NYSE:DOUG Douglas Elliman Q3 2023 Earnings Report $1.60 -0.03 (-1.84%) Closing price 04/25/2025 03:59 PM EasternExtended Trading$1.64 +0.04 (+2.81%) As of 04/25/2025 07:32 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings History Douglas Elliman EPS ResultsActual EPS-$0.06Consensus EPS -$0.08Beat/MissBeat by +$0.02One Year Ago EPSN/ADouglas Elliman Revenue ResultsActual Revenue$251.55 millionExpected Revenue$288.19 millionBeat/MissMissed by -$36.64 millionYoY Revenue GrowthN/ADouglas Elliman Announcement DetailsQuarterQ3 2023Date11/7/2023TimeN/AConference Call DateWednesday, November 8, 2023Conference Call Time8:30AM ETUpcoming EarningsDouglas Elliman's Q1 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled on Friday, May 9, 2025 at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Douglas Elliman Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 8, 2023 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Welcome to the Douglas Elements Third 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 An archived version of the webcast will be available on the Investor Relations section of the company's website located at investors. Element.com for 1 year. During this call, the terms adjusted EBITDA and adjusted net income will be used. Operator00:00:27These 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. Reconciliations to adjusted EBITDA and adjusted net loss are contained in the company's earnings release, which has been posted to the Investor Relations section of the company's website. Before the call begins, I would like to read a Safe Harbor statement. The statements made during this conference call are not historical or that are not historical facts are forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward looking statements. These risks are described in more detail in the company's Securities and Exchange Commission filings. Operator00:01:21I would now like to turn the call over to the Chairman, President and Chief Executive Officer of Douglas Elliman, Howard Lorber, please go ahead. Speaker 100:01:31Good morning and thank you for joining us. With me today are Richard Lampen, our Chief Operating Officer Brian Kirkland, our Chief Financial Officer and Scott Durkin, President and CEO of Douglas Elliman Realty, our residential real estate brokerage business. Before turning to our results for the Q3, we wanted to address the current litigation in the residential real estate brokerage industry. Given that we are talking about active litigation against Douglas Elliman, we are not going to comment extensively on that litigation and potential outcomes. I will make some brief comments and do not intend to comment further or take questions on these issues. Speaker 100:02:08Last week, a jury ruled in favor of the plaintiffs In the Sitzer Burnett lawsuit in federal court in Missouri and awarded $1,780,000,000 in damages, which is subject to being tripled under the law. We expect that the defendants, which include the National Association of Realtors and several other residential real estate franchisors and brokerages Doing business in Missouri will appeal the verdict and that the case will take a substantial period of time, possibly years to be resolved. Douglas Elliman is not a party to that lawsuit, but we have been named in 2 new separate cases involving customary real estate business practices And the National Association of Realtor rules that were the subject of the Sitzer Burdonate lawsuit. We believe the lawsuits against us lack merit and we intend to challenge them. We have retained counsel to advise and represent us. Speaker 100:03:00We do not anticipate these lawsuits will result in any changes to our business that will significantly disrupt the agent buyer relationship. In the meantime, we believe that Douglas Elliman has too competitive advantage if our industry landscape evolves. First, our agents specialize in high end home sales across the markets we serve, in which the greater average transaction size Makes expert home brokers a necessity. 2nd, our Douglas Elliman Development Marketing business, which represents high end developers in the sale of such homes, Continues to perform well. We will continue to keep a close eye on industry developments and adjust our strategy if and when needed, We are confident we are well positioned to succeed. Speaker 100:03:44Now turning to Douglas Elliman's financial results for the 3 months ended September 30, 2023. Please note that all numbers presented this morning will be as of September 30, 2023, unless otherwise stated. We are pleased that Douglas Elliman continued to outperform many of its competitors in the Q3 of 2023 despite ongoing industry wide In our luxury markets where buyers are more immune to interest rate pressures, the competitive advantage provided by Douglas Elliman's strong development marketing business and are world class agents. For the Q3 of 2023, Douglas Elliman reported $251,500,000 in revenues compared to $272,600,000 in the Q3 of 2022. However, in Florida, 1 of our largest markets and our strongest market during the pandemic, we experienced a 20% increase in revenues in the quarter. Speaker 100:04:48We believe the best markets tend to emerge 1st from any downturn and view Florida's strong Q3 as a positive leading indicator of future performance across our luxury markets. Net loss attributed to Doug's settlement for the Q3 was 4,900,000 or $0.06 per diluted share compared to net loss of $4,000,000 or $0.05 per diluted share in 2022. Adjusted EBITDA attributed to Douglas Elliman was a loss of $3,000,000 compared to income of $124,000 in the 2022 period. For comparison purposes, our Real Estate Brokerage segment reported an operating loss of $2,000,000 this quarter compared to operating income of $1,500,000 in 2022. And adjusted EBITDA to the segment was approximately $1,500,000 compared to $5,100,000 in 2020. Speaker 100:05:39Adjusted net loss attributed to Doug's settlement was $4,700,000 or $0.06 per share compared to adjusted net loss of $4,000,000 or $0.05 per share in 2022. Now turning to Douglas Elliman's results for the 9 months ended September 30, 2023. Douglas Elliman reported $741,400,000 in revenues for the 9 months ended September 30, 2023, compared to $945,800,000 in 2022. Net loss attributed to Douglas Elliman was 27,700,000 or $0.34 per diluted share compared to net income of $12,800,000 or $0.15 per diluted share in 2022. Adjusted EBITDA to Douglas Elliman for the 9 month period was a loss of $23,200,000 compared to income of $32,100,000 in 2022. Speaker 100:06:31Our Real Estate Brokerage segment reported an operating loss of $20,300,000 for the period compared to operating income of $37,600,000 in 2022. Adjusted EBITDA attributed to the segment was a loss of $9,000,000 compared to income of $47,200,000 in the 2022 period. Finally, adjusted net loss attributable to Douglas Simon was $26,400,000 or $0.32 per share in the 9 month period compared to adjusted net income of $12,200,000 or $0.14 per share in 2022. Now we will discuss our outlook on the current operating environment for Douglas Elliman as well as trends we are seeing in the residential real estate marketplace. We have previously discussed the cyclical nature of our industry. Speaker 100:07:20The last 6 quarters have been a difficult part of the cycle as historically high mortgage rates have driven sustained listing inventory shortages across our luxury markets. While we expect these industry wide challenges will continue to impact our results for the remainder of 2023, we remain encouraged by some improvements in trends we are seeing. Specifically, our average sales price per transaction increased to $1,570,000 this quarter, up from 1.4 $9,000,000 in the Q3 of 2022. Revenues in the Q3 of 2023 declined 7.7% compared to the Q3 of 2022. The year over year decline narrowed from the 1st and second quarters of 2023, which saw declines of 30.7% and 24.3%, respectively, from 2022. Speaker 100:08:12We believe this signals that the market is beginning to adjust the interest rates. Our commission receipts in October improved on a year over year basis, the first time since May 20 22. Total listing volume also improved in the Q3, up 6.2% from the 2022 period. Due to our solid financial position and cost reduction strategy, Douglas Elliman is well positioned to successfully navigate near term industry challenges. Douglas Elliman's strong balance sheet underscores our long history of profitability and managing various market conditions. Speaker 100:08:48We maintain ample liquidity with cash and cash equivalents of approximately $126,000,000 or $1.43 per common share and no debt. In the Q3 of 2023, we continued to adjust our cost structure to benefit our business, including additional headcount reductions, cutting costly sponsorships, Streamlining advertising and commencing a program to begin consolidating office space. Our cost reduction efforts have been judicious The results of our strategy are beginning to flow to the bottom line. Compared to the year ago period, our real estate brokerage segment reduced its operating expenses, excluding commission expense and restructuring by $7,800,000 in the Q3 of 2023, representing a decline of 10.5%. On a sequential basis, our Real Estate Brokerage segment reduced its operating expenses, excluding commission expense and restructuring by $4,100,000 this quarter compared to the Q2 of 2023, representing a decline of 5.8%. Speaker 100:09:54We expect the impact of our cost reduction efforts will continue to We are proud to share that our agent retention rate stands at 90% and we continue to attract the industry's best talent. Looking ahead, we remain focused on continuing to capture market share by leveraging Our key strengths, which include our world class network of 6,900 agents and our development marketing business. Our development marketing business is creating a foundation for long term value as transactions close over the next several years and provides a competitive advantage, especially considering the limited inventory of existing homes available for resale. For the 12 months ended September 30, 2023, our Development and Marketing business signed and brought to market new projects with $5,100,000 of gross transaction value, including $4,600,000 of gross transaction value added in the 12 months ended September 30, 2023 in Florida alone. In summary, Douglas Elliman continues to meet the current macroeconomic challenges, And we believe our differentiated platform and the underlying strength of our business positions us for long term growth and success. Speaker 100:11:13Our proven management team has a successful history of navigating many economic cycles and applying financial discipline that balances the importance of maintaining revenue and managing operating expenses to create long term stockholder value. Looking ahead, in addition to driving operational We are focused on strategic market expansion, continued recruitment of outstanding talent and further adoption of innovative solutions to empower our brokers. With that, we will be happy to answer questions. Operator? Operator00:12:09We'll take our first question from Dan Fannon with Jefferies. Please go ahead. Your line is open. Speaker 200:12:15Thanks. Good morning. Wanted to follow-up on, I guess, more of your latter comments there, just in terms of reevaluating your market footprint. Clearly, Florida seems to be doing well, but are there areas or markets that you're subscale that you might be looking to exit? Or on the opposite Potentially in this type of environment, areas you're looking to expand and maybe take market share? Speaker 100:12:39Well, obviously, there are markets that are not performing as well as they've had in the past, New York being one of them, although New York has picked up considerably. It's interesting. It's much more of a downtown market now than it was Years ago when everyone was going uptown to the Upper East Side. But it's okay. It's not terrible. Speaker 100:13:05I mean, I think probably one of the not so good markets for everyone is California. And that's basically because of what's going on in California. Not that some of it's not going on in New York, but they also put in a new tax, which really is hurting The realtors because of the additional tax for the buyers and the sellers. So that is a soft market. On the good side, we've looked at a couple of markets where one of them being in Nashville. Speaker 100:13:40We think that's a good market. And when I say it's a good market, it's also a good market for us because there's a lot of new development projects starting. And we'd like to go into a market when we have a new Development signed up or almost signed up and we know that we'll have a bit real business starting from day 1. We're trying to stay with No surprise, the low tax or no tax states. Las Vegas is doing okay. Speaker 100:14:07We have there in a short time, I We have about 90 to 100 brokers. We have a couple of new development projects signed up. So that's good. And New York, we also have a couple of new ones we're working on. Miami through all of South Florida, I should say, because we're on the West Coast now. Speaker 100:14:33We've opened a bunch of offices on the West Coast. We just opened in Sarasota. So we're doing well there and that is a really robust new development marketplace. So that's really Speaker 200:14:50helping. Okay. That's helpful. And then you mentioned October receipts Improved year over year. So if you could just expand upon that? Speaker 200:14:58And then also, inventories, are you seeing any Change or sustain change as you look at what's happening here in October November versus what has been happening here obviously in recent months? Speaker 300:15:12Hi, Dan. It's Brian Kirkland. October receipts were up about 2.5% from October 2022, And that was fairly evenly distributed between existing home and development marketing. So we feel really positive about that. We do think that buyers are now starting to adjust to the mortgage interest rate environment. Speaker 300:15:33And then your next question was Speaker 200:15:37Just as whether inventories are also showing similar signs of showing some continued improvement. Speaker 300:15:44And we're also seeing across the board, I think our listing inventory in the 3rd quarter was up 6% from 2022 Q3. We view that as a positive sign. That's been a trend that has been continuing the entire year. Last year, obviously, there was a seller strike. Now that's returning where The market is really opening up, and this will be gradual, but we're very positive on the long term. Speaker 200:16:11Okay, great. And then just lastly, just the development marketing business in general, you mentioned Some specifics, seems like that is picking up. I guess, is there any higher level comments you can talk about in Aggregate versus the regions and or, I guess, thinking about prospectively, is there a sign that, that has continued momentum as you think about this quarter and next year. Speaker 100:16:40Yes, look, it has quite a bit of momentum. I can give you examples, but I don't want to brag. So, not going to do it. But I mean, We've opened projects in actually in Miami, where we were shocked how quick they sold And the prices that we're getting for them. And I think that's also So all the way pretty much in all of South Florida. Speaker 100:17:16It's sort of robust. And I think part of the reason It is the fact what you were asking about, about the inventory. If there's really no resale inventory, the only inventory or the biggest inventory on the market is the new development. And realistically, when I speak to people about it, I think it's pretty simple. If you're worried about interest rates, the good news about new development that you don't pay upfront, you don't close, you put down deposits over the period of time that the buildings Started and being built, probably you end up having cash of about 40% to 50% by the time it's ready to close. Speaker 100:17:57When it's ready to close, which is usually, let's say, 2 to 3 years after we started sales, you are sitting with a Probably, if you're going to mortgage it, probably lower interest rates. We would assume so 2 or 3 years from now. And also with inflation still around, you're going to own something that you couldn't build again for the price or couldn't buy again for the price that you bought it at 2 or 3 years before. So that's sort of an interesting way to look at it, which I think is like one of the reasons that market is so strong. Speaker 200:18:35Great. Thanks for taking my questions. Speaker 300:18:39Thanks, Seth. Operator00:18:41We'll take our next question from Sohrab Monsely with BTIG. Please go ahead. Your line is open. Speaker 400:18:48Hey, good morning guys. Hope you're all doing well. I guess first one on the industry headlines. I know you're not commenting there directly on the cases, which I understand. But I guess you guys are in somewhat of a unique position in that you have some experience navigating some class action lawsuits in your Liggett business. Speaker 400:19:07So I guess is there anything that you can draw from your experience just going through that? And are there any parallels that you see in the cases that are being brought against the brokerage industry today? Speaker 100:19:17We don't really want to comment on it. I mean, obviously, we have a long experience in it and we're hoping that that experience is going to help us Navigate this and if it turns out as good as the other one, the last one, the last big one we did then we'd be pretty happy. Okay. Speaker 400:19:36And then on the new development side, it definitely feels like a differentiator, right, just because the lack of supply and Because developers need that service. I guess, can you just give us a sense for how large that business is today? And then how much more can you scale that business up going forward. Speaker 300:19:54So, thanks for that question. So that business has been gradually growing throughout the year. We do And you can go back to prior conference call scripts and you see every quarter we're giving more numbers coming in the pipeline over the last year. So right now, we have about $21,500,000,000 in pipeline that's currently on the market. That doesn't include many other projects that are coming to market And that number is up from about $20,000,000 last quarter $20,000,000,000 excuse me. Speaker 300:20:23So $21,500,000,000 in the pipeline. Speaker 100:20:25And just to give you some additional info, I think probably about $13,000,000,000 or $14,000,000,000 of it is in South Florida. Yes, dollars 13,000,000,000 to $14,000,000,000 in South Florida. Speaker 400:20:36And so is there any way we could sort of get a sense for like when this volume should start Trickling into the P and L, right, over the next couple of years. Is there any sense? Because I mean that seems pretty meaningful there if you just apply that volume against Yes. Speaker 100:20:52BK is going to answer that, but I will tell you every time we think when it's coming, it's usually delayed. Whether it's building or permits or financing, we'll put a development back up. But go ahead. Speaker 300:21:04And Howard, I don't know what else I can add to Yes. All that being said, it will come into revenue over the next 4 to 5 years. It will be more gradual. And but the point about this business is it has great inertia and it keeps building on volume. So it's almost becomes a residual. Speaker 100:21:26Yes, that's right. Speaker 400:21:27Okay. And then just on the share repurchases, I know the 2 year anniversary on the spin is So that sort of gives you ability to sort of unlock that. Obviously, a lot of uncertainty right now with the lawsuits, but Is there any thought being given to putting a plan in place even if it's just to send sort of a message to the market here where the stock is trading? Speaker 300:21:49Yes. So, you're correct that 2 years comes up in 50 days from now from the spin off. That's going to be a Board decision. Obviously, the Board meets every quarter. It deliberates well on these matters. Speaker 300:22:02And We are very confident forward we'll make a decision. Speaker 100:22:06Yes, we're surely going to talk about it in great detail and then make a decision. Speaker 400:22:11Okay. And then just last one, Brian, on your run rate operating expenses ex the commissions, what's a good ballpark To assume sort of over the next few quarters and then can you just talk about any opportunities to lower that run rate just in 2024? Because it seems like we're sort of going to probably hit A flat market on transaction volumes, we could be higher on ASP. So just, yes, anything there. Speaker 300:22:34Okay. And we're very proud of what we've done on We're proud because we have been judicious because we're taking a long term approach. As Howard mentioned earlier, our operating expenses, Excluding commissions and restructuring, we're down $7,800,000 versus the last year quarter. That was comprised of about $3,600,000 of We have reduced about 60 employees over the last year, reduction of $2,200,000 in advertising and sponsorships, Another $1,800,000 in just general type expenses and $400,000 in travel. On a sequential basis, Quarterly expenses were lower from 2nd quarter by about $4,100,000 about $1,300,000 of that was personnel where some of the cuts we made Earlier in the year are now starting to come in on a full quarter and also $1,300,000 on advertising and administration and 250 $1,000 of travel. Speaker 300:23:34We've been very mindful of spending judiciously and not being penny wise, impound foolish and not I think any cuts that would impact the agent experience. So you know rent expense is one of our big numbers and Occupancy cost just on the pure leases are about $34,000,000 a year. There's another $10,000,000 of other costs associated with the leases. So that's about 22.5% of our non activity based expenses. We'll start to see runoff of that Before January 25, starting in 2023, it reduces about $8,250,000 over that 2 year period. Speaker 300:24:17And after then, we start running off about $3,000,000,000 of leases throughout the year. Speaker 100:24:22So Our plan really is to Unless it's a specific location that we really need and it's really being used, it's to basically not renew any leases and consolidate Speaker 300:24:37Right. And when we give those numbers, obviously, that's just our pure expense. That's not what we will save by doing that. Speaker 400:24:45So just on the run rate to understand, so we should assume like personnel and those line items sort of stay flat from here on, but then where you would really see sort of declines is on The rent side, is that fair over the next few quarters? Speaker 300:25:02We are evaluating our expenses going forward and we'll continue to analyze expenses across the board. We're hopeful that we can achieve more savings, but stay tuned. Great. All right. Speaker 400:25:15Thanks a lot, guys. Operator00:25:23And ladies and gentlemen, Those are all of the questions that we have for today. Thank you for joining us on the Douglas Elliman quarterly earnings conference call. We hope you have a good day and this will conclude our call. Speaker 100:25:39Thank you. Bye.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallDouglas Elliman Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Douglas Elliman Earnings HeadlinesHamptons home sales have surged in 2025 — with prices hitting a record highApril 26 at 1:48 PM | msn.comSouthpole fashion founder lists Miami penthouse for $27.5M — $16.5M more than what he paid in 2021April 25 at 2:04 AM | msn.comHere’s How to Claim Your Stake in Elon’s Private Company, xAIElon Musk has done it again. He’s developed a powerful new AI model that’s already turning heads — and turning the industry upside down. Some say it could threaten Google’s search engine dominance. Others believe it could mark the beginning of the end for ChatGPT.April 26, 2025 | Brownstone Research (Ad)Douglas Elliman Inc. (NYSE:DOUG) is definitely on the radar of institutional investors who own 49% of the companyApril 24 at 4:03 PM | finance.yahoo.comBrooklyn Home Prices Hit a Record High (Again)April 24 at 6:52 AM | nytimes.comSeaside house ripe for an update sells for $26.67M near Bon Jovi's old house in Palm beachApril 21, 2025 | yahoo.comSee More Douglas Elliman Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Douglas Elliman? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Douglas Elliman and other key companies, straight to your email. Email Address About Douglas EllimanDouglas Elliman (NYSE:DOUG) owns Douglas Elliman Realty, LLC, operating as a residential brokerage company in the United States with operations in New York, Florida, California, Texas, Colorado, Nevada, Massachusetts, Connecticut, Maryland, Virginia and Washington, D.C. In addition, Douglas Elliman sources, uses and invests in early-stage, disruptive property technology (“PropTech”) solutions and companies and provides other real estate services, including development marketing, property management and settlement and escrow services in select markets.View Douglas Elliman ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Markets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 5 speakers on the call. Operator00:00:00Welcome to the Douglas Elements Third 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 website located at investors. Element.com for 1 year. During this call, the terms adjusted EBITDA and adjusted net income will be used. Operator00:00:27These 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. Reconciliations to adjusted EBITDA and adjusted net loss are contained in the company's earnings release, which has been posted to the Investor Relations section of the company's website. Before the call begins, I would like to read a Safe Harbor statement. The statements made during this conference call are not historical or that are not historical facts are forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward looking statements. These risks are described in more detail in the company's Securities and Exchange Commission filings. Operator00:01:21I would now like to turn the call over to the Chairman, President and Chief Executive Officer of Douglas Elliman, Howard Lorber, please go ahead. Speaker 100:01:31Good morning and thank you for joining us. With me today are Richard Lampen, our Chief Operating Officer Brian Kirkland, our Chief Financial Officer and Scott Durkin, President and CEO of Douglas Elliman Realty, our residential real estate brokerage business. Before turning to our results for the Q3, we wanted to address the current litigation in the residential real estate brokerage industry. Given that we are talking about active litigation against Douglas Elliman, we are not going to comment extensively on that litigation and potential outcomes. I will make some brief comments and do not intend to comment further or take questions on these issues. Speaker 100:02:08Last week, a jury ruled in favor of the plaintiffs In the Sitzer Burnett lawsuit in federal court in Missouri and awarded $1,780,000,000 in damages, which is subject to being tripled under the law. We expect that the defendants, which include the National Association of Realtors and several other residential real estate franchisors and brokerages Doing business in Missouri will appeal the verdict and that the case will take a substantial period of time, possibly years to be resolved. Douglas Elliman is not a party to that lawsuit, but we have been named in 2 new separate cases involving customary real estate business practices And the National Association of Realtor rules that were the subject of the Sitzer Burdonate lawsuit. We believe the lawsuits against us lack merit and we intend to challenge them. We have retained counsel to advise and represent us. Speaker 100:03:00We do not anticipate these lawsuits will result in any changes to our business that will significantly disrupt the agent buyer relationship. In the meantime, we believe that Douglas Elliman has too competitive advantage if our industry landscape evolves. First, our agents specialize in high end home sales across the markets we serve, in which the greater average transaction size Makes expert home brokers a necessity. 2nd, our Douglas Elliman Development Marketing business, which represents high end developers in the sale of such homes, Continues to perform well. We will continue to keep a close eye on industry developments and adjust our strategy if and when needed, We are confident we are well positioned to succeed. Speaker 100:03:44Now turning to Douglas Elliman's financial results for the 3 months ended September 30, 2023. Please note that all numbers presented this morning will be as of September 30, 2023, unless otherwise stated. We are pleased that Douglas Elliman continued to outperform many of its competitors in the Q3 of 2023 despite ongoing industry wide In our luxury markets where buyers are more immune to interest rate pressures, the competitive advantage provided by Douglas Elliman's strong development marketing business and are world class agents. For the Q3 of 2023, Douglas Elliman reported $251,500,000 in revenues compared to $272,600,000 in the Q3 of 2022. However, in Florida, 1 of our largest markets and our strongest market during the pandemic, we experienced a 20% increase in revenues in the quarter. Speaker 100:04:48We believe the best markets tend to emerge 1st from any downturn and view Florida's strong Q3 as a positive leading indicator of future performance across our luxury markets. Net loss attributed to Doug's settlement for the Q3 was 4,900,000 or $0.06 per diluted share compared to net loss of $4,000,000 or $0.05 per diluted share in 2022. Adjusted EBITDA attributed to Douglas Elliman was a loss of $3,000,000 compared to income of $124,000 in the 2022 period. For comparison purposes, our Real Estate Brokerage segment reported an operating loss of $2,000,000 this quarter compared to operating income of $1,500,000 in 2022. And adjusted EBITDA to the segment was approximately $1,500,000 compared to $5,100,000 in 2020. Speaker 100:05:39Adjusted net loss attributed to Doug's settlement was $4,700,000 or $0.06 per share compared to adjusted net loss of $4,000,000 or $0.05 per share in 2022. Now turning to Douglas Elliman's results for the 9 months ended September 30, 2023. Douglas Elliman reported $741,400,000 in revenues for the 9 months ended September 30, 2023, compared to $945,800,000 in 2022. Net loss attributed to Douglas Elliman was 27,700,000 or $0.34 per diluted share compared to net income of $12,800,000 or $0.15 per diluted share in 2022. Adjusted EBITDA to Douglas Elliman for the 9 month period was a loss of $23,200,000 compared to income of $32,100,000 in 2022. Speaker 100:06:31Our Real Estate Brokerage segment reported an operating loss of $20,300,000 for the period compared to operating income of $37,600,000 in 2022. Adjusted EBITDA attributed to the segment was a loss of $9,000,000 compared to income of $47,200,000 in the 2022 period. Finally, adjusted net loss attributable to Douglas Simon was $26,400,000 or $0.32 per share in the 9 month period compared to adjusted net income of $12,200,000 or $0.14 per share in 2022. Now we will discuss our outlook on the current operating environment for Douglas Elliman as well as trends we are seeing in the residential real estate marketplace. We have previously discussed the cyclical nature of our industry. Speaker 100:07:20The last 6 quarters have been a difficult part of the cycle as historically high mortgage rates have driven sustained listing inventory shortages across our luxury markets. While we expect these industry wide challenges will continue to impact our results for the remainder of 2023, we remain encouraged by some improvements in trends we are seeing. Specifically, our average sales price per transaction increased to $1,570,000 this quarter, up from 1.4 $9,000,000 in the Q3 of 2022. Revenues in the Q3 of 2023 declined 7.7% compared to the Q3 of 2022. The year over year decline narrowed from the 1st and second quarters of 2023, which saw declines of 30.7% and 24.3%, respectively, from 2022. Speaker 100:08:12We believe this signals that the market is beginning to adjust the interest rates. Our commission receipts in October improved on a year over year basis, the first time since May 20 22. Total listing volume also improved in the Q3, up 6.2% from the 2022 period. Due to our solid financial position and cost reduction strategy, Douglas Elliman is well positioned to successfully navigate near term industry challenges. Douglas Elliman's strong balance sheet underscores our long history of profitability and managing various market conditions. Speaker 100:08:48We maintain ample liquidity with cash and cash equivalents of approximately $126,000,000 or $1.43 per common share and no debt. In the Q3 of 2023, we continued to adjust our cost structure to benefit our business, including additional headcount reductions, cutting costly sponsorships, Streamlining advertising and commencing a program to begin consolidating office space. Our cost reduction efforts have been judicious The results of our strategy are beginning to flow to the bottom line. Compared to the year ago period, our real estate brokerage segment reduced its operating expenses, excluding commission expense and restructuring by $7,800,000 in the Q3 of 2023, representing a decline of 10.5%. On a sequential basis, our Real Estate Brokerage segment reduced its operating expenses, excluding commission expense and restructuring by $4,100,000 this quarter compared to the Q2 of 2023, representing a decline of 5.8%. Speaker 100:09:54We expect the impact of our cost reduction efforts will continue to We are proud to share that our agent retention rate stands at 90% and we continue to attract the industry's best talent. Looking ahead, we remain focused on continuing to capture market share by leveraging Our key strengths, which include our world class network of 6,900 agents and our development marketing business. Our development marketing business is creating a foundation for long term value as transactions close over the next several years and provides a competitive advantage, especially considering the limited inventory of existing homes available for resale. For the 12 months ended September 30, 2023, our Development and Marketing business signed and brought to market new projects with $5,100,000 of gross transaction value, including $4,600,000 of gross transaction value added in the 12 months ended September 30, 2023 in Florida alone. In summary, Douglas Elliman continues to meet the current macroeconomic challenges, And we believe our differentiated platform and the underlying strength of our business positions us for long term growth and success. Speaker 100:11:13Our proven management team has a successful history of navigating many economic cycles and applying financial discipline that balances the importance of maintaining revenue and managing operating expenses to create long term stockholder value. Looking ahead, in addition to driving operational We are focused on strategic market expansion, continued recruitment of outstanding talent and further adoption of innovative solutions to empower our brokers. With that, we will be happy to answer questions. Operator? Operator00:12:09We'll take our first question from Dan Fannon with Jefferies. Please go ahead. Your line is open. Speaker 200:12:15Thanks. Good morning. Wanted to follow-up on, I guess, more of your latter comments there, just in terms of reevaluating your market footprint. Clearly, Florida seems to be doing well, but are there areas or markets that you're subscale that you might be looking to exit? Or on the opposite Potentially in this type of environment, areas you're looking to expand and maybe take market share? Speaker 100:12:39Well, obviously, there are markets that are not performing as well as they've had in the past, New York being one of them, although New York has picked up considerably. It's interesting. It's much more of a downtown market now than it was Years ago when everyone was going uptown to the Upper East Side. But it's okay. It's not terrible. Speaker 100:13:05I mean, I think probably one of the not so good markets for everyone is California. And that's basically because of what's going on in California. Not that some of it's not going on in New York, but they also put in a new tax, which really is hurting The realtors because of the additional tax for the buyers and the sellers. So that is a soft market. On the good side, we've looked at a couple of markets where one of them being in Nashville. Speaker 100:13:40We think that's a good market. And when I say it's a good market, it's also a good market for us because there's a lot of new development projects starting. And we'd like to go into a market when we have a new Development signed up or almost signed up and we know that we'll have a bit real business starting from day 1. We're trying to stay with No surprise, the low tax or no tax states. Las Vegas is doing okay. Speaker 100:14:07We have there in a short time, I We have about 90 to 100 brokers. We have a couple of new development projects signed up. So that's good. And New York, we also have a couple of new ones we're working on. Miami through all of South Florida, I should say, because we're on the West Coast now. Speaker 100:14:33We've opened a bunch of offices on the West Coast. We just opened in Sarasota. So we're doing well there and that is a really robust new development marketplace. So that's really Speaker 200:14:50helping. Okay. That's helpful. And then you mentioned October receipts Improved year over year. So if you could just expand upon that? Speaker 200:14:58And then also, inventories, are you seeing any Change or sustain change as you look at what's happening here in October November versus what has been happening here obviously in recent months? Speaker 300:15:12Hi, Dan. It's Brian Kirkland. October receipts were up about 2.5% from October 2022, And that was fairly evenly distributed between existing home and development marketing. So we feel really positive about that. We do think that buyers are now starting to adjust to the mortgage interest rate environment. Speaker 300:15:33And then your next question was Speaker 200:15:37Just as whether inventories are also showing similar signs of showing some continued improvement. Speaker 300:15:44And we're also seeing across the board, I think our listing inventory in the 3rd quarter was up 6% from 2022 Q3. We view that as a positive sign. That's been a trend that has been continuing the entire year. Last year, obviously, there was a seller strike. Now that's returning where The market is really opening up, and this will be gradual, but we're very positive on the long term. Speaker 200:16:11Okay, great. And then just lastly, just the development marketing business in general, you mentioned Some specifics, seems like that is picking up. I guess, is there any higher level comments you can talk about in Aggregate versus the regions and or, I guess, thinking about prospectively, is there a sign that, that has continued momentum as you think about this quarter and next year. Speaker 100:16:40Yes, look, it has quite a bit of momentum. I can give you examples, but I don't want to brag. So, not going to do it. But I mean, We've opened projects in actually in Miami, where we were shocked how quick they sold And the prices that we're getting for them. And I think that's also So all the way pretty much in all of South Florida. Speaker 100:17:16It's sort of robust. And I think part of the reason It is the fact what you were asking about, about the inventory. If there's really no resale inventory, the only inventory or the biggest inventory on the market is the new development. And realistically, when I speak to people about it, I think it's pretty simple. If you're worried about interest rates, the good news about new development that you don't pay upfront, you don't close, you put down deposits over the period of time that the buildings Started and being built, probably you end up having cash of about 40% to 50% by the time it's ready to close. Speaker 100:17:57When it's ready to close, which is usually, let's say, 2 to 3 years after we started sales, you are sitting with a Probably, if you're going to mortgage it, probably lower interest rates. We would assume so 2 or 3 years from now. And also with inflation still around, you're going to own something that you couldn't build again for the price or couldn't buy again for the price that you bought it at 2 or 3 years before. So that's sort of an interesting way to look at it, which I think is like one of the reasons that market is so strong. Speaker 200:18:35Great. Thanks for taking my questions. Speaker 300:18:39Thanks, Seth. Operator00:18:41We'll take our next question from Sohrab Monsely with BTIG. Please go ahead. Your line is open. Speaker 400:18:48Hey, good morning guys. Hope you're all doing well. I guess first one on the industry headlines. I know you're not commenting there directly on the cases, which I understand. But I guess you guys are in somewhat of a unique position in that you have some experience navigating some class action lawsuits in your Liggett business. Speaker 400:19:07So I guess is there anything that you can draw from your experience just going through that? And are there any parallels that you see in the cases that are being brought against the brokerage industry today? Speaker 100:19:17We don't really want to comment on it. I mean, obviously, we have a long experience in it and we're hoping that that experience is going to help us Navigate this and if it turns out as good as the other one, the last one, the last big one we did then we'd be pretty happy. Okay. Speaker 400:19:36And then on the new development side, it definitely feels like a differentiator, right, just because the lack of supply and Because developers need that service. I guess, can you just give us a sense for how large that business is today? And then how much more can you scale that business up going forward. Speaker 300:19:54So, thanks for that question. So that business has been gradually growing throughout the year. We do And you can go back to prior conference call scripts and you see every quarter we're giving more numbers coming in the pipeline over the last year. So right now, we have about $21,500,000,000 in pipeline that's currently on the market. That doesn't include many other projects that are coming to market And that number is up from about $20,000,000 last quarter $20,000,000,000 excuse me. Speaker 300:20:23So $21,500,000,000 in the pipeline. Speaker 100:20:25And just to give you some additional info, I think probably about $13,000,000,000 or $14,000,000,000 of it is in South Florida. Yes, dollars 13,000,000,000 to $14,000,000,000 in South Florida. Speaker 400:20:36And so is there any way we could sort of get a sense for like when this volume should start Trickling into the P and L, right, over the next couple of years. Is there any sense? Because I mean that seems pretty meaningful there if you just apply that volume against Yes. Speaker 100:20:52BK is going to answer that, but I will tell you every time we think when it's coming, it's usually delayed. Whether it's building or permits or financing, we'll put a development back up. But go ahead. Speaker 300:21:04And Howard, I don't know what else I can add to Yes. All that being said, it will come into revenue over the next 4 to 5 years. It will be more gradual. And but the point about this business is it has great inertia and it keeps building on volume. So it's almost becomes a residual. Speaker 100:21:26Yes, that's right. Speaker 400:21:27Okay. And then just on the share repurchases, I know the 2 year anniversary on the spin is So that sort of gives you ability to sort of unlock that. Obviously, a lot of uncertainty right now with the lawsuits, but Is there any thought being given to putting a plan in place even if it's just to send sort of a message to the market here where the stock is trading? Speaker 300:21:49Yes. So, you're correct that 2 years comes up in 50 days from now from the spin off. That's going to be a Board decision. Obviously, the Board meets every quarter. It deliberates well on these matters. Speaker 300:22:02And We are very confident forward we'll make a decision. Speaker 100:22:06Yes, we're surely going to talk about it in great detail and then make a decision. Speaker 400:22:11Okay. And then just last one, Brian, on your run rate operating expenses ex the commissions, what's a good ballpark To assume sort of over the next few quarters and then can you just talk about any opportunities to lower that run rate just in 2024? Because it seems like we're sort of going to probably hit A flat market on transaction volumes, we could be higher on ASP. So just, yes, anything there. Speaker 300:22:34Okay. And we're very proud of what we've done on We're proud because we have been judicious because we're taking a long term approach. As Howard mentioned earlier, our operating expenses, Excluding commissions and restructuring, we're down $7,800,000 versus the last year quarter. That was comprised of about $3,600,000 of We have reduced about 60 employees over the last year, reduction of $2,200,000 in advertising and sponsorships, Another $1,800,000 in just general type expenses and $400,000 in travel. On a sequential basis, Quarterly expenses were lower from 2nd quarter by about $4,100,000 about $1,300,000 of that was personnel where some of the cuts we made Earlier in the year are now starting to come in on a full quarter and also $1,300,000 on advertising and administration and 250 $1,000 of travel. Speaker 300:23:34We've been very mindful of spending judiciously and not being penny wise, impound foolish and not I think any cuts that would impact the agent experience. So you know rent expense is one of our big numbers and Occupancy cost just on the pure leases are about $34,000,000 a year. There's another $10,000,000 of other costs associated with the leases. So that's about 22.5% of our non activity based expenses. We'll start to see runoff of that Before January 25, starting in 2023, it reduces about $8,250,000 over that 2 year period. Speaker 300:24:17And after then, we start running off about $3,000,000,000 of leases throughout the year. Speaker 100:24:22So Our plan really is to Unless it's a specific location that we really need and it's really being used, it's to basically not renew any leases and consolidate Speaker 300:24:37Right. And when we give those numbers, obviously, that's just our pure expense. That's not what we will save by doing that. Speaker 400:24:45So just on the run rate to understand, so we should assume like personnel and those line items sort of stay flat from here on, but then where you would really see sort of declines is on The rent side, is that fair over the next few quarters? Speaker 300:25:02We are evaluating our expenses going forward and we'll continue to analyze expenses across the board. We're hopeful that we can achieve more savings, but stay tuned. Great. All right. Speaker 400:25:15Thanks a lot, guys. Operator00:25:23And ladies and gentlemen, Those are all of the questions that we have for today. Thank you for joining us on the Douglas Elliman quarterly earnings conference call. We hope you have a good day and this will conclude our call. Speaker 100:25:39Thank you. Bye.Read morePowered by