Douglas Elliman (DOUG) 8 Aug 242024 Q2 Earnings call transcript

Welcome to Douglas Elliman Second Quarter 2024 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 An archived version of the webcast will be available on the Investor Relations section of the company's website located at investors.element.com for 1 year.

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

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

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

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

today's operating results will X XXXX. residential business. we ended June discuss real financial Elliman's call, Douglas XX, current On the for X and months brokerage estate and Our the environment

numbers be June otherwise XXXX, unless as this will All XX, stated. of morning presented

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

turn to an on I matters. want our to update begin with results, certain I Before

to pleased management growth leading received credit-focused First, firm. XXXX, we alternative Kennedy Lewis, in July were a million asset from $XX have investment a

to as collaborate tapping forward believe network We we expansion, and long-term and Kennedy this positions us into the to Lewis base growth we look stockholder for and strategic knowledge value. of drive

will estate to class which also litigation our of seller settlement were fees in action pending other Second, similar of June real to the we receive litigation. result preliminary approval pleased court XXXX, relating pending brokerage

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

in across quarters, previous resulted for luxury markets These lower shortages this time. than our discussed have transaction As inventory shortages during generationally X high have years. significantly volumes sustained more rates listing driven interest in

remain challenges encouraged will results, continue by expect to we improvements. impact these While industry-wide we recent

X% respectively. second prior revenues average July X%, July home cash and approximately to daily values gross from XX% compared in by and quarter existing our transaction increased Further, sales the by increased from First, approximately year period XXXX. receipts

trend This rates. October evidence XXXX. market's gradual is higher the of believe began to We this continues adjustment a in that interest

Second, in we see to development platform competitors. momentum Elliman business, differentiates continue from marketing Douglas a our that our

benefit Elliman clients. Through with employs industry tandem residential and extensive model, Douglas a developer our broker professionals the their marketing its our where marketing development our top estate hybrid division, leverage agents of work development real resale for relationships in

can agents Elliman commission brands estate often real as sell that developments hired are units. development to same and well-known years sought continues resell marketing Consequently, after their Douglas high-profile very by be Our rent market enhance and potential or additional to those developers. they provide for

signed pipeline This $XX division approximately value projects new including and value, billion of in of active billion transaction alone. has approximately transaction Florida $XX.X an gross gross

We projects believe as commission close. the we these recognize for income from future bodes when will this well they

and as period quarter is increased us, the it leader the and upon markets are the year in be to XXXX advent luxury XX% listing The volume second we the Elliman Douglas from homes. positioned Third, prior in listing million these of continuous well $XXX of the prestigious market serves. sell

quarter and a XXXX exclusives increase the the compared first in in increase For and follows of a won total California, quarter to Coral increases in volume Orange significant of X-figure quarter compared listing example, during The the quarter, the fourth XX% quarter Colorado of in Florida. County, to XXXX Gables, we first XXXX. Snowmass, fourth the X.X%

volume, the and will XXXX. of into remainder the quarter seeing increased XXXX of impact and already first trend listing are of the this continue we believe We in

industry an the price our properties volume, listing transaction quarters. for in and was in transaction real remained consistency reputation in client the $X.XX $X.XX sales believe best million in increase the experience per our finest X the Douglas quarter with We as average for our sales per past million Consistent and estate. second reflects of average strength luxury markets the as offering the well price Elliman

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

cost consolidate sponsorships, to past have the fit continued streamlining cutting a costly headcount advertising we our to business, better Over and year, reductions office our adjust space. structure additional including commencing to program

the representing segment year settlement approximately restructuring XXXX, compared period. operating its expenses, brokerage non-cash of expenses, $XX.X X.X% commission and reduced expenses, to first in excluding estate real a litigation of decline Our half prior by million other expenses the

Over XX June expenses, operating to brokerage $XX expenses estate and settlement June litigation its segment or has other XXXX, XX, ended excluding reduced ended XX, approximately months non-cash the by compared restructuring last months our the expenses, million expenses, X.X% XX commission real XXXX.

significantly We the impacting Douglas believe experience. efforts to these are meet head Elliman agent without challenges industry on enabling

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

$X.XX turning to share in Now reported the XXXX. to for XXXX million $X.X X share or $XXX.X to $XXX.X Elliman June months XX, ended in quarter was compared $X.X diluted the million million period. $X.XX period. Net for per XXXX results per million second Douglas Elliman attributed Douglas in the to the loss or Douglas financial diluted Elliman revenues compared

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

to the XXXX million were EBITDA Estate million compared purposes, $X.X million $X.X $X.X the Brokerage period. in period. compared operating comparison in reported of of an quarter of segment to to For operating income Real loss income Adjusted million our segment XXXX $X this attributed the

Douglas $X.XX liquidity equivalents in of second per $X.X million. XXXX, $X.XX Adjusted quarter the Douglas attributed period. share has net the XXXX share Elliman and was maintained loss at or cash or $XX.X June million to to ample compared with million $X.X cash in Elliman approximately XX, per

months to million revenues the compared in $X.XX June diluted or X XXXX for period. in financial year diluted attributable period. per Elliman for per Now prior XX, $XX.X Douglas quarter the $X.XX was to the or $XX.X XXXX. Net second $XXX in reported share million share results Elliman ended million turning $XXX.X to compared loss the Douglas to Douglas million Elliman's

Net we litigation attributed attributed of charge, Elliman Douglas XXXX loss paid $XX.X Douglas to included Elliman million $X.XX million million the in to have million EBITDA months which in were period. of the June settlement Adjusted XXXX, XXXX $XX.XX period compared to the X XX, a loss $XX.X in a in ended June XXXX.

XXXX brokerage in includes the to of for XXXX million in Adjusted to of million $XX.X attributed million EBITDA the purposes, estate litigation Operating XXXX comparison million segment For the settlement reported loss $X.X first our compared period. X $XX.XX loss operating segment period in were the a months $XX.X of million compared the XXXX period. $XX.X real loss the an charge. to

XXXX, $X.XX months Adjusted net June million the to XXXX period. in XX, share Douglas was loss the $XX.X $X.XX or X ended $XX.X in attributed compared million or per to Elliman per share

positioned In strong confident long-term reduction Douglas continued differentiated Elliman platform, its with is summary, are success for we and luxury that cost brand. efforts

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

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

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

of I first that think Texas, one, in in I seen inventory of markets we've and increase like noted Howard, So and guess, sort you your recently, an in comments more core well. your as some Florida

GTV why to still guess, into into looks in translated wondering agents price, your more Because units maybe I sort X%. So what break hearing units it as of like unit this that's when down growth from transaction you're I were down quarter. performance not

So any would there be thoughts helpful.

bit mean, at Yes. I in think It's or build rate inventory because most okay? I the lower building waiting are especially less they're you waiting because the cuts, rates. really still end so inventory market people for of levels, and then the buyers at little still look, there's have levels a

have will year. the cuts rate of the some before So that end hoping we

Who knows? inventory people we're sure to going point really the purchases of before decide the cuts year-end. X.XX-point really new I talk quarter-point then mean X.X with and as we'd make happy we'll current inventory. see also from And been be down but there's X cut

say, Okay. translates actually And prepared think up then you comments, on Bryant, I XX% that the just cash receipts. Can I going guess did you forward? how in us into remind revenue

to can we've I really XXXX up -- in Sure. mean compared XXXX XX%. you good performance had obviously,

anywhere Our between and XX% running margins XX%. are

seeing So forward. going depends that But a strong is on really what regions market. we're very

we've And are of starting so a July, that in we the to previous add to see impact the to particular. as little seen strong just listing question,

occurs. revenue when recognize when it -- is does That's sale earnings take we only the complete. because So the process

forward. So we going think that looks positive

And that for then capital guess deploy raise, on growth. it I to sounds the you're Great. Okay. looking like

maybe So out envision just looking be it more Or target. about is teams tuck-in then building you acquisitions? can you that maybe you'd spend And that a going organically? to whether talk market just towards

Look, that to no our expansion going. is really that's tax because states are states are where limited basically the income people

we back So We're in. the Texas. it's We've no most really I now. a not markets in that a be tax we in bit, could think held states have we're of covered little number of but

[ is somewhat because still people coming to in Most We're it's Texas. from Florida that, also Florida. people the coming But it doing over. they're in almost or coming are most a California having obviously Florida, lot think ] droves. New And well Florida to from we all We're see of York. coming in booming shocking is like said people Florida. of as

surprising. side -- of heard position I to have with on thinking to wants anyone out more that to aligned the sometimes from that that I from is in California a And California. a Well, neighbor and go The going came of Florida Texas. that there that's me tax general few that Florida, are people each think we've times is California was get

going to what's well. we happy we're So know money be continue sort to work with it, our on. and of with careful very and And going we're

we We hopefully Kennedy getting will Lewis, be involved. with working and be well will

developers, are possible. to developers, single-family home to business, if big we're pick and hoping of They some that a up lender

And Okay. expenses. then, Bryant on

line looks around So it down is go-forward. nicely. But the my you've more able bring G&A question like the been to

how managing are of in thinking general, year, sort So to begin year right? line you in of back if fixed your about expenses volumes to half or that inflect were just or the next the

that actions trend you add sort Or of through? some prior as Should as of support down to to folks growth forward? expect go flow to do you we the your to expect continue more

we scale return revenues when favorably. going that, expenses So obviously, think you're a business and asking question, will your think forward. that question to we the that we answer scale can about do And impact

just let's where going. were we and But talk about we're where

do And really which been it's the reductions focused to we're expenses of expense the driver deliberate on we years. a foolish. agent And on impact, been been from that's a long-term gradual work has X We're otherwise, profits management this over has in our on as expense reflect and building these cuts judicious has #X to contributions are continuing continuing the not So not stockholder to last very the enhance and manner. focused the Pennywise, experience, value. been

is And which variable now the advertising, of while leases of the the initially, expenses seeing we're personnel revenues sponsorships. expense long-term impact reductions and to and from eliminations lower came somewhat

amount expenses continue to we're our to need like will, going more So we to advertising, to the -- but to a to spend we'll smartly there's continue things we'll to maximum continue on think scale possible. try where

let me I an to talking expansion. And was before something about add what

of to in are go go developers into markets from -- we not buy expansion a what company of now and business start multiple is do not or most these is but states. to we do way Our scratch,

an Tennessee So We have projects don't like, Tennessee. instance, for we office have in in coming up.

a have broker. We

part that is so just we pretty development while may that's And in other opening new markets. a save which great just of our projects, be money doing much business. how And for a

that one. play last industry. talk look, seen of just Can just up some the we've split, maybe Bryant, points. basis there. And you the Understood. On across XXX about And pressure Okay. dynamics it was

is I'll similar the give the you a Yes, walk And of asset course. but first forward. quarter, this to

you has what's mix is given look paid of to nothing markets in. on margin completely analysis number that in recent region sensitive the consistent. So is agents years. split, the And region they're in But changed we're to the really we're our region, if happening grid at condition we looking

increased home state in Florida, home which our higher specifically, second of the So is commission 'XX existing a second quarter sales XX% the quarter from to of XX% in XXXX. of sales existing

accounted accounting which difference or profit York about of to marketing, development between the is for City, only look for at the the when earnings sale the revenue the that margin. accounted because closes. remainder sensitive that change that the due if The to That and business -- was that X.X% is process New Elliman half related you recognition we you business about recognize know on X.X% and revenue Douglas in complete

as I on mean during realtor. line. said, market, we good that, transactions that the that's result ultra-luxury going And due to a in had and transactions and a and Howard payouts an pipeline that the we was really of impact profits. -- margins. and significant That's quarter, ultra-luxury in for that's The some to bottom tremendous our have lower X record-breaking commission future bigger was basis, we're higher final percentage looks

gross profit. But at same time, to the absolute going in higher it's result

Abramowitz comes from Our next with Jefferies. question Peter

Yes.

overall market, your transaction that share gained this seem in look would you So value the if at it versus just quarter. overall business market we

if what that's you any that's going or context Maybe if and drove could that. wondering forward? sustainable comments just something you that provide around So think

record-breaking drove. Obviously, sales

We have the ultra-luxury best real residential agents. estate broker. We're

in highest of level Just in sales. to add, the think, the have, we industry, have whole we whole country, the I

are, average think, that's companies, the million, they close $X.X of sale right? rest I that. Our even matter to what companies, anyone The year there's was no even don't I think this size

million I think $X less. all or they're

rates correct, that high rate addition markets Howard, were real name being in in you're sales the mortgage believe sensitive, we we estate, I record-breaking very addition also that, markets the mortgage second to less and are quarter. in are ultra-luxury also are in to in

So from perspective. to from outperform interest that rate like going quarter we that rate a the are in --

there moves Okay. macro That's bit wild around overall concern maybe And market. than helpful. recession weeks on a just volatile to the backdrop, of couple And seems then a question a a be in today the and there more obviously, some was ago. little

could macro maybe less impacted think through not help you I the your that impact business. us if Just by know your and as sensitive. buyer is core backdrop

think But about had internally And of have a how could conversations if do sort we that term? business? think about we through, medium the us should of sort help you go-forward the affects how go into recession, you

recession if don't because there one. coming, is tough a that is That's recession recession how opposite. may know still serious heard in we oh, Yes. the even question think it, in I We how is a others many are don't best say be hearing times be to keep we that would I be going coming. there's we position the any to recession. the There the that But about weather industry recession.

country. because And is we'll the recession, that's come in what's you out the the to of #X important #X, be that one, will when continue broker be if there

Got one it. I then And could. more, if

could potentially or teams the or new you're where business next market mentioned X? kind your expanding you you a of overall, there, in be acquiring for Howard, be markets on Could it's maybe on think touch whether expansion. comments think, the just strategic you markets toward some the just the where I end that recovery, year just beefing may of possibility, thinking up over

Yes.

the in it without As new development. one through of no that some pretty there's really new doing these I lot spending sales. markets, ways a of money said, much of we're one is does development Because

including markets, said our our -- So that's as how all we're Las Vegas. markets, all I in including much Texas newer what we're our that's pretty Tennessee, building doing, and and

don't service country have Florida, because part that spend the New We to pretty York have in it great to and office projects do much. some and the you have back we whole that of can money much and

a not a We new doing. feet office open office. we're and business opening want the get not we So big first before in we're and we're X,XXX -- going that to taking beautiful opening not building

haven't huge that has been that Florida? because have -- pretty worked we new Florida, business. been well have to I and market at mean, us well long And for how share share huge development very in we the in you there look if guess we're market Florida, known a I in we

years. XX

Beach, years, now to built halfway we bulk And the I in all don't #X in the going pretty XX, Beach County. of we're that really XX, Miami way #X was Palm XX And Coast the we're we're do. broker east XX West up we the where say broker years. on we're Florida. new the like have anyone the on much, we go really And up side, development they and knows business up

that's And huge help. a really been

matter do If And and really so where we we're we're It to going doesn't make business. are. it. going to places can where it it do money, doing economically and there's they be

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