,
today reported its financial results for the first quarter ended
March 31, 2021.
“2021 is off to a strong start for the year given the
performance in both our Drive Shack and American Golf businesses
this quarter. We are extremely pleased with our first quarter
progress as our results demonstrate impressive momentum in the golf
and entertainment sector with nearly a full recovery from the
walk-in sales side of our business. Our strong results validate our
team’s ability to adapt to the constant changes as well as the
wants and needs of our guests,” said Chief Executive Officer and
President Hana Khouri. “Total walk-in revenue for the quarter at
our Drive Shack venues was 96% of last year’s first quarter levels,
the highest we have seen since the onset of the pandemic. We
delivered our third consecutive quarter of positive adjusted
EBITDA, which increased $7.4 million to $2.7 million this quarter
compared to the same quarter last year and continues to be
positively impacted by our relentless focus on revenue driving
initiatives and continued expense control discipline.”
Khouri continued, “The entire organization remains centered on
our 2021 strategic priorities to drive growth and profitability,
including the launch and expansion of Puttery. We recently
announced our third location in Penn Quarter, Washington DC’s
premier entertainment zone, and our plans remain on track to debut
our first two Puttery venues in Dallas and Charlotte this summer.
We are energized by the robust pipeline of potential sites we are
pursuing in multiple key markets and we look forward to sharing
future Puttery locations with you as we finalize new leases. We
believe 2021 will be an instrumental year for us as we advance our
growth priorities throughout the year and beyond.”
Business Update
The Company’s four entertainment Drive Shack golf venues
generated total revenue of $8.2 million in the first quarter 2021,
a decrease of $1.9 million compared to the first quarter 2020. The
decrease was primarily due to lower event revenue, which declined
$1.6 million compared to the same period last year and continued to
be impacted by local restrictions on large group gatherings.
The strong momentum and demand for traditional golf continued
for American Golf throughout the first quarter of 2021. New full
golf membership sales increased 30% and total rounds increased 29%
on American Golf’s five private courses compared to the first
quarter 2020. During the same period, green and cart fee revenue
increased 46% on American Golf’s 30 public courses compared to the
first quarter 2020. Overall, American Golf’s traditional golf
business generated total revenue of $52.9 million in the first
quarter 2021, which includes $13.8 million of managed course
expense reimbursements. American Golf’s total revenue increased
$1.9 million compared to the first quarter 2020, primarily due to
the increase in green and cart fees and last year’s course closures
in mid-March and was partially offset by a decrease in event
revenue.
Financial Liquidity Update
As of April 30, 2021, the Company had approximately $81.5
million of unrestricted cash on hand compared to approximately $86
million as of February 28, 2021. The Company continues to maintain
strong capital allocation discipline and expense control across the
organization.
Financial Results
Three Months Ended March 31, 2021 compared to the Three Months
Ended March 31, 2020
($ in thousands, except for per share
data) (Unaudited):
Three Months Ended
March 31, 2021
March 31, 2020
Total revenues
$
61,091
$
61,135
Operating Loss
$
(7,875
)
$
(14,843
)
Net Loss
$
(10,904
)
$
(17,362
)
Net Loss applicable to common
stockholders
$
(12,299
)
$
(18,757
)
Net Loss applicable to common stock, per
share
Basic
$
(0.15
)
$
(0.28
)
Diluted
$
(0.15
)
$
(0.28
)
Adjusted EBITDA1
$
2,731
$
(4,697
)
For the three months ended March 31, 2021, the Company reported
an operating loss of ($7.9) million and net loss of ($10.9) million
compared to an operating loss of ($14.8) million and a net loss of
($17.4) million in the corresponding period of the prior year.
Adjusted EBITDA was $2.7 million for first quarter 2021, an
increase of $7.4 million compared to Adjusted EBITDA of ($4.7)
million for first quarter 2020. 1
1 Adjusted EBITDA is a non-GAAP financial measure. For
definitions and reconciliations of non-GAAP results please refer to
the exhibit to this press release.
Preferred Stock Dividends The Board of Directors of the
Company declared dividends on the Company’s preferred stock for the
period beginning May 1, 2021 and ending July 31, 2021. The
dividends are payable on July 30, 2021, to holders of record of
preferred stock on July 1, 2021, 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.
2021 First Quarter Earnings Conference Call Details
Management will host a live conference call and webcast to discuss
the Company’s 2021 first quarter results today starting at 9:00
a.m. Eastern Time. The webcast will be made available to the public
on a listen-only basis, along with the associated slide
presentation, on the Company’s investor relations website at
https://ir.driveshack.com. The conference call may be accessed 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 and referencing conference ID 2703847.
A telephonic replay of the conference call will also be
available approximately two hours following the conclusion of the
call through 11:59 P.M. Eastern Time on Friday, May 21, 2021 and
may be accessed 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 2703847.
Additional Information For additional information that
management believes to be useful for investors, please refer to the
presentation posted on the Company’s investor relations website,
https://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
investor relations website, https://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 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 release, 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
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 and the
effect of the COVID-19 pandemic on our business and financial
results. For a discussion of some of the risks and important
factors that could affect 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 most recent Annual Report on Form 10-K and Quarterly
Report on Form 10-Q. In addition, new risks and uncertainties
emerge from time to time, and it is not possible for the Company to
predict or assess the impact of every factor that may cause its
actual results to differ from those contained in any
forward-looking statements. Such forward-looking statements speak
only as of the date of this 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.
Non-GAAP Financial Measure Adjusted EBITDA is not a
measurement of financial performance under generally accepted
accounting principles in the United States ("GAAP") and should not
be considered in isolation or as an alternative to GAAP financial
measures. We believe this non-GAAP financial measure, as we have
defined it, provides a supplemental measure of financial
performance of our current operations at our entertainment and
traditional golf venues. This measure excludes items that we
believe are unrelated to the day-to-day performance of our current
golf entertainment or traditional golf venues, including one-time
pre-opening costs associated with new venue openings, corporate
severance payments, (gain) loss on lease terminations and
impairment, stock-based compensation, depreciation and amortization
and other income (which does not include revenue from golf
entertainment or traditional golf venues). This non-GAAP financial
measure is presented so that investors have the same type of
financial data that management uses in evaluating the financial
performance of the Company.
The principal limitation of this non-GAAP measure is that it
excludes significant expenses and income that are required by GAAP
to be recorded in our financial statements. A reconciliation is
provided for the non-GAAP financial measure to our GAAP net
income/(loss). Investors are encouraged to review the related GAAP
financial measures and the reconciliation of the non-GAAP financial
measure to our GAAP net income/(loss), and not to rely on any
single financial measure to evaluate our business.
Adjusted EBITDA. We define Adjusted EBITDA as GAAP net income
(loss), adjusted for income tax expenses, other income (loss),
interest expenses, interest and investment income, depreciation and
amortization, gain (loss) on lease terminations, impairment and
other losses, pre-opening costs and certain other non-recurring
items (including corporate severance payments, transactional
G&A and stock-based compensation).
Consolidated Balance Sheets
(dollars in thousands, except share
data)
(Unaudited)
March 31, 2021
December 31, 2020
Assets
Current assets
Cash and cash equivalents
$
85,936
$
47,786
Restricted cash
2,852
2,252
Accounts receivable, net
5,143
4,446
Real estate securities,
available-for-sale
3,271
3,223
Other current assets
17,754
14,410
Total current assets
114,956
72,117
Restricted cash, noncurrent
795
795
Property and equipment, net of accumulated
depreciation
167,663
169,425
Operating lease right-of-use assets
195,280
192,828
Intangibles, net of accumulated
amortization
14,574
15,124
Other assets
6,593
6,765
Total assets
$
499,861
$
457,054
Liabilities and Equity
Current liabilities
Obligations under finance leases
$
6,180
$
6,470
Membership deposit liabilities
14,748
14,692
Accounts payable and accrued expenses
26,308
29,596
Deferred revenue
20,079
23,010
Other current liabilities
27,504
28,217
Total current liabilities
94,819
101,985
Credit facilities and obligations under
finance leases - noncurrent
11,653
12,751
Operating lease liabilities -
noncurrent
173,528
167,837
Junior subordinated notes payable
51,180
51,182
Membership deposit liabilities,
noncurrent
101,853
99,862
Deferred revenue, noncurrent
10,983
9,953
Other liabilities
3,463
3,447
Total liabilities
$
447,479
$
447,017
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 March 31, 2021 and December 31, 2020
61,583
61,583
Common stock, $0.01 par value,
1,000,000,000 shares authorized, 92,027,806 and 67,323,592 shares
issued and outstanding at March 31, 2021 and December 31, 2020,
respectively
919
673
Additional paid-in capital
3,232,713
3,178,704
Accumulated deficit
(3,244,225
)
(3,232,391
)
Accumulated other comprehensive income
1,392
1,468
Total equity
$
52,382
$
10,037
Total liabilities and equity
$
499,861
$
457,054
Consolidated Statements of
Operations (Unaudited) (dollars in thousands, except share
data)
Three Months Ended March
31,
2021
2020
Revenues
Golf operations
$
53,161
$
48,625
Sales of food and beverages
7,930
12,510
Total revenues
61,091
61,135
Operating costs
Operating expenses
48,870
54,367
Cost of sales - food and beverages
2,104
3,655
General and administrative expense
7,982
9,818
Depreciation and amortization
6,245
6,794
Pre-opening costs
556
552
Loss on lease terminations and
impairment
3,209
792
Total operating costs
68,966
75,978
Operating loss
(7,875
)
(14,843
)
Other income (expenses)
Interest and investment income
153
130
Interest expense, net
(2,626
)
(2,745
)
Other income (loss), net
(61
)
367
Total other income (expenses)
(2,534
)
(2,248
)
Loss before income tax
(10,409
)
(17,091
)
Income tax expense
495
271
Net Loss
(10,904
)
(17,362
)
Preferred dividends
(1,395
)
(1,395
)
Net Loss Applicable to Common
Stockholders
$
(12,299
)
$
(18,757
)
Net Loss Applicable to Common Stock, per
share
Basic
$
(0.15
)
$
(0.28
)
Diluted
$
(0.15
)
$
(0.28
)
Weighted Average Number of Shares of
Common Stock Outstanding
Basic
82,558,881
67,069,534
Diluted
82,558,881
67,069,534
Adjusted EBITDA Non-GAAP
Reconciliation (dollars in thousands)
Three Months Ended
March 31,
2021
2020
Net Loss
($
10,904
)
($
17,362
)
Income tax expense
495
271
Other (income) loss, net
61
(367
)
Net interest expense
2,473
2,615
Operating Loss
($
7,875
)
($
14,843
)
Depreciation and amortization
6,245
6,794
Loss on lease terminations and
impairment
3,209
792
Pre-opening costs
556
552
Other items(1)
596
2,008
Adjusted EBITDA
$
2,731
($
4,697
)
(1) For the three months ended March 31, 2021 and 2020, other
items include (i) corporate severance of $130 and $693,
respectively; (ii) transactional G&A of $196 and $1,178,
respectively; and (iii) employee’s stock-based compensation of $270
and $137, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210507005121/en/
Investor Relations Kelley Buchhorn Head of Investor
Relations ir@driveshack.com (646) 585-5591
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