Reported Total Company Revenue of $73.9 Million
and Operating Income of $1.1 Million for the Second Quarter
2021
Delivered Quarterly Operating Income for the
First Time in Three Years
Delivered Positive Adjusted EBITDA of $7.7
Million for the Second Quarter 2021
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 second quarter and six
months ended June 30, 2021.
“We have had incredible results this quarter including reporting
operating income for the first time in three years and our fourth
consecutive quarter of positive Adjusted EBITDA,” said Drive Shack
Inc.’s Chief Executive Officer and President Hana Khouri. “Both our
American Golf and Drive Shack businesses delivered strong financial
performances as the momentum in the golf and entertainment sectors
continued throughout the second quarter. Walk-in revenue at our
Drive Shack venues was at an all-time high and each surpassed their
pre-pandemic venue contribution levels, including Orlando
delivering above break-even for the first time.”
Khouri continued, “2021 is a pivotal year for our company and we
remain centered on executing the successful launch and expansion of
Puttery. Our team’s relentless focus to deliver our first venue,
located in The Colony, Texas near Dallas, is unmatched. We have
faced numerous learnings and obstacles during construction, which
is to be expected with the introduction of a brand-new concept and
are now in the final testing and training phases. We look forward
to introducing our first Puttery location to the Dallas market in
the coming weeks. Development continues with our Charlotte, DC and
Miami venues and, earlier this morning, we announced our newest
Puttery location in Houston, our fifth market nationwide.
Additionally, we look forward to a long-standing partnership with
Rory McIlroy and his team as we further grow our Puttery brand in
the coming years.”
Business Update
Total revenue for the second quarter this year was $73.9 million
compared to $32.1 million in the same period last year. The
Company’s four entertainment Drive Shack golf venues generated
total revenue of $11.6 million in the second quarter 2021, an
increase of $9.8 million compared to $1.8 million in the second
quarter 2020. The increase was primarily due to COVID-19 related
venue closures during the majority of the second quarter last
year.
The Company’s traditional golf business, American Golf,
generated total revenue of $62.3 million in the second quarter
2021, which included $12.9 million of managed course expense
reimbursements, compared to $30.3 million in the second quarter
2020, which included $8.5 million of managed course expense
reimbursements. The increase to last year’s second quarter was
primarily due to COVID-19 related course closures for a portion of
the second quarter 2020.
Balance Sheet
As of June 30, 2021, the Company had cash and cash equivalents
of $81.4 million compared to $85.9 million as of March 30, 2021.
The Company continues to maintain strong capital allocation
discipline and expense control across the organization.
Summary Financial Results
Three and Six Months Ended June 30, 2021 compared to the Three
and Six Months Ended June 30, 2020
($ in thousands, except for per share data) (Unaudited):
Three Months Ended June 30,
Six Months Ended June 30,
2021
2020
2021
2020
Total revenues
$73,879
$32,100
$134,971
$93,235
Operating Income (Loss)
$1,053
($12,148)
($6,822)
($26,991)
Net Loss
($1,969)
($39,526)
($12,873)
($56,888)
Net Loss applicable to common
stockholders
($3,364)
($40,921)
($15,663)
($59,678)
Net Loss applicable to common stock, per
share
Basic
($0.04)
($0.61)
($0.18)
($0.89)
Diluted
($0.04)
($0.61)
($0.18)
($0.89)
Adjusted EBITDA1
$7,719
($7,049)
$10,450
($11,747)
For the three months ended June 30, 2021, the Company reported
operating income of $1.1 million and a net loss of ($2.0) million
compared to an operating loss of ($12.1) million and a net loss of
($39.5) million in the same period last year. Adjusted EBITDA was
$7.7 million for second quarter 2021, an increase of $14.8 million
compared to Adjusted EBITDA of ($7.0) million for second quarter
2020.1
For the six months ended June 30, 2021, the Company reported an
operating loss of ($6.8) million and a net loss of ($12.9) million
compared to an operating loss of ($27.0) million and a net loss of
($56.9) million in the same period last year. Adjusted EBITDA was
$10.4 million for the six months ended June 30, 2021, an increase
of $22.2 million compared to Adjusted EBITDA of ($11.7) million for
the same period in 2020.1
1Adjusted 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 August 1, 2021
and ending October 31, 2021. The dividends are payable on November
1, 2021, to holders of record of preferred stock on October 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 Second Quarter Earnings Conference Call Details
Management will host a live conference call and webcast to
discuss the Company’s 2021 second 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 1-877-876-9177 (from within the U.S.) or 1-785-424-1670
(from outside of the U.S.) ten minutes prior to the scheduled start
of the call and referencing conference ID “DSQ221.”
A telephonic replay of the conference call will also be
available approximately two hours following the conclusion of the
call through end of day on Thursday, August 12, 2021 and may be
accessed by dialing 1-800-839-5324 (from within the U.S.) or
1-402-220-1521 (from outside of the U.S.) and referencing
conference ID “DSQ221.”
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 Inc.
Drive Shack Inc. is a leading owner and operator of golf-related
leisure and entertainment businesses focused on bringing people
together through competitive socializing. Today, our portfolio
consists of American Golf, Drive Shack and Puttery.
About Puttery
Puttery is a modern spin on putting, re-defining the game with
unique twists at every hole. Bold and full of possibilities, guests
can enjoy a high-energy atmosphere, combining competitive
socializing and innovative auto-scoring technology within an
immersive experience as they move from one course to the next. With
plentiful curated culinary offerings and inventive craft cocktails,
all centered around a lively bar area with great music, guests can
relax and enjoy their evening before, during and after their tee
time.
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)
June 30, 2021
December 31, 2020
Assets
Current assets
Cash and cash equivalents
$81,428
$47,786
Restricted cash
2,990
2,252
Accounts receivable, net
4,577
4,446
Real estate securities,
available-for-sale
3,341
3,223
Other current assets
22,879
14,410
Total current assets
115,215
72,117
Restricted cash, noncurrent
1,027
795
Property and equipment, net of accumulated
depreciation
171,126
169,425
Operating lease right-of-use assets
187,870
192,828
Intangibles, net of accumulated
amortization
14,181
15,124
Other assets
6,420
6,765
Total assets
$495,839
$457,054
Liabilities and Equity
Current liabilities
Obligations under finance leases
$5,794
$6,470
Membership deposit liabilities
14,748
14,692
Accounts payable and accrued expenses
32,752
29,596
Deferred revenue
16,529
23,010
Other current liabilities
24,775
28,217
Total current liabilities
94,598
101,985
Credit facilities and obligations under
finance leases - noncurrent
10,402
12,751
Operating lease liabilities -
noncurrent
172,372
167,837
Junior subordinated notes payable
51,179
51,182
Membership deposit liabilities,
noncurrent
103,859
99,862
Deferred revenue, noncurrent
10,224
9,953
Other liabilities
3,695
3,447
Total liabilities
$446,329
$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 June 30, 2021 and December 31, 2020
$61,583
$61,583
Common stock, $0.01 par value,
1,000,000,000 shares authorized, 92,085,419 and 67,323,592 shares
issued and outstanding at June 30, 2021 and December 31, 2020,
respectively
921
673
Additional paid-in capital
3,233,269
3,178,704
Accumulated deficit
(3,247,589)
(3,232,391)
Accumulated other comprehensive income
1,326
1,468
Total equity
$49,510
$10,037
Total liabilities and equity
$495,839
$457,054
Consolidated Statements of
Operations (Unaudited)
(dollars in thousands, except share
data)
Three Months Ended June 30,
Six Months Ended June 30,
2021
2020
2021
2020
Revenues
Golf operations
$61,750
$29,675
$114,912
$78,300
Sales of food and beverages
12,129
2,425
20,059
14,935
Total revenues
73,879
32,100
134,971
93,235
Operating costs
Operating expenses
55,635
33,224
104,504
87,591
Cost of sales - food and beverages
3,151
829
5,255
4,484
General and administrative expense
8,028
6,368
16,012
16,186
Depreciation and amortization
5,784
6,682
12,029
13,476
Pre-opening costs
789
270
1,345
822
(Gain) Loss on lease terminations and
impairment
(561)
(3,125)
2,648
(2,333)
Total operating costs
72,826
44,248
141,793
120,226
Operating income (loss)
1,053
(12,148)
(6,822)
(26,991)
Other income (expenses)
Interest and investment income
159
135
312
265
Interest expense, net
(2,713)
(2,591)
(5,339)
(5,336)
Other income (loss), net
(18)
(24,422)
(79)
(24,055)
Total other income (expenses)
(2,572)
(26,878)
(5,106)
(29,126)
Loss before income tax
(1,519)
(39,026)
(11,928)
(56,117)
Income tax expense
450
500
945
771
Net Loss
(1,969)
(39,526)
(12,873)
(56,888)
Preferred dividends
(1,395)
(1,395)
(2,790)
(2,790)
Net Loss Applicable to Common
Stockholders
($3,364)
($40,921)
($15,663)
($59,678)
Net Loss Applicable to Common Stock, per
share
Basic
($0.04)
($0.61)
($0.18)
($0.89)
Diluted
($0.04)
($0.61)
($0.18)
($0.89)
Weighted Average Number of Shares of
Common Stock Outstanding
Basic
92,065,615
67,111,843
87,338,509
67,090,805
Diluted
92,065,615
67,111,843
87,338,509
67,090,805
Adjusted EBITDA Non-GAAP
Reconciliation
(dollars in thousands)
Three Months Ended June 30,
Six Months Ended June 30,
2021
2020
2021
2020
Net Loss
($1,969)
($39,526)
($12,873)
($56,888)
Income tax expense
450
500
945
771
Other (income) loss, net
18
24,422
79
24,055
Net interest expense
2,554
2,456
5,027
5,071
Operating income (loss)
$1,053
($12,148)
($6,822)
($26,991)
Depreciation and amortization
5,784
6,682
12,029
13,476
(Gain) loss on lease terminations and
impairment
(561)
(3,125)
2,648
(2,333)
Pre-opening costs
789
270
1,345
822
Other items1
654
1,272
1,250
3,279
Adjusted EBITDA
$7,719
($7,049)
$10,450
($11,747)
- For the three months ended June 30, 2021 and 2020, other items
include (i) corporate severance of $0 and $0, respectively; (ii)
transactional G&A of $176 and $836, respectively; and (iii)
employee’s stock-based compensation of $478 and $436, respectively.
For the six months ended June 30, 2021 and 2020, other items
include (i) corporate severance of $130 and $693, respectively;
(ii) transactional G&A of $372 and $2,014, respectively; and
(iii) employee’s stock-based compensation of $748 and $572,
respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210809005223/en/
Investor Relations and Media: Kelley Buchhorn Head of
Investor Relations Drive Shack Inc. 646-585-5591 ir@driveshack.com
pr@driveshack.com
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