Earnings call transcript Q3 2022

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Operator

Welcome to Douglas Elliman, Inc.’s Third Quarter 2022 Earnings Conference Call. This call is being recorded and simultaneously webcast. An archived version of the webcast will be available on the Investor Relations section of the company’s website located at investors.elliman.com for one year.

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. company’s income release, EBITDA to which Relations of net the contained the adjusted section earnings company’s has the to and are adjusted in Investor Reconciliations website. been posted

risks those would to Before are could the statement. statements risks forward-looking uncertainties in not and during Exchange made statements forward-looking to are a results set conference from forth that actual facts safe The call materially like the historical by call harbor and read that in I cause begins, in that statements. are detail differ are These described more Securities the implied or to company’s filings. Commission subject

Now Chairman, M. Inc. I over Howard call Chief to Douglas to the Elliman, President Lorber. would the Executive like turn and Officer of

Howard M. Lorber

me and thank Financial for Elliman of Richard Bryant morning, are us. Operating President With Chief Realty, Kirkland, residential our estate our Good Durkin, CEO joining Lampen, Scott today brokerage Chief business. Officer; real Douglas our and you Officer; and

today’s ended On for nine markets. discuss and real residential and three the financial in months Douglas trends Elliman’s XX, in estate, our results XXXX, performance luxury we September call, will

then open questions. and We closing the for call provide will comments

and operating well I environment Douglas believe begin challenging the despite by real market. estate would the like is discussing why positioned for to current we residential Elliman

the We increases decline in and date. As new inventory we to of from commissions in interest existing by in financial a this in discussed markets. trend a mortgage rates home been saw continues caused in the and supply we second beginning quarter decline earnings significant volatility June, limited sales, this has call, believe

agents which is key the a take outstanding we down to opportunities of with competitive our our and have relationship As our include strengths, advantages due best-in-class advantage network, positioned global to enters them. Douglas and significant cycle, Elliman our provide industry

in XXXX. net XXX We have added agents

retain to retention provide Each addition In of year, our Elliman. agents, agent proud opportunities Douglas we referral bring within together relationships may transactional so successfully very they Elliman help XX% business rate. establish recruiting important to to agents we are that

approach on the combines serves developments, our business, new One for remain platform transactions expertise new us platform our competitors. represent and and an employees the the exclusive retail most our experienced marketing leading The hybrid development of with which agents in home States. reason from agents encourages that XX agents Elliman development pipeline joined our business marketing with world-class distinguishes team has our marketing because team as the United agents. a resale in development to future And luxury our to developments often business for a in market the is

less Elliman are in the finest Our key which Douglas luxury key brand reputation, markets, mortgage sensitive the the rates. interest brand. most to strength second of represents real by XXX-year is across estate the Backed

Our with key purchases. markets are luxury similar complementary home

We Newport and markets continue we Vegas, to opening recently Basalt, offices Nantucket to in expand existing new and Connecticut, with in Las into markets expanded Canaan, also expanded Beach, with similar have characteristics. Colorado. California New Having

to increase designed to productivity been of innovative have our subsidiary. their these applications PropTech New Ventures applications our Third, regions by with our business. approach distinct and provides Valley state-of-the-art investment technology Many identified

that companies us an client new a investor these discover operating to agents as transformative with relationship and cost. innovations at Our cutting-edge enables our low benefit

in enhancements embraced have recruiting from these Our is component and technology agents competitors. a agents critical

key financial is strength course, profile. our of our final And

our provides debt. new overhead entering of This history XXXX, liquidity power and by $XXX profitability as long us September no a to expenses of of have as We increase our approximately well opportunities brokerage markets. with at cash core current million business XX, and scale

in several XXXX The address shortage, market active. where the sudden characteristic key borrowing potential a restrained homeowners from the of with purchase continues pricing. refinance to like restrained which or we part has listing rate to past costs levels sales inventory base supply be over place the a as are the would through the sector, the reluctant firm I in housing housing potential, unusual obtained the Therefore, particularly increase entering to market keeping low for years. in have in remain luxury mortgage listing inventory

have As a result, luxury are listing see we lower seen continuing and at levels. to inventory

before the lower market entering began. at era We’re than levels the pandemic

forced consumers believe tight prices will adjust passes time to gradually and and However, sellers will the interest adjust ease accordingly. as when we to rates higher supply sell

residential real last cycle markets markets emerge usually a first are cycle ends. to the when a in estate, the Importantly, to and luxury enter markets down

opportunity So, subsides. a luxury uncertainty in markets all growth for tremendous see we when market

to turning compared financial our reported September three ended the XX, results months three with XX, XXXX. XX, Douglas XXXX. and Elliman’s for results XXXX, revenues to Beginning The ended months three of Elliman September financial in quarter XXXX. $XXX.X Now the the September million ended third Douglas in million for months $XXX.X

or three million third $X per share months or XX, to September million the diluted the per income for $XX.X Elliman in XXXX Douglas share of XXXX. to compared attributed ended loss $X.XX of net $X.XX quarter diluted Net was

segment. EBITDA in $XX.X other company reported spin-off operating of For stand-alone compared estate Expenses $X.X was quarter XXXX. reported and of ended comparison reported purposes, and are our XXXX, real incurred compared segment for third Elliman Elliman the brokerage as operating quarter estate corporate months $XX.X following our million in operations XX, $XXX,XXX of the months Group. XXXX. company our income operations million to the brokerage September XXXX, the began segment, Therefore, its to ended public businesses real for three the September in brokerage from to X our million public Douglas are in Vector third a of XX, attributed XXXX, adjusted by the Douglas in

three the attributed Adjusted compared million million XXXX. ended real quarter $X.X EBITDA of were segment to estate to our XX, September $XX.X XXXX, in brokerage third for months the

per share months third the to XXXX. net quarter compared XX, per $X.XX $XX.X $X.X September $X.XX For share income was ended adjusted three in to loss or of adjusted attributed of XXXX, Elliman the net million or Douglas million

to Moving September nine results ended now Elliman’s Douglas for financial XXXX. months the XX,

million Douglas billion months compared For $X.XX revenues nine XXXX, September Douglas September diluted in per for ended to XX, or net in to $X.XX the share or income $XX.X was XXXX the income in compared diluted $XXX.X months Net the ended XX, million $X $XX.X period. reported per nine to attributed million Elliman the XXXX Elliman of XX, period. share

Douglas attributed $XX.X For adjusted September in to the to XXXX, compared nine months million was $XX.X XX, XXXX ended million period. the EBITDA Elliman

months comparison to XXXX operating income brokerage September XX, reported of the million real For $XX.X compared our estate for purposes, for the nine period. ended XXXX, segment $XX.X million

estate segment were million XXXX, XX, the period. for real to for our to months ended the $XX.X XXXX compared nine attributed brokerage EBITDA Adjusted million September $XX.X

Douglas For XXXX. period. also the compared a Selman adjusted $XX.X strong $X.XX the nine Douglas net cash September per share $XXX maintained balance attributed million was per income of XXXX, months $XX.X ended to million Elliman sheet approximately to in million with XXXX or or September XX, XX, share $X.XX at

despite summary, shown performance differentiated challenging position Elliman believe XXXX in In growth. we continued our market, a has platform Douglas long-term and enduring approach us for and

analyzing navigating has discipline of economic revenue and history also importance create operating Our judiciously expenses balances applying value. that of successful cycles stockholder a maintaining to long-term the proven financial while management team many

XXXX, reflect revenues These in XXXX, to our levels. demonstrate of metropolitan the appropriately record. team as crisis brand creating had Further of the to both that by income on name the environment. York the great a New opportunities in net XXXX concentrated business by financial returned area. power then and experience was During increased decades and management of Douglas markers as agents economic our XXXX, has examples the And tenacity luxury the Elliman well this current

Looking focused to adoption continued our of on talent, innovative solutions recruitment value empower agents. creating ahead, efficiencies best-in-class and operational expansion, we stockholder through market are strategic further of

third It the share In to the quarter, key were addition, pleased another will to forward. allocation a that as $X.XX during component is going pay of serve stockholders. capital our dividend our dividend our we per expectation

With that, we be answer questions. will to happy Operator?

Operator

the first Fannon Daniel Jefferies. Instructions] line from [Operator comes Your from of question

is line open. Your

Daniel Fannon

this what kind what environment. as are of up macro said, doing might Good just rates normalized morning. type to I a working be maybe against Clearly, backdrop. kind you. understand activity Thank – revenue specifically more are inventory of you kind wanted differently of you follow to and of in all some and the

how of give kind months today management little So more of was in versus, about about and a team you are thinking next and year said I doing hoping a ago? guys you six differently general but as of thinking managing you’re terms, the even terms as some can actually business, specific terms say, – what get into you in you

Howard M. Lorber

our special as going agents to leases, from to That, leave expenses provide bringing been support costs reduce our agents have with and evaluate agents, anything and not that’s us. events. us We process in in facing, related are to administrative We services do we are and related to such that’s to travel, The want we a distinguishes non-agent a because to loan of staying one agent-facing. competitors. new intend the reasons support we

Daniel Fannon

Okay.

mentioned should those recent about quarter? of we Canaan, to that continue that markets are Is kind Nantucket, you’ve growth more and periods. Vegas, level mentioned historical of putting forth kind prospectively, think new And you so guess, a I third expanding. couple Las And – in you of new New here still and of about in of the think been you markets as maybe kind

Howard M. Lorber

was a And do get in to markets. different opening try temporary opening in good some really us. in than looking find and buying We those space purchases, probably go hundreds of once we’re That and of We few that very a is bought California. or at to have. money in and lot thousands Yes, it. made get us with company just many basically, to out way companies. to them a those to people rent, some space small Yes. markets money buy spend cases, or And bring started. markets in not small the slightly in in offices. new over come just we’re We generally other never we those We then brokers a

it businesses not we’re to relates spenders new big opening new So and markets. really as

and to space We’re another go just works. hire buy company not it going that there, hope or

careful opening So in new we’re offices. very

So situation continue, we’re the right and going right find to the we if people.

Daniel Fannon

have Or bit think I trends a markets trying sense delineation strong share, York? it’s rates market any just Understood. are of industry to are have there U.S. the just Florida broad what happening hoping little between But of you to across where kind is a more versus some know the the And markets? as within challenges you Are and everything differences? you higher New the that’s – inventory for little of the better, a those about get

Howard M. Lorber

to comparisons likes York, make the And and who at doesn’t you But the would look last of XXXX to if so year? mean, happen to And really some the look I XXXX, to to me, something Yet to to than I it compared last well seem think I year, said we and is New also. the year to when everyone XXXX you anyone XXXX, that make XXXX, the And other compared is, what pretty we don’t at New again, much how is performing that better believe, really XXXX, compare XXXX York happened fact Yes. is quickly. are markets. sense were. real actually then base was pandemic. XXXX. to was look XXXX back before because XXXX understands still, XXXX

just talking just think about shape. up still buyers very at we’re level, lots luxury the from good that markets matter And of the it hold lot. little up pretty we’re because moved a holding on price are inventory. it’s generally I has pretty in I good inventory of that last year. the there’s now, People but We see as think a So

some So that’s soften to – going but at point.

Daniel Fannon

that provide be on of Okay. would or I marketing update And of if kind if could the today you lastly, assume around would new an that’s some prospects and how then shows showing kind that slowdown, of that also just helpful. would also signs development, – update any – but

Howard M. Lorber

not lot a new New development York the in there started Yes. nothing I is because during of pandemic. mean,

of before the projects robust development most coming that XX But new new months and Florida, up. the we projects have over the do were very a the projects coming have where left on So for us we a billions. schedule from few market next big is in market over new

Daniel Fannon

half clarify And come that back more you. to Thank start or... the XX next we seeing year that should is months, it of next on just

Howard M. Lorber

We’ve open now. starting projects. the Florida, They’re now. starting in few they’re – No, not a in you’re months, them the couple Usually summer. going opened during last to

to going And So every opened of starting more ago, a month. couple probably we’re we’ve be a months opening couple.

in opening things have Florida. to going We’re

Daniel Fannon

Great. Thank taking you for all my questions.

Operator

conclude questions today. Third gentlemen, now have us those We Douglas you XXXX This are will on we may a joining Conference and call. for for and that Call. all Earnings day, good Quarter Elliman’s Ladies you the you have Thank hope our disconnect.

Douglas Elliman (DOUG) 4 Nov 222022 Q3 Earnings call transcript