DS - Earnings call transcript Q2 2021

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Operator

Good morning. My name is Ashley, and I will be your conference operator today. At this time, I would like to welcome everyone to the Drive Shack's Second Quarter 2021 Earnings Conference Call. Currently all lines have been placed on mute, to prevent any background noise. After the prepared remarks, we will have a question-and-answer session, instructions will be given at that time. recorded being is call [Operator Instructions]. Today's time, over to this I Investor would call the hand to Kelley like Relations. At Buchhorn, of Head Ms. begin. Buchhorn, may you

Kelley Buchhorn

Thanks, welcome like quarter Ashley, everyone. call. to earnings our second and to morning, good you I'd

statements. so to Executive you've website Joining and I'd Hana certain we at already. Nichols. posted ir.driveshack.com, our and on not supplement you Mike Khouri; the Officer, and Officer, investor will point me download Financial our to President if out today made the We've over remarks is done you those that, to from include factors turn it Chief now Chief annual our Investor forward-looking risk Actual like encourage Relations that today supplement reports press considered encourage disclaimers now the the statements. call investor in contained our with with in Hana. We differ And results quarterly the review SEC. may and I'd release review by filed to to materially like to and these and

Hana Khouri

Hi. and quarter us, conference supplement. X Good was the joining our the for QX quarter thank second and of a fantastic go now morning, on call. through highlights Page for I'll you everyone,

We and First the in is million obviously, X earnings. company in we've years. reported revenue time $XX first and operating total income, just foremost, in million $X was over generated positive which operating income

total in EBITDA Golf a quarter. fourth $XX $XX first revenue Orlando their our time adjusted EBITDA, performance, $X.X which over million consecutive perform positive well adjusted around total the delivered basis, with breaking XX-month trailing for On venues million, for company also Shack we incredible. to also with surpassed EBITDA the adjusted just continues of Drive since XXXX. also EBITDA. American of million even have pre-pandemic We of is company quarter delivered

second first Puttery closely opening Next, outside forward our we've Charlotte, North Carolina. weeks, thereafter venue venue the coming followed and progress our on are in massive to by made Dallas just Puttery looking in of

D.C., most with Puttery currently We Houston. Miami pipeline. additional and have working An several in those five execution now, development nearing are actively others right Charlotte, the recently, in lease sites Dallas, venues in or in are two

with Ventures of Puttery We they've development his also and hand committed unrestricted Puttery agreement on to venues. partnership where our group our least ample $XX in fund Symphony McIlroy invest the partner cash Rory with through quarter ended liquidity to first We formal million $XX at executed seven and have million the of XXXX.

let's take we to So before today, just where back got on a here talk are about step how go we we X. further into Page

past few the an years, from a Over to entertainment undergone has company. business a transformation operating Drive traditional golf significant Shack

strong, our operate this namely significantly our we August, first courses, Palm in X Drive golf Page time, Today, X we opened by opened expectations Shack and Puttery site. internal Shack plans our consists respectively. the October outperforming which course Richmond venue portfolio our Raleigh, then Generation Drive to majority April owned we building sold XXXX September locations, is locations and X.X golf These traditional our West in venues on portfolio XXXX Beach, beating of and and venues our of XX%. During X. of business, growth Orlando, In as beta today. entertainment our We the which the served venues Shack Drive XXXX, fund of in opened

Richmond Palm, and just business, XX in under West the Miami states Dallas, to recently, across Washington, in committed Golf are Charlotte, Orlando, and we are Drive to additionally Raleigh, located D.C., Shack and we Orleans of Manhattan. committed nine venues just have With and We currently New side we Puttery, I On Houston. mentioned, leases most as in currently venues in held courses American our QX. four

pursuing as for million mind Shack Keep of moments. revenue actively just a time have line have with for of pre-pandemic slightly to with that quarter, and returned our largely the We robust $XX plans levels locations around and the markets million. Puttery coming and exception at are pipeline across below to speak Puttery XXXX levels near-term Drive in events. venues pre-COVID in year. our I'll the U.S. venues more the operating in we which Page was of level COVID of beyond, prioritized future record last X. all was provided Shack talk due QX Drive shut we exceeding we've venues Drive we'll few $X.X Combined Shack X spoke is on in a Because March for a EBITDA first to venue quarter We about here at performance pre-pandemic venue now in which about also a levels, that, what together. down reference,

we've down four broken walk-in strong of On due venue. the all we out are revenue is XX, in page, venues results locations. performance The part record the revenue at by the Page next levels to seeing

of can You was walk-in Total revenue performance led by see $XX.X over million on this XX, $XX venues for by was all our the in entertainment how just chart Page incredibly the quarter. revenue. million, strong

venues Our for and pre-COVID normalized delivered walk-in our has walk-in returned revenue highs business this all-time levels to quarter.

all up to pre-COVID In in fact, venues. COVID out coming this XXXX quarter strong total of momentum seeing levels lockdown QX walk-in million. We're compared XX% X revenue of across was $X

of with year. the holidays. with with for the to the in plan at of first up X COVID expected we XXXX, half of want exceeding to given first do the the of emphasis uncertainty events venues the start start year through the during back with out Our ramping more planned QX than of months four back conservatively first half I XXXX particularly year. the have events for for We on revenue better did point the goals performed all the the that half

beginning we've outlined to XX, see rise. Page we're demand on on As event the

anticipation sequentially and revenue $X.X total returning, which we experiencing. and we revenue XXXX. million facilitate to event business demand to increased expectations, event internal events QX While sales in of events our team continue $X.X the head QX. in they bookings restructured totaled quarter, XX% expect this we or into momentum event to XX% events we half already trending increased compared are above of our our are the as back Near-term the in million of last QX, In is venue

We continue Shack drive examples on day XXX leagues visits initiatives our venues, of see revenue Page couple ran our ends. to an on starting in and door over participating popular the return quarter, deck. of for league increase open across XX you'll to of after relaunched night encourage We with to to leagues venues. the to our on which beverage teams X our a our weekday guests well off-peak spend as way weeks, this innovate May a Drive food in X social Monday get nights are X great tournament, Similar as otherwise social slower in

Our to later QX. next commence planned is social in league

per We Again, get were encourage also to into F&B for the $XXX ways Richmond days guests on popular capped sold off-peak venues at Passes visits. revenue and we to in out are $XXX Bay trying The our was response to our in Orlando strong. brought Play back to in repeat unlimited and create quickly, sold also Richmond. drive increased passes and Pass Orlando venue. both and

The golf traditional Page to remains AGC strong. golf is our demand very XX. American of for the now, turn I'll business our traditional arm which Golf, So on

cart and by I'm I in sorry, fee delivered revenue sequential QX this when company earlier, green million compared round led and in total AGC As quarter, our revenue at increases year. this fee revenue mentioned $XX total - public daily for to courses in of

X% these leaving near we've On roughly to capacity activity. levels seen side increase membership availability remains for the our safe Since continue COVID, sales. levels are of the at as max onset private golf business, a XX%, course traditional new member private outdoor of

job team Our strong quarter Golf do in results quarter. a after American continues delivering to tremendous

to as return great levels. begins to our delivering expect continue results We business to pre-COVID event slowly

deck. Puttery. Page now Turning of the XX to the to Flipping

putting. game Mini and forward the projected food will We've version So growth path an we at remain Golf, auto-scoring focusing immersive program. great while company. When energy Puttery a high economics confident integrated look our is beverage was be to venue-level continue quarters atmosphere with technology for ago, that modern best with providing and the of we of that we on the really put and Puttery indoor our several of

spend to build $XX each to million $X venue. and expect We million between

$X expect you compare When We million take to months complete, to we here. million to to approximately to months X about million spend and $XX million. complete EBITDAs to the numbers X generate to of Puttery $X takes We in Shack expect them XX about choice expect which is them to these to to venue believe to and build EBITDA. million generates and we up obvious Drive $X between $X each venue XX where

capital we more be these the venue, current learned widespread is and both anticipated specific, COVID and pipeline. quite fall that a risk our costs a development Colony great XX are The experience within we've great, range. Drive business. million numbers the projecting of our still expected the phases the COVID-related Puttery To grow across report Shack In build to pandemic. While are box from locations of quickly a less as to global Puttery $X ability and to to especially development us Page $XX builds. to for of is first spite it with big Shack relates pleased and gives been during view we're bit, an just construction a Puttery adjacency Drive the impacts design variables, new gives creating of have our million a our Dallas, than to outside

Miami construction prioritized are of pipeline see locations Puttery pursuing various X robust phase. on Charlotte, D.C., venues phase the the currently we with cycle, U.S., X of and in in committed development additional Puttery stages As our marked or map either Houston, design along geographic The Dallas, you the are in committed their life in locations the the of by lease can we've market.

venue, in including our core patio seating also to enjoy COVID to and us the with into only are lounge We second active The with a course. these an about committed on specific has And their a of to We specialty opening is are also Colony have we in food uniquely the us. it to is either our one debut executed, food been Colony venue coming in location leases We've guest as on these also just an the hugely in of courses lounges floors feet, to Charlotte's When be material are on There additional guests floor, an lease also outdoor chain on target Lodge, bar experience. photos are and earlier, being the XXXX while progress market. you'll the able with same details bars which enjoy designed Library not XX,XXX are have location. that beverage you cocktails of made construction. our X Colony specifically X you'll courses, of nearing but design X-hole the two to focus over in every total outdoor shown related many The on important of few Puttery on our indoor venues to and delays will bring The XXXX. and XX. for on Illusion. summer overlooks and the our areas Puttery outside multiple square spanning just located underway your first three There golf execution. bar or X to experience. Charlotte their total areas, to labor throughout the in program Page are throughout. specific immerse faced XX spoke great continued which planned Colony Rooftop, conditions two supply We've sites weeks. amphitheater Dallas, themed shortages

opening opening are 'XX for such, line the and As QX time Charlotte. now date targeting slightly adjusted we a

open will lines. labor over COVID-driven year venues first of and shortages the have impacted of half these remaining Our conditions next also course the as time

all both sites, that With on to Puttery very have of expect additional by next of the potential or and venues QX open $XX successful and ensure this able In development Island as The Shack Colony to million XXXX by beginning as our a XX Charlotte to still order under end new accomplish from openings. venues, construction we year. will and these well apply plan robust We Drive we around Randall's Puttery this, will venue. still lease of we'll to need active to smooth complete learnings and be begin an in the of our pipeline be

necessary the We our the and access to debt funding obtain confident market capital are expect can XXXX complete to we plan.

to future required all secure summary currently the Rory will It's invest in the is note over options investment performing of expect we Puttery that the and unencumbered and agreement funding incremental have and to Puttery it assets, site, XX of will of new the full as partners to on help million We now are a venues then new of his which overview We've venue use the his committed in we end colony showcase increasingly of $XXX the $XX our the well XXXX. pursuing days, Page to team needed. we reference. a fully our coming if and important lastly, the experience. provided million as between as near are $XX puttery.com that development entertainment million And Rory opening with the unveil will

to media We more. the event on serve information venues reservation social location for the food hub supplement. website so connection Page Puttery's system inquiries, preview our will beverage as have of much the of and a finder, XX menu, all and with website

go to more it come turn I going few financial I'm over and now a to our a then that, with back detail, will closing over remarks. results Mike? Mike in to So with little

Michael Nichols

Hana, morning, Thanks, good and everyone.

This begin, provide all of Before on our last to same year Drive the golf Shack venues traditional to were compared want number year. entire the our period of year, open quarter. the courses X I details this second venues and courses quarter in second I the for of opened and

During COVID of impacted our that experiencing year, quarter closures restrictions the were last and both businesses. still second we

June XXXX, For the on and Richmond QX quarter Drive on reopened West May Shack Raleigh Beach remained during week Orlando XX, venue May of closed. reopened the reopened on last XX, our Palm XX,

business our second both traditional open for most a XXXX With May that were early effect revenue. events of golf I still be won't reopening in with detailed XXXX. entire our on were courses year's for restrictions last quarter. Drive through as and Once the to impacting comparisons Shack only severely in AGC, of walking and reopened, quarter gatherings X backdrop, second Additionally, group courses large

of quarter. Page operating to now million. income million, financial second total revenue adjusted our deck $X.X for for basis, for the performance Turning in XX the of summary $XX.X a the a generated we company view EBITDA of quarter, On and $X.X million of

an We of earlier, in XXXX. a As since we XX-month EBITDA. first QX basis, reported years of operating Hana reported our or the of the walk-in with golf $XX.X generated unit delivered total have quarter. company At And quarter X of all-time adjusted fourth trailing mentioned entertainment adjusted $XX.X high level, $XX.X for quarterly business income of million positive EBITDA million. on our segment revenue we our million revenue consecutive at

course side, golf managed $XX.X revenue, of generated traditional the AGC On million of million. including $XX.X reimbursements

I we As income $X.X operating year. of mentioned, second quarter this just the for reported million

golf EBITDA in million. level for which comments EBITDA $XX.X $XX.X quarter, million venue earlier and of million the traditional for includes was venue golf Our entertainment mentioned the $X.X level Hana's

large throughout part We to results in have control achieved because discipline these expense continue entire we exercise company. the

million QX in other versus restrictions our at $XX.X before QX Our the XXXX. in in this below came and million year and $X.X total quarter levels COVID pre-pandemic expenses SG&A were last

needs. Puttery SG&A of to increase have SG&A address ensure to annual we future we in as capital pre-COVID While support resources of run still briefly a grow extent represent less This to our a dollars we our liquidity our new want planning we great also expense will business. I nonetheless more decline are modest business, the to expense leverage than rate run will rate. versus and than SG&A adequate expense for XX% XX% our

approximately end million of we June the unrestricted XXXX, of cash. As of had $XX

X venues. common settled provides for we execute cash need from capital As Puttery $XX net our February. in stock first approximately XXXX to our a proceeds that we growth the of offering plans our reminder, follow-on received million This

As our currently Puttery we million to to our development. additional growth XX to plans $XX ahead plans we approximately fund venues in for XXXX, capital need we look estimate this will fund

access to this later funding the expect XXXX. the an to of first capital We markets secure effort year quarter debt necessary the for in

XX. Page $X.X shareholders to results the per summary financial was our Moving $X.XX on quarter share. million or net to loss applicable on for The common

$X.XX common For $XX an earlier settled in the that in part the shares issued year, million shareholders $X.XX the offering additional loss year-to-date, follow-on common equity resulting from share. as QX of million was approximate the net per this to of February. or benefit There roughly $XX.X year is this

on I With Drive stock announce preferred October Finally, company's back dividends turn Board that, it the am on are of for dividends the quarterly closing I'll XXXX, to October XXXX. remarks. Shack pleased payable period November holders ending XXXX. to on The declared Hana for record the to X, X, XX,

Hana Khouri

Mike. Thanks,

for Puttery our you organization partners to to dedication have and the being entire that extremely Huge and possible. primary last I'd us for first as our X-plus involved for to As open grateful the objectives entire on growth quarter all been back today. you collaboration to to the helped across one to making tell, throughout with Puttery. The thanks bring vision operator been last in for to we've drive expand to strategic the very field these we today. remains I'm Thank our organization location. prepare of life and busy numerous entire line priorities to profitability this joining and debut and can call questions. team the successfully like years XXXX the launch results turn the focused the from now the Puttery teams the

Operator

from We'll question Instructions] Saleh with [Operator first BTIG. Peter take our

Peter Saleh

back of impact at just else the to the enthusiasm? within delta anywhere spending a delta Have consumers variant. lately, or units any concern terms variant? pull the I'm in seen of Hana, or business of lot all been the new their relates the you. there's you Have Thank Great. performance you it seen curious, as about in Shack Drive

Hana Khouri

now. very watching this right Hey, Pete. is I as closely, we're every think, business It's interesting,

a would even not to or pullback pullback have slight attribute that I Delta variant. the seen we substantial can a say, We

In fact, well our our internal perform kind venues we've seen exceptionally projections. to of continue to

protecting make guests to this staff steps taken we're and that our from have surge. We our sure new

our standards foremost, in a no, believe get location great. to of been Colony So encouraging to and in and has which first reimplementing office. associates the implemented them in We're all as weekly rolled the managers of to our testing continue incentive just any vaccine. vaccine. associates pullback, Puttery in and employees encourage our to want get we're We vaccine kind program We necessary. out We've CDC the to staff adjust science. But corporate all the we'll the recommendations, masking follow seen our And our venues. of significant hourly we haven't we'll and

Peter Saleh

to Good Orleans move Great. capital New have the instead? talk there venues. are in So a you Can Shack a capital to those And hear. there your much understand already is opening you just development commitment all that and how York Puttery? bit given Drive little commitment trying in New guys Pottery definites? those investment the in about below towards possibility the invested in you the Or that just units X are yields to

Hana Khouri

Yes.

we've right we of New there, in minimal, as is about and now, on I Orleans think capital as I are previous believe. committed let hold date our to So definitely talked to Mike speak in quarters, I can the which

and Drive we Randall's with to So press going in are Shack Island. our forward Manhattan location

that in but York mandates and us really slated specifically However, U.S., we're there. inside be mean, courses COVID state last whole to have slowed we're XXXX. other and There say, attempting, also or various were that the with with delays, that running specifically to working with Puttery planning in X in up get venue. New down to very and restrictions across of - New the still put but open that home committed should location - York, is much that I city also We'll I year, to now

Michael Nichols

million additional related Yes. roughly costs of New standpoint design prior hard There development from New in and some $X costs Orleans that to invested a were capital Orleans. and to

Peter Saleh

going I talk pass hear And on it of Great. surprise then the this little question, if place? Great. in anticipate a or this And initiatives Orlando? my Or be view along. helpful. that you bit was you're think last Can you well positive just you'll put a Thank just to Can performance breakeven? you that above breakeven. you Very quarter and above you. venue to guys about track about I'll talk forward? be some how of you the that then do

Hana Khouri

Yes. Thanks, Pete.

that very, long coming. team a the of forward. are Obviously, in put We very has Orlando proud the time results

community in are we're size that say, I'm of was event we're the I COVID, Tavistock, reopen there. normalized combination businesses also for of a they've support we specifically development helpful in think lot QX. it but support driving businesses the team because rightsized We, really We've has incredibly resume moved whole have. actually businesses us word out sales they on back Bay get to focused the in venue sold inquiries and really One, corporate We And which our activities, reopen really some to local there well. be things. that again, they hosting there monitor during and COVID really on us and locations, continue in in in in and QX the help That radar team out events as as the event our we managed been they the obviously, There's there, to of the the of have but other there happy hopefully closed. to We Pass, helping were Orlando. innovative to that. partnered Play of all also the all a managed with though, of instituted to able trying great that that to in both their group add management revenue expenses. expenses Orlando. that

continues I'm the expecting very I'll said breakeven say if I've Orlando is that if for over to which Orlando be I and today will expecting you year. perform overall again we them we're what what in the well year. breakeven, this And past, So that think positive to happy go asked this is trajectory

Peter Saleh

Thank Great. much. you very

Hana Khouri

Peter. Thanks

Operator

your with our go last line ahead, from Craig-Hallum open. Group. Capital Please is take Fuhrman question Alex We'll

Alex Fuhrman

ask a the and taking wanted much really you Thank I question about Puttery. very my second quarter on Great. of strong to development congratulations performance. for

And Dallas over the couple kind excited think Are I the development-wise, think about been opening bottlenecks you've next we're there the of start encountering step that one as and of has rest in as just any couple all Dallas moving portfolio? see down specific weeks. you kind how to Puttery location next you the that then going of been for of it that hiring further, road? the

Hana Khouri

Thanks Alex, good to question. you. Yes. to the talk for

I think - great questions.

foremost, debut really, and First Puttery. are excited really to we

waiting long think all time I we've been a for this.

So in the coming it's about. show what weeks, we're everyone our able doors super to excited to open be kind of to

slightly We our the well as those be modest now shortages. were to that contracts I help thing, have the labor future labor be that also chain, issues, material them some the those is will of those labor to we're experienced what our bit And the when delays. that had business, slightly our lead specific, to shortage lot we modified increase found very experiencing as some some forward lines. dates subcontractors which as contracts including with shortages, going that impacted we subcontractor in There general very COVID mitigated time we and When penalties some realized shortages, have trying general labor going We're requirements quickly supply we learnings. say we time these and do same but forward could side. what as about of And materials, not substitution we've guarantee I'm longer contractor to related think different dates. of building, do were in obviously, for have to I happy for learnings, - of on hitting on venues. we've to will talking with and cost well a which for have already times, a definitely be The time, our hospitality as anything you the you one us apply take first and very a of mitigate some

to the part we because during to it Colony the we've institute question When of prepared weren't which went COVID market. there's of was a about the few is, then really So being able I was given that be very, the we say really, things really on talent will really very who that just really team, and where hiring comfortable your we management attrition hump. talented levels but brought for team. we the a actively specifically, the that learned we into to get situation we talk lot for very met for what to like with Colony of that have in marketing management to and that but X found need hiring, second difficult. other the just depth that able and need it given at someone associate we will where say I our had issues our a we employees efforts we look were variables, like, not who easy, And of right Charlotte that we're our more. helps was from future, referral kind now about. well, just least a excited hiring point, We good we've are When We days. I'm were we a account XX we of program instituted point And the $XXX recommended perspective. for more, still that get Charlotte, stayed we at any over at for are us hiring XX And that our no and

implemented that feel we colony So implementing Dallas We there. in approach staff. hire our and a confident to hourly plan similar in on the we

labor week we'll every and change. with obstacle as the So market. times feel with new COVID a I it's adapt the like obviously

feel prepared it But as with it it. we're we take to we'll well So deal comes. like

Alex Fuhrman

mean like of business, Okay. back tight half Terrific. That's to of year. had that great I to percentage hear. And what then there wondering the on a pretty compare too on historically? Just you're it membership. XXs the of you the build? we typically could expect How in sounds membership traditional golf side high see does have the

Hana Khouri

see did is membership levels not Yes. high. Pre-COVID, we

So we with levels COVID. membership the definitely rise saw

So I X things would assume that those are correlated.

we While the happened at identical two times. sure, for things say can't

membership and setting kind the make wait our members continuing innovative able up prospective numbers. At we the that to trying both increase forward. are we we're to COVID, list So we're we're we're just in manage trying to appropriately with that that our managing previously is and come way so appropriately with that we're right ways guiding before were sure of expectations member high what point, capacity now this moving to current this

Alex Fuhrman

That's Great. Thanks much. helpful. really very

Hana Khouri

you. thank Yes,

Operator

questions. to no And the turn for are over there Buchhorn closing remarks. I'll back further any call Kelley

Kelley Buchhorn

catching not Thank we always, today. a of thank on then. as us day. look to your Have great before you, call the for to We'd up like you joining quarter, forward everyone. if next with And rest you

Operator

And this Thank you does today's conclude participation. your for program.

You any at disconnect may time.

Drive Shack (DSHK) 9 Aug 212021 Q2 Earnings call transcript