Douglas Elliman (DOUG) 7 Nov 242024 Q3 Earnings call transcript

Welcome to Douglas Elliman's Third 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 An archived version of the webcast will be available on the Investor Relations section of the company's website located at investors.elliman.com for 1 year.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. 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 Chairman S. I over Liebowitz. call Executive to Elliman, to the Michael and would the Officer like turn Chief of Douglas

thank us. and morning, joining for you Good

I'm and to Financial CEO is the current otherwise of Elliman's me operating historic company call named Chairman will ended presented foremost, Elliman as will to chapter and new diversification. our Bryant morning XX, growth X XXXX, the exciting Kirkland, XX, been honored XXXX. of environment lead and discuss X September and and have this the transformation, Officer. On With through this Chief Douglas of on First today an results for Douglas All financial be and stated. numbers we September unless today's call, months

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

employees. truly reflecting all on and few have We of of our turn made welcome. with to staff agents many across feel first third quarter start have XXXX and my roster truly we outstanding our the by me like leading Before I've to agents I'd Douglas results, weeks an They spoke met Elliman. organization. and to

and integrity. to create We build culture and culture stronger enhance an and have of collaboration, respect foundation our incredible even an on

firm to my Douglas ahead I innovate that the Our the opportunity. in to our and view, and evolve stay estate. Elliman this estate recognizable brand took with services added and most differentiate must is value from reason in-depth real be in real the analytics provides incredible expertise brand, It's We and competitors.

diversify title, grow already and unit like complementary to ancillary about. and created are in property staging, businesses, M&A excited that brokerage deliver acquisitions insurance plan we to value, We we escrow, business explore the a have management and strategic very to

are engine. already We to opportunity to months real property a sharing our plans and Florida as recurring into forward there's more with company our weeks stream in revenue Elliman we I expand discussions approach look This the business ahead. management diversified expand businesses. transform revenue sustainable of growth where our Douglas a a and will into in

who With our discuss turn it and the Bryant, the real estate over trends I'll industry. that, will shaping to performance residential

With Douglas Thank increasing new revenues and for Elliman. business. the at you, Michael, will investing the team vision Douglas in the leadership, is be team diversifying the by to able Elliman our about and enthusiastic management your focus on logically

We the well will the estate division. advantages expertise Elliman's in ultra-luxury as real on segment brokerage marketing in residential as development capitalize competitive Douglas our

on trends updates home as and in marketing well our financial Before development in of as some reviewing earned markets. pricing, we performance, some the key sale provide will listings accolades

comparable to in to per average XXXX home quarter, remained through price home XX, for million best September in $X.XX XXXX $X.X sale the is per XXXX, million third price sales million compared transaction First, Year-to-date, to In $X.X compared our transaction per the period. our sale industry home $X.XX average pricing home period. rose sale strong. the per million

build Second, from we continue to increased home sale momentum listings.

prior period. year listing XXXX Our in quarter third volume the of increased the X% from

Florida this a the gross marketed of billion is gross transaction $XX.X value. $XX.X industry player of remains Third, in pipeline our Approximately actively with development billion approximately of projects alone. transaction preeminent division value marketing of

through Valley for XX, the fourth recently brokerage In and We they the active the between the value transaction well records outperform year ended North these eclipsed quarter in Westchester the Long be we XXXX of to and of business by North recognize generally future and that of Hamptons, the our to I Island, as pipeline, to expect their on this close, Fourth, we sales peers. the projects pleased scheduled bodes market will from commission #X We volume brokerages Island. many foundation of and sales addition we December will were end Long this XXXX. another continue which Fork income Miami Hudson coming billion also have named to gross of the report am of is XXXX. $X.X believe when

to transitioning structure. our expense on updates Now

investments manage return markets on We investment. on focusing our across to continue by

For and the months corresponding XXXX. and September our in X brokerage operating reduced to period estate as expenses depreciation litigation ended stock restructuring expenses noncash segment real XX, expenses, settlement, commissions, million by approximately its the $XX.X compared XXXX, amortization, excluding compensation

loss value share $X.X $X.XX $XX.X in period. at within attributed or Elliman's in XXXX ended embedded change maintained to share XX, per X revenues compared diluted in in million million Douglas $XXX.X diluted will and $XXX.X XX, for Now the Elliman million XXXX approximately has noncash quarter. fair the Douglas to XXXX Elliman liquidity was million reported September Elliman cash Douglas the results derivative per turn common Elliman third to of cash million Douglas with for equivalents period to compared the September financial XXXX. the we months for Net debt. in attributed XXXX Net $XX.X to the charge included convertible of Douglas a ample loss third $XXX.X million. quarter or $X.XX

Elliman Douglas of $X.X a of $X period. third compared in in to a reported million loss quarter to loss XXXX EBITDA the were Adjusted the million

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

period. Now turning to results reported million ended XXXX $XXX.X Douglas X million charge revenues, litigation the Net XXXX in the charge $X.XX Elliman loss a per and fair attributed the per in debt included $XXX.X increase to value share convertible the or XX, to diluted Douglas months million third to in in in loss of noncash share quarter. quarter Elliman XXXX for or $X.XX the financial in Elliman Net embedded $XX.X from $XX.X first period period. for a million within derivative Douglas XXXX. compared the an Elliman's was attributed Douglas settlement million $XX.XX million diluted $XX.X the September

Elliman period. Douglas months were loss X XX, of Adjusted in the million a EBITDA in ended million compared $XX.X the $XX XXXX of attributed September loss XXXX to to a

reported period. Adjusted compared September purposes, brokerage charge. X $XX.X to XXXX million in segment the share operating of was $XX.X for $X.XX net the comparison to loss Operating estate loss the ended XXXX or our of $X real in brokerage XXXX of real to For Douglas months million $XX.X attributed period in loss X million per the period. XXXX first compared to million an segment Adjusted XX, settlement million litigation per $X.X a million estate the included loss $XX.XX in XXXX EBITDA in XXXX of $XX.X compared loss months were period. to a the the share Elliman or million attributed $X.XX a

Now you, Michael. back to

at some second this that. unit away on to to we've from we understand a of focus. Bryant. step each and Thanks, really of my business. are this for feel going away And focusing I'd major negotiations And -- on on we're a all important, is that listen, looking you do to can created. our We've and is how so moved new ROI to agents that like prepared remarks, deals we step with be on going ROI deal be every laser-focused extremely that we M&A into really

diversification. our mentioned business model primary Diversifying of I one this addition, is goals. In

nature sit greatly real the our base it, new has goes down, organically us the all business starting to will business the that diversification around and and doing bring diversifying into enhance the and and and businesses agent markets. As understand business a acquisitions and up estate agent growing lumpy we

very that. about we're excited So

us. the brand, of can of this days brand domestically brand, truly opportunity. this I'm Elliman best Douglas power the in. about be this the this that the take of all we ability scale are of took role I to on very ahead The the the businesses because further just brand, with to excited ability than of

happy Operator? And any answer with that, to be we'll questions.

[Operator to Abramowitz Instructions] Peter go We'll Jefferies. with first

debt. that embedded the charge could dig in a derivative wondering in bit the change convertible just side you Bryant, accounting just the from to Yes. if on little

little understand us more. help Just that a bit

accounting want Thanks the for to derivative. this for take embedded And the opportunity question. the to we obviously, explain

elaborating, to charge the note price increased quarter. end repeat primarily issued the time driven of that Before again, by debt XX% and important I And it's the was the the the of between that because the company's amount was XX%. stock

into background. So let's the dive

the As a the the confidence growth you're aware, investment We strength separately Michael to our the in this, Douglas $XX Lewis from from conversion feature Kennedy well value the demonstrates million In this in standards received firm. company Investment XXXX, business as debt. just required the Elliman mentioned. debt July name market's the the that as company the with believe accounting investment connection of the of Management

this $X.XX at approval relates company's in modifications So debt by share. to requirement and because price exchange a per to that provision mandated stock requirements, the convertible below of any provision was which of occurs issue debt, an the stockholder

the and value stated $X.XX the there would at $XX price be again, $XX.X stock cash company money, As debt and X way, increased embedded or face the the in debt of that the time to value to a September because in debt convert was because would end expense the put share not company's carried the the resulted rather a at the the charge debt quarter, to or paid And at only per when we the by debt than is worth face earnings. the noncash of the holder at XX by another emphasize of earlier, the noncash important the it's value. and $X.XX either million of should shares To convertible in XX%, are retire end charge the the and quarter company's were derivative it million $XX.X the scenarios, this $XX shares at million. practical million, then sell increased debt issuance a for

So with any have you it? other questions that, on do

of sort helpful. And embarked on has then think its your high. thinking has of you're end and just I stubbornly overall the how impact rate the cycle the one on easing about No, the Fed long curve of to remained No. backdrop kind Since that's the markets. here,

can might So just how impact you sales think to 'XX. market the as that through help wondering ahead if us sort look of we

BK, a you to want address for second? that

Michael. Yes. Thanks,

said, changed, up, so have sensitive a All generally, increase, rates clogging we our what and when to seen and buyers outperform peers. higher of generally And than that cash we less of we've we is being supply our and that's we the -- have because in rates when percentage years. the demand are gone rates inventory, there peers have rates because X.X have interest when last

next we we X believe over peers our environment. years. for the positioned cuts to we're additional than hopeful But rate again, are in So better this obviously, year

we're on that the a bullish there's being significantly listen, the part And obviously be of cycle with to add over, business. to getting election think we're that bit, little going to the I to number Yes. think very activity. that We one, more a

why there paying Trump lowest obviously, the was statements be and going right people lender, going he other the and the would is whether credit right? remember, what paying, it thing And what say, we're listen, do, I -- and jawboning is making Fed going got next doesn't think world that about it's we now best nobody have still to right? the like lowest is actually not a sticky Like gets rate, President. best Fed I you're in always the He whatever the you're to or we've the I If credit think should inflation And why have rate. the and the out really our knows. to that. probably think him are

like way. get, to next can rates. think is somebody White a should over in Fed you're But is is let going underbuilt low you've we have we activity. eased House going And that and independent real homebuilding. I terms now think to have which that. think we're permits the homes the regulation interest the that that the and all And new obviously markets with position going I election estate easier, spurs wants wants But the really And for And just of the The and people White themselves. as obviously, to has is easier has which in guy they But an you're to up to respect -- House and to in stay in got significantly in probably yesterday, saw makes everybody into make building the significantly that the advantage them speak get all uncertainty of take we homes. new incredible nation world. that that clearly to year

going So we're opportunities excited about forward. our

incredible have Douglas reason position advantage with the Development division. the in Marketing And because we we're that Elliman Right. competitive is the of

and I for to one of just position. whether on embark or more, across just investments, curious, luck Okay. Michael. a you the kind meet That's about here you ROI talking new targets as helpful in But good And and company. this on good you new mentioned your very if all and thorough. could, journey existing

Just the value and hurdles here wondering think return kind within rates quantifying sort help through you of us of for looking about the how if to company? thinking create you're what you're could

this getting Listen, So want bit. in, We're we're that of I'm we our obviously into that businesses management role them business their they're believe we in builders, and to think the our a addition incredible more lot we we the we're on we're title be the right? little the We going segment can entrepreneurs We're that that and discussing in that business. ROI agents, to still to what in businesses a a each weeks. add will help agents. the insurance in have is few We're ROI property in we build obviously businesses. business think agents, -- for

on agents want and quality have be we want be quality moment, can incredible And it's agents incredible to believe So going going people, we have every do we be, increase our ROI we're of recruiting to profitability already, We're at think to so don't but to a sake sense. we having we and look to smart, disciplined at not how to headcount machine. the be we're in if it, agents. top We be the agents, how want the very and do quality you be earnings, quality over and And only we quantity growth, lot we that for do look this We to going a of We're a smart the think really of can going it forward, the one we disciplined. just we if have, methodical going that it headcount. really us, and culture, business we right? excited. they're we really and and interested to are what of about makes of new agent of for at

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