Reports 2020 Fourth Quarter Net Income of $9.9
Million and Positive Adjusted EBITDA of $5.3 Million
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
full year ended December 31, 2020.
“We are very pleased with our fourth quarter results as we
continue to see strong momentum in both our Drive Shack and
American Golf businesses,” said President and Chief Executive
Officer Hana Khouri. “In December, we successfully reopened our
Orlando entertainment golf venue and launched an online platform
for single-bay reservations across all of our entertainment golf
venues, both of which continue to generate solid and encouraging
sales results. Our revenue driving initiatives and continued
expense control discipline contributed to the positive Adjusted
EBITDA results of $5.3 million this quarter, a $7.4 million
improvement compared to the same quarter last year. With the
challenging year faced by many in 2020, the quick reaction by our
team across the entire organization to adapt to the new environment
and re-stabilize the business positioned us to advance our growth
priorities through the year. I am incredibly proud of their hard
work and relentless commitment to the continued success of our
business.”
Khouri continued, “As we look ahead into 2021, our focus remains
on strategic priorities to drive growth and profitability,
including the launch and expansion of Puttery, capturing market
share using data and analytics, growing brand awareness and
advancing technology and innovation to remain at the forefront in
our space. With our currently liquidity position and relatively
unlevered balance sheet, we can maintain flexibility and optimize
our capital stricture to be better positioned to react to future
business needs. We believe 2021 will be a momentous year for us
that is carried by a team that sets us apart and will drive us
forward.”
Business Update
The Company’s four entertainment Drive Shack golf venues,
including Orlando which reopened on December 18, 2020, generated
total revenue of $7.2 million in the fourth quarter 2020, a
decrease of $5.7 million compared to the fourth quarter 2019. The
decrease was primarily due to lower event revenue, which declined
$4.0 million compared to the same period last year and continues to
be impacted by locally mandated capacity restrictions on large
group gatherings.
The strong momentum and demand for traditional golf continued
for American Golf throughout the fourth quarter of 2020. New full
golf membership sales increased 20% and member rounds increased 37%
on American Golf’s five private courses compared to the fourth
quarter 2019. During the same period, green and cart fee revenue
increased 44% on American Golf’s 30 public courses compared to the
fourth quarter 2019, despite available tee times decreasing due to
locally mandated restrictions. Overall, American Golf’s traditional
golf business generated total revenue of $53.1 million in the
fourth quarter 2020, which includes $13.3 million of managed course
expense reimbursements. American Golf’s total revenue declined $5.8
million compared to the fourth quarter 2019, largely due to event
revenue, which decreased by approximately $9.5 million during the
same period.
Financial Liquidity Update
As of February 28, 2021, the Company had approximately $86
million of unrestricted cash on hand compared to approximately $44
million as of October 31, 2020. This increase is primarily due to
approximately $54 million in net cash proceeds from the follow-on
common stock offering completed in February 2021. The Company
continues to maintain strong capital allocation discipline and
expense control across the organization.
Financial Results
Three Months and Full Year Ended
December 31, 2020
compared to the Three Months and
Full Year Ended December 31, 2019
($ in thousands, except for per
share data) (Unaudited):
Three Months Ended
Year Ended
December 31, 2020
December 31, 2019
December 31, 2020
December 31, 2019
Total revenues
$
60,287
$
71,815
$
219,987
$
272,064
Operating Loss
$
(3,648
)
$
(20,121
)
$
(36,635
)
$
(67,284
)
Net Income/(Loss)
$
9,946
$
(15,276
)
$
(56,354
)
$
(54,854
)
Net Income/(Loss) applicable to common
stockholders
$
8,551
$
(16,671
)
$
(61,934
)
$
(60,434
)
Net Income/(Loss) applicable to common
stock, per share
Basic
$
0.13
$
(0.25
)
$
(0.92
)
$
(0.90
)
Diluted
$
0.13
$
(0.25
)
$
(0.92
)
$
(0.90
)
Adjusted EBITDA1
$
5,301
$
(2,064
)
$
(3,106
)
$
(11,951
)
For the three months ended December 31, 2020, the Company
reported an operating loss of ($3.6) million and net income of $9.9
million compared to an operating loss of ($20.1) million and a net
loss of ($15.3) million in the corresponding period of the prior
year. Adjusted EBITDA was $5.3 million for fourth quarter 2020, an
increase of $7.4 million compared to Adjusted EBITDA of ($2.1)
million for fourth quarter 2019. 1
For the twelve months ended December 31, 2020, the Company
reported an operating loss of ($36.6) million and a net loss of
($56.4) million compared to an operating loss of ($67.3) million
and a net loss of ($54.9) million in the corresponding period of
the prior year. Adjusted EBITDA was ($3.1) million for full year
2020, an increase of $8.8 million compared to Adjusted EBITDA of
($12.0) million for full year 2019. 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 February 1, 2021
and ending April 30, 2021. The dividends are payable on April 30,
2021, to holders of record of preferred stock on April 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.
2020 Fourth Quarter and Full Year Earnings Conference Call
Details
Management will host a live conference call and webcast to
discuss the Company’s 2020 fourth quarter and full year 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 http://ir.driveshack.com. The conference call may be
accessed 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 and referencing conference ID
5779120.
A telephonic replay of the conference call will also be
available approximately two hours following the conclusion of the
call through 11:59 P.M. Eastern Time on Friday, March 26, 2021 and
may be accessed by dialing 1-800-585-8367 (from within the U.S.) or
1-404-537-3406 (from outside of the U.S.) and referencing
conference ID 5779120.
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 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 (Unaudited)
(dollars in thousands, except share
data)
December 31, 2020
December 31, 2019
Assets
Current assets
Cash and cash equivalents
$
47,786
$
28,423
Restricted cash
2,252
3,103
Accounts receivable, net
4,446
5,249
Real estate assets, held-for-sale, net
---
16,948
Real estate securities,
available-for-sale
3,223
3,052
Other current assets
14,410
17,521
Total current assets
72,117
74,296
Restricted cash, noncurrent
795
438
Property and equipment, net of accumulated
depreciation
169,425
179,641
Operating lease right-of-use assets
192,828
215,308
Intangibles, net of accumulated
amortization
15,124
17,565
Other investments
---
24,020
Other assets
6,765
4,723
Total assets
$
457,054
$
515,991
Liabilities and Equity
Current liabilities
Obligations under finance leases
$
6,470
$
6,154
Membership deposit liabilities
14,692
10,791
Accounts payable and accrued expenses
29,596
25,877
Deferred revenue
23,010
26,268
Other current liabilities
28,217
23,968
Total current liabilities
101,985
93,058
Credit facilities and obligations under
finance leases - noncurrent
12,751
13,125
Operating lease liabilities -
noncurrent
167,837
187,675
Junior subordinated notes payable
51,182
51,192
Membership deposit liabilities,
noncurrent
99,862
95,805
Deferred revenue, noncurrent
9,953
6,283
Other liabilities
3,447
3,278
Total liabilities
$
447,017
$
450,416
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, 2020 and 2019
61,583
61,583
Common stock, $0.01 par value,
1,000,000,000 shares authorized, 67,323,592 and 67,068,751 shares
issued and outstanding at December 31, 2020 and 2019,
respectively
673
671
Additional paid-in capital
3,178,704
3,177,183
Accumulated deficit
(3,232,391
)
(3,175,572
)
Accumulated other comprehensive income
1,468
1,710
Total equity
$
10,037
$
65,575
Total liabilities and equity
$
457,054
$
515,991
Consolidated Statements of Operations (Unaudited)
(dollars in thousands, except share data)
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
2020
2019
Revenues
Golf operations
$
52,906
$
53,608
$
189,972
$
216,497
Sales of food and beverages
7,381
18,207
30,015
55,567
Total revenues
60,287
71,815
219,987
272,064
Operating costs
Operating expenses
46,161
59,409
188,745
229,306
Cost of sales - food and beverages
2,180
4,759
8,834
15,217
General and administrative expense
7,182
9,994
31,284
47,976
Depreciation and amortization
6,823
6,627
27,152
22,396
Pre-opening costs
279
1,811
1,328
9,040
(Gain) loss on lease terminations and
impairment
1,310
9,336
(721
)
15,413
Total operating costs
63,935
91,936
256,622
339,348
Operating loss
(3,648
)
(20,121
)
(36,635
)
(67,284
)
Other income (expenses)
Interest and investment income
165
156
565
955
Interest expense, net
(2,736
)
(2,753
)
(10,968
)
(8,760
)
Other income (loss), net
16,601
7,921
(7,611
)
20,876
Total other income (expenses)
14,030
5,324
(18,014
)
13,071
Net Income/(Loss) before income
tax
10,382
(14,797
)
(54,649
)
(54,213
)
Income tax expense
436
479
1,705
641
Net Income/(Loss)
9,946
(15,276
)
(56,354
)
(54,854
)
Preferred dividends
(1,395
)
(1,395
)
(5,580
)
(5,580
)
Net Income/(Loss) Applicable to Common
Stockholders
$
8,551
$
(16,671
)
$
(61,934
)
$
(60,434
)
Net Income/(Loss) Applicable to Common
Stock, per share
Basic
$
0.13
$
(0.25
)
$
(0.92
)
$
(0.90
)
Diluted
$
0.13
$
(0.25
)
$
(0.92
)
$
(0.90
)
Weighted Average Number of Shares of
Common Stock Outstanding
Basic
67,238,624
67,060,440
67,158,745
67,039,556
Diluted
67,833,329
67,060,440
67,158,745
67,039,556
Adjusted EBITDA Non-GAAP Reconciliation
(dollars in thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Net Income (Loss)
$
9,946
($
15,276
)
($
56,354
)
($
54,854
)
Income tax expense
436
479
1,705
641
Other (income) expense, net
(16,601
)
(7,921
)
7,611
(20,876
)
Net interest expense
2,571
2,597
10,403
7,805
Operating Loss
($
3,648
)
($
20,121
)
($
36,635
)
($
67,284
)
Depreciation and amortization
6,823
6,627
27,152
22,396
(Gain) loss on lease terminations and
impairment
1,310
9,336
(721
)
15,413
Pre-opening costs
279
1,811
1,328
9,040
Other items(1)
537
283
5,770
8,484
Adjusted EBITDA
$
5,301
($
2,064
)
($
3,106
)
($
11,951
)
(1)
For the three and twelve months ended
December 31, 2020, other items include (i) corporate severance of
($4) and $1,128, respectively; (ii) transactional G&A of
$161 and $3,276, respectively; and (iii) stock-based compensation
of $380 and $1,366, respectively. For the three and twelve months
ended December 31, 2019, other items include (i) corporate
severance of $682 and $2,271, respectively; (ii) transactional
G&A of $1,132 and $5,076, respectively; and (iii) stock-based
compensation of ($1,531) and $1,137, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210312005114/en/
Investor Relations Inquiries Kelley Buchhorn, Head of
Investor Relations ir@driveshack.com
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