Douglas Elliman (DOUG) 10 Mar 232022 Q4 Earnings call transcript

Welcome to Douglas Elements Inc.'s Fourth Quarter 2022 Earnings Conference Call. The 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 An archived version of the webcast will be available on the Investor Relations section of the company's website located at investors.element.com for one year.

During the 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, income to which Relations of EBITDA the contained the adjusted section earnings company's have the to adjusted are net in Investor Reconciliations website. been posted

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

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

joining in Lampen, trends today's are me our luxury Douglas year this XXXX, our Kirkland, Elliman stated. XX, for us. residential in Durkin, Officer; performance and Bryant Douglas discuss XXXX, three of estate Elliman's Good With our On Chief and as ended Operating and All December brokerage morning, Richard call, Financial Officer; President unless will Realty, numbers and be real our the Scott thank for today residential Chief of morning markets. presented and months CEO we December you results XX, financial estate, will otherwise business. real

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

and to transaction of discussing the operating National in transaction trends, Douglas are in for real environment peak volume volume the respectively. with by we Despite by XX% current XX% home industry in residential Elliman residential transaction and sales existing approximately declining the a each of Douglas that these than to volume well XX%, by is value significant with more XXXX, Realtors. report Elliman believe and industry outperformed gross according the to Association declining estate proud begin positioned. why the and headwinds estate, I we would After XXXX, like XXXX, faced generational real reaching

declines in luxury in increases and interest mortgage volatility are shortages driven These in in active. were markets we markets rates, financial inventory the which by significant listing

However, borrowing reluctant luxury the from lower costs, in available part because market remain obtained mortgage homeowners with prices increases supply in Sudden rates entering their past several of the remain the as limited to stable. housing inventory constrained markets, years. over

ahead, to as gradually sellers expectations tight higher interest consumers passes and to continue Looking we the believe supply ease will adjust time accordingly. adjust rates and price

leveraging outstanding our our our agents. agent agent some XXXX, and our increased with of remain of Importantly, significant ends. including in the luxury key these proud our to the by count which most We last residential cycle strengths, network relationships by most share will And retention importantly, positioned growth real enter believe see market we and markets to markets markets estate, a uncertainty be Therefore, well in include the first we and individuals, XX% market opportunities Douglas and usually very we cycle celebrated in XXX teams rate. subsides. the when markets global down and first luxury when almost outstanding in Elliman's are to capture industry's emerge agents markets

operate $X.X join to will of we are the close California, provide Elliman the XXXX, This York, Douglas Elliman and several transaction incentive In transactions years. our and We proud over to value business for provides also Florida, development Massachusetts gross marketing to New preeminent these added value an agents in business next as marketing our long-term development team. business. world-class billion which Texas,

venture Vegas, as annual Beach, available markets our to the growth XXXX, Dallas approach Beach New represent is strength as Vero Vedra exciting the expand opportunities next and market and well of as markets the Our are of Ponte expansion Beach gross transaction our markets D.C. part such entered we with share critical and Douglas In gains proposition. along Newport These Elliman markets our Colorado. growing Basil, to in Las a $XX and And existing Canyon, value. tucked total approximately footprint. our billion

we designed to applications and advantage Douglas profile to And and remains provide expand, technology agents distinct approach expand. financial in business. will component to with these competitive agents our enhancements provide As embrace productivity to critical increase a state-of-the-art and our their will technology Elliman's continue flexibility recruiting.

and liquidity December debt. of of of strong $XXX our XXXX, equivalents cash and consisted XX, million no As cash long-term

balance adjust Douglas ability Elliman's and to underscores long our sheet history of conditions. various strong Our to profitability market

business advantage brokerage as Our liquidity well with a when to our competitive entering our scale expenses grow as core overhead provides us markets. new

expenses. of stewardship our to Turning

As you across we aware, regions. successfully in XXXX, enterprise-wide expenses reduced our based are nonactivity

monitor to we network during also our continue investments support in made as XXXX, well and opportunistic expenses these as infrastructure. we While agents for XXXX technology our

industry provide these increased believe we from While additional experience, is taking management this Elliman's of total will better we Douglas the impacting to decades stockholders. Leveraging position to expenses service steps investments agents. future estate the Elliman value 'XX, for 'XX Douglas to real long-term level for team our provide without

to network, XXXX, to senior half and head position, and space, by new second have we position process of consolidating count. have have implemented will any which attrition, the add event expenses and the For far, meaningful rent office we of more reduced require normal we example, In begin reduce that will XXXX. of expect to advertising during an in for begun a in thus reduce frozen streamlined policies and serve our opportunity sponsorships approval the hiring, agent XXXX

Douglas Elliman. these believe a that We changes in will result nimbler

ended to results financial in Elliman million the $XXX.X Net Douglas months Now compared reported the returning compared to $X.XX to quarter. Douglas income share was X $XXX XXXX. X per loss $XX.X attributed XXXX revenues diluted or the months or in of Elliman's $X.XX for quarterly million ended Elliman XX, for share the December Douglas diluted net period. in million XXXX $XX.X million per to

of Douglas in million of to $XX.X company Elliman in operating million public loss Other the was its XXXX, following estate Expenses began the by segment. segment, a reported stand-alone and operations incurred of businesses as brokerage income a real and period. Vector attributed to spin-off from compared $XX.X reported EBITDA Adjusted public quarterly Group. XXXX Douglas Elliman the our our operations are company our brokerage in Corporate are in

operating our of purposes, brokered reported $XX.X compared in comparison segment estate the income loss million million real For operating period. $XX.X of an in XXXX XXXX quarterly to

of per $XX.X or our the XXXX in to attributed in brokerage loss loss anticipate that EBITDA the net $XX.X quarterly quarterly for XXXX million We to the share a XXXX compared was Douglas share the period. per of declines. $XX.X of the of attributed income million Adjusted reflect Adjusted period. million the to trends real $X.XX adjusted period segment significant was estate XXXX income in quarter results Elliman compared net $XX.X to same year-over-year of or first million $X.XX will

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

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

long-term Douglas summary, our weathered us for Elliman In challenges believe the XXXX, of and macroeconomic growth. we platform positions differentiated

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

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

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

be questions. With that, answer to will we happy

Operator?

from comes Fannon of the Please Jefferies LLC. line [Operator Daniel first Instructions] from Our question proceed.

follow up to just around the on of the environment. Wanted current comments

to your that be think prepared you similar said in I remarks XQ. would XQ

you some across the delineation be looking change more little regions worse, might things would better more could there's or maybe that expand So that upon a inventory, there helpful. any or hoping if is geographies, where or areas activity? guess be maybe I

Sure.

even Manhattan, before because I the that but in performance think when years you to York, has New especially best, pandemic. probably the subpar of it has look performed that's

XXXX, are to XXXX realistically right better Probably I a the before as camping, comparisons towards 'XX, the comparison is comparison. 'XX, 'XX. really good the So years said, not

is City comparison Manhattan, strong. when So York do a there, you looking pretty New

new the Again, in of now I tremendously little think The new new has number very up markets market and that. doing why Aspen, with The the which we up are projects. markets That's said inventory down fact degree. in as issue a I there or is real that many inventory. place strong are went development development. small signed to inventory is other very is Aspen development have new such that we're as the we reasons projects come The are well. And a there's for only XXXX,

hope about happening. that project, the people X all, selling And finished that and development X-year be project when until start lower around you is of interest rates, generally of gives are mortgage time will years time. during closings period of new period First also that to a it's the rates that

market the -- is producing inventory. that's new most why why that’s So the

into find to same buy. because do, if worried up much As they to we environment. selling are today low they they people said, mortgage going higher be rate they're at else rate to what mortgage And something be and a giving have not time, may even then, able going about a the

to wanted sheet. follow just up balance the on I

where mentioned change then lot given a have said stock Thinking, think on obviously, You buyback you million. And you I is, potentially? dividend, just there's looking but in the heard thoughts cash, $XXX at correct, of the any the also you cash. I a if if

a around lose in is the much. quarter-over-quarter, million change $XX quarter. didn't of So CapEx don't that know, that's I there lot

as and how uses the forward? think going curious we about cash should of Just that

want do through go that? to B.K., you

in which million. addition Well, $X loss, quarter, is dividend to pay EBITDA we about the every a also the

do if that think with working the reconciles you I change. along cash So capital, that,

internal buyback. It was our

October. of Yes. in repayment million $X there a was debt

of other or buyback, uses the And cash Okay. perspective.

internal our stock as until limited the we'll from Vector back buyback ability spun the X is always company, Group get And -- end of years off that that, to we because spinoff. at and we the of opportunistic. far after perspective be were As buy somewhat XXXX, past

view one buying and of And you're value the the the the this Elliman. seen because names as Douglas bought a real we always year. over stock best insiders estate You've last very good in have

proactively of announced a know through reduced expenses, you amount then that a way office it's space. to is the going frozen consolidated around year, And hiring, but those dollar And the around put all some in to I -- the initiatives? the initiatives sponsor, there come later

Well, for mean, really you offices. when that leases years and why anymore. instance, side. an large certain amount expire, for that of we with look, do need I eliminated And we okay? we know of really we year think first moment. marketing leases that expenses our next we on stuck and give couple this the we space in particular know yes, and I of that's be really that do What expenses will been reductions don't somewhat this don't believe, many with show the event could exact at on year have is And the consolidation years they're we've that some

those numbers help think year, big I to will to and over And where year really be. that a our start we more happening, this will they when consolidations in with line so next getting which be want

quarter? just lastly, for you XX% out year? that the the is retention an think full And another fourth that rate. I for Or threw then was Was number -- the

year. Full

And change much that did XQ? in

the trailing I No, XX% it September at XX, the -- months that was XXXX, stable. Dan. for September was XX believe in -- XX

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