Generation 2.0 Drive Shack venues produce
strong results, generated $15 million of revenue in second half of
2019
2 new Urban Box sites announced – Dallas, TX
and Charlotte, NC
Expect to open 4 new venues in 2020
Drive Shack Inc. (NYSE: DS), a leading owner and operator of
golf-related leisure and “eatertainment” venues, today reported its
financial results for the fourth quarter and full year ended
December 31, 2019.
The Company announced that during the fourth quarter of 2019 it
successfully opened its third Generation 2.0 Drive Shack venue in
West Palm Beach, FL on October 14th. In the second half of 2019,
the three new Generation 2.0 venues generated combined revenue of
approximately $15 million. The new venues have ramped up faster
than anticipated and are expected to achieve EBITDA margins of
approximately 25% and development yields of 10 to 15% in 2020.
“For the second straight quarter we see our Generation 2.0
venues produce exceptional results,” says CEO, Hana Khouri. “Our
fourth quarter results highlight the strength of these new venues,
as the venues significantly outpace the anticipated timelines to
ramp up to target economics. This is a direct result of the
talented and experienced leadership team we have in place. They’ve
done a phenomenal job executing the plan and will continue to be a
key differentiator, and driver for us, as we execute our growth
plan across the next 50 entertainment venues.”
Additionally, the Company announced substantial progress in the
development of its newest innovation, the “Urban Box,” including
the announcement of new sites in Dallas, TX and Charlotte, NC.
Three Urban Box venues are set to debut alongside Drive Shack’s New
Orleans venue in the second half of 2020. The Company outlined its
plans for growth, which include doubling the number of operating
entertainment golf venues by the end of 2020. By the end of 2023,
the company plans to operate a portfolio of nearly 60 entertainment
venues, including 50 urban box venues and 8 core venues.
The Company also announced the departure of David Hammarley, who
served as Chief Financial Officer. Lawrence A Goodfield Jr., the
Company’s Chief Accounting Officer and Treasurer, will also assume
the role of Interim Chief Financial Officer.
Financial Results
Three Months Ended December 31, 2019 compared
to the Three Months Ended December 31, 2018 and the Year Ended
December 31, 2019 compared to Year Ended December 31, 2018 ($ in
thousands, except for per share data):
Three Months Ended
Year Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
Total revenues
$
71,815
$
69,286
$
272,064
$
314,369
Loss applicable to common stockholders
$
(16,671
)
$
(4,905
)
$
(60,434
)
$
(44,263
)
Loss applicable to Common Stock, per
share
Basic
$
(0.25
)
$
(0.07
)
$
(0.90
)
$
(0.66
)
Diluted
$
(0.25
)
$
(0.07
)
$
(0.90
)
$
(0.66
)
For the three months ended December 31, 2019, the Company
reported a loss of $17 million, or ($0.25) per share, compared to a
loss of $5 million, or ($0.07) share, in the corresponding period
of the prior year. For the twelve months ended December 31, 2019,
the Company reported a loss of $60 million, or ($0.90) per share,
compared to a loss of $44 million, or ($0.66) per share, in the
corresponding period of the prior year.
Conference Call Friday, March 6, 2020
Management will hold a conference call to discuss these results
Friday, March 6th at 9:00 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 “8985335.”
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 Friday, March 20, 2020 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 “8985335.”
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
(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, EBITDA margin, and Development Yield. 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)
December 31,
2019
2018
Assets
Current assets
Cash and cash equivalents
$
28,423
$
79,235
Restricted cash
3,103
3,326
Accounts receivable, net
5,249
7,518
Real estate assets, held-for-sale, net
16,948
75,862
Real estate securities,
available-for-sale
3,052
2,953
Other current assets
17,521
20,505
Total current assets
74,296
189,399
Restricted cash, noncurrent
438
258
Property and equipment, net of accumulated
depreciation
179,641
132,605
Operating lease right-of-use assets
215,308
—
Intangibles, net of accumulated
amortization
17,565
48,388
Other investments
24,020
22,613
Other assets
4,723
8,684
Total assets
$
515,991
$
401,947
Liabilities and Equity
Current liabilities
Obligations under finance leases
$
6,154
$
5,489
Membership deposit liabilities
10,791
8,861
Accounts payable and accrued expenses
25,877
45,284
Deferred revenue
26,268
18,793
Real estate liabilities, held-for-sale
4
2,947
Other current liabilities
23,964
22,285
Total current liabilities
93,058
103,659
Credit facilities and obligations under
finance leases - noncurrent
13,125
10,489
Operating lease liabilities -
noncurrent
187,675
—
Junior subordinated notes payable
51,192
51,200
Membership deposit liabilities,
noncurrent
95,805
90,684
Deferred revenue, noncurrent
6,283
6,016
Other liabilities
3,278
5,232
Total liabilities
$
450,416
$
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 December 31, 2019 and 2018
61,583
61,583
Common stock, $0.01 par value,
1,000,000,000 shares authorized, 67,068,751 and 67,027,104 shares
issued and outstanding at December 31, 2019 and 2018,
respectively
671
670
Additional paid-in capital
3,177,183
3,175,843
Accumulated deficit
(3,175,572
)
(3,105,307
)
Accumulated other comprehensive income
1,710
1,878
Total equity
$
65,575
$
134,667
Total liabilities and equity
$
515,991
$
401,947
Consolidated Statements of Operations
(unaudited)
(dollars in thousands, except share
data)
Three Months Ended December
31,
Year Ended December 31,
2019
2018
2019
2018
Revenues
Golf operations
$
53,608
$
53,014
$
216,497
$
244,646
Sales of food and beverages
18,207
16,272
55,567
69,723
Total revenues
71,815
69,286
272,064
314,369
Operating costs
Operating expenses
59,409
57,043
229,306
251,794
Cost of sales - food and beverages
4,759
4,740
15,217
20,153
General and administrative expense
9,994
8,951
47,976
38,560
Depreciation and amortization
6,627
5,346
22,396
19,704
Pre-opening costs
1,811
435
9,040
2,483
Impairment and other losses
9,336
2,595
15,413
8,240
Realized and unrealized (gain) loss on
investments
—
152
—
(131
)
Total operating costs
91,936
79,262
339,348
340,803
Operating loss
(20,121
)
(9,976
)
(67,284
)
(26,434
)
Other income (expenses)
Interest and investment income
156
412
955
1,794
Interest expense, net
(2,753
)
(3,699
)
(8,760
)
(16,639
)
Other income (loss), net
7,921
10,037
20,876
2,880
Total other income (expenses)
5,324
6,750
13,071
(11,965
)
Loss before income tax
(14,797
)
(3,226
)
(54,213
)
(38,399
)
Income tax expense
479
284
641
284
Net Loss
(15,276
)
(3,510
)
(54,854
)
(38,683
)
Preferred dividends
(1,395
)
(1,395
)
(5,580
)
(5,580
)
Loss Applicable to Common
Stockholders
$
(16,671
)
$
(4,905
)
$
(60,434
)
$
(44,263
)
Loss Applicable to Common Stock, per
share
Basic
$
(0.25
)
$
(0.07
)
$
(0.90
)
$
(0.66
)
Diluted
$
(0.25
)
$
(0.07
)
$
(0.90
)
$
(0.66
)
Weighted Average Number of Shares of
Common Stock Outstanding
Basic
67,060,440
67,027,104
67,039,556
66,993,543
Diluted
67,060,440
67,027,104
67,039,556
66,993,543
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200305005941/en/
For Investor Relations Inquiries: Austin Pruitt Head of
Investor Relations 646-585-5591 IR@driveshack.com
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