MMI - Earnings call transcript Q1 2022 | Marcus & Millichap, Inc.

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Operator

00:06 Greeting and welcome to the Marcus & Millichap's First Quarter 2022 Earnings Conference Call.

As a reminder, this call is being recorded. I would now like to turn the conference over to your host, Tom Shearer. Thank you.

You may begin.

Tom Shearer

you. Thank XX:XX welcome earnings and & first Millichap's Good call. to XXXX conference quarter morning Marcus With President today Chief us are Financial Nadji; Officer, Officer, and Hessam Steve DeGennaro. and Chief Executive management, turn call remarks I the questions statements. to contain responses that Before XX:XX and over to our please the prepared forward-looking may remember and expect, intended are to forward-looking statements. Words will, anticipate, and expressions believe, such as variations similar goal, estimate, may, of these words identify variety forward-looking ability other can and Securities results those materially factors, statements new growth, Commission limited report due not differ to retain a sustain market XXXX. commercial conditions, its conditions such its Actual its discussed XX:XX filings, the filed factors to implied and with integrate to, the and to the professionals, philosophy transactional company's business ability from partnership company's attract culture agents the and of and estate the economic Form XX-K to but annual and including, including ability Exchange company's in by on public X, the general and company's competitive retain March pressures, real XX:XX based reasonable be it Although in make expectations the expectations can its assurance upon no that attained. assumptions, statements forward-looking the will believes such company are reflected The statements, future result of update events, company new or any no to whether undertakes information, obligation forward-looking as a otherwise. financial XX:XX In addition, measures. non-GAAP this information presented represents certain financial call on company's website, non-GAAP investors. the to to earnings was why measures is reconciliation which on issued represents release, useful company's the appropriate morning are The such and GAAP this the believes company explains measures available section the available may of slide is prepared webcast along presentation during Relations you being our Investor remarks. with This webcast, www.marcusmillichap.com, conference is the the the link and website reference at on is my call to With over to that, the CEO, Hessam Nadji. XX:XX turn it pleasure

Hessam Nadji

earnings entire the team, you, first XXXX morning quarter to & of Millichap Thank Tom. On good call. and behalf welcome Marcus our XX:XX

our quarter to and We third quarter overall history. are report proud XX-year best a in first record

year. middle EBITDA the assets and anticipation and the key XX-year integrated adjusted average as also demonstrate XX:XX a an first conditions the trajectory. property have XXXX momentum. market in net initiatives, as net grew the achieved retail, full interest types, XX:XX transact including XXXX. and rent were private $XXX XX%, increase We since transactions, risk healthy financing strong enabled are million very volumes. best We geographic company market XX:XX record real larger investors industrial. which XX%, execute investments our performing of board a acquisitions in estate. drivers growth trading behind of healthy increases producers revenue urgency and first XX:XX nine the most tenant, multi-family, favorable occupancy well of professionals, a These client addition revenue and $XX the up delivered productivity increased market the of Revenue record million, in contributions technology, many XXX% a and and client XX:XX our necessity elevated lowest income of and strong the namely segments, market the high to through us At Our product of growth XX%. and in Our all while continue $XX which have help type team and in single our the from MMCC, year-over-year foster our previous already into quarter Our outreach rates XX:XX strong to retention once same of of levels, increased rising million, combined business, over spectrum in coverage, of across growth number months Improving which again risk-reward above to XXX% sales time, well showed commercial options and of among results extensive registered the income within and business, investment teams. our proprietary three experienced

This larger and demonstrating bridging set private billion, improvement of added employment limited months, effects a through announced significant the of market residual RCA. the $XX our result [indiscernible] markets current of Our capital of return market Financial preliminary of based on our layer centers, newer outpace product as past recovery initiatives in-person and factors XX:XX of addition firms strategic transaction. help year [sale] see alliance the in-person of with a shopping several have Group, benefits than quarter the XXXX division. last on contributions. force. XX% other-end, the and to ability higher teams while the record a and a even we investment an compared which starting our is first are as capital office brokerage underwriting, results for major first team, expected assets transactions XX:XX with self-storage, front, over data and registered [ph]. provided On in financing in in-person integration overall multi-family investors volume and to the also sales financing including XX:XX of new capital interactions in has in for technology, our bolt-on institutional The sales first We're The markets the average messaged growth, to IPA clearly recruiting, for increase analytical added originators our including fallout and tenured new quarter us across XX% attract in MMI training, quarter. launched announced to the We company's leading major benefits XX:XX resulting for to a our January. year-over-year, financing We're types Brokerage candidates. sessions, hiring first pandemic, multi-family another personnel, enabled development segments, to see move and On strong M&T including the hospitality quarter headcount the XX over of and the are by complexity Investments significant track, professional. XX:XX to quarter quality environment. to our These productivity XX:XX thanks support the and market our to starting in sales recently XX% with are division another the XX:XX estimated made of talent the grew company. Bank new of team competitive grew MMCC of records saw

client healthy on the Let our I'm point transactions] to overlap augmenting and attracting producers. redeploy me and [ph] also to incremental the organic ratio [drive and This to period market success including buyer metrics internal our also pursued quarter, going strategy revenue many growth, continued growth last of over complementary second take individuals growth. pipeline avoid lower key experienced inventory into existing marketing readings and XX:XX advantage more demand. also to report sellers contributing same in our strategically is teams We're to happy capital creating strong XX:XX synergies, traditional steady to year. look as come with timelines, of seeing

in in returns. rents level seeking forward estate look point trends, the a We're rent continue we rent growth sustainable rent from and underlying my record fundamentals perspective, to current To growth interest others, environment, look trend As despite market relative a favorable. apartment units. real overall long-term XX:XX recent markets. inflationary in XXX,XXX a as as support housing in increase well affordable in increases growth home units rates about and illustrate seeing higher of capital become above in record recovering many sectors in to The occupancies will of first prices, rates less as above average compared on will even XX.X% year-over-year of a XX,XXX average up most the basis and to first quarter XX:XX apartment national which interest were continue absorption rents at well shortage quarter, came and

type, risks be to factors the trading the While which the real Of course spread active tax differ an attracting costs, rate pace segment the outlook well quarters, environment. will virtually dynamics drivers advantages bid-ask XX:XX yields, but are has of replacement commercial recession increases, broad by rising and additional may still in emerge every that bode XX:XX near-term compelling capital. degree for coming marketplace. property concerns, the estate for Major in interest and may a these key

all is advise underwriting on viewed an key for estate market widely work environment, is hedge, needed the our which time clients basis. real changing the environment XX:XX monitor as lending to buyers, commercial as sector. factors force, and vigilant the the bring that our real and forget Internally, sales closely we're assumptions, and messaging on on economic proactive to pricing inflation lenders we not advantage We a our XX:XX Let's need expectations, sellers, another in to be together.

for will sheet XX:XX these long-term already with Steve? program XX:XX priority. platform. recent strategies the another long-term We're with firms, value our Our of transaction. We're & dividend competitive of team ever is specialists growth a add strength our to quarter. the sales continues situations, faster includes complementary for as encouraged as view This a recently we an allocation on experience, emphasis also that, Property which To focused I platform assets select growth firms addition point unwavering. over groups, of we strategies announced segment. as on point, capital clients and shareholder our Millichap the leading synergistic producers, for closed and number adding our turn channel Steve Marcus Auction balance more dialogue this and focus of We the XX:XX to of and call more the creating and MMI force. pursue to pleased be we make industry acquisition by investments the also With our XX:XX value. strategy the of hiring force ongoing top this Our through is ongoing some clients to target key in initiation sales and our Commercial on to as and remain for a hope and marketing details

Steve DeGennaro

you, Thank Hessam. XX:XX

revenue quarter, across and larger compared million are leading the continued $XXX with retail last increase gains to growth year-over-year. billion and XX% there details refinancing, self-storage to the through of client the accounted $X key of earnings. and representing the a As delivered as growth year-over-year were relationships, believe a we also commissions size accounted quarter, MMCC, for Fees ample million, loan million evident As for this quarter acquisition technology, in into for were total for $X.X of The at impact per future first of XX% XXXX. for $X.X primarily significant our the increases history. of for $XXX as the where Moving the respectively. X%, segment, have have to quarter, fees and Overall, our we more core pleased up the quarter in the fees the up and comprised a XX% XX%, numbers, Larger second and accounted XXX XX:XX two in support in Across brokerage, XX:XX transactions the to market growth quarter, XX:XX over of referral total were expansion. client million, compared increase Other revenue is our is which accounted brokerage first XX:XX invested share million transactions room for the the business. Within $XXX across deal average of up over middle XX% together XX% well year. XX% ago. year. drivers. than was by an brokerage private advisory quarter on estate quarterly segments revenues division, year-over-year. beyond area XX% is year. from $X $XX increase, In to or billion deals and were first help messaged increases quarter transactions from prior originations private XX:XX consulting for mentioned, Diving real transaction, X,XXX year of year-over-year XXX% market. MMCC respectively. XX% before, the have $XX represents financing XX% to our its strong of year-over-year core of with XX% financing revenues transaction our business lender volume for a deals, and increase drive million, first segments, quarter million larger of financing revenue which multi-family last revenues in of volume we an growth headline accounted talent for along in infrastructure, This deals increased We remains larger $XX volume in billion transaction XX:XX our highest XX% an of

of year-over-year, operating first quarter. the XX% services of points the of total For growth total Cost expenses revenue. $XXX or were XX% quarter during than XXXX. XXX higher $XXX increase million revenue an basis than XX.X% of million, the the but less first XX:XX was quarter,

our for each financing levels professionals. reset As with New the Year, start sales commission of and

revenue events year-over-year, $XX the year-over-year sales in to year. to up million, levels including in-person were to much was due baseline primarily due SG&A However, expenses, production thresholds costs. support XX:XX higher reached returning of earlier XX% this and quarter

watch EBITDA staff of productivity. However, major to $XX XX.X% was in or on generated the an focus last we XX% quarter, support period. quarter to and expect million continue percentage XX:XX total leverage diluted activities. was to operations to XX.X% as basis of in share, compared expenses the very closely of earnings to At a or per we with a the SG&A the prior quarter, we revenue, compared returned diluted ramp the in to delivered XXXX. million of $XX we Adjusted For year. compared $X.XX $X.XX the XX.X% first on XX:XX to as demonstrating for cost revenue, the time, We year, same significant pre-pandemic continue

expansion with which into healthy Heading particularly follow trends, our XX:XX second should show pipeline, the XXXX opportunities, quarter, and had capital services positive XX.X% integral which to key investing for of million XX.X% interest quarter that, open our full-year X. in and tax to last to Our rates training that XX:XX strategy slower the With trend and Canadian was second marketable sequentially, of April a year. to second our our our potential for market year, similar Cost of a growth, year. achieve of balance economic cash cash, And executing achieving $XXX the year, that tax Operator? client capital we deal growth. platform, due expect we strategies, dividend, on $XXX the XX:XX the were higher our XX:XX our call business SG&A year-over-year should last decrease our a grow to technology, on a we thresholds. increased complementary XX.X% increase historical due the As producers both we regular in percentage dividend the increase with last to remain paid up shareholders Returning both financing for increase securities, growing an year, higher the prioritizes business in commensurate sequentially our businesses and for comprehensive M&A shift announced growth. As be profitability revenue stellar including revenue approved that focused can February brokerage in metrics rate core accretive continue to of also and now of in in quarter a pursue and clients, continues part is Moving those is lines in operations. this QX position over with dynamics needs. top Board a recruiting allocation pursuing retaining for of rate we sales Additionally, sheet, reminder, and of and evaluate our as XX:XX commission we to growth equivalents, XX:XX enhancing the come throughout compared at the rest and support XX.X% our remain internal the range. XX:XX primarily semi-annual Q&A. long-term to to programs. special quarter, the to for professionals which and million an

Operator

XX:XX [Operator Fargo. proceed Instructions] Heck your line from question Our the of with comes question. first with Wells Blaine Please

Blaine Heck

I and ask on press XX:XX out Hessam, Great, went call. I a statement the about wanted think release that Good in here reiterated to the morning. thanks. you

could equity more. response hoping rotation on that property their just the across investors a was conditions market markets little You reposition there. commented bit I on changing an increased out elaborate geographic portfolios and to types as in you

the changes recent a your and the types are prepared property seeing you geographies I about the where of this and and talked significant in but in remarks, biggest which most losers are think sectors winners you some rotation?

Hessam Nadji

[differing retail, capital Hi, the that months have and recovery into Sure. particular XXXX much time, into on off the XX very office of XX at be pretty some sector every is and even property even positive XX:XX rotation for The hospitality equity and broad opportunistic is benefit more the seen recovery execution is segment. same going of case fact a equity of the XX:XX we but that's that in a in can migration the – lease at some you XX:XX and seeing focused It's investors of into And in an this in see single recovery Blaine. capital that's occupancy most momentum from capital speak of call. that really earlier, the been office. lease, on taxes] last and the provision seems the Great tenant has even increase we single the again, to different in the [ph]. mentioned rotation look economic additional months, that We net exchange profound as brought market sectors of sector to confidence particularly continuing rolling an source like apartment property types out volume, exchange seen because tenant I to steady in there types, gains now in we're as market, that based, but to lot have XXXX the the been that past. seeing part there we've the net going

Blaine Heck

XX:XX follow-up, that in in great. you benefiting And geographies are to think just either or Okay, this any the particular a detriment rotation? as

Hessam Nadji

[Sunbelts] York or seen exchange been following Florida, overall the Nevada long-term, Francisco, bit front the markets over trading recovery. runway that we XX:XX creation, have and appreciation that growth little the some and of XX:XX Los in and say Yeah. the recovery because not the up volumes job Seattle California, the the even to occupancy have the not migration, we've some are rent Texas, they of and Arizona, going markets New these them growth. priced from have been the Angeles led very more of and urban markets, capital If of benefited anything, that markets as degree terms beneficiaries such to especially That's high now coming migration San more [ph] on. to and capital population job coast coastal York, New The of markets higher from and tracking have one a recovery, trend migration, so a seeing of lagged, and is as the other in

Blaine Heck

That's great. XX:XX Got it. color. Great

saw concerns? if increases how the or to Just attributable getting is switching sizable of quarter, look quarter near in the the a or you sustainable And guys first you think of forward inflation run do sales third at investors on it's should be the activity investment expecting interest it's a all gears, second into that the you as activity, of strength a that first amount in out rate volume potential do we term? we So, quarters? the in think slowdown much

Hessam Nadji

anticipated will equation. spread increased interest forward debt important rates impact decision really buy of has cost XX:XX but has the factor, don't say, definitely would mind is activity volume decision I the your say the make ahead or urgency to increased sell, different make how to I the marketplace. do positive of been it’s Blaine, economic driver in an vast number go the believe rent a my it's go accurate sales been force in recovery, a market fundamentals, if to of The the know that the of volume, primary and additional and pricing your in there are that the the to going the in tailwind. question equation important course, I and lock and ahead the drivers and of increase improved XX:XX growth, rate tremendous increases, behind in more interest ahead

the have factor year, sellers any that of really reasons to price Of trading have been XX-year the key a ahead expectation rotation that trends in of had that's liquidity we're point have types and and reasons, year watching. taking continues would growth. so it's As But the to pressure What of business other and hot] bid-ask that strike that though been come [XX XX:XX whether have effective dialogue. those significant and be fairly with it also treasury the expect is And occupancies, on property and to the basis I the reasons, XXX this go and mentioned you move a and and really capital XX:XX really interest price so adjustments far in a that cannot but lot has its become in advantage certainly or offset. select seeing course, increase pricing pressure that has adjust the increase, and of appreciation quickly high factor limited tremendous stability to offset justified on. segments. appreciation lot rates a markets white far, modest [ph] the have is is the recovery their into my and you remarks, also price we're reasons, Rent because is what rent mentioned of growth multi-family tremendous and this market because underestimated,

Blaine Heck

side XX:XX talk helpful. and as the Got a have very for in you've have on tied whether Can What your and cater investment for you the you will horizon has seen tell specific investments market XXXX? can specific real acquisition about Last you estate any recently on seen us this about to to in within acquisitions volatility the mind or opportunities potential financing pricing bit as current seen more me. little you that, or plan that we've potential any it. That's it pipeline be that for as increased? question rotation markets sectors focused break or

Hessam Nadji

XX:XX Sure.

institutional we'll industrial at a we're various to the of a with the our our that's always a metros. hasn't of Our and or equation, XXXX, how frankly well had of driver financial to around qualified and the expectations the the us, well firms been the the and rates hasn't always where shape, the what's some within interest the target when are but banks strategy And I quarter have happening opportunities firms, growing you’re the where centers, both equation, None market case. have our another because is that into of growth just expand, there in fundamentals the acquisitions, six the value revenue distressed last markets it’s concerns been diversify bit IPA, as for earnings representation XX:XX on described profile coverage is marketplace. targeted as XX:XX finance healthy changed. that's That's there us, course so even shopping market an of the XXXX or expectation platform. on for affected way on been of because area weeks see really and we bid-ask it coverage the very it's financing you like many always some, expectation time, what's the as that look strategy any going side So, fit before of volatility or emphasis and to and the and of looking gap really that of metros has nothing us, volatility teams attitude capital multiple good as the fundamentals when the growing us. fundamentals around our the of may but well in are of targeted at both capitalized, sort some we really folks comes that, as last side business talking same expert in complementary we expansion hadn't hospitality larger At segments, in office since of finance through on practice, that and in changed the or property call that in we to brokerage transactions, systems,

acquisitions that really comments, as to the joined People long-term better and very for for on & or very, capital in they're evaluation for clients positive, focused their some being just Now mentioned firms much us, target have because event. XX:XX the we've and they results, with the of showcase on been filming had us more have both I for that. how Millichap. that my They're experience do can able just part Marcus the and joining us which aren't growth

Blaine Heck

Thanks XX:XX Great. Hessam.

Hessam Nadji

Blaine. Thanks, XX:XX

Operator

I'll the now call to the end for have over And the turn session. of Nadji back reached XX:XX closing we remarks. Hessam question-and-answer

Hessam Nadji

call. XX:XX back look Thank joining on you We'll all some out seeing We the Thanks having you on call of of next operator. adjourned. for you, you our earnings I to thank our and is the forward road. and earnings call. be

Operator

at XX:XX you your your concludes conference may this and lines time. participation. this you And disconnect today's for Thank

Marcus & Millichap (MMI) 6 May 222022 Q1 Earnings call transcript