DOUG - Earnings call transcript Q1 2022

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Operator

Welcome to Douglas Elliman Inc.’s First Quarter 2022 Conference Call.

During this call, the terms adjusted net income and adjusted EBITDA will be used. These terms are non-GAAP financial measures and should be considered in addition to, but not as a substitute for, other measures of financial performance prepared in accordance with GAAP. Reconciliations to adjusted net income and adjusted EBITDA are contained in the company’s earnings release, which has been posted to the Investor Relations section of the company’s website located at investors.elliman.com.

Before the call begins, I would like to read a Safe Harbor statement. results this statements that risks or that that cause during facts not and implied made from could forward-looking materially are are actual by statements forward-looking conference forth are call historical uncertainties those statements. The set differ in to subject to company’s risks These the described Commission Exchange more in and are filings. in detail Securities Douglas I and Chief President to the would Chairman, now like M. Officer to Elliman of turn Howard the call over Inc., Executive Lorber.

Howard Lorber

you thank afternoon joining Good for us. and

Richard Chief of today’s Durkin, real our in factors Operating estate are Realty, Kirkland, Lampen, continued Chief Financial contributed Scott business. market Bryant call, the residential today and our discuss real the market financial President strength me Joining and On first our will estate solid to quarter brokerage our Douglas of how Officer; we residential performance. Officer; the CEO and Elliman U.S.

We will call. then answer today’s your concluding before questions

we with estate comprehensive a attractive last why brand U.S. earnings our dynamics positions in Douglas synonymous solutions of call, suite on Elliman estate to the name the During market. real capitalize a highly discussed technology-enabled and residential luxury real

first for for million of luxury combined X $XXX.X months the dynamics price demand across ongoing true. an in We XX, residential first quarter, have million compared These to trend XXXX. markets. result to $XXX.X the to particularly appreciation, our ended our that which we saw propelled quarter continued an revenues increase XXXX, of During March this the homes continues inventory, with be significant low for to strong demonstrated in

will been months March by or gross billion XX, XXXX, cash. occur international reported of higher markets we result in the is materially for of momentum XXXX importance strong on estate this $XX.X in over prices growing XX, important XX Also for March mortgage in and homes not buyers to as sales of XXXX, and transaction close our brand peers and in we up such real the to the ended business millennial due Our return transactions higher this in luxury and believe billion for to to the new average gross value value our factors months markets. results underbuilding across leading of buyers, of billion contributing increased percentage particular, from are It luxury of continue limited this that residential sales luxury transaction where months. presence supply the XXXX. To-date, our higher versus between a the believe our note ended momentum $XX.X Elliman markets. rates, impacted all X our $XX.X the focus has last We our and our is because X

per leading the of per million of our XXXX, an months outside For average price $X.XX Elliman substantially XX than York transaction New competitors higher March had ended XX, home, City.

well. Our us is average existing is our complementary this markets price $X.X but in creates our continue above runway million, not only to as business believe markets, approximately average. grow to well national for a per We which in transaction the

our through well-known to trusted. in growth markets, and name the recruiting organic in to major have significant is opportunities addition Elliman market In increase our we where markets adjacent share

the remains billion gross with largest March our in transaction months in City York market ended New XXXX. $XX.X value XX XX, last

market and York remained Florida. with home value price selling pleased City period, and in continue with across of transaction gross same billion strong approximately be $X the the Florida to also We South performance New in million $XX.X our at South per average

strong We share New City York in also and maintained market Florida. South

respectively. was City York XX% XX%, last share For market our and and months, the Florida XX New in South

quarter. In Beach ever that the footprint continued Vero Vedra Beach in market. near Florida, In the highest opened markets. transaction we brokered Nantucket expanded we in across also existing and in Massachusetts, expand first have price a luxury recently Ponte We to April to our Jacksonville office new and in

offices additional the X in opening are in coming Boston We months.

continue also business We to aggressively grow in our Texas.

We We Texas the major us a future. be new Austin. Dallas believe actively in for market and Houston, will recruiting are in agents

concierge enhanced including residential out Our continue is service our expenses of to and we by maximize data-driven MyDouglas focus designed services. streamlined our on and and XXXX, to to for quarter reducing cloud-based to of our by out our service. the media, brokerage automate digital incorporating distribution portal agent first approach In continued our further rolled two a we and agents’ presence processing new differentiated and packaged of payment social rolling marketing escrow videos applications StudioPro technology. our Concurrently, refinements agent features, personalized new

applications these integrated and In automated expenses, agents. to service lowering addition superior provide experience will a more to our

Elliman PropTech acceleration through and is continued ahead, focused creating stockholder our footprint, of expansion cutting-edge solutions, Looking the of our efficiencies. adoption on value of best-in-class talent acqui-hires of operational acquisitions, recruitment

the for to like to gratitude employees for clients. results financial express Elliman and my deep the every agents work the hard company who discuss I’d our we and quarter, day Before our

best and ranked let With consistently continue move to on results. us among power our business backdrop, are the in that Elliman’s Douglas agents the success. to Our financial company’s

million compared to attributed luxury and March $X.XX the income the our ended XXXX income by or For driven year other $X.XX primarily the net Net months Elliman markets. commission reported brokerage in to Elliman $XX in increased XXXX, $XXX.X period. of to diluted prior for months $XXX.X X million ended share million X was $X.X Douglas XXXX share per Douglas period, XX, revenues XX, million in or income compared per March the in

March ended million months XXXX. $XX.X first the X Elliman to the in compared Douglas million quarter XX, was to $XX.X of attributed EBITDA XXXX, adjusted For

reported brokerage estate XXXX, Elliman operating company real income X March operations months comparability reported in other brokers to estate incurred of the company for segment the our purposes, Expenses ended and in operating the March corporate a public our reported our began compared for the Therefore, stand-alone X $XX.X quarter XXXX. are operations comparison million XX, the segment as of for real in first business $XX.X For of XX, XXXX. purposes, public brokerage million months ended by segment. and are our

Our $XX.X ended adjusted XXXX, March the reported XX, months to ended XXXX. March for EBITDA million it attributed X real compared months estate of million XX, for to segment $XX.X the brokerage X

quarter, For also of months in balance quarter ended of Douglas net we first XX, per platform have strength the million compared sheet $X.X share or March In strong market. for or growth. in X at with XXXX, we a adjusted a We share position believe adjusted million of in XX, summary, income per $X.XX and XXXX. XXXX. continued strong the a believe cash $X.XX of strong Elliman liquidity maintained income net the had a $XXX.X first us March places was this to $XX.X Elliman

In we pleased our will expectation begin key Operator? that a addition, to component as answer be is forward. were dividend $X.XX quarter, first during a share per our to It will going stockholders. questions. happy capital we paying serve dividend that, allocation of our the to With

Operator

Your the Instructions] Ritwik line first from question from [Operator of comes Roy Jefferies.

Your line is open.

Ritwik Roy

team. Yes. and Howard

of any cash you on when you number? So percentage sales guys have resilience by chance, you guys discussed mentioned relative that to a guys, buyers. Do rates, higher the

Howard Lorber

there less financing deal on but ultimately is which be interest back the getting affected Well, they looked having deals, that market much real and mean mortgage. And start higher-end with a quicker a don’t the or from they because don’t purchase they rates are – of the long fact going financing, don’t years in what it to getting they too time like, it that up, really the in have interest on in I’ve market. want bank. talk start what fact, a point. getting to they to private yet. from want out as market, if doesn’t after to they rates of the bank, But could people priced see doesn’t that it the private we brings that seen rates it mortgage past is is be the that are of get varies they into over And They thinking market ago, not

people some market. into to come So the of it sort motivates

Ritwik Roy

Understood.

of So that ask ties that. what to I going into kind was after

New – against relatively would you end interest rate back... York say and higher those So rate the markets resilient like guess, are City basically I interest the Florida,

Howard Lorber

depends could some into account At but don’t people ago, it also it back got be that. we to we are houses. but if how much. had these then wouldn’t years And point, taking Well, resilient, that we inflation. it look, see need rates crazy And they

according And therefore, that there but – We’re still they and problems right want as possible because is inflation new possible probably houses quick the way data time and everything do and people houses with housing. better are we this as supply interest short now to and going in the it to all to millions now. need country it rising rates, do looks of to build no than and the see,

Ritwik Roy

helpful. if current That year on was year? Got Thank upcoming And bit or in just a for fiscal modeling. this should XXXX fixed growth think we it. costs about How little I you. this may,

Howard Lorber

Yes. Bryant? BK,

Bryant Kirkland

are how Rick, Hi, you?

Ritwik Roy

hear I you. am you. well. Thank doing to from Good

Bryant Kirkland

good. Very

cost, them bonuses. advertising based, compensation put which them activity we and we if So three are put discretionary based, into into and we look them We at non-activity them or put into put our expansion. into We buckets.

as $XXX to progresses. been If years million. general base million number initiatives taking administrative $XXX the line, our cropped examine as on costs reduced to be up our recent the but offices, people those have you the we returned have at cost in to non-activity has That look from will year

Ritwik Roy

though, to G&A, it. brokerage clarity the And just entity total Got referring that’s that just or in segment? for reduction the

Bryant Kirkland

business, or of increased over costs, business $XX really is obviously, and through correlate they million. million, XXXX XXXX. since of $XXX $XXX gone months to we’ve from are last costs And G&A significantly million $XX million expansion activity-based – advertising has The which from to either bonuses to most and $XX that been the Yes. contingent the million it’s the XX but are from activity-based or discretionary roughly our

Ritwik Roy

Okay. Understood.

expect – potentially guys to guess in that of taking So I from some that pickup monitoring situation metering the you guess you G&A, but the with or sort I return scenario? away office, are

Bryant Kirkland

very We’re monitoring it close.

Howard Lorber

of up had primary say slowed markets, return to had that When find and to down it. just and COVID picking to then people Yes. Don’t when the all we that that forget, furlough people, back we of markets, office, to sudden, we and a wasn’t had started is part on our in hire easy. layoffs. really and And you people

we on not negative that positive other space think side. lots have side we’re of have. most the the is to the space, going The that’s need all fact really – we office like I that companies

save years. few going next over start to as So the due, some leases consolidate coming substantial and we’re on rent money

Ritwik Roy

give guys – good this That’s do transactions have in one it. of hear. reporting, then quarter? you did to guys Got or missed number the And I in maybe the you a item, but last

Howard Lorber

No, I don’t...

Bryant Kirkland

quarter? minute. the In press a release. Just in the Rick, it’s

Ritwik Roy

The number?

Bryant Kirkland

real And when are we expenses company. the That corporate are include Rick, the not we giving estate does subsidiary. brokerage costs providing as expenses, a public at

Ritwik Roy

understood. it. Okay, Got

include So, it yes. the entity Does there? G&A Understood.

deal at that I answers. your will the cool. release count take Okay, for and then appreciate press another look guys’

Howard Lorber

Okay, thank you.

Operator

next Ladenburg [Operator question Instructions] John comes Massocca Thalmann. with from Your

is line Your open.

John Massocca

Good afternoon.

Howard Lorber

Hi.

John Massocca

Curious broker maybe kind feel York – a still markets recruit a number are of in agents? of good expand broker where I mean, looking you add markets? like New do markets in in think in of place core count? you of terms But geographies. newer do Are in Florida, to you South you know you’re some obviously an or from some your brokerage you in a there you feel initiative is some I more need to adjacent in to kind – or

Howard Lorber

looking add. we’re always to No, No.

X. going agent, agent as attrition. we Texas, that when it. a year mean, was dollars newer up, Dallas looking million an We think have made for. people And we’re of though, We agents. markets the agent as what on just started And We couple announcement our a of commissions. good in count, far XX I about days the hired or try a you I doing look an month like great We was couple numbers to some hired in last in especially a ago. our This then keep that’s at

the lot are So of And and time recruiting to that is much on is, jobs we the very spend we in everyone the bandwagon. one a executive recruit including every of doing in their company, that. company, mine,

John Massocca

potentially of growth, think kind much is that the And we driven? that capital much environment as could today? really And about Okay. particularly recruitment markets of given how then M&A, how we’re of be in current

Howard Lorber

tougher of to no probably recruit, companies, better, longer we but period small buying most than there and time it. the simple call little mean we I just sounds someone. of look M&A also to also. look, but of maybe acquisitions have costs want Well, where just XX recently on we been is cost at a is small There there going deals a And a is a But of solution. group bit acquisitions, other And want over have to okay? walkover takes a we is we recruiting hand, the – company. our sort which that had and took

or I it think outside in was Naples. Naples of

And so all a a have in sudden, we office of new now Naples.

a brand. we that’s from pay if have – one Florida wants. I agents, New want Douglas where of we that, they and agents York So been people but our Texas of go They in Florida is and and Florida. mean the our they from, you to markets, our reasons because the you everyone Elliman wanted summer our ask they in months. are the built that’s business going tell brand, company. other to get people our to to Aspen going didn’t California upfront what agents lot how they Florida. anything to their wanted have and brand people,

York the to have we Hamptons. going So been New City have people

to have growing keep we our each how many company. so to the markets And really connect that’s markets. We All to started want other.

John Massocca

detailed company just that for Okay. now also one-time mean, kind one company the rate out side? given should of question, brokerage a going on, of is G&A, we watch ish in separate and talked about of amount then a or the was And anything public and activity there that then of kind you I kind maybe on the you’re run good XQ that

Bryant Kirkland

as company stock related of public about As general million million far far as at had administrative – comp. we the $X.X of that good side, as afternoon, $X.X John, loss, to

for there year million, was be $X part will We the $XX believe that one-time. number million. of a about So that was the

John Massocca

Okay. That’s helpful. very And for that’s me. it

Bryant Kirkland

item. more one John, Yes.

– earlier quarter, over in And number Someone was months, the transactions XX,XXX. the of a it’s about X,XXX. asked the last XX number first

John Massocca

Okay, thank you much. very

Howard Lorber

Thank you.

Operator

from is line Nolan question the Mike next Your of with JPMorgan.

line Your open. is

Mike Nolan

you Good succession independently discuss now traded? afternoon. that Could management you’re

Howard Lorber

X and we only on doing Well, this recruiting. lot new management is of a independently going but we months, good – markets month been opening the a think team, we’ve we’re and into have fourth

at ready management that point, we will So have plan point. not put at but some a this together succession for we’re

Mike Nolan

Okay, thank you.

Operator

all Thank evening on will We Douglas have those today. us you hope quarter you gentlemen, first for Ladies you are we and earnings good joining a the questions call. XXXX Elliman’s that may now for conference and disconnect. call. This conclude have our

Douglas Elliman (DOUG) 15 May 222022 Q1 Earnings call transcript