The Company announces successful opening of 3
new Drive Shack venues, results significantly outperform
expectations
Achieves goal of selling 24 owned golf courses
for total proceeds of ~$170 million
Drive Shack Inc. (NYSE: DS), a leading owner and operator of
golf entertainment and leisure venues, today announced financial
results for its third quarter ended September 30, 2019.
The Company announced the successful openings of three
Generation 2.0 Drive Shack venues: Raleigh, NC opened August 23rd;
Richmond, VA opened September 20th; West Palm Beach, FL opened
October 18th. As of November 8th, the three new venues generated
combined revenue of $6.5 million, exceeding the Company’s plan by
21%. The new venues are expected to continue to ramp up faster than
anticipated and achieve average EBITDA of $4 million to $6 million
and development yields of 10 to 15% in 2020. Additionally, the
Company announced the retirement of Ken May, who served as Chief
Executive Officer. Hana Khouri, the Company’s current President,
will be assuming the role of CEO and President.
“It has been a tremendous quarter, and we are thrilled to
announce the success of our Generation 2.0 venues,” says Hana
Khouri. “To open not one, but three new venues in a span of three
months, and to see results of this caliber out of the gate,
illustrates the strong trajectory of the company, as well as the
talented and experienced leadership we have in place.”
“These results provide a real platform for valuation, stability,
and growth of Drive Shack moving forward,” says Chairman of the
Board of Directors, Wes Edens. “Hana and her team have done a
phenomenal job and set a precedent for the level of success we
expect moving forward as we grow the company on a national
scale.”
Additionally, the Company announced substantial progress in the
development of its newest innovation, the “Urban Box.” The indoor
format will provide a social, technology-enhanced mini golf
experience designed for dense, urban locations. The focus on
putting reduces venue dimension requirements compared to the core
Drive Shack stores, and therefore provides more real estate
opportunities, shorter development timelines and less capital risk.
Three Urban Box stores are set to debut alongside Drive Shack’s New
Orleans venue in 2020.
The Company also announced the completion of its goal to sell 24
of its 26 owned golf courses for total proceeds of approximately
$170 million by year end 2019. The proceeds will be used to fund
the development of the Company’s entertainment golf venues.
Financial Results
Three Months Ended September 30, 2019 compared
to the Three Months Ended September 30, 2018 and Nine Months Ended
September 30, 2019 compared to Nine Months Ended September 30, 2018
($ in thousands, except for per share data):
Three Months Ended September
30, 2019
Three Months Ended September
30, 2018
Nine Months Ended September
30, 2019
Nine Months Ended September
30, 2018
Total revenues
$
74,682
$
87,419
$
200,249
$
245,083
Loss applicable to common stockholders
$
(13,414
)
$
(15,470
)
$
(43,763
)
$
(39,360
)
Basic
$
(0.20
)
$
(0.23
)
$
(0.65
)
$
(0.59
)
Diluted
$
(0.20
)
$
(0.23
)
$
(0.65
)
$
(0.59
)
For the three months ended September 30, 2019, the Company
reported a loss of $13 million, or ($0.20) per share, compared to a
loss of $15 million, or ($0.23) share, in the corresponding period
of the prior year. For the nine months ended September 30, 2019,
the Company reported a loss of $44 million, or ($0.65) per share,
compared to a loss of $39 million, or ($0.59) per share, in the
corresponding period of the prior year.
The Company paid dividends on October 31, 2019 to holders of
record of preferred stock on October 1, 2019, for the period
beginning August 1, 2019 and ending October 31, 2019, 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.
The Board of Directors of the Company declared dividends on the
Company’s preferred stock for the period beginning November 1, 2019
and ending January 31, 2020. The dividends are payable on January
31, 2020, to holders of record of preferred stock on January 2,
2020, 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.
Conference Call Tuesday, November 12, 2019
Management will hold a conference call to discuss these results
Tuesday, November 12th at 9:15 a.m. Eastern Time. The conference
call can be accessed over the phone 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; please reference
conference ID “9757719.”
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 Tuesday, November 26, 2019 by dialing
1-800-585-8367 (from within the U.S.) or 1-404-537-3406 (from
outside of the U.S.); please reference conference ID “9757719.”
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 items in this Press
Release may constitute forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including, but not limited to, statements regarding Drive Shack
Inc.’s (NYSE: DS; “DS Inc.” or the “Company” and “we,” “us” and
“our,” as applicable) (a) statements relating to returns on our
investments, (b) anticipated future sales of selected owned golf
properties, including without limitation statements relating to the
timing and amount of anticipated proceeds, (c) our plans and
expectations to optimize the operation of, and grow, our existing
leased and managed golf properties, (d) redeployment of cash from
our generated liquidity, (e) targeted multiples, yields and
returns, (f) our ability to terminate or restructure leases and (g)
the Company’s current business plan and expectations relating to
our Drive Shack venues, including (i) the number of venues that we
may be able to develop, (ii) timing and frequency for opening
venues, (iii) financial performance of these venues and capital
expenditure costs, (iv) the growth of the golf, golf entertainment,
and eatertainment industry and business, and (v) our ability to
enhance technology. These statements are based on management's
current expectations and beliefs and are subject to a number of
risks, trends and uncertainties that could cause actual results to
differ materially from those described in the forward-looking
statements, many of which are beyond our control. We cannot give
any assurances that management’s current expectations will be
attained. For a discussion of some of the risks and important
factors that could cause actual results to differ materially from
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 periodic
reports filed with the Securities and Exchange Commission (“SEC”),
which are available on the Company’s website
(www.http://ir.driveshack.com). In addition, new risks and
uncertainties emerge from time to time, and it is not possible to
predict or assess the impact of every factor that may cause actual
results to differ from those contained in any forward-looking
statements. Accordingly, you should not place undue reliance on any
forward-looking statements contained in this Press Release.
Forward-looking statements speak only as of the date of this Press
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 expectations with regard
thereto or change in events, conditions or circumstances on which
any statement is based.
Non-GAAP Financial Information. This Press Release
includes information based on financial measures that are not
recognized under generally accepted accounting principles (“GAAP”),
including EBITDA. You should use non-GAAP information in addition
to, and not as an alternative to, financial information prepared in
accordance with GAAP, which is included in the Company’s filings
with the SEC. The Company has not reconciled its EBITDA
expectations set forth in this press release to net income (loss),
as items that impact such measures are out of the Company’s control
and/or cannot be reasonably predicted. Accordingly, a
reconciliation is not available without unreasonable effort. The
company has not reconciled EBITDA to net income (loss) in this
press release because doing so would require unreasonable
effort.
Past Performance; No Offer; No Reliance: Past performance
is not a reliable indicator of future results and should not be
relied upon as the basis for making an investment decision. This
Press Release does not constitute an offer to sell, or a
solicitation of an offer to buy, any security. Any such offer would
only be made by means of formal offering documents, the terms of
which would govern in all respects. You should not rely on this
Press Release as the basis upon which to make any investment
decision.
Cautionary Note regarding Estimated / Targeted Returns and
Growth: Targeted returns and growth represent management’s view
and are estimated based on current and projected future operating
performance of our current locations and other targeted locations,
comparable companies in our industry and a variety of other
assumptions, many of which are beyond our control, that could prove
incorrect. As a result, actual results may vary materially with
changes in our liquidity or ability to obtain financing, changes in
market conditions and additional factors described in our reports
filed with the SEC, which we encourage you to review. We undertake
no obligation to update these estimates. See above for more
information on forward-looking statements.
Consolidated Balance Sheets (dollars in thousands, except
share data)
(Unaudited)
September 30, 2019
December 31, 2018
Assets
Current assets
Cash and cash equivalents
$
24,816
$
79,235
Restricted cash
3,163
3,326
Accounts receivable, net
5,243
7,518
Real estate assets, held-for-sale, net
27,833
75,862
Real estate securities,
available-for-sale
2,914
2,953
Other current assets
18,615
20,505
Total current assets
82,584
189,399
Restricted cash, noncurrent
931
258
Property and equipment, net of accumulated
depreciation
185,737
132,605
Operating lease right-of-use assets
220,197
—
Intangibles, net of accumulated
amortization
18,208
48,388
Other investments
23,648
22,613
Other assets
4,601
8,684
Total assets
$
535,906
$
401,947
Liabilities and Equity
Current liabilities
Obligations under finance leases
$
6,222
$
5,489
Membership deposit liabilities
10,766
8,861
Accounts payable and accrued expenses
38,032
45,284
Deferred revenue
7,627
18,793
Real estate liabilities, held-for-sale
21
2,947
Other current liabilities
28,697
22,285
Total current liabilities
91,365
103,659
Credit facilities and obligations under
finance leases - noncurrent
14,397
10,489
Operating lease liabilities -
noncurrent
191,442
—
Junior subordinated notes payable
51,194
51,200
Membership deposit liabilities,
noncurrent
93,988
90,684
Deferred revenue, noncurrent
6,170
6,016
Other liabilities
3,694
5,232
Total liabilities
$
452,250
$
267,280
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, 2019 and December 31, 2018
61,583
61,583
Common stock, $0.01 par value,
1,000,000,000 shares authorized, 67,050,556 and 67,027,104 shares
issued and outstanding at September 30, 2019 and December 31, 2018,
respectively
670
670
Additional paid-in capital
3,178,655
3,175,843
Accumulated deficit
(3,158,901
)
(3,105,307
)
Accumulated other comprehensive income
1,649
1,878
Total equity
$
83,656
$
134,667
Total liabilities and equity
$
535,906
$
401,947
Consolidated Statements of Operations (unaudited) (dollars in
thousands, except share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenues
Golf operations
$
60,797
$
68,928
$
162,889
$
191,632
Sales of food and beverages
13,885
18,491
37,360
53,451
Total revenues
74,682
87,419
200,249
245,083
Operating costs
Operating expenses
63,454
70,330
169,897
194,751
Cost of sales - food and beverages
3,856
5,180
10,458
15,413
General and administrative expense
12,755
10,149
37,981
29,611
Depreciation and amortization
5,723
4,495
15,769
14,358
Pre-opening costs
4,350
245
7,229
2,048
Impairment and other losses
1,872
4,172
6,077
5,645
Realized and unrealized (gain) loss on
investments
—
48
—
(283
)
Total operating costs
92,010
94,619
247,411
261,543
Operating loss
(17,328
)
(7,200
)
(47,162
)
(16,460
)
Other income (expenses)
Interest and investment income
191
467
799
1,382
Interest expense, net
(2,061
)
(4,290
)
(6,008
)
(12,940
)
Other income (loss), net
7,341
(3,052
)
12,955
(7,157
)
Total other income (expenses)
5,471
(6,875
)
7,746
(18,715
)
Loss before income tax
(11,857
)
(14,075
)
(39,416
)
(35,175
)
Income tax expense
162
—
162
—
Net Loss
(12,019
)
(14,075
)
(39,578
)
(35,175
)
Preferred dividends
(1,395
)
(1,395
)
(4,185
)
(4,185
)
Loss Applicable to Common
Stockholders
$
(13,414
)
$
(15,470
)
$
(43,763
)
$
(39,360
)
Loss Applicable to Common Stock, per
share
Basic
$
(0.20
)
$
(0.23
)
$
(0.65
)
$
(0.59
)
Diluted
$
(0.20
)
$
(0.23
)
$
(0.65
)
$
(0.59
)
Weighted Average Number of Shares of
Common Stock Outstanding
Basic
67,040,692
66,992,322
67,032,519
66,982,233
Diluted
67,040,692
66,992,322
67,032,519
66,982,233
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191111005723/en/
For Investor Relations Inquiries:
Austin Pruitt Head of Investor Relations 646-585-5591
IR@driveshack.com
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