Drive Shack Inc (DSHK)

[Enterprising Investor]

Drive Shack Announces Fourth Quarter and Full Year 2018 Results and Declares First Quarter 2019 Preferred Stock Dividends (3/14/19)

NEW YORK--(BUSINESS WIRE)--Drive Shack Inc. (NYSE:DS), an owner and operator of golf entertainment and dining venues and traditional golf courses, today announced financial results for its fourth quarter and full-year ended December 31, 2018.

Business Highlights

Drive Shack

- Announced four new Drive Shack locations in: Chicago, IL; Houston, TX; Newport Beach, CA; and Portland, OR

- Awarded Drive Shack New York City in Manhattan

- Drive Shack Orlando, which opened in April 2018, generated $1.6 million of revenue in Q4 with spend per visitor of $41, up 8% compared to Q3

American Golf Corporation

- Golf course sales of $90 million from 13 courses in 2018, with a total of $115 million from 15 courses to date

- American Golf Corporation full year 2018 revenue generation of $309 million

- Grew public course The Players Club Members by 14% and private course average Full-Golf Membership Dues Per Member by 4%, on a same-store basis over prior year

Ken May appointed Chief Executive Officer, following four years as CEO of Topgolf

David Hammarley appointed Chief Financial Officer, with two plus decades of hospitality experience across such companies as sbe and Starwood Hotels & Resorts

“In 2018, we took a big step in our transition from a traditional golf company to a full-fledged entertainment business with great golf content. We now look forward to a transformative 2019, as we quadruple the number of our golf entertainment venues. Expansion into dining and entertainment is our top priority, and we continue to invest in identifying new Drive Shack locations, building them quicker, and improving the customer experience for our guests,” said Ken May, Chief Executive Officer.

“We generated $115 million in gross proceeds from the sale of 15 owned golf courses and repaid $102 million of debt. As we continue to monetize our golf courses, these proceeds will serve as the platform for growth for our entertainment golf business where we are targeting 20 open units by 2022,” said David Hammarley, Chief Financial Officer.

Development

Since third quarter of 2018, the Company signed 4 new locations across Chicago, IL; Houston, TX; Newport Beach, CA; Portland, OR. The company plans to open up 3 new Drive Shack site locations in Raleigh, NC, West Palm Beach, FL, and Richmond, VA in the second half of 2019.

Financial Outlook

Our FY 2019 expectations and stabilized targets are as follows:

- Drive Shack Orlando site is targeted to break even from a cash flow perspective in 2019 and continue to ramp up its revenues and cash flow generation in 2020 onwards

- Raleigh, West Palm Beach, and Richmond planned to open in the second
half of 2019

- Plan to open 3 to 5 new sites in 2020 and 5 to 10 sites in 2021 and 2022

- Targeting over 20 sites by 2022

- Stabilized target Drive Shack entertainment unit economics:

-- Cost to build between $20 to $35 million across the varying markets and relevant venue formats

-- Top-line revenues anticipated to be $15 to $25 million with target EBITDA margins of approximately 25%-30%

- Complete the remaining short-term course sales by end of 2019 with total gross proceeds of approximately $175 million from 24 of 26 owned courses
Continue to explore the monetization of the remaining 2 owned courses in 2019

- Stabilized traditional golf business to generate revenue of approximately $175 million and target annual free cash flow of over $10 million in 2020 and beyond

Preferred Stock Dividends

The Company will pay dividends on April 29, 2019 to holders of record of preferred stock on April 1, 2019, for the period beginning February 1, 2019 and ending April 30, 2019, 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.

Financial Results

[Tables deleted]

Conference Call Today

Management will hold a conference call to discuss these results today 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 “2396776.”

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 Thursday, March 28, 2019 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 “2396776.”

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.

https://www.businesswire.com/news/home/20190314005301/en/Drive-Shack-Announces-Fourth-Quarter-Full-Year