DOUG - Earnings call 3 2023 | Douglas Elliman Inc.

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Operator

Welcome to the Douglas Elliman's Third Quarter 2023 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 An archived version of the webcast will be available on the Investor Relations section of the company's website located at investors.elliman.com for 1 year.

During this call, the terms adjusted EBITDA and adjusted net income 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 and release, loss to which Relations of EBITDA the contained the adjusted section earnings company's has the to adjusted are net in Investor Reconciliations website. been posted

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

Chairman, Lorber. Chief Elliman, I of Douglas go President Please Officer would like to and turn now Executive Howard to the ahead. call the over

Howard Lorber

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

turning third wanted current the the address residential quarter, in our to the to estate litigation results real we brokerage Before industry. for

about Missouri Federal is in we jury we tripled not favor which the that Douglas intend not of to being the Court or against the awarded in in lawsuit week, ruled questions under Given are further are on make these on in a to issues. Last outcomes. active take plaintiffs in $X.XX subject Sitzer/Burnett law. litigation damages, comments comment and Elliman, extensively I billion potential do and that going and will talking brief litigation some to comment

take in of doing substantial which several period time, resolved. include We estate residential years, will and case the and possibly of expect Realtors verdict business appeal franchisors will be the other and that that the to National a real defendants, Association brokerages Missouri, the

real of Sitzer/Burnett estate not of that X separate National the the business have we intend believe them. customary Association is the We cases like us been practices that Realtors against to the a subject new and lawsuit. Elliman named merit in involving challenge and Douglas party we lawsuits to rules lawsuit, but were

not have and will our We agent-buyer significantly any disrupt lawsuits We in result business do advise to relationship. to these changes that represent anticipate us. retained will counsel the

In has we evolves. the landscape competitive if industry meantime, Douglas believe that Elliman X our advantages

our sales home size in across transaction markets First, which agents high-end brokers necessity. serve home the greater expert we the in a average specialize makes

sale to business, Second, our development perform the such homes, high-end in Elliman Douglas well. continues marketing developers of which represents

on we to We a adjust well close but will we needed, strategy continue and are are eye keep our succeed. confident to industry if positioned developments and when

X XXXX, Now this XX, be numbers Douglas the will turning ended that September Elliman's stated. for morning to months note presented Please otherwise unless all financial XXXX. September of as XX, results

our We to are despite pressures; rate in its We in interest factors: competitors business; Douglas more results. marketing strong competitive the many attribute provided Elliman's third stable world the development our our luxury our buyers continue where agents. pleased that immune impact pricing are XXXX, Douglas that Elliman to markets, X of class industry-wide of advantage to headwinds continued by ongoing solid outperform quarter performance to and

Douglas the third XXXX, third the revenues of in For compared quarter in of $XXX.X to million quarter $XXX.X Elliman reported million XXXX.

of the any first luxury future our and of increase believe tend strongest from the across XX% experienced leading market largest during we Florida's a strong in our performance quarter. and emerge one pandemic, However, markets to best third downturn revenues We markets. the in a in positive view markets quarter Florida, our as indicator

in XXXX XXXX. million of in million Douglas third to $X net was the or per $X.XX diluted compared attributed or income EBITDA $X Douglas share, diluted was to attributed quarter loss $XXX,XXX Adjusted for share the to to period. million of of loss Net a compared Elliman $X.XX Elliman $X.X loss per

compared operating our XXXX, this $X.X adjusted million in $X.XX per or segment in purposes, net $X.X share, real of to loss to million adjusted comparison million XXXX. $X.X to million compared of loss to segment $X.X estate For the income Douglas and was brokerage $X of EBITDA million reported to XXXX. an million Elliman in attributed was loss compared or Adjusted quarter $X.XX per net operating approximately $X share

share, diluted XX, $XX.X EBITDA diluted compared to was income the X the Adjusted loss XXXX. for of the to for for Douglas in in million results share Elliman's September Net $XXX.X per $XX.X to XX, Douglas to income months million to Elliman loss September attributed XXXX. Elliman Douglas in Douglas $XXX.X in or XXXX, reported Elliman $X.XX XXXX. months or turning per XXXX. to of period net compared million revenues of million $XX.X Now X-month ended compared $X.XX X million a million $XX.X ended was

of was income an brokerage million compared of XXXX the period. in $X loss in to million Our of $XX.X loss income attributed EBITDA $XX.X a compared $XX.X period the segment operating to the million real segment estate Adjusted operating reported million of for XXXX. to

period, in Finally, to income million $X.XX of or adjusted XXXX. million Douglas net share $XX.X Elliman per loss the to or adjusted $X.XX attributed share X-month $XX.X per compared in was net

operating residential on we we our trends as environment Now marketplace. the current estate as will real Elliman Douglas well in for outlook seeing are discuss the

our the have of a industry. high historically last We listing been have X discussed sustained nature driven rates markets. our cyclical mortgage shortages have part The the of difficult previously cycle, as quarters across luxury inventory

will continue expect some seeing. improvements we of challenges by remainder encouraged these remain in to trends XXXX, the for we results are we While impact our industry-wide

sales beginning million the our this declined of the XXXX. X.X% quarter signals XX.X%, interest average in to XX.X% We compared third rates. per quarter, from XXXX. The of this of which first increased decline $X.XX quarter second the to quarter price XXXX, is XXXX. to to of adjust and from year-over-year respectively, million and in believe the Revenues narrowed market the transaction $X.XX up declines from Specifically, third quarters of third saw XXXX that

May year-over-year also quarter, Elliman cost industry a improved our Due X.X% in reduction strategy, the period. XXXX. to and Our well Douglas challenges. positioned October solid up third since volume XXXX time basis, first on position successfully financial near-term from the in is the listing commission improved navigate Total to receipts

$XXX balance with Douglas Elliman's managing $X.XX and of We and maintain or cash sheet common share history market million equivalents cash no strong ample underscores of conditions. profitability long debt. our approximately per liquidity various and

quarter streamlining to of XXXX, consolidating third headcount commencing business, program structure including adjust cost our our to begin and space. the benefit In a reductions, additional continue we office costly sponsorships, advertising to cutting

efforts are and reduction beginning cost been flow bottom of Our to result have the judicious our line. to strategy the

estate representing real of to On reduced and commission expenses, of a year restructuring, brokerage XX.X%. Compared segment ago quarter expense the by $X.X million decline excluding third period, XXXX, its operating in our the real of quarter our and decline its compared a operating second representing XXXX, of segment to commission excluding the sequential basis, X.X%. brokerage expense $X.X million quarter expenses, estate reduced a this restructuring, by

impact will without Douglas the of Elliman cost nimble the to a experience. impacting create more continue expect We significantly reduction agent efforts our

to retention are attract proud at rate stands continue that share We we and agent our talent. the to industry's best XX%,

strengths, to development share our and remain leveraging our Looking our capture ahead, by on agents continuing business. key focused market marketing include of world-class which we X,XXX network

the several especially foundation a and competitive a the available long-term business for as next value for close marketing of development transactions is years Our limited provides existing considering resale. creating inventory homes over advantage,

$X.X projects added and For were to transaction XX business marketing the months million months XXXX, $X.X of value, Florida gross the including value XXXX, in signed September XX market ended brought million XX, XX, ended in new September transaction our gross development alone. of

differentiated the us and strength long-term our underlying Douglas meet to summary, and business for current continues our believe and platform macroeconomic growth Elliman In positions challenges, success. of the we

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

Looking efficiencies, we to to our of are and happy on will addition expansion, questions. recruitment operational adoption continued solutions strategic that, of market brokers. With talent innovative answer focused empower be outstanding further ahead, to Operator? in we driving

Operator

[Operator Instructions] from first take with Dan our Jefferies. We'll question Fannon

Daniel Fannon

in be guess, footprint. there, there market more are well. Wanted markets or to Or subscale to doing be looking might areas up of just But environment, maybe of expand your on areas reevaluating type that your this in seems that take you exit? you're and of looking potentially the on, you're to Florida I terms share? follow Clearly, latter opposite to side, comments market

Howard Lorber

in performing well as markets obviously, had one they've being past, as there of Well, New the them. York are that not are

some is not It's going tax everyone markets buyers basically picked that for East probably I to everyone York in what's because interesting. of New has considerably. the and of the a one it Side. additional for was was up of market than which the not put uptown that's realtors of Although more California, downtown not-so-good It's tax really Upper much it's they a I California, the mean, the It's on is also But not on York. it's the of years hurting new But because going ago and sellers. okay. in in when now going think New terrible.

soft a So that market. is

good from good where also development good projects starting. it's And and market like a the into I On us almost when We up a up, that couple we'll to signed looked market new being market. at we've because there's a -- business have starting when in good of And or new we'd one a a of of we markets a think know side, signed development lot a go for have it's that's real them X. day Nashville. a say market, we

stay Vegas low with, is Las the okay. or tax doing states. no We're to trying surprise, tax no

the in to brokers. we We short there about I XX XXX have time, think -- have

signed have new couple projects development of up. We a

say. ones we've we're So have Florida, we just South -- Coast. Miami New on. we're on in that's We West all And a the Sarasota. of West I opened now, offices working a opened Coast the should new good. York, on Because couple of through bunch also

that a development doing there, well we're and So robust new is really marketplace.

helping. really So that's

Daniel Fannon

mentioned Okay. That's helpful. October year-over-year. improved receipts And then you

versus can that? months? here, look inventories, also So upon obviously, seeing as and in happening you expand been at recent November are any happening then you sustained has what And or change just in . here change October what's you

J. Kirkland

that home up was Dan, between evenly it's of and fairly our distributed XXXX, October existing X.X% receipts and development October were Bryant marketing. Kirkland. from about

feel about to really now environment. was... rate we mortgage that buyers that. your question next the then adjust interest And positive to think We are starting do So

Daniel Fannon

inventories signs are of whether some showing Just improvement. continued also -- showing similar

J. Kirkland

was there -- a that quarter. in That's been sign. We seller trend year, entire also the the view the a across been positive a third board, our XXXX as I was from quarter year. up continuing Last we're think obviously, seeing X% listing And strike. third inventory that has

where returning, that's opening we're is Now really will the positive And be term. this but long gradual, very up. the market on

Daniel Fannon

in Okay. And developed then development business just Great. -- the lastly, general. marketing just marketing

You picking prospectively, is a specifics. the there has is comments It talk that I you this that, you like quarter thinking is regions? guess, And/or, about up. guess any mentioned continued about I seems about think higher-level some aggregate versus momentum that and -- in year? can there sign is as next

Howard Lorber

a of all South And quite inventory. I I inventory, give shocked in has the think about, want resale they true were do projects the where the it. them. inventory sort the quick how in mean, the prices -- robust. fact new is the you that going I opened were If there's is it on the reason And of bit only we that's don't the and inventory Look, not asking of getting about Miami, pretty actually also examples, no in really you think development. so but But or it's -- to can part for biggest of I way we're all I to sold momentum. market we've brag, the Florida, Yes. that much

about And think speak realistically, people simple. pretty I I it's to when it,

don't is If close. you're upfront, you worried about you about don't development new good pay interest news rates, the

started cash probably you it's put the period You started time being to up building's having rates, lower built, it, ready and we And or now. would probably, which sitting X is years a with to interest years X of by it's that XX% end the over to you're you about going and -- usually, say, let's mortgage time XX% to are close, after X to deposits close. assume of we probably the X so, ready from if down when sales,

before. it going with X also to or at And price you're couldn't around, for the or years buy X inflation again you build bought own that something still that price again for you the couldn't --

of -- sort strong. interesting market way is is which that's one to an the that it, it's I So so think of look reasons at

Operator

Bhonsle take next with question BTIG. We'll from our Soham

Soham Bhonsle

understand. industry headlines. guess lawsuits unique one I some I on guess in business. cases, know class directly have you the are there on you're action of not first a in the that I in you I somewhat But some Leggett experience your position which commenting navigating guys

I that brought the there can going any So see your you brokerage cases is guess that the against And there just are you through are today? that? in from draw anything being parallels that industry experience

Howard Lorber

big the pretty We one a and that be the navigate to we're one, don't turns as long it obviously, other one want is last this. to hoping we mean, And comment really experience if it. have -- I that, we'd then experience out it happy. on help in last good did, going we as the us

Soham Bhonsle

it then of because business just And supply just service. more is of the going differentiator, up how how a can feels that right, for can the that definitely side, developers Okay. sense a and scale I you large much And then forward? like give development lack us new business you today? because that guess need on

J. Kirkland

Soham, question. that thanks for

conference We the been every business gradually back pipeline see we're last coming go growing you prior and the more throughout you giving do that over the can numbers into -- scripts year. year. quarter and So to has call

up billion And quarter million the currently many is other that So right about in -- doesn't excuse market. are to $XX coming pipeline have now, market. That $XX me. from about number last projects we billion, that's include that $XX.X on

billion in $XX.X So pipeline. the

Howard Lorber

some $XX billion it additional of just I you $XX give or South in info, probably And to think about billion is Florida.

J. Kirkland

That's about right.

Howard Lorber

South Yes. $XX billion Florida. billion in to $XX

Soham Bhonsle

sense the could any a there if Is should we I of sense over against is sort years? of start seems there next P&L, mean, that apply like get you right, the volume because, couple sort of... so pretty just -- into any And trickling when for there volume that way meaningful this

Howard Lorber

Yes. every usually answer coming, it's But is building permits think will you, delayed. BK. or to going for the when BK go But financing development. that. tell ahead, I we time Whether it's or it's

J. Kirkland

point has great to is And it Right. it I add will revenue a this that. business what I into -- know but X almost And it else that years. next building more don't come can Howard, so over on to residual. X It All said, the keeps gradual. being be and the about volume, becomes will it inertia

Soham Bhonsle

Yes. That's right.

here Okay. anniversary on message And repurchases. then share is of spin if the just even sort the market lot it's a with putting the uncertainty a to being that that. thought just ability to the plan lawsuits. an so sort to now the coming of I X-year gives to any unlock trading? up, know is But Obviously, in right is you place, of of of a given with send stock where there the sort

J. Kirkland

Yes.

spinoff. meets XX days quarter. make up confident years comes So every matters, a a are be Board from we you're on and That's deliberates Obviously, in Board now to these well very Board decision. the the the will X going decision. correct, It from the

Howard Lorber

we're detail surely going a about then great in Yes, decision. and talk it to make

Soham Bhonsle

to it be opportunities you Okay. lower And seems the then next on of few in rate like volumes, to we of hit And run operating a flat sort what's then Bryant. your Because higher over to transaction that but on can last just one, any run sort about just expenses quarters? probably On we're market ASP. going ballpark XXXX? commissions, just could a assume the rate good ex talk

there. anything yes, just So

J. Kirkland

we very expenses. And a we've long-term have the of judicious taking proud been we're because we're done on approach. we're because what And proud

million our $X million As general of and in and were That last commissions Howard type and in over just million XX mentioned restructuring quarter. excluding earlier, about down expenses in of advertising was and comprised the expenses operating another $X.X $X.X of versus personnel reduction $X.X have reduced the $XXX,XXX we sponsorships, year last employees year, million travel. costs, about

of about a quarterly made $X.X now $X.X some year are was quarter On full starting cuts been not the a mindful from of on $X.X and penny and And the wise and $XXX,XXX about personnel, earlier in by travel. million judiciously of quarter. second also million being not sequential that expenses on administration We've million, come experience. advertising the spending foolish, and cuts in on that basis, we lower and very were any pound to would impact where taking agent

So expense you million costs leases. occupancy one There's associated and $XX a year. the of know the on pure leases rent $XX just of costs with another about our is of million numbers, other big

XX.X% over see So nonactivity-based million [ our January runoff of million in $X about it running about million a to period. reduces of then, 'XX. $X.XX about start start And lease expenses. X-year of year. ], before that after Starting that's We'll expense $XX that we off

So...

Howard Lorber

really plan that used, to really have renew leases being offices. we and we to really is where it's any a basically location -- it's consolidate specific need it's unless Our other not and

J. Kirkland

obviously, we that. when not just pure will And doing give we Right. that's save numbers, our expense. by those what That's

Soham Bhonsle

is should those to would on so rate, really like that But over here personnel on you the So sort on. next and line few see just of items stay then the side, where we is run from flat understand, sort the fair, quarters? of assume rent decline

J. Kirkland

achieve stay our analyze the hopeful we're forward across I and we mean to We're that expenses board. continue more but can tuned. going expenses evaluating the we'll savings,

Operator

Elliman this Douglas will good quarterly are hope gentlemen, of a day, have -- questions for on call. our joining you and we you We Thank conclude have no those call. earnings are there today. ladies the the And that and us all for conference

Howard Lorber

you. Thank

J. Kirkland

Bye.

Douglas Elliman (DOUG) 8 Nov 232023 Q3 Earnings call transcript