Fourth Quarter 2021 Total Company Revenue Up
17% to $70.5 Million Compared to Fourth Quarter 2020
Full Year 2021 Total Company Revenue Up 28% to
$282 Million Compared to $220 Million for Full Year 2020; Highest
Annual Total Company Revenue Reported in Three Years
Full Year 2021 Operating Loss Improves 48% to
($19.2) Million Compared to ($36.6) Million for Full Year 2020
Full Year 2021 Adjusted EBITDA1 of $16.2
Million, a $19.3 Million Increase Compared to ($3.1) Million for
Full Year 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 fourth quarter and
twelve months ended December 31, 2021.
“Our fourth quarter results reflect the strong momentum we
continue to see across our entire brand portfolio. The walk-in
business at our four Drive Shack venues has largely returned to
pre-COVID levels and total event revenue is up meaningfully across
both Drive Shack and American Golf compared to last year and was
the highest quarterly event revenue reported since pre-COVID,” said
Drive Shack Inc.’s President and Chief Executive Officer Hana
Khouri. “Both Puttery locations generated positive venue-level
operating results this quarter and we remain extremely pleased with
their strong performance as they continue to deliver well within
our expectations.”
Khouri continued, “2021 was truly a momentous year for our
Company. We delivered our highest annual total company revenue in
three years and our best annual earnings performance since our
transformation to a golf leisure and entertainment company. We
successfully launched our new Puttery brand in September 2021 and
ended the year with two venues open in The Colony, Texas and
Charlotte, North Carolina. Today, we have eight additional venues
that are under lease and behind those we have a significant number
of sites that are in various stages of discovery moving toward
lease commitment. In 2021, we drove growth and profitability in our
business by delivering on the strategic priorities we set out to
achieve, and I am grateful to the dedicated associates across the
entire organization who remain committed to driving our brand and
business forward. As we look ahead into 2022, we remain focused on
increasing brand awareness and further driving profitability, while
at the same time optimizing our capital structure to efficiently
support our development and growth plans.”
Fourth Quarter 2021 Financial Highlights
Total revenue for the fourth quarter this year was $70.5
million, an increase of $10.2 million or 17.0%, compared to $60.3
million in the same period last year.
American Golf, the Company’s traditional golf business,
generated total revenue of $56.5 million, which included $13.0
million of managed course expense reimbursements, in the fourth
quarter 2021, an increase of $3.4 million or 6.4% compared to total
revenue of $53.1 million, which included $13.3 million of managed
course expense reimbursements, in the fourth quarter 2020. The
increase to last year was primarily due to higher public course
green and cart fees and daily fee rounds and total event revenue
this year versus the same period last year.
The Company’s entertainment golf business, comprised of both
Drive Shack and Puttery venues, generated total revenue of $14.0
million in the fourth quarter 2021, an increase of $6.8 million, or
95.1% compared to $7.2 million in the fourth quarter 2020. The
increase was due to a $4.0 million increase in total revenue at the
Company’s four Drive Shack venues, with $2.8 million of the
increase driven by higher event revenue. Additionally, the
Company’s two Puttery venues generated total revenue of $2.8
million in the fourth quarter this year. As a reminder, the Company
debuted its first Puttery venue in The Colony, Texas in September
2021 and opened its second Puttery venue in Charlotte, North
Carolina in mid-December 2021.
Operating loss for the fourth quarter 2021 was approximately
($6.4) million, a decrease of $2.8 million in profitability versus
an operating loss of ($3.6) million in fourth quarter 2020. The
change was primarily due to $1.9 million of increased costs in 2021
from the catch-up of course maintenance that was deferred in 2020,
$0.8 million in rent abatements for certain golf course properties
in the fourth quarter 2020 that did not repeat in 2021 and a $0.9
million increase in preopening costs in 2021. These increases were
partially offset by other net operating profit improvements in
2021.
Consolidated net loss was ($8.6) million for the fourth quarter
this year compared to consolidated net income of $9.9 million in
the same period last year. Last year, the Company recorded a $16.6
million gain in the fourth quarter on the sale of a previously
owned golf course. Adjusted EBITDA was $2.5 million for fourth
quarter 2021 compared to Adjusted EBITDA of $5.3 million in the
fourth quarter 2020.1
Full Year 2021 Financial Highlights
Total revenue for full year 2021 was $281.9 million, an increase
of $61.9 million, or 28.1%, compared to $220.0 million for full
year 2020.
American Golf generated total revenue of $236.8 million in 2021,
which included $54.4 million of managed course expense
reimbursements, an increase of $42.0 million or 21.6% compared to
last year’s total revenue of $194.7 million, which included $50.4
million of managed course expense reimbursements. The increase in
2021 was primarily due to higher public course green and cart fees
and daily fee rounds, private course total rounds and memberships,
and total event revenue.
The Company’s entertainment golf business generated total
revenue of $45.1 million for full year 2021, an increase of $19.8
million or 78.3% compared to $25.3 million for full year 2020. The
increase was primarily due to a $16.2 million increase in total
revenue at the Company’s four Drive Shack venues, with $11.8
million in increased walk-in revenue and $4.4 million in higher
event revenue. The Company’s two Puttery venues generated total
revenue of $3.6 million for the portion of the year they were open
in 2021.
Operating loss for full year 2021 was ($19.2) million, an
improvement of $17.5 million or 47.7% versus an operating loss of
($36.6) million for full year 2020. Consolidated net loss was
($30.3) million for full year 2021, an improvement of $26.0 million
or 46.2% compared to full year 2020. Adjusted EBITDA was $16.2
million for full year 2021, an increase of $19.3 million compared
to Adjusted EBITDA of ($3.1) million for full year 20201.
As of December 31, 2021, the Company had cash and cash
equivalents of $58.3 million compared to $47.8 million as of
December 31, 2020.
Summary Financial Results
Three and Twelve Months Ended December 31, 2021 compared to the
Three and Twelve Months Ended December 31, 2020 ($ in thousands,
except for per share data):
Three Months Ended Dec. 31,
Twelve Months Ended Dec. 31,
2021
2020
2021
2020
(unaudited)
(unaudited)
Total revenues
$
70,527
$
60,287
$
281,864
$
219,987
Operating Loss
($
6,430
)
($
3,648
)
($
19,174
)
($
36,635
)
Consolidated Net Income (Loss)
($
8,573
)
$
9,946
($
30,312
)
($
56,354
)
Income (loss) applicable to common
stockholders
($
10,346
)
$
8,551
($
35,499
)
($
61,934
)
Income (loss) applicable to common stock,
per share
Basic
($
0.11
)
$
0.13
($
0.39
)
($
0.92
)
Diluted
($
0.11
)
$
0.13
($
0.39
)
($
0.92
)
Adjusted EBITDA1
$
2,535
$
5,301
$
16,240
($
3,106
)
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 February 1, 2022
and ending April 30, 2022. The dividends are payable on May 2,
2022, to holders of record of preferred stock on April 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 Fourth Quarter and Full Year Earnings Conference Call
Details
Management will host a live conference call to discuss the
Company’s 2021 fourth quarter and full year 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 1-866-342-8591 (from within the U.S.) or
1-203-518-9713 (from outside of the U.S.) ten minutes prior to the
scheduled start of the call and referencing conference ID
“DSQ421.”
A telephonic replay of the conference call will be available
after 12:00 p.m. Eastern Time starting today through 11:59 p.m.
Eastern Time on Friday, March 18, 2022, and may be accessed by
dialing 1-800-839-2486 (from within the U.S.) or 1-402-220-7223
(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 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)
December 31, 2021
December 31, 2020
Assets
(unaudited)
Current assets
Cash and cash equivalents
$
58,286
$
47,786
Restricted cash
3,480
2,252
Accounts receivable, net
5,563
4,446
Real estate securities,
available-for-sale
3,486
3,223
Other current assets
30,034
14,410
Total current assets
100,849
72,117
Restricted cash, noncurrent
798
795
Property and equipment, net of accumulated
depreciation
179,260
169,425
Operating lease right-of-use assets
181,915
192,828
Intangibles, net of accumulated
amortization
13,430
15,124
Other assets
6,538
6,765
Total assets
$
482,790
$
457,054
Liabilities and Equity
Current liabilities
Obligations under finance leases
$
5,400
$
6,470
Membership deposit liabilities
18,039
14,692
Accounts payable and accrued expenses
33,019
29,596
Deferred revenue
26,301
23,010
Other current liabilities
26,524
28,217
Total current liabilities
109,283
101,985
Credit facilities and obligations under
finance leases - noncurrent
9,075
12,751
Operating lease liabilities -
noncurrent
166,031
167,837
Junior subordinated notes payable
51,174
51,182
Membership deposit liabilities,
noncurrent
104,430
99,862
Deferred revenue, noncurrent
10,005
9,953
Other liabilities
1,487
3,447
Total liabilities
$
451,485
$
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 December 31, 2021 and 2020
$
61,583
$
61,583
Common stock, $0.01 par value,
1,000,000,000 shares authorized, 92,093,425 and 67,323,592 shares
issued and outstanding as of December 31, 2021 and 2020,
respectively
921
673
Additional paid-in capital
3,233,608
3,178,704
Accumulated deficit
(3,267,426
)
(3,232,391
)
Accumulated other comprehensive income
1,163
1,468
Total equity of the company
$
29,849
$
10,037
Noncontrolling interest
1,456
-
Total equity
$
31,305
$
10,037
Total liabilities and equity
$
482,790
$
457,054
Drive Shack Inc. and Subsidiaries
Consolidated Statement of Operations
(unaudited)
(Dollars in thousands, except share
data)
Three Months Ended Dec. 31,
Twelve Months Ended Dec. 31,
2021
2020
2021
2020
(unaudited)
(unaudited)
Revenues
Golf Operations
$
55,390
$
52,906
$
232,560
$
189,972
Sales of food and beverages
15,137
7,381
49,304
30,015
Total revenues
70,527
60,287
281,864
219,987
Operating costs
Operating expenses
57,026
46,161
222,260
188,745
Cost of sales - food and beverages
3,863
2,180
12,814
8,834
General and administrative expense
8,112
7,182
33,809
31,284
Depreciation and amortization
6,166
6,823
24,018
27,152
Pre-opening costs
1,177
279
4,552
1,328
(Gain) Loss on lease terminations and
impairment
613
1,310
3,585
(721
)
Total operating costs
76,957
63,935
301,038
256,622
Operating income (loss)
(6,430
)
(3,648
)
(19,174
)
(36,635
)
Other income (expenses)
Interest and investment income
182
165
684
565
Interest expense, net
(2,734
)
(2,736
)
(10,698
)
(10,968
)
Other income (loss), net
626
16,601
655
(7,611
)
Total other income (expenses)
(1,926
)
14,030
(9,359
)
(18,014
)
Loss before income tax
(8,356
)
10,382
(28,533
)
(54,649
)
Income tax expense
217
436
1,779
1,705
Consolidated net income (loss)
(8,573
)
9,946
(30,312
)
(56,354
)
Less: net loss attributable to
noncontrolling interest
(378
)
-
(393
)
-
Net income (loss) attributable to the
Company
(8,951
)
9,946
(29,919
)
(56,354
)
Preferred dividends
(1,395
)
(1,395
)
(5,580
)
(5,580
)
Income (loss) applicable to common
stockholders
($
10,346
)
$
8,551
($
35,499
)
($
61,934
)
Income (loss) applicable to common stock,
per share
Basic (in dollars per share)
($
0.11
)
$
0.13
($
0.39
)
($
0.92
)
Diluted (in dollars per share)
($
0.11
)
$
0.13
($
0.39
)
($
0.92
)
Weighted average number of shares of
common stock outstanding
Basic
92,073,344
67,158,745
92,073,344
67,158,745
Diluted
92,073,344
67,158,745
92,073,344
67,158,745
DRIVE SHACK INC. AND SUBSIDIARIES
Adjusted EBITDA Non-GAAP Reconciliation
(unaudited)
(Dollars in thousands)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
2021
2020
Consolidated net income (loss)
($
8,573
)
$
9,946
($
30,312
)
($
56,354
)
Income tax expense
217
436
1,779
1,705
Other (income) loss, net
(626
)
(16,601
)
(655
)
7,611
Net interest expense
2,552
2,571
10,014
10,403
Operating income (loss)
($
6,430
)
($
3,648
)
($
19,174
)
($
36,635
)
Depreciation and amortization
6,166
6,823
24,018
27,152
(Gain) loss on lease terminations and
impairment
613
1,310
3,585
(721
)
Pre-opening costs
1,177
279
4,552
1,328
Other items1
1,009
537
3,259
5,770
Adjusted EBITDA
$
2,535
$
5,301
$
16,240
($
3,106
)
(1)
For the three months ended December 31,
2021 and 2020, other items include (i) corporate severance of $86
and ($4), respectively; (ii) transactional G&A of $472 and
$161, respectively; and (iii) employee stock-based compensation of
$451 and $381, respectively. For the twelve months ended December
31, 2021 and 2020, other items include (i) corporate severance of
$266 and $1,128 respectively; (ii) transactional G&A of $1,305
and $3,276, respectively; and (iii) employee stock-based
compensation of $1,689 and $1,366, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220311005132/en/
Investor Relations Kelley Buchhorn Head of Investor
Relations and Treasury Drive Shack Inc. 646-585-5591
ir@driveshack.com
Media Morgan Schaaf Head of Brand Marketing and
Communications Drive Shack Inc. 469-283-2760
media@driveshack.com
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