Douglas Elliman (DOUG) 8 Aug 232023 Q2 Earnings call transcript

Welcome to Douglas Elliman's Second 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 An archived version of the webcast will be available on the Investor Relations section of the company's Web site located at investors.elliman.com for one year.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, income to which Relations of EBITDA the contained the adjusted section earnings company's has the to adjusted are net in Investor Reconciliations site. Web been posted

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

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

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

On as estate. for and morning of in environment real the trends months Elliman's presented first numbers of thoughts six today's otherwise second XXXX, financial results and discuss will unless we as the current be stated. quarter our residential on operating XX, call, this as June All well Douglas will XXXX,

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

the ended June months results XX, three Starting for first financial Douglas with Elliman's XXXX.

past many in stable market. luxury of We estate current are second in competitors this residential the outperform challenging of Douglas are where attribute buyers unwavering to development its during U.S. to that We and pressures, the XXXX, of markets, by our XX backdrop advantage pleased discuss continued Elliman rate quarter months the pricing even provided real industry-wide world-class which the detail these our Douglas I'll competitive in the Elliman's our marketing strong headwinds, shortly. more of Still, over further agents. immune reflect results to interest business dedication the

Douglas reported Elliman to was compared million, period. of of in $XX.X second income diluted XXXX, or per period. $XXX.X second million XXXX the the $XXX.X for compared Douglas the or diluted to to XXXX revenues, in quarter million In share, $X.XX share, net quarter Elliman attributed the in per loss $X.XX million, $X.X Net

Adjusted Elliman of quarter period. the income of was Douglas EBITDA XXXX attributed million the of to in loss compared million $X.X a XXXX, in second $XX.X to

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

was Douglas compared million, $X.X loss or million, estate XXXX net million period. Douglas $XX.X to in segment attributed of quarter quarter Elliman was share, XXXX, or quarter, in to of of net adjusted to attributed the the real the income the Elliman's $X.X brokerage $X.XX second per million Adjusted second $X.XX EBITDA XXXX. to Adjusted in second share, $X.X per compared in

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

of Adjusted $XX.X $XX.X of the attributed period. compared in a for million, EBITDA Douglas loss XXXX to was period the X-month Elliman million income to

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

million, compared was Douglas to million X-month to to in income Adjusted $X.XX in or Adjusted Elliman's the estate of share, segment period. million period, share, brokerage per real per of XXXX XXXX of X-month XXXX to or period, $XX.X EBITDA $XX.X was the attributed period. $X.XX net Elliman Douglas loss in the $XX.X in a income million, $XX.X attributed compared the adjusted loss net

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

have calls, We're of of the created we is sharp to mentioned our industry rates, impact a difficult in which in continue due industry-wide has luxury year been cycle results XXXX. and these challenges cyclical markets the the on our the shortages and inventory As second mortgage half increases we previous part listing sustained to to have last serve. in expecting

touched in we we quarter, are on some by are last trends encouraged However, we improvements as seeing.

second agents and XXXX. first, and second $X.XX We of the expertise million markets our quarterly we this our the the quarter as validates per of broadly. highest average the at Specifically, average since improvement markets sales as transaction luxury well stability believe remained was serve for the of more luxury the strong price the both quarter

as Douglas buyers reliant. we which mortgage a are in less to before, the As have markets stated operates luxury Elliman emerge from markets the are cycle first down usually

life and buyers gradually interest to require inventory to expect expectations as We sellers higher increase sellers ease to and tight listings and pricing adjust adjust traditional milestones the consumers of also to supply rates, transact.

continue improvement and operating financial to our sequential see results. Second, in we

adjusted home. quarter results quarters XXXX results the number transactions revenue And and from previous our in terms selling gross and XXXX transaction previous from quarters average second terms income, price operating showed of value. Our three EBITDA, improvement improved second of in the of two per quarter

XXXX. in quarter quarter We compared with quarters listings listings quarter XXXX, have XX% the listings quarter for first up up second XXXX of and fourth compared also seen the first sequential second and XX% to of first the total of improvements to

revenues quarter fourth the this for of sign an XXXX. of to encouraging months, Given three to the listings is usually nine conversion takes

positioned our balance position cost history is successfully ample Douglas Douglas liquidity We managing and conditions. continues to and of which reduction as no with strategy, a with to market Elliman overhead to conditions. us equivalents profitability our business Elliman's approximately debt, $XXX Importantly, scaling due share, to strong maintain advantage competitive near-term of we brokerage core entering and This believe expenses to challenges. per well various also sheet flexibility us navigate long industry markets. our $X.XX when our new financial million, cash common in expanding underscores as liquidity various provides and strong provide cash or market well adjust

our of dividend XXXX. quarter will our XX, the the cash In and returns. dividend dividend of us decision share believe made on to our sheet balance deliver strengthen second of suspend Board XXXX, position on an the stockholder stock per paid quarterly long-term stock annual declare was our updated and policy common June X%, We which $X.XX to

make to adjust cost fit a strategy, efforts consolidating business, our to half our XX more, first to continued structure including advertising costly to of commencing program by cost space. the office reduction cutting in Related sponsorships, to and head our streamlining positions, begin count XXXX, reducing we thoughtful approximately

reduced two As real a of two segment efforts, its estate categories. quarter by real $X.X first support categories. brokerage and second administrative estate and $X $X.X XXXX, of expenses comparing the million, general these operations expenses result of or the of support quarter the On when the our its X.X% million by million, expenses the and general to from second XXXX its X.X% million reduced $X.X by sequential of and basis, a brokerage operations its and of administrative expenses quarter by segment and XXXX, our

the to and and markets. nimble in impacting opportunities more make see actions experience. will luxury We continue create Douglas firmly our and Elliman believe expect a these significant the These about reduction financial the us solid impact without we cost efforts encouraging of profile optimistic our significantly agent Elliman our trends growth Douglas

our to continuing on XX% include teams some focused individuals. most strong We importantly, by very our capture of include, relationships remain retention We which key our most and leveraging remain market of industry's proud X,XXX with agents, network our global and strengths, first rate. the outstanding our agent and share celebrated will

of especially marketing Our limited provides preeminent existing a the advantage, competitive resale. Douglas homes Elliman for also development considering available inventory business

the June XX, This marketing brought years. XXXX, added gross value months over value, long-term gross $X.X XX, billion value June transactions several $X.X in to business market the provide For will of ended the and months including transaction close XXXX, foundation of ended a in alone. signed Florida transaction and our a these XX billion as create next XX development

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

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

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

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

the questions. do you Operator, any Operator, please for audience? questions open from have

me? Excuse

-- They're difficulties. trying Howard, there appear to to the admin operator. be reach technical

or a minute We'll give wait. of We'll a it Okay. couple minutes.

Fannon from ask Jefferies, please question. Dan your

open. is line Your

Can me? you hear

Yes.

Great.

region. bit hoping to was color of current more on maybe little I some So, by the just a get environment,

of the being You Obviously, still number talked up. new there. to starting price in also average is about holding sales pick low, listings but

if as think you the in there's you So, where well differences about some today Florida, Northeast of if any terms could about your activity? pockets maybe obviously, talk the as a of strengths within, you have as bit just the presence

Upper -- speak well the years, has brokers of the of of end New last markets weaker end New -- in to but which What I still I Well, York parts traditionally Florida. certain quite downtown. predominantly of doing close Florida and see higher sure, is are are The is were see the yet. two the -- New market overtaking the York for The right over doing in York, came our that lower what The well. now, York, couple day. better not every biggest sort we markets markets. Side East New in And

has changed. that So,

business. much like pretty was go by very there week, In the we week South last business. is We week strong and see, Florida, story week that for Florida, is instance,

well. Our new very is doing development

around to for numbers, well. Florida just price as in at over the of not Maybe million started average sales I'm and Just as we about, one are ago. about our high very XXst Florida. which Miami is quick talking sold, well. developments the Avenue. particular give $XXX we selling some new they're months seven on project an Most as in selling Beach, Collins of And on ocean Xs, It's of the but recently, strong one Street you

and Houston We're Texas, couple developments forward. Austin, now but Dallas pick there. up new we've now pretty is we're Our business in in new still move to also we of started to there, starting where a opened

market, slow California other tough now. businesses. never XXXX, I'd It's year will done one probably they -- picked all But that happen right Other is this say, other loved, a is again, a then. we've while. and for been up now the we things than

know, we there you an company have As escrow forth. so and

up pick new to big do And so to up We're development ancillary It's new Nevada. in -- a things some new us, that need Las in trying -- Vegas office signing the revenue. is we're there. pretty to of we Summerlin. new close for

one. We this one, will be the second have

Some entered. the way until other markets don't season. new small. of the for That's the market a us Nantucket, much and low-cost the end of know are really you we

Our during the be low tax tax considering times, these Nashville. Boston And at is markets. business One think that has place at other we to been is We're or are looked no of best to And couple with a increasing. trying the states. especially we've but that's times. we all -- stay

new activity aren't seasonality, the think think short you the that And about given the this you listings the in into do and year here in you point I back of 'XX, get material where sit better, second any just the of you half, the and starting expecting on term you versus at in -- year. to That's think at activity of the in helpful. look -- we that then first terms half seen terms are Is typically you've know bottom then and half the but there lows of and kind -- as as recovery do level? Great.

the best going that I been? of second would have a hope so. we're what half traditionally, Traditionally We're better quarter -- hopeful year. it BK, very the has that to is I'll way. put it

and to goes fourth it is quarter Traditionally, and generally the and quarter the best first third quarters then quarter weakest. are the second then the the

and people Yes. That's because forth of and holiday so traveling. times

we're we're a hopeful closing So, to very year. good for hoping, the

items. Okay. out expense been appreciate then I -- that of on that the have the numbers And cost, the some taken just

some planned exit flow-through So, from out XQ exit an into they're run of just be expense the might base think rate had in about of what meaning is or as and the we there level, think the the also XQ. timing as still, we XQ, you about majority just of that that or

So, looks fixed the just what good trying to starting point like. base get of of a cost kind

where say we the BK this. tell will that, but I you let are in I'll numbers

at We to that we BK, obviously we cost want are things would careful that be be detrimental -- looking don't constantly have But cutting. to to agents. cut you the

Both you Howard, Yes. and correctly. said Dan it

see now are year-over-year, continue which in cost-cutting segment, million phase. administrative continue leases we be think and and year. operations at we and And the going enter entering expenses have are for support. I will Howard run we And to that's be call, 'XX of we think the to cost more there would we the hit and the lower. general rest on -- We reductions key will we forward. about down will during a going expiring, as brokerage $X.X have We under expect rate that which were looking our as two would mentioned

space, yes. one a located, leases big on that's lease. I working was expensive going of -- those expensive smaller, and lease and company, expensive a very over is in less quarter And that have getting quarter already we're or change second a year. as the we very to the be is And that was management lease, Yes, next we've that believe our substantial of first our lease, done.

impact Yes. not have luxury have had in experience. our a not to And many it's competitors had agent that that we balance cutting have such sheet very of cost think note strong we and Howard, been a because I deliberate this to we've the important

Yes.

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