Drive Shack Inc. (the “Company”) (NYSE: DS) announced financial results for the first quarter ended March 31, 2020. The Company also provided an update on the impact of the COVID-19 pandemic on its business, together with measures the Company has taken to reduce cash expenditures.
Hana Khouri, Chief Executive Officer and President of the Company, stated, “While it is undeniable that the pandemic presents us with a challenge like we have never seen, we used this as an opportunity to rationalize our business and adapt our operating model, leaving ourselves poised to reopen safely, responsibly and efficiently.”
“We believe these measures, coupled with our relatively unlevered balance sheet, will distinguish us from other experiential businesses and provide a platform for solid growth going forward,” Khouri continued.
Business Update
By the end of March, all 4 of the Company’s golf entertainment venues and 57 of 61 of its owned, leased or managed traditional golf courses were closed as mandated shutdowns and stay-at-home orders went into effect across the country.
As it prepares for reopening golf entertainment venues, the Company remains focused on safeguarding the health of its employees, guests and communities. It has invested in supplies and protocols intended to keep guests and employees safe and comfortable, including antibody testing, temperature checks, masks and gloves.
“While we cannot predict with certainty when state governments will give us the green light to reopen our Drive Shack venues, early indications suggest that some locations could be open as early as May 2020,” said Khouri.
The Company’s traditional golf business is starting to show signs of resurgence. As of May 7, 2020, the Company has opened 31 of its 61 owned, leased or managed courses. Across the courses that are open, demand for traditional golf appears to be strong, as guests seek a social outlet that allows them to maintain distance.
Financial Liquidity Update
As of April 30, 2020, the Company had approximately $14 million of unrestricted cash on hand. In order to preserve cash savings, the Company furloughed over 4,000 employees across operations and the corporate office, deferred the payment of 2019 annual employee bonuses, temporarily suspended the quarterly cash dividend on the Company’s preferred stock and halted new construction. In addition, the Company is in discussion with all of its landlords relating to rent deferral and forgiveness.
First Quarter Results (unaudited) | |||||||
Three Months Ended March 31, 2020 compared to the Three Months Ended March 31, 2019 | |||||||
($ in thousands, except for per share data): | |||||||
Three Months Ended | |||||||
March 31, 2020 | March 31, 2019 | ||||||
Total revenues | $ | 61,135 | $ | 53,952 | |||
Loss applicable to common
| $ | (18,757 | ) | $ | (15,995 | ) | |
Loss applicable to Common
| |||||||
Basic | $ | (0.28 | ) | $ | (0.24 | ) | |
Diluted | $ | (0.28 | ) | $ | (0.24 | ) | |
For the three months ended March 31, 2020, the Company reported a loss of $19 million, or ($0.28) per share, compared to a loss of $16 million, or ($0.24) share, in the corresponding period of the prior year.
Conference Call Friday, May 8, 2020
Management will hold a conference call to discuss these results Friday, May 8th at 8:00 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 “6275653.”
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, May 22, 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 “6275653.”
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 “eatertainment” businesses.
Forward-Looking Statements: The Company cautions that this release contains forward-looking statements, including, without limitation, statements relating to our expected results of operations and the impact on our business and operations of the global spread of the novel coronavirus outbreak. These forward-looking statements involve risks and uncertainties and, consequently, could be affected by the uncertain and unprecedented impact of the coronavirus on our business and operations and the related impact on our liquidity needs; our ability to continue as a going concern; our ability to access other funding sources; the duration of government-mandated and voluntary shutdowns; the speed with which our venues safely can be reopened and the level of customer demand following reopening; the economic impact of the coronavirus and related disruptions on the communities we serve; our overall level of indebtedness and leverage; general business and economic conditions, including as a result of the coronavirus; the impact of competition; the seasonality of the Company's business; adverse weather conditions; guest and employee complaints and litigation; labor costs and availability; changes in consumer and corporate spending, including as a result of the coronavirus; changes in demographic trends; changes in governmental regulations; unfavorable publicity, our ability to open new venues, and acts of God. Accordingly, actual results may differ materially from the forward-looking statements, and the Company therefore cautions you against relying on such forward-looking statements. The Company intends these forward-looking statements to speak only as of the time of this release and does not undertake to update or revise them as more appropriate information becomes available, except as required by law.
Consolidated Balance Sheets | |||||||
(dollars in thousands, except share data) | |||||||
(Unaudited) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 16,785 | $ | 28,423 | |||
Restricted cash | 3,041 | 3,103 | |||||
Accounts receivable, net of allowance of $904 and $1,082, respectively | 4,190 | 5,249 | |||||
Real estate assets, held-for-sale, net | 16,970 | 16,948 | |||||
Real estate securities, available-for-sale | 3,103 | 3,052 | |||||
Other current assets | 13,966 | 17,521 | |||||
Total current assets | 58,055 | 74,296 | |||||
Restricted cash, noncurrent | 513 | 438 | |||||
Property and equipment, net of accumulated depreciation | 184,219 | 179,641 | |||||
Operating lease right-of-use assets | 212,246 | 215,308 | |||||
Intangibles, net of accumulated amortization | 16,780 | 17,565 | |||||
Other investments | 24,365 | 24,020 | |||||
Other assets | 5,245 | 4,723 | |||||
Total assets | $ | 501,423 | $ | 515,991 | |||
Liabilities and Equity | |||||||
Current liabilities | |||||||
Obligations under finance leases | $ | 6,004 | $ | 6,154 | |||
Membership deposit liabilities | 10,784 | 10,791 | |||||
Accounts payable and accrued expenses | 31,242 | 25,877 | |||||
Deferred revenue | 25,118 | 26,268 | |||||
Real estate liabilities, held-for-sale | 4 | 4 | |||||
Other current liabilities | 23,367 | 23,964 | |||||
Total current liabilities | 96,519 | 93,058 | |||||
Credit facilities and obligations under finance leases - noncurrent | 12,468 | 13,125 | |||||
Operating lease liabilities - noncurrent | 185,802 | 187,675 | |||||
Junior subordinated notes payable | 51,190 | 51,192 | |||||
Membership deposit liabilities, noncurrent | 97,648 | 95,805 | |||||
Deferred revenue, noncurrent | 6,389 | 6,283 | |||||
Other liabilities | 3,496 | 3,278 | |||||
Total liabilities | $ | 453,512 | $ | 450,416 | |||
Commitments and contingencies | |||||||
Equity | |||||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized, 1,347,321 shares
| 61,583 | 61,583 | |||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 67,070,513 and
| 671 | 671 | |||||
Additional paid-in capital | 3,177,384 | 3,177,183 | |||||
Accumulated deficit | (3,193,399 | ) | (3,175,572 | ) | |||
Accumulated other comprehensive income | 1,672 | 1,710 | |||||
Total equity | $ | 47,911 | $ | 65,575 | |||
Total liabilities and equity | $ | 501,423 | $ | 515,991 | |||
Consolidated Statements of Operations (unaudited) | |||||||
(dollars in thousands, except share data) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Revenues | |||||||
Golf operations | $ | 48,625 | $ | 44,706 | |||
Sales of food and beverages | 12,510 | 9,246 | |||||
Total revenues | 61,135 | 53,952 | |||||
Operating costs | |||||||
Operating expenses | 54,367 | 47,723 | |||||
Cost of sales - food and beverages | 3,655 | 2,698 | |||||
General and administrative expense | 9,818 | 11,619 | |||||
Depreciation and amortization | 6,794 | 4,924 | |||||
Pre-opening costs | 552 | 1,179 | |||||
Impairment and other losses | 792 | 4,088 | |||||
Total operating costs | 75,978 | 72,231 | |||||
Operating loss | (14,843 | ) | (18,279 | ) | |||
Other income (expenses) | |||||||
Interest and investment income | 130 | 344 | |||||
Interest expense, net | (2,745 | ) | (2,153 | ) | |||
Other income (loss), net | 367 | 5,488 | |||||
Total other income (expenses) | (2,248 | ) | 3,679 | ||||
Loss before income tax | (17,091 | ) | (14,600 | ) | |||
Income tax expense | 271 | — | |||||
Net Loss | (17,362 | ) | (14,600 | ) | |||
Preferred dividends | (1,395 | ) | (1,395 | ) | |||
Loss Applicable to Common Stockholders | $ | (18,757 | ) | $ | (15,995 | ) | |
Loss Applicable to Common Stock, per share | |||||||
Basic | $ | (0.28 | ) | $ | (0.24 | ) | |
Diluted | $ | (0.28 | ) | $ | (0.24 | ) | |
Weighted Average Number of Shares of Common Stock Outstanding | |||||||
Basic | 67,069,534 | 67,027,104 | |||||
Diluted | 67,069,534 | 67,027,104 | |||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20200507006242/en/
Contacts:
Austin Pruitt
Head of Investor Relations
646-585-5591
IR@driveshack.com
