Drive Shack Inc. (NYSE:DS; the “Company”) today reported the
following information for the second quarter ended June 30,
2018.
BUSINESS HIGHLIGHTS
- Drive Shack – The Company opened
its first venue in Orlando, Florida, in April 2018.
- The Company has announced five
additional venues to date, which are in various stages of
development, and are expected to open throughout 2019 and early
2020.
- American Golf – As of June 30,
2018, the Company owned, leased or managed 74 golf properties
across 12 states. These courses are located predominately in
high-volume, top-tier cities across the U.S.
- The Company is monetizing its 26 owned
properties. As of the date of this release, 1 property was sold and
15 properties were under contract or had a letter of intent for
purchase. The remaining properties are being actively marketed and
the Company aims to achieve all sales by early 2019.
- The Company entered the year aiming to
terminate or restructure 14 of its lease agreements. During the
first six months of the year, 2 properties have been terminated or
converted to management agreements. The Company continues to pursue
the remaining 12 agreements.
SECOND QUARTER 2018 FINANCIAL
RESULTS
- GAAP Loss of $6 million, or $0.09 per
share, for the three months ended June 30, 2018, compared to a loss
of $6 million, or $0.09 per share, in the prior year corresponding
period.
- GAAP Loss of $24 million, or $0.36 per
share, for the six months ended June 30, 2018, compared to a loss
of $20 million, or $0.31 per share, in the prior year corresponding
period.
- Year-over-year decrease is primarily
due to lower interest income because of the repayment of the
resorts-related loan and sale of agency securities, partially
offset by stronger year-over-year performance in the traditional
golf business.
Three Months Ended June 30,
Six Months Ended June 30, 2018
2017 2018 2017 GAAP Loss $ (6) million
$ (6) million $ (24) million $ (20) million GAAP Loss per WA Basic
Share $ (0.09) $ (0.09) $ (0.36) $ (0.31) WA: Weighted
Average
THIRD QUARTER 2018 PREFERRED STOCK
DIVIDENDS
Drive Shack Inc.’s Board of Directors declared dividends on the
Company's preferred stock for the period beginning August 1, 2018
and ending October 31, 2018. The dividends are payable on October
31, 2018 to holders of record of preferred stock on October 1,
2018. The Company will pay dividends of $0.609375, $0.503125 and
$0.523438 per share on the 9.750% Series B, 8.050% Series C and
8.375% Series D preferred stock, respectively.
ADDITIONAL INFORMATION
For additional information that management believes to be useful
for investors, please refer to the presentation posted on the
Investor Relations section of the Company’s website,
http://ir.driveshack.com. For consolidated information, please
refer to the Company’s most recent Quarterly Report on Form 10-Q or
Annual Report on Form 10-K, which are available on the Company’s
website, http://ir.driveshack.com.
EARNINGS CONFERENCE CALL
The Company’s management will host a conference call on Friday,
August 3, 2018 at 9:00 A.M. Eastern Time. A copy of the earnings
release will be posted to the Investor Relations section of Drive
Shack Inc.’s website, http://ir.driveshack.com.
All interested parties are welcome to participate on the live
call. The conference call may be accessed by dialing 1-866-913-6930
(from within the U.S.) or 1-409-983-9881 (from outside of the U.S.)
ten minutes prior to the scheduled start of the call; please
reference conference ID “7369948.”
A simultaneous webcast of the conference call will be available
to the public on a listen-only basis at http://ir.driveshack.com.
Please allow extra time prior to the call to visit the website and
download any necessary software required to listen to the internet
broadcast.
A telephonic replay of the conference call will also be
available two hours following the call’s completion through 11:30
P.M. Eastern Time on Friday, August 17, 2018 by dialing
1-800-585-8367 (from within the U.S.) or 1-404-537-3406 (from
outside of the U.S.); please reference conference ID “7369948.”
Consolidated Statements of Operations
(Unaudited)
($ in thousands, except share data)
Three Months Ended June 30,
Six Months Ended June 30, 2018
2017 2018 2017 Revenues Golf
operations $ 69,150 $ 60,639 $ 122,704 $ 106,935 Sales of food and
beverages 21,854 20,721 34,960 33,566
Total revenues 91,004 81,360 157,664
140,501
Operating costs Operating expenses 67,042 62,028
124,421 112,537 Cost of sales - food and beverages 6,193 6,009
10,233 10,041 General and administrative expense 10,268 7,058
19,462 14,545 Management fee to affiliate — 2,677 — 5,354
Depreciation and amortization 4,315 5,972 9,863 11,765 Pre-opening
costs 247 50 1,803 50 Impairment — 32 1,473 32 Realized and
unrealized (gain) loss on investments (89) 3,287
(331) 6,676 Total operating costs 87,976
87,113 166,924 161,000
Operating income
(loss) 3,028 (5,753) (9,260)
(20,499) Other income (expenses) Interest and
investment income 469 6,395 915 14,283 Interest expense, net
(4,601) (5,131) (8,650) (10,565) Other (loss) income, net
(3,699) 293 (4,105) 170 Total other income
(expenses) (7,831) 1,557 (11,840) 3,888
Loss before income tax (4,803) (4,196) (21,100) (16,611) Income tax
expense — 510 — 1,049 Net Loss (4,803)
(4,706) (21,100) (17,660) Preferred dividends (1,395)
(1,395) (2,790) (2,790)
Loss Applicable to Common
Stockholders $ (6,198) $ (6,101)
$ (23,890) $ (20,450) Loss
Applicable to Common Stock, per share Basic $ (0.09) $ (0.09) $
(0.36) $ (0.31) Diluted $ (0.09) $ (0.09) $ (0.36) $ (0.31)
Weighted Average Number of Shares of Common Stock
Outstanding Basic 66,977,104 66,874,155
66,977,104 66,858,155 Diluted 66,977,104
66,874,155 66,977,104 66,858,155
Consolidated Balance Sheets
($ in thousands, except share data)
June 30, 2018 (Unaudited)
December 31, 2017 Assets Current Assets Cash and cash
equivalents $ 125,659 $ 167,692 Restricted cash 3,859 5,178
Accounts receivable, net 9,877 8,780 Real estate assets,
held-for-sale 165,261 2,000 Real estate securities,
available-for-sale 2,425 2,294 Other current assets 25,171
21,568 Total Current Assets 332,252 207,512 Restricted cash,
noncurrent 777 818 Property and equipment, net of accumulated
depreciation 93,592 241,258 Intangibles, net of accumulated
amortization 53,716 57,276 Other investments 21,901 21,135 Other
assets 9,041 8,649
Total Assets $
511,279 $ 536,648 Liabilities and
Equity Current Liabilities Obligations under capital leases $
5,158 $ 4,652 Membership deposit liabilities 8,972 8,733 Accounts
payable and accrued expenses 44,506 36,797 Deferred revenue 10,614
31,207 Real estate liabilities, held-for-sale 9,651 — Other current
liabilities 15,145 22,596 Total Current Liabilities
94,046 103,985 Credit facilities and obligations under capital
leases 112,268 112,105 Junior subordinated notes payable 51,204
51,208 Membership deposit liabilities, noncurrent 87,832 86,523
Deferred revenue, noncurrent 7,608 6,930 Other liabilities
5,480 4,846
Total Liabilities $ 358,438
$ 365,597 Commitments and contingencies
Equity
Preferred stock, $0.01 par value,
100,000,000 shares authorized, 1,347,321 shares of9.75% 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 pershare, issued and outstanding as
of June 30, 2018 and December 31, 2017
$ 61,583 $ 61,583
Common stock, $0.01 par value,
1,000,000,000 shares authorized, 66,977,104 and66,977,104 shares
issued and outstanding at June 30, 2018 and December 31,
2017,respectively
670 670 Additional paid-in capital 3,174,089 3,173,281 Accumulated
deficit (3,084,934) (3,065,853) Accumulated other comprehensive
income 1,433 1,370
Total Equity $
152,841 $ 171,051 Total Liabilities
and Equity $ 511,279 $ 536,648
ABOUT DRIVE SHACK INC.
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 statements
regarding the timing and frequency of opening new Drive Shack
venues, the Company’s ability to consummate the sales of its owned
golf courses and the Company’s ability to terminate or restructure
its lease agreements. These statements are based on management's
current expectations and beliefs and are subject to a number of
trends and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements,
many of which are beyond Drive Shack’s control. The Company can
give no assurance that its expectations will be attained.
Accordingly, you should not place undue reliance on any
forward-looking statements contained in this press release. For a
discussion of some of the risks and important factors that could
cause actual results to differ 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 most recent Quarterly
Report on Form 10-Q or Annual Report on Form 10-K. Furthermore, 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 press release. The
Company expressly disclaims 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.
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