Reported Total Company Revenue of $76.4 Million
for the Third Quarter 2021; Highest Quarterly Revenue Reported in
Three Years
Reported Operating Loss of $5.9 Million and
Positive Adjusted EBITDA of $3.3 Million for the Third Quarter
2021
Debuted First Puttery Venue in The Colony,
Texas in September 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 third quarter and nine
months ended September 30, 2021.
“The third quarter was a historic quarter for our Company with
the launch of Puttery, our new, competitive socializing and
immersive entertainment experience,” said Drive Shack Inc.’s
President and Chief Executive Officer Hana Khouri. “Our first
Puttery venue debuted in our home market on September 3rd in The
Colony, Texas, one of the most exciting entertainment districts in
North Texas. Guests are responding favorably to our inaugural
Puttery and the feedback on their experience remains overwhelmingly
positive. I am beyond proud of the countless team members that
worked hard to deliver our first venue and I thank them for their
unmatched dedication and commitment to bring our Puttery brand and
vision to life. We look forward to opening additional Puttery
venues in the coming months, including our Charlotte location which
is planned to open later this quarter.”
Khouri continued, “We delivered strong results for the third
quarter, including the highest quarterly revenue in three years and
our fifth consecutive quarter of positive adjusted EBITDA. Our
American Golf and Drive Shack businesses have largely returned to
pre-COVID levels, and our events business continues to meaningfully
increase as we near the important, key holiday months. 2021 has
been an instrumental year and we remain centered on our strategic
priorities to drive growth and profitability this year and
beyond.”
Third Quarter 2021 Financial Highlights
Total revenue for the third quarter this year was $76.4 million
compared to $66.5 million in the same period last year. The
Company’s traditional golf business, American Golf, generated total
revenue of $65.1 million in the third quarter 2021, which included
$14.7 million of managed course expense reimbursements, compared to
$60.3 million in the third quarter 2020, which included $15.2
million of managed course expense reimbursements. The increase to
last year’s third quarter was largely due to higher event revenue
and green and cart fee revenue this year.
The Company’s entertainment golf business, comprised of both
Drive Shack and Puttery venues, generated total revenue of $11.3
million in the third quarter 2021, an increase of $5.1 million
compared to $6.2 million in the third quarter 2020. The increase to
last year’s third quarter was primarily due to strict COVID-19
local mandates that remained in effect on large group gatherings
last year, which impacted both walk-in and event revenue in the
prior year’s quarter. Additionally, the Company debuted its first
Puttery entertainment golf venue in September 2021, which generated
total revenue of $0.8 million this year.
Operating loss for the third quarter 2021 was ($5.9) million, an
improvement of $0.1 million versus an operating loss of ($6.0)
million in the third quarter 2020. The Company incurred
significantly higher pre-opening costs in the third quarter this
year compared to the same period last year due to increased costs
associated with its new Puttery venues incurred this year.
Additionally, the Company’s operating expenses this year are more
normalized, including G&A expenses, given it is beyond the peak
COVID-19 impacts during the same period last year when its
operating expenses were below historic levels. Adjusted EBITDA was
$3.0 million in the third quarter this year, relatively flat versus
the same period last year.
As of September 30, 2021, the Company had cash and cash
equivalents of $63.9 million compared to $47.8 million as of
December 31, 2020.
Summary Financial Results Three and Nine Months Ended
September 30, 2021 compared to the Three and Nine Months Ended
September 30, 2020 ($ in thousands, except for per share data)
(Unaudited):
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Total revenues
$76,366
$66,465
$211,337
$159,700
Operating Loss
($5,921)
($5,996)
($12,744)
($32,987)
Net Loss
($8,866)
($9,412)
($21,739)
($66,300)
Loss applicable to common stockholders
($10,246)
($10,807)
($25,909)
($70,485)
Loss applicable to common stock, per
share
Basic
($0.11)
($0.16)
($0.29)
($1.05)
Diluted
($0.11)
($0.16)
($0.29)
($1.05)
Adjusted EBITDA1
$3,254
$3,340
$13,707
($8,407)
For the three months ended September 30, 2021, the Company
reported an operating loss of ($5.9) million and a net loss of
($8.9) million compared to an operating loss of ($6.0) million and
a net loss of ($9.4) million in the same period last year. Adjusted
EBITDA was $3.3 million for third quarter 2021, relatively flat
compared to Adjusted EBITDA for the third quarter 2020.1
For the nine months ended September 30, 2021, the Company
reported an operating loss of ($12.7) million and a net loss of
($21.7) million compared to an operating loss of ($33.0) million
and a net loss of ($66.3) million in the same period last year.
Adjusted EBITDA was $13.7 million for the nine months ended
September 30, 2021, an increase of $22.1 million compared to
Adjusted EBITDA of ($8.4) million for the same period in 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 November 1, 2021
and ending January 31, 2022. The dividends are payable on January
31, 2022, to holders of record of preferred stock on January 1,
2022, 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 Third Quarter Earnings Conference Call Details
Management will host a live conference call and webcast to
discuss the Company’s 2021 third quarter results today starting at
9:00 a.m. Eastern Time. A simultaneous webcast of the conference
call will be available to the public on a listen-only basis on the
Company’s investor relations website at https://ir.driveshack.com,
along with the supplemental slide presentation. The conference call
may be accessed by dialing 1-877-876-9173 (from within the U.S.) or
1-785-424-1667 (from outside of the U.S.) ten minutes prior to the
scheduled start of the call and referencing conference ID
“DSQ321.”
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 Monday, November 15, 2021 and may be
accessed by dialing 1-877-710-5301 (from within the U.S.) or
1-402-220-1604 (from outside of the U.S.).
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.
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).
DRIVE SHACK INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share
data)
(unaudited)
September 30, 2021
December 31, 2020
Assets
Current assets
Cash and cash equivalents
$
63,867
$
47,786
Restricted cash
3,442
2,252
Accounts receivable, net
4,084
4,446
Real estate securities,
available-for-sale
3,414
3,223
Other current assets
28,605
14,410
Total current assets
103,412
72,117
Restricted cash, noncurrent
709
795
Property and equipment, net of accumulated
depreciation
174,616
169,425
Operating lease right-of-use assets
186,220
192,828
Intangibles, net of accumulated
amortization
13,767
15,124
Other assets
5,752
6,765
Total assets
$
484,476
$
457,054
Liabilities and Equity
Current liabilities
Obligations under finance leases
$
5,638
$
6,470
Membership deposit liabilities
17,978
14,692
Accounts payable and accrued expenses
33,812
29,596
Deferred revenue
13,086
23,010
Other current liabilities
20,744
28,217
Total current liabilities
91,258
101,985
Credit facilities and obligations under
finance leases - noncurrent
9,997
12,751
Operating lease liabilities -
noncurrent
174,776
167,837
Junior subordinated notes payable
51,177
51,182
Membership deposit liabilities,
noncurrent
102,521
99,862
Deferred revenue, noncurrent
10,555
9,953
Other liabilities
3,377
3,447
Total liabilities
$
443,661
$
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 September 30, 2021 and December 31, 2020
$
61,583
$
61,583
Common stock, $0.01 par value,
1,000,000,000 shares authorized, 92,086,727 and 67,323,592 shares
issued and outstanding at September 30, 2021 and December 31, 2020,
respectively
921
673
Additional paid-in capital
3,233,866
3,178,704
Accumulated deficit
(3,257,835
)
(3,232,391
)
Accumulated other comprehensive income
1,254
1,468
Total equity of the company
$
39,789
$
10,037
Noncontrolling interest
1,026
—
Total equity
$
40,815
$
10,037
Total liabilities and equity
$
484,476
$
457,054
DRIVE SHACK INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (Dollars in
thousands, except share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Revenues
Golf operations
$
62,257
$
58,766
$
177,170
$
137,066
Sales of food and beverages
14,109
7,699
34,167
22,634
Total revenues
76,366
66,465
211,337
159,700
Operating costs
Operating expenses
60,729
54,993
165,234
142,584
Cost of sales - food and beverages
3,696
2,170
8,951
6,654
General and administrative expense
9,685
7,916
25,697
24,102
Depreciation and amortization
5,823
6,853
17,852
20,329
Pre-opening costs
2,030
227
3,375
1,049
(Gain) Loss on lease terminations and
impairment
324
302
2,972
(2,031
)
Total operating costs
82,287
72,461
224,081
192,687
Operating income (loss)
(5,921
)
(5,996
)
(12,744
)
(32,987
)
Other income (expenses)
Interest and investment income
190
135
502
400
Interest expense, net
(2,626
)
(2,896
)
(7,964
)
(8,232
)
Other income (loss), net
107
(157
)
29
(24,212
)
Total other income (expenses)
(2,329
)
(2,918
)
(7,433
)
(32,044
)
Loss before income tax
(8,250
)
(8,914
)
(20,177
)
(65,031
)
Income tax expense
616
498
1,562
1,269
Net loss
(8,866
)
(9,412
)
(21,739
)
(66,300
)
Less: net loss attributable to
noncontrolling interest
(15
)
—
(15
)
—
Net loss attributable to the Company
(8,851
)
(9,412
)
(21,724
)
(66,300
)
Preferred dividends
(1,395
)
(1,395
)
(4,185
)
(4,185
)
Loss applicable to common stockholders
$
(10,246
)
$
(10,807
)
$
(25,909
)
$
(70,485
)
Loss applicable to common stock, per
share
Basic
$
(0.11
)
$
(0.16
)
$
(0.29
)
$
(1.05
)
Diluted
$
(0.11
)
$
(0.16
)
$
(0.29
)
$
(1.05
)
Weighted average number of shares of
common stock outstanding
Basic
92,085,846
67,212,532
88,938,344
67,131,827
Diluted
92,415,570
67,212,532
89,521,013
67,131,827
DRIVE SHACK INC. AND SUBSIDIARIES
Adjusted EBITDA Non-GAAP Reconciliation (unaudited) (Dollars in
thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Net loss
($
8,866
)
($
9,412
)
($
21,737
)
($
66,300
)
Income tax expense
616
498
1,562
1,269
Other income (loss)
(107
)
157
(29
)
24,212
Net interest expense
2,436
2,761
7,462
7,832
Operating loss
($
5,921
)
($
5,996
)
($
12,742
)
($
32,987
)
Depreciation and amortization
5,823
6,853
17,852
20,329
(Gain) loss on lease termination and
impairment
324
302
2,972
(2,031
)
Pre-opening costs
2,030
227
3,375
1,049
Other items(1)
998
1,954
2,250
5,233
Adjusted EBITDA
$
3,254
$
3,340
$
13,707
($
8,407
)
(1) For the three months ended September 30, 2021 and 2020,
other items include (i) corporate severance of $50 and $440,
respectively; (ii) transactional G&A of $461 and $1,101,
respectively; and (iii) employee stock-based compensation of $487
and $413, respectively. For the nine months ended September 30,
2021 and 2020, other items include (i) corporate severance of $180
and $1,132 respectively; (ii) transactional G&A of $833 and
$3,114, respectively; and (iii) employee stock-based compensation
of $1,237 and $986, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211108005428/en/
Investor Relations Contact Kelley Buchhorn Head of
Investor Relations Drive Shack Inc. 646-585-5591
ir@driveshack.com
Media Contact Morgan Schaaf Head of Brand Marketing and
Communications Drive Shack Inc. 469-283-2760 media@driveshack.com
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