DOUG - Earnings call 4 2023 | Douglas Elliman Inc.

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Operator

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 An archived version of the webcast will be available on the Investor Relations section of the company's website located at investors.elliman.com for 1 year.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

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

Howard 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

turning brokerage Before litigation real we residential the reference the in other to estate Sitzer/Burnett want and ongoing resulting financial industry. to results,

Given to outcomes. this going are we potential or comment is litigation, to active speak not

of these also nationally, Elliman more to centralize XXXX. The to We the Sitzer/Burnett before hear defendant. plaintiffs the decline judicial questions Since March its aware of those been answer currently lawsuits ], The are and these a on us is XX, to [ will one the of as seeking federal of matter panel involve verdict subsidiaries than Missouri. presided judge certain on the or in trial over who have intend cases Douglas XX matters. filed which that X actions

in by reviewing on it that believe cases companies. to has commissions, we of other will are the pending the years a litigate Justice have buyers industry and reached against Douglas in stages and will weighing In We likely addition, them. brought. broker the on take that been is still lawsuits, intend Elliman the number of challenge defending Department settlements very we currently free practices understand including which to or merit, trial early by and setting lack is motions

enormously As fourth that the of the we in estate out was brokerage share we Elliman Douglas most are begin discuss the named to United recently trusted quarter proud performance, our real to firm America's States we to the is commitment a Lifestory hard accomplishment agents This of world-class trusted most the across our series by serve. testament clients tremendous to work and markets their Research. unwavering our

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

forurth that Elliman results. many that industry-wide are of of Douglas XXXX in ongoing peers quarter We to its impact pleased outperform continued headwinds the despite

markets factors: stable world-class buyers advantage by sensitive to X strong solid are our our attribute in and Douglas our the We competitive interest to less performance development where provided luxury marketing pricing business and rate agents. Elliman's pressures,

period. quarter $XX.X diluted million the $XX.X in EBITDA Elliman the share loss attributed $XXX.X Adjusted $X.XX quarter to Net attributed share million compared of Elliman period. in the quarter to the the of quarter Douglas in compared was to for compared $XX.X to per For $XX.X fourth Elliman million million $X.XX million fourth $XXX.X million to per XXXX reported in or XXXX, the fourth fourth Douglas a of diluted or in Douglas were XXXX XXXX. revenues loss

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

Elliman's or Adjusted $X.XX turning $XX.X XX, loss income XX, per billion attributed Elliman million attributed the diluted year $X.XX results December share to to in million compared XXXX. 'XX. Now Douglas to XXXX, Douglas to share of or compared $X.XX diluted Douglas was Elliman for Net year ended XXXX. in were million per compared to million ended a to in the $XX.X $X.X $XX year XXXX. Douglas of December EBITDA for in million reported revenues loss $XXX Elliman

XXXX. of million an Our segment loss real of real EBITDA loss reported the to million Elliman brokerage of was $XX.X XXXX. attributed $XX.X Douglas million to loss in the Adjusted per net $X.XX to to $X.XX of to estate year brokers the in income a for $XX income million operating have estate $XX.X compared operating million year were per Adjusted compared attributed $X.X in for compared $XX.X or or share share million XXXX.

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

luxury resulted discussed We Generationally, of transactions this time. during shortages rates almost cyclical lower listing in high have the significantly across have previously for inventory X mortgage markets our sustained These years. our driven nature industry. shortages have

remain While by results the fourth XXXX we of continue specifically. expect these our to XXXX, industry-wide will for improvements the quarter challenges we quarter first encouraged of impact in

this XXXX. trend is market of markets particularly interest increase February downturn. activity commission XXXX first We from January adjust higher has rates. strongest receipts our believe emerge year-over-year The markets continued by have first the first quarterly the markets as to to to is Florida. year-over-year the the higher since tend a in beginning quarter across This to improved be fourth driven that which Generally, the we quarter on and in XXXX in in signals a saw revenues of basis our serve,

buyers the it Reserve is shift Nonetheless, interest January cutting are toward rates. after that a fairly Federal signaled nearing encouraged long-awaited in

the Colorado, of XXXX. in Because listings California, expect in in XXXX. we when of in Importantly, impact total from improved period, begin of we the York that fourth compared up half revenues second reported of volume listing quarter Florida, and sales XX% volume also see with listing quarter fourth significantly increasing recognize XXXX to increased the the New will gains XXXX closes, the we the to all

transaction volume billion and from best is reflects markets compared reputation luxury transactions, quarter real the XXXX. well finest as gross XXXX the believe Our as operate approximately fourth client fourth average we our the in XXXX managing XXXX of the Douglas experience transaction strategy, increased consistency transaction quarter near-term increased in challenges. financial This various quarter successfully with flat and Douglas of solid conditions. We of sales our Elliman's reduction the of billion in $X.X fourth fourth increase the in quarter. history well Douglas quarter price the industry industry remained an X.X% positioned value and of average Elliman's to price $X.X per in of the to Consistent was market million third in strong profitability offering position in transaction fourth long the for in navigate to our cost to underscores strength quarter. $X.XX and and balance Elliman sheet estate. Due per properties the

our costly Throughout our streamlining sponsorships, consolidated structure program liquidity $X.XX commencing equivalents the per We with or adjust including cost fit maintained of advertising additional debt. a office share to and continued million $XXX to ample zero and to year, common space. cash better reductions, approximately we cutting a business, have and cash have headcount

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

year of experience. brokerage quarter $X.X segment expense, representing a to XXXX, Our million agent fourth of X.X% We including period. restructuring efforts real decline create expenses, non-case expenses impacting estate these Douglas operating in Elliman significantly reduced compared approximately will more the the nimble by believe its prior without commission and to other the continue a

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

strengths, market Looking ahead, on transactions development our especially agents the home to including our provides capture at continuing advantage foundation leveraging we by ] creating our business. inventory network and [ is next focused and marketing believe available. share a years the residences limited of of development marketing a the close several key world-class remain business We value as sales for considering XX and competitive over particularly premium long-term our

projects value development active this marketing market and gross believe transaction $XX.X transaction value, billion is projects come our to an of value bodes our well new close to of years. of these as billion the Further, and they we Florida from business in in future additional December $XX.X as year. marketing next of As transaction commission including had development scheduled XX, signed of XXXX, from in income gross We the $X.X billion will recognize business pipeline coming alone. for the

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

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

Looking empower to ahead, recruitment on our operational to expansion, and focused solutions outstanding are in continued brokers. efficiencies, strategic innovative of addition market adoption we further of driving talent

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

Operator

take question Bhonsle. first Instructions] our [Operator We'll Soham from

Soham Bhonsle

me? all you hear Can

Howard Lorber

Yes, yes.

Now we can.

Soham Bhonsle

Great. Hope you're doing well.

taken great. But compared market the So share where which the at row to every some in either. is this quarter not in market today in I U.S. you're like national looks least you've a the second stats, in know

about market well? local share Or we the your guess a you of I think the here? a markets markets So should as of this more outperforming national sort of are seeing just sort question of function end is, take level on

Howard Lorber

the we've to anywhere our We're say and would we to more interested brokers stuck better. markets on what high-end that's And much single markets, average I is not they going pretty -- just that, have going generally be but price high-end a an don't the to the that do to sales. perform say have to more in we have the markets, expansion be why same. near market going speaking,

So we right strategy the is company. think for our this that

Soham Bhonsle

it. Got

points like And split was basis of looks Okay. up quarter. your commission last ballpark another this in XXX It quarter. was same sort the it

today? of Are just just of this mix? for a should you increase to sort the trend maybe seeing can function to is we of continue? the that speak So you And competition more expect there? drivers agents Or

Howard Lorber

been Well, at probably competition. times, And has agents back I years, and guess at will think be this And and years. down this a And come that my are it's sort positive hard trading sign as better you on now of level Companies that a about the up it's when better that increases. will least for of that It's there's market bonuses slowed of maybe things particular splits. number say down. And mentioned. are the those they cash lot it's I will doing for been something X Surely, that think they're on these it giving you've -- not going new forth. both X higher to or point. and and down brokers come at take improves would that is agent and lower but mediate we'll because given, so many and help back already forth, I

Soham Bhonsle

line Okay. run G&A Bryant, Was higher expenses, in call it Understood. ex-commissions then, items was operating think there? on any sort XXXX? total the how a quarterly just looks onetime we to little And should out the And rate like for the OpEx there about then of quarter-over-quarter.

J. Kirkland

You're higher. correct, the line was G&A

quarter. timing quarter as of was obviously, events in and related of an we third increase that professional particularly and insurance expenses, the the there the fourth sponsor as that to Some quarter between also, fees relates well during to

are, we in making particular, would cuts forward, we making about be those lease business. XXXX. In of our are and say a discussed in we running in are to calls cuts over where we've addition we division $X prior other expect Going million meaningful cuts like meaningful going that, our to of And the we more but management the some property to in areas to go off.

Soham Bhonsle

lastly, is right? call? Scott He is Got the just it. on And then Hello?

sort with feel for to a all they good guess, wondering, where you may today? Scott one's I going whatever environment maybe just guys us This of Howard. come feel adapting Scott, conversations are like Is agents there Or do agents around just you I concern today? uncertain for give just like about a ahead? daily. speak or you to Can feel

Howard Lorber

Yes.

still, is markets a that's -- $XXX,XXX market. transaction. what I litigation. we on I a still a Long of agents a the And end, that, but the ahead. will lower great said, in is averages end But lower are sales. think I comment whole compared But $XXX,XXX have group really markets a that very come that adapting course, that assume, as not started are high to to at to company most about country. the to market high of we're ever look, feel -- have high-end the high-end where going Island we per of I -- do them Like probably

So it's market. not extremely the low

not I the are that of a been think cut rate quarter, disappointment anyway happy us or the going for is I have going first agents guess But I hopefully second that quarter think little But happen to think in that be thought the industry. happens, I will that be because great doing now think there's obviously a which it's most once well. now. boom I to we which the that

Operator

Jefferies. go We'll Mehri with next, Ahmed

Ahmed Mehri

volume year? from my and you question hoping some seeing this comps could share to was just first of the on is there when This I in macro guess Ahmed environment. you're is Jefferies. start what terms color accelerate about I

Howard Lorber

about So you're competitors? our compared talking to

Ahmed Mehri

like call year-over-year? like, of terms in No,

Howard Lorber

lack -- low Yes, tax obviously inventory again, markets, most markets in of a and the year-over-year, states. in there's especially strong -- have we

the -- And now great -- strong like generally market. pretty to believe, I the upside that's come X that, cut a Elliman. will doing there rate and part strong that, -- and push at there business the our once substantially down, development have business offices. more that We and key Texas, a be a very markets great and new more market, Douglas lot Texas. of very still end in we So And a we new business we a is of speaking, as rates a there's is we're have have -- will substantially high into

Texas. Austin, We and they another Houston, so Dallas we're at in maybe market looking and or have

tax So in. pretty expand states We're looking no looking also to we or that's a to a think great market basis. low tax but on it markets, at other be we're at the much macro

Ahmed Mehri

better a the just if or expand maybe color which it. Got little demand maybe what you Actually, more markets you're great more on market. could seeing That's about? markets on are concerned

J. Kirkland

Yes.

Howard Lorber

we're California that And is what are a And taxes. people difficult, more also payouts commission taxing the We're think adding I had that to it's was that the Very always because tough. ones state keep mean than brokers Well, California states. but the East -- difficult they pretty their are Coast. of I ones California, concerned about out very in okay? higher

one. So tough that's a

in. I that think that's the probably toughest markets of the we're

want I BK, think that do I think think -- -- I But look, comment? -- you to

J. Kirkland

to. happy be I'll Yes,

is as is their think I one permeating throughout population. the in our brand part country story about luxury shifts the our

the If year. from you this -- from of revenues. market of -- at look our they last XX% fourth the markets, XX% XX% Florida, California XX.X% increased quarter to new alone went XX% of total Florida to revenues in to year

a a in So Florida. demand to we And that continuing was see strong increase. of are significant lot

Howard in that As in earlier, inventory there's have mentioned that selling $XX.X we currently development we're billion marketing.

Howard Lorber

of backlog to the be will on And others coming that the market.

J. Kirkland

$X.X that million Howard. believe, And is I Florida, in -- billion, Yes. number $X.X

Ahmed Mehri

one Got just last me. it. one then And That's helpful. for

this business. -- so you cash couldn't I I guess I Could the and just -- but on development apologies of -- that? what's timing on explain understand find trying if filings, like again of, recognition to like guess, your of really your revenues Just maybe I missed

Howard Lorber

BK?

J. Kirkland

I'll to Yes. be that. take happy

deferred generally, a a development as cost. the And deferred a marketing, that record as that is cost deposit So our in to recognize liability paid when received the agent we we -- or commission we as revenue.

close So to because development when that the have a we do start new under occurs met not rules, been all recognize sell. close sale until profit units on accounting items to the

So was recognized. that's when revenue

that paid X million about generally, about time, I The on believe liability deferred the on number and recognized costs be $XX a deferred commissions is million. $XX $XX is related over difference will million the is we years. the the next there of books. to So

Howard Lorber

going new And other on to resales. are development -- the sales less our this is help margins. regular Missions than

J. Kirkland

a gave only market that Florida I $X.X year $X.X billion. Coming Yes. to billion. is development earlier. of number is this

Howard Lorber

That's market. not the on what's including already

J. Kirkland

correct. That's

Howard Lorber

yet. closed It hasn't

Operator

questions our for the that will those on and day, you us call. gentlemen, Thank conclude have are conference today. have call. Elliman's We quarterly for earnings this Douglas a and Ladies good all joining we you hope

Douglas Elliman (DOUG) 1 Mar 242023 Q4 Earnings call transcript