Drive shack inc. announces second quarter 2021 financial results and preferred stock dividends for third quarter 2021
Dallas--(business wire)--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 second quarter and six months ended june 30, 2021. “we have had incredible results this quarter including reporting operating income for the first time in three years and our fourth consecutive quarter of positive adjusted ebitda,” said drive shack inc.’s chief executive officer and president hana khouri. “both our american golf and drive shack businesses delivered strong financial performances as the momentum in the golf and entertainment sectors continued throughout the second quarter. walk-in revenue at our drive shack venues was at an all-time high and each surpassed their pre-pandemic venue contribution levels, including orlando delivering above break-even for the first time.” khouri continued, “2021 is a pivotal year for our company and we remain centered on executing the successful launch and expansion of puttery. our team’s relentless focus to deliver our first venue, located in the colony, texas near dallas, is unmatched. we have faced numerous learnings and obstacles during construction, which is to be expected with the introduction of a brand-new concept and are now in the final testing and training phases. we look forward to introducing our first puttery location to the dallas market in the coming weeks. development continues with our charlotte, dc and miami venues and, earlier this morning, we announced our newest puttery location in houston, our fifth market nationwide. additionally, we look forward to a long-standing partnership with rory mcilroy and his team as we further grow our puttery brand in the coming years.” business update total revenue for the second quarter this year was $73.9 million compared to $32.1 million in the same period last year. the company’s four entertainment drive shack golf venues generated total revenue of $11.6 million in the second quarter 2021, an increase of $9.8 million compared to $1.8 million in the second quarter 2020. the increase was primarily due to covid-19 related venue closures during the majority of the second quarter last year. the company’s traditional golf business, american golf, generated total revenue of $62.3 million in the second quarter 2021, which included $12.9 million of managed course expense reimbursements, compared to $30.3 million in the second quarter 2020, which included $8.5 million of managed course expense reimbursements. the increase to last year’s second quarter was primarily due to covid-19 related course closures for a portion of the second quarter 2020. balance sheet as of june 30, 2021, the company had cash and cash equivalents of $81.4 million compared to $85.9 million as of march 30, 2021. the company continues to maintain strong capital allocation discipline and expense control across the organization. summary financial results three and six months ended june 30, 2021 compared to the three and six months ended june 30, 2020 ($ in thousands, except for per share data) (unaudited): three months ended june 30, six months ended june 30, 2021 2020 2021 2020 total revenues $73,879 $32,100 $134,971 $93,235 operating income (loss) $1,053 ($12,148) ($6,822) ($26,991) net loss ($1,969) ($39,526) ($12,873) ($56,888) net loss applicable to common stockholders ($3,364) ($40,921) ($15,663) ($59,678) net loss applicable to common stock, per share basic ($0.04) ($0.61) ($0.18) ($0.89) diluted ($0.04) ($0.61) ($0.18) ($0.89) adjusted ebitda1 $7,719 ($7,049) $10,450 ($11,747) for the three months ended june 30, 2021, the company reported operating income of $1.1 million and a net loss of ($2.0) million compared to an operating loss of ($12.1) million and a net loss of ($39.5) million in the same period last year. adjusted ebitda was $7.7 million for second quarter 2021, an increase of $14.8 million compared to adjusted ebitda of ($7.0) million for second quarter 2020.1 for the six months ended june 30, 2021, the company reported an operating loss of ($6.8) million and a net loss of ($12.9) million compared to an operating loss of ($27.0) million and a net loss of ($56.9) million in the same period last year. adjusted ebitda was $10.4 million for the six months ended june 30, 2021, an increase of $22.2 million compared to adjusted ebitda of ($11.7) million for the same period in 2020.1 1adjusted 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 august 1, 2021 and ending october 31, 2021. the dividends are payable on november 1, 2021, to holders of record of preferred stock on october 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. 2021 second quarter earnings conference call details management will host a live conference call and webcast to discuss the company’s 2021 second quarter 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 https://ir.driveshack.com. the conference call may be accessed by dialing 1-877-876-9177 (from within the u.s.) or 1-785-424-1670 (from outside of the u.s.) ten minutes prior to the scheduled start of the call and referencing conference id “dsq221.” 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 thursday, august 12, 2021 and may be accessed by dialing 1-800-839-5324 (from within the u.s.) or 1-402-220-1521 (from outside of the u.s.) and referencing conference id “dsq221.” 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. about puttery puttery is a modern spin on putting, re-defining the game with unique twists at every hole. bold and full of possibilities, guests can enjoy a high-energy atmosphere, combining competitive socializing and innovative auto-scoring technology within an immersive experience as they move from one course to the next. with plentiful curated culinary offerings and inventive craft cocktails, all centered around a lively bar area with great music, guests can relax and enjoy their evening before, during and after their tee time. 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 (dollars in thousands, except share data) (unaudited) june 30, 2021 december 31, 2020 assets current assets cash and cash equivalents $81,428 $47,786 restricted cash 2,990 2,252 accounts receivable, net 4,577 4,446 real estate securities, available-for-sale 3,341 3,223 other current assets 22,879 14,410 total current assets 115,215 72,117 restricted cash, noncurrent 1,027 795 property and equipment, net of accumulated depreciation 171,126 169,425 operating lease right-of-use assets 187,870 192,828 intangibles, net of accumulated amortization 14,181 15,124 other assets 6,420 6,765 total assets $495,839 $457,054 liabilities and equity current liabilities obligations under finance leases $5,794 $6,470 membership deposit liabilities 14,748 14,692 accounts payable and accrued expenses 32,752 29,596 deferred revenue 16,529 23,010 other current liabilities 24,775 28,217 total current liabilities 94,598 101,985 credit facilities and obligations under finance leases - noncurrent 10,402 12,751 operating lease liabilities - noncurrent 172,372 167,837 junior subordinated notes payable 51,179 51,182 membership deposit liabilities, noncurrent 103,859 99,862 deferred revenue, noncurrent 10,224 9,953 other liabilities 3,695 3,447 total liabilities $446,329 $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 june 30, 2021 and december 31, 2020 $61,583 $61,583 common stock, $0.01 par value, 1,000,000,000 shares authorized, 92,085,419 and 67,323,592 shares issued and outstanding at june 30, 2021 and december 31, 2020, respectively 921 673 additional paid-in capital 3,233,269 3,178,704 accumulated deficit (3,247,589) (3,232,391) accumulated other comprehensive income 1,326 1,468 total equity $49,510 $10,037 total liabilities and equity $495,839 $457,054 consolidated statements of operations (unaudited) (dollars in thousands, except share data) three months ended june 30, six months ended june 30, 2021 2020 2021 2020 revenues golf operations $61,750 $29,675 $114,912 $78,300 sales of food and beverages 12,129 2,425 20,059 14,935 total revenues 73,879 32,100 134,971 93,235 operating costs operating expenses 55,635 33,224 104,504 87,591 cost of sales - food and beverages 3,151 829 5,255 4,484 general and administrative expense 8,028 6,368 16,012 16,186 depreciation and amortization 5,784 6,682 12,029 13,476 pre-opening costs 789 270 1,345 822 (gain) loss on lease terminations and impairment (561) (3,125) 2,648 (2,333) total operating costs 72,826 44,248 141,793 120,226 operating income (loss) 1,053 (12,148) (6,822) (26,991) other income (expenses) interest and investment income 159 135 312 265 interest expense, net (2,713) (2,591) (5,339) (5,336) other income (loss), net (18) (24,422) (79) (24,055) total other income (expenses) (2,572) (26,878) (5,106) (29,126) loss before income tax (1,519) (39,026) (11,928) (56,117) income tax expense 450 500 945 771 net loss (1,969) (39,526) (12,873) (56,888) preferred dividends (1,395) (1,395) (2,790) (2,790) net loss applicable to common stockholders ($3,364) ($40,921) ($15,663) ($59,678) net loss applicable to common stock, per share basic ($0.04) ($0.61) ($0.18) ($0.89) diluted ($0.04) ($0.61) ($0.18) ($0.89) weighted average number of shares of common stock outstanding basic 92,065,615 67,111,843 87,338,509 67,090,805 diluted 92,065,615 67,111,843 87,338,509 67,090,805 adjusted ebitda non-gaap reconciliation (dollars in thousands) three months ended june 30, six months ended june 30, 2021 2020 2021 2020 net loss ($1,969) ($39,526) ($12,873) ($56,888) income tax expense 450 500 945 771 other (income) loss, net 18 24,422 79 24,055 net interest expense 2,554 2,456 5,027 5,071 operating income (loss) $1,053 ($12,148) ($6,822) ($26,991) depreciation and amortization 5,784 6,682 12,029 13,476 (gain) loss on lease terminations and impairment (561) (3,125) 2,648 (2,333) pre-opening costs 789 270 1,345 822 other items1 654 1,272 1,250 3,279 adjusted ebitda $7,719 ($7,049) $10,450 ($11,747)
