Drive Shack Inc. (NYSE: DS), owner and operator of golf-related leisure and entertainment businesses, on Monday reported its financial results for the third quarter and nine months ending Sept. 30, 2021.
Drive Shack experienced revenue growth in core businesses and began highlighting its entertainment golf concepts.
Highlights include:
- $76.4M total revenue in Q3-21, the highest quarterly revenue since Q3-18;
- Operating loss of $5.9 million in Q3-21 vs. $6.0 million in Q3-20;
- Total company Adj. EBITDA of $3.3M, the fifth consecutive quarter of positive adjusted EBITDA;
- FY 2022 is projected to grow from YE – 2021 projections from $280M;
- Drive Shack has sold off all but one of its owned golf courses to help fund the pivot to the off course, entertainment business;
- Bullish on the opportunities, Drive Shack plans to take on $85M in debt capital in 2022.
The brand’s latest entertainment concept, Puttery opened its first door in The Colony, Texas, over Labor Day weekend. Puttery offers competitive socializing with unique putting courses, craft cocktails, music and food in an adults-only playground. The Dallas-launched venue experienced late Saturday nights as its busiest daypart with average stays of two hours and 60% of customers planning their visit ahead. The next location will open next month in Charlotte while 13 others are planned for 2022.
Hana Khouri, president and CEO of Drive Shack Inc., said the smaller footprint concept has faster development cycles versus the original sister concept, Drive Shack. Puttery presents the best path forward for near-term growth. Puttery indoor venues are projected to average 21,000 square feet and be located adjacent to other entertainment venues. The development cycle is 6-9 months and $7M- $11M per Puttery location. It’s far faster and less risky than developing Drive Shack’s 12- to 15-acre locations that require an average development cycle of 18-24 months and $35M-$45M in capital.
Other notable insights:
- The company’s entertainment golf business, comprised of both Drive Shack and Puttery venues, generated total revenue of $11.3 million in the third quarter 2021, an increase of 45% over third quarter 2020 primarily associated with 2020 COVID impacts.
- Puttery is planning to open 50 venues by the end of 2024. The next Drive Shack is planned to open on Manhattan/Randall Island, N.Y., in 2023, joining four other Drive Shack locations in Orlando, Raleigh, Richmond and West Palm Beach.
- The company’s traditional golf business, American Golf, generated total revenue of $65.1 million in the third quarter 2021, compared to $60.3 million in the third quarter 2020, a gain of 8%. Green fee and cart fee revenues were impacted by both wild fires in the west, slowing and closing play at several of its daily fee courses and causing green fees to decline 8% in the daily-fee segment. On the private club management part of AGC’s portfolio, rounds declined 6% due to planned renovation projects. Private courses in the portfolio are currently sitting at 99% of member capacity.
