NYSE:DOUG Douglas Elliman Q4 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-$0.08Consensus EPS -$0.03Beat/MissMissed by -$0.05One Year Ago EPS-$0.23Douglas Elliman Revenue ResultsActual Revenue$214.14 millionExpected Revenue$254.52 millionBeat/MissMissed by -$40.38 millionYoY Revenue GrowthN/ADouglas Elliman Announcement DetailsQuarterQ4 2023Date3/1/2024TimeAfter Market ClosesConference Call DateFriday, March 1, 2024Conference Call Time8:00AM 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)Annual Report (10-K)SEC FilingEarnings HistoryCompany ProfilePowered by Douglas Elliman Q4 2023 Earnings Call TranscriptProvided by QuartrMarch 1, 2024 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Welcome to Douglas Elements 4th Quarter and Full Year 20 23 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 An archived version of the webcast will be available on the Investor Relations section of the company's website located at investors.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. Operator00:00:29These 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 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. Operator00:01:19Now I'd like to turn the call over to the Chairman, President and Chief Executive Officer of Douglas Elliman, Howard Lorber. Please go ahead. Speaker 100:01:28Good 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 financial results, we want to reference the ongoing Sitsa Burnett and other resulting litigation in the residential real estate brokerage industry. Given this is active litigation, we are not going to comment or speak to potential outcomes. We also intend to decline to answer questions on these matters. Speaker 100:02:04Since the verdict, more than 20 cases have been filed nationally, of which Douglas Hellman is currently aware of 7 that involve us or one of its subsidiaries as a defendant. The plaintiffs in certain of those Sabrina trial in Missouri. The judicial panel will hear the matter on March 28, 2024. In addition, we understand that the Department of Justice is reviewing industry practices on setting buyers' broker commissions, including by weighing in on settlements reached by other companies. Douglas Elliman is currently defending the cases pending against it and has a number of free trial motions that will or have been brought. Speaker 100:02:48We believe the lawsuits, which are still in the very early stages and will likely take years to litigate, lack merit and we intend to challenge them. As we begin to discuss our 4th quarter performance, we are enormously proud to share that Douglas Elliman recently named the most trusted real estate brokerage firm in the United States as part of the America's Most Trusted series by LifeStory Research. This tremendous accomplishment is a testament to the hard work of our world class agents and their unwavering commitment to our clients across the markets we serve. Now turning to Douglas Elliman's financial results for the 3 months ended December 31, 2023. Please note that all numbers presented this morning will be as of December 31, 2023, unless otherwise stated. Speaker 100:03:35We are pleased that Douglas Elliman continued to outperform many of its peers in the Q4 of 2023 despite ongoing industry wide headwinds that impact results. We attribute our solid performance to 3 factors: stable pricing in our luxury markets, where buyers are less sensitive to interest rate pressures the competitive advantage provided by Douglas Elliman's strong development marketing business and our world class agents. For the Q4 of 2023, Douglas Elliman reported Net loss attributed to Douglas Simon for the Q4 was $14,800,000 or $0.18 per diluted share compared to $18,400,000 or $0.23 per diluted share in the 2022 period. Adjusted EBITDA attributed to Douglas Simon in the 4th quarter were a loss of $17,500,000 compared to $17,100,000 in the 2022 period. For comparison purposes, our Real Estate Brokerage segment reported an operating loss of $16,400,000 this quarter compared to $15,600,000 in the 2022 period, and adjusted EBITDA attributed to the segment were approximately a loss of $12,500,000 compared to $12,600,000 in the 2022 period. Speaker 100:05:01Adjusted net loss attributed to total summary in the 4th quarter was $14,500,000 or $0.18 per share compared to 18,400,000 or $0.23 per share in the 2022 period. Now turning to Douglas Elliman's results for the year ended December 31, 2023. Vogtle Sondland reported $956,000,000 in revenues for the year ended December 31, 2023, compared to $1,150,000,000 in 2022. Net loss attributed to total settlement was 42,600,000 or $0.52 per diluted share compared to $5,600,000 or $0.08 per diluted share in 2022. Adjusted EBITDA attributed to Todoga Salmon for the year were a loss of $40,700,000 compared to income of $15,000,000 in 2022. Speaker 100:05:52Our Real Estate Brokerage segment reported an operating loss of $36,800,000 for the year compared to operating income of $22,000,000 in 2022. Adjusted EBITDA attributed to the Real Estate Brokerage segment were a loss of $21,500,000 compared to income of $34,500,000 in 2022. Adjusted net loss attributed to Vogtle and was $40,900,000 or $0.50 per share for the year compared to $6,200,000 or $0.08 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 residential real estate. We have previously discussed the cyclical nature of our industry. Speaker 100:06:36Generationally, high mortgage rates have driven sustained listing inventory shortages across our luxury markets for almost 2 years. These shortages have resulted in significantly lower transactions during this time. While we expect these industry wide challenges will continue to impact our results for the Q1 of 2024, we remain encouraged by improvements in the Q4 of 2023 specifically. The Q4 saw our first increase in year over year quarterly revenues since the Q1 of 2022, which was driven by higher activity across the markets we serve, particularly in Florida. Generally, the strongest markets tend to be the 1st markets to emerge from a downturn. Speaker 100:07:20This trend has continued in 2024 as our commission receipts have improved on a year over year basis in January February of 2024. We believe this signals that the market is beginning to adjust to higher interest rates. Nonetheless, buyers are feeling encouraged after the Federal Reserve signaled in January that it is nearing a long awaited shift toward cutting interest rates. Importantly, total listing volume also improved in the Q4 of 2023, up 25% from the 2022 period with gains in listings reported in Florida, California, New York and Colorado, all increasing significantly compared to the Q4 of 2022. Because we recognize revenues when the sale closes, we expect that we will begin to see the impact of increased listing volume in the second half of twenty twenty four. Speaker 100:08:13Our gross transaction value increased to $7,900,000,000 in the Q4 of 2023 from $7,500,000,000 in the Q4 of 2022. And transaction volume increased by approximately 5.2% in the 4th quarter. Consistent with the increase in transactions, our average sales price per transaction remained an industry best $1,580,000 in the 4th quarter. This was flat compared to the Q3 of 2023 Q4 of 2022. We believe the consistency in average price per transaction reflects the strength of the luxury markets we operate in as well as Douglas Elliman's reputation for offering the finest properties and client experience in real estate. Speaker 100:08:58Due to our solid financial position and cost reduction strategy, Douglas Elliman is well positioned to successfully navigate near term industry challenges. Douglas Elleman's strong balance sheet underscores our long history of profitability in managing various market conditions. We have maintained ample liquidity with cash and cash equivalents of approximately $120,000,000 or 1.31 dollars per common share and 0 debt. Throughout the year, we have continued to adjust our cost structure to benefit our business, including additional headcount reductions, cutting costly sponsorships, streamlining advertising and commencing a program to consolidate office space. Our cost reduction efforts have been judicious and the results of our strategy are beginning to flow to the bottom line. Speaker 100:09:48Our Real Estate Brokerage segment reduced its operating expenses, including commission expense, restructuring and other non case expenses by $2,200,000 in the Q4 of 2023, representing a decline of approximately 3.2% compared to the prior year period. We believe these efforts will continue to create a more nimble bogus element without significantly impacting the aging experience. We are proud to share that our agent retention rates stand at 92%, 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, including our world class network of agents and our development marketing business. We believe 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, particularly at premium residences and especially considering the limited inventory of existing home sales available. Speaker 100:10:50As of December 31, 2023, our development and marketing business had an active pipeline of signed and new projects $21,600,000,000 gross transaction value, including $13,800,000,000 of gross transaction value in Florida alone, Further, dollars 9,700,000,000 of additional transaction value from our development marketing business is scheduled to come to market in the next year. We believe this bodes well for the future as we will recognize commission income from these projects as they close in the coming years. 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. Our proven management team has a successful history of navigating many economic cycles and applying financial discipline that balances the importance of maintaining revenues and managing operating expenses to create long term stockholder value. Looking ahead, in addition to driving operational efficiencies, we are focused on strategic market expansion, continued recruitment of outstanding talent and further adoption of innovative solutions to empower our brokers. Speaker 100:12:08With that, we will be happy to answer questions. Operator? Operator00:12:19Thank you. We'll take our first question from. Please go ahead. One moment, please. Speaker 200:13:23Hi. Can you all hear me? Speaker 100:13:25Yes. Yes. Now we can. Speaker 200:13:27Hi, great. Good morning, everyone. Hope you're doing well. So Speaker 300:13:31this looks like it's Speaker 200:13:32the 2nd quarter in a row where you've taken some market share, at least compared to the national stats, which is great. But I know you're not in every market in the U. S. Today either. So I guess the question is, are you seeing market share take on a local level as well? Speaker 200:13:47Or should we sort of think about this more of a function of your end markets just outperforming sort of the national markets here? Speaker 100:13:55I would say that generally speaking, the high end markets do perform better. And that's why we've pretty much stuck to the high end markets and our expansion is going to be going to be the same. We're not interested in going to every single market just to say that we have more markets, more brokers, but they don't have anywhere near what we have an average price on sales. So we think that this is the right strategy for our company. Speaker 200:14:32Got it. Okay. And it looks like your commission split was up another 2 10 basis points this quarter. It was sort of in the same ballpark last quarter. So can you just maybe speak to the drivers of the increase there? Speaker 200:14:45And are you seeing more competition for agents today? Or is that just a function of mix? And should we sort of expect this trend to continue? Speaker 100:14:53Well, I think it's both those things you mentioned. Surely, there's been a lot of competition. Companies are trading agents back and forth and many times they're giving cash bonuses when they sign up and higher splits. And this has been going on now for a number of years, probably for about 6 or 7 years. And I think it's sort of slowed down at this particular point. Speaker 100:15:22And my guess is that as the market improves and brokers are doing better and better, that the that maybe will come down. It's not positive that I would say it will come down because it's hard to take something back that you've already given, but at least on new agents and so forth will be at a lower level and that will help mediate these increases. Speaker 200:15:48Okay, understood. And then, Brian, on the operating expenses, looks like the G and A line was a little higher quarter over quarter. Was there any one time items to call out there? And then how should we think about sort of the quarterly run rate for just total OpEx ex commissions in 2024? Speaker 400:16:08So, good morning first. And you're correct, the G and A line was higher. Some of that relates to the timing of expenses, particularly between the Q3 and Q4 related to events that we sponsor as well as insurance. And obviously, also there was an increase in professional fees during the quarter. Going forward, we would say we like where we are, but we are going to be making more meaningful cuts in 2024. Speaker 400:16:40In particular, we've discussed in our prior calls about the $4,000,000 lease running off. And in addition to that, we are making meaningful cuts in our property management division and expect some of those cuts to go over to the other areas of the business. Speaker 200:16:57Got it. And then just lastly, is Scott on the call? He is, right? Hello? Yes. Speaker 200:17:07This is Tom. This one is for Scott, I guess, Scott or Howard. I guess, just wondering, you guys all speak to agents daily. Can you just maybe give us a feel for what conversations with agents are going like today? Is there concern around sort of just uncertain environment today? Speaker 200:17:24Or do you feel like they feel good about adapting to whatever may come ahead? Speaker 100:17:30Yes. I think that most of them are adapting to what will ever come ahead. I assume, as I said, we're not going to comment on the litigation. But I feel that look, we have a great group of agents in the high end markets that do high very high end sales. And of course, we are have to have markets that are lower end, but still high compared to the whole country. Speaker 100:18:00Like Long Island is a where the company really started is a lower end market, but still that's a market probably that averages about $600,000 per transaction. So it's not extremely low market. But I think that the agents are happy, happier anyway doing well. I guess there's been a little disappointment because I think most of us thought that we have a rate cut in the Q1, which obviously is not going to happen now. But I think once that happens, which hopefully now will be the Q2, that I think that it's going to be a great boom for the industry. Speaker 200:18:51Great. I appreciate all the thoughts. Operator00:18:57We'll go next to Ahmed Mairi with Jefferies. Speaker 300:19:03Good morning. This is Ahmed from Jefferies. I guess my first question is about the macro environment. I was just hoping you could share some color on what you're seeing there and when comps start to accelerate in terms of volume this year? Speaker 100:19:22So you're talking about compared to our competitors? Speaker 300:19:27No. In terms of like call it year over year. Speaker 100:19:32Yes, again year over year obviously we have there's a lack of inventory in most markets, especially in the strong markets and the low tax states. So that I believe once there is a rate cut that that will push a lot more into the market and we will be doing substantially more business as rates come down. And our new development business is a key part of the company is a key part of Douglas Elliman and we have a great very strong business there. And that's generally speaking at the high end of the market. And we're still pretty new in markets like Texas and there's a great upside to Texas. Speaker 100:20:33We now have we have 3 offices. We have Austin, Dallas and Houston and we're looking at maybe another market or so in Texas. So we think that's a great market to be in. We're also looking at others at other markets, but we're looking pretty much at the low tax or no tax states to expand on a macro basis. Speaker 300:20:57Got it. That's great color on the markets. Actually, if you could maybe expand a little more on just what markets are seeing better demand or which markets maybe you're more concerned about? Speaker 100:21:13Yes. Well, I mean, what I think the ones that we're more concerned about are the ones that are taxing people out of their states. We're in California, but California is very difficult, okay, very difficult because they keep adding taxes and it's pretty tough. And California was also a state that always had higher commission payouts to brokers than the East Coast. So that's a tough one. Speaker 100:21:51I think that's probably the toughest of the markets that we're in. But I think that think look I think BK, do you want to comment? Speaker 400:22:00Yes, I'll be happy to and good morning. I think one part about our story is our luxury brand is permeating throughout the country as there shifts in the population. If you look at Florida, California and new markets, they increased from 41% of revenues in the Q4 last year to 40 6% this year. Florida alone went from 20.5% to 25% of the market of our total revenues. So that was a significant increase. Speaker 400:22:32And we are continuing to see a lot of strong demand in Florida. As Howard mentioned earlier, there's $13,800,000,000 in inventory that we have that we're currently selling in our development marketing. Speaker 100:22:50And the backlog of others that will be coming on to the market? Speaker 400:22:52Yes. And that number in Florida, I believe, is $5,800,000 $5,800,000,000 Howard. Speaker 300:23:02Got it. That's helpful. And then just one last one for me. This is really like I guess I couldn't find it, so apologies if I missed this on your filings. But just trying to understand your development business. Speaker 300:23:13Could you maybe explain again what's like the timing of, I guess, recognition of cash and revenues on that? Speaker 100:23:29BKs. Yes. I'll be happy Speaker 400:23:32to take that. So generally, when a deposit is received in development marketing, we record that as a liability or deferred revenue and we recognize the commission that we pay to our agent as a cost as a deferred cost. So we do not recognize profit on the new development until units start to close because under the accounting rules, a sale occurs when all items have been met to close that sale. So that's when revenue was recognized. So there is a deferred liability on the books. Speaker 400:24:10I believe the number is about $63,000,000 and the deferred cost related to commitments we paid on is about $41,000,000 The difference of that twenty $1,000,000 will be recognized over time generally that that's 4 years. Speaker 100:24:23The other advantage is this is going to help our margins. Missions on new development sales are less than regular resales. Speaker 300:24:39Got it. Yes, that's very helpful. Speaker 400:24:42Yes. I gave a number earlier. Coming to market on new development this year is $9,700,000,000 Florida of that is 5,100,000,000 Speaker 100:24:55That's not including what's already on the market? Speaker 400:24:58That's correct. Speaker 100:24:59Hasn't closed yet. Speaker 300:25:04Perfect. Thank you. Operator00:25:09Ladies and gentlemen, those are all the questions that we have for today. Thank you for joining us on Douglas Elliman's quarterly earnings conference call. We hope you have a good day and this will conclude our call.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallDouglas Elliman Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Annual report(10-K) Douglas Elliman Earnings HeadlinesSouthpole fashion founder lists Miami penthouse for $27.5M — $16.5M more than what he paid in 2021April 25 at 2:04 AM | msn.comDouglas Elliman Inc. 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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 Douglas Elements 4th Quarter and Full Year 20 23 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. Operator00:00:29These 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 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. Operator00:01:19Now I'd like to turn the call over to the Chairman, President and Chief Executive Officer of Douglas Elliman, Howard Lorber. Please go ahead. Speaker 100:01:28Good 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 financial results, we want to reference the ongoing Sitsa Burnett and other resulting litigation in the residential real estate brokerage industry. Given this is active litigation, we are not going to comment or speak to potential outcomes. We also intend to decline to answer questions on these matters. Speaker 100:02:04Since the verdict, more than 20 cases have been filed nationally, of which Douglas Hellman is currently aware of 7 that involve us or one of its subsidiaries as a defendant. The plaintiffs in certain of those Sabrina trial in Missouri. The judicial panel will hear the matter on March 28, 2024. In addition, we understand that the Department of Justice is reviewing industry practices on setting buyers' broker commissions, including by weighing in on settlements reached by other companies. Douglas Elliman is currently defending the cases pending against it and has a number of free trial motions that will or have been brought. Speaker 100:02:48We believe the lawsuits, which are still in the very early stages and will likely take years to litigate, lack merit and we intend to challenge them. As we begin to discuss our 4th quarter performance, we are enormously proud to share that Douglas Elliman recently named the most trusted real estate brokerage firm in the United States as part of the America's Most Trusted series by LifeStory Research. This tremendous accomplishment is a testament to the hard work of our world class agents and their unwavering commitment to our clients across the markets we serve. Now turning to Douglas Elliman's financial results for the 3 months ended December 31, 2023. Please note that all numbers presented this morning will be as of December 31, 2023, unless otherwise stated. Speaker 100:03:35We are pleased that Douglas Elliman continued to outperform many of its peers in the Q4 of 2023 despite ongoing industry wide headwinds that impact results. We attribute our solid performance to 3 factors: stable pricing in our luxury markets, where buyers are less sensitive to interest rate pressures the competitive advantage provided by Douglas Elliman's strong development marketing business and our world class agents. For the Q4 of 2023, Douglas Elliman reported Net loss attributed to Douglas Simon for the Q4 was $14,800,000 or $0.18 per diluted share compared to $18,400,000 or $0.23 per diluted share in the 2022 period. Adjusted EBITDA attributed to Douglas Simon in the 4th quarter were a loss of $17,500,000 compared to $17,100,000 in the 2022 period. For comparison purposes, our Real Estate Brokerage segment reported an operating loss of $16,400,000 this quarter compared to $15,600,000 in the 2022 period, and adjusted EBITDA attributed to the segment were approximately a loss of $12,500,000 compared to $12,600,000 in the 2022 period. Speaker 100:05:01Adjusted net loss attributed to total summary in the 4th quarter was $14,500,000 or $0.18 per share compared to 18,400,000 or $0.23 per share in the 2022 period. Now turning to Douglas Elliman's results for the year ended December 31, 2023. Vogtle Sondland reported $956,000,000 in revenues for the year ended December 31, 2023, compared to $1,150,000,000 in 2022. Net loss attributed to total settlement was 42,600,000 or $0.52 per diluted share compared to $5,600,000 or $0.08 per diluted share in 2022. Adjusted EBITDA attributed to Todoga Salmon for the year were a loss of $40,700,000 compared to income of $15,000,000 in 2022. Speaker 100:05:52Our Real Estate Brokerage segment reported an operating loss of $36,800,000 for the year compared to operating income of $22,000,000 in 2022. Adjusted EBITDA attributed to the Real Estate Brokerage segment were a loss of $21,500,000 compared to income of $34,500,000 in 2022. Adjusted net loss attributed to Vogtle and was $40,900,000 or $0.50 per share for the year compared to $6,200,000 or $0.08 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 residential real estate. We have previously discussed the cyclical nature of our industry. Speaker 100:06:36Generationally, high mortgage rates have driven sustained listing inventory shortages across our luxury markets for almost 2 years. These shortages have resulted in significantly lower transactions during this time. While we expect these industry wide challenges will continue to impact our results for the Q1 of 2024, we remain encouraged by improvements in the Q4 of 2023 specifically. The Q4 saw our first increase in year over year quarterly revenues since the Q1 of 2022, which was driven by higher activity across the markets we serve, particularly in Florida. Generally, the strongest markets tend to be the 1st markets to emerge from a downturn. Speaker 100:07:20This trend has continued in 2024 as our commission receipts have improved on a year over year basis in January February of 2024. We believe this signals that the market is beginning to adjust to higher interest rates. Nonetheless, buyers are feeling encouraged after the Federal Reserve signaled in January that it is nearing a long awaited shift toward cutting interest rates. Importantly, total listing volume also improved in the Q4 of 2023, up 25% from the 2022 period with gains in listings reported in Florida, California, New York and Colorado, all increasing significantly compared to the Q4 of 2022. Because we recognize revenues when the sale closes, we expect that we will begin to see the impact of increased listing volume in the second half of twenty twenty four. Speaker 100:08:13Our gross transaction value increased to $7,900,000,000 in the Q4 of 2023 from $7,500,000,000 in the Q4 of 2022. And transaction volume increased by approximately 5.2% in the 4th quarter. Consistent with the increase in transactions, our average sales price per transaction remained an industry best $1,580,000 in the 4th quarter. This was flat compared to the Q3 of 2023 Q4 of 2022. We believe the consistency in average price per transaction reflects the strength of the luxury markets we operate in as well as Douglas Elliman's reputation for offering the finest properties and client experience in real estate. Speaker 100:08:58Due to our solid financial position and cost reduction strategy, Douglas Elliman is well positioned to successfully navigate near term industry challenges. Douglas Elleman's strong balance sheet underscores our long history of profitability in managing various market conditions. We have maintained ample liquidity with cash and cash equivalents of approximately $120,000,000 or 1.31 dollars per common share and 0 debt. Throughout the year, we have continued to adjust our cost structure to benefit our business, including additional headcount reductions, cutting costly sponsorships, streamlining advertising and commencing a program to consolidate office space. Our cost reduction efforts have been judicious and the results of our strategy are beginning to flow to the bottom line. Speaker 100:09:48Our Real Estate Brokerage segment reduced its operating expenses, including commission expense, restructuring and other non case expenses by $2,200,000 in the Q4 of 2023, representing a decline of approximately 3.2% compared to the prior year period. We believe these efforts will continue to create a more nimble bogus element without significantly impacting the aging experience. We are proud to share that our agent retention rates stand at 92%, 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, including our world class network of agents and our development marketing business. We believe 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, particularly at premium residences and especially considering the limited inventory of existing home sales available. Speaker 100:10:50As of December 31, 2023, our development and marketing business had an active pipeline of signed and new projects $21,600,000,000 gross transaction value, including $13,800,000,000 of gross transaction value in Florida alone, Further, dollars 9,700,000,000 of additional transaction value from our development marketing business is scheduled to come to market in the next year. We believe this bodes well for the future as we will recognize commission income from these projects as they close in the coming years. 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. Our proven management team has a successful history of navigating many economic cycles and applying financial discipline that balances the importance of maintaining revenues and managing operating expenses to create long term stockholder value. Looking ahead, in addition to driving operational efficiencies, we are focused on strategic market expansion, continued recruitment of outstanding talent and further adoption of innovative solutions to empower our brokers. Speaker 100:12:08With that, we will be happy to answer questions. Operator? Operator00:12:19Thank you. We'll take our first question from. Please go ahead. One moment, please. Speaker 200:13:23Hi. Can you all hear me? Speaker 100:13:25Yes. Yes. Now we can. Speaker 200:13:27Hi, great. Good morning, everyone. Hope you're doing well. So Speaker 300:13:31this looks like it's Speaker 200:13:32the 2nd quarter in a row where you've taken some market share, at least compared to the national stats, which is great. But I know you're not in every market in the U. S. Today either. So I guess the question is, are you seeing market share take on a local level as well? Speaker 200:13:47Or should we sort of think about this more of a function of your end markets just outperforming sort of the national markets here? Speaker 100:13:55I would say that generally speaking, the high end markets do perform better. And that's why we've pretty much stuck to the high end markets and our expansion is going to be going to be the same. We're not interested in going to every single market just to say that we have more markets, more brokers, but they don't have anywhere near what we have an average price on sales. So we think that this is the right strategy for our company. Speaker 200:14:32Got it. Okay. And it looks like your commission split was up another 2 10 basis points this quarter. It was sort of in the same ballpark last quarter. So can you just maybe speak to the drivers of the increase there? Speaker 200:14:45And are you seeing more competition for agents today? Or is that just a function of mix? And should we sort of expect this trend to continue? Speaker 100:14:53Well, I think it's both those things you mentioned. Surely, there's been a lot of competition. Companies are trading agents back and forth and many times they're giving cash bonuses when they sign up and higher splits. And this has been going on now for a number of years, probably for about 6 or 7 years. And I think it's sort of slowed down at this particular point. Speaker 100:15:22And my guess is that as the market improves and brokers are doing better and better, that the that maybe will come down. It's not positive that I would say it will come down because it's hard to take something back that you've already given, but at least on new agents and so forth will be at a lower level and that will help mediate these increases. Speaker 200:15:48Okay, understood. And then, Brian, on the operating expenses, looks like the G and A line was a little higher quarter over quarter. Was there any one time items to call out there? And then how should we think about sort of the quarterly run rate for just total OpEx ex commissions in 2024? Speaker 400:16:08So, good morning first. And you're correct, the G and A line was higher. Some of that relates to the timing of expenses, particularly between the Q3 and Q4 related to events that we sponsor as well as insurance. And obviously, also there was an increase in professional fees during the quarter. Going forward, we would say we like where we are, but we are going to be making more meaningful cuts in 2024. Speaker 400:16:40In particular, we've discussed in our prior calls about the $4,000,000 lease running off. And in addition to that, we are making meaningful cuts in our property management division and expect some of those cuts to go over to the other areas of the business. Speaker 200:16:57Got it. And then just lastly, is Scott on the call? He is, right? Hello? Yes. Speaker 200:17:07This is Tom. This one is for Scott, I guess, Scott or Howard. I guess, just wondering, you guys all speak to agents daily. Can you just maybe give us a feel for what conversations with agents are going like today? Is there concern around sort of just uncertain environment today? Speaker 200:17:24Or do you feel like they feel good about adapting to whatever may come ahead? Speaker 100:17:30Yes. I think that most of them are adapting to what will ever come ahead. I assume, as I said, we're not going to comment on the litigation. But I feel that look, we have a great group of agents in the high end markets that do high very high end sales. And of course, we are have to have markets that are lower end, but still high compared to the whole country. Speaker 100:18:00Like Long Island is a where the company really started is a lower end market, but still that's a market probably that averages about $600,000 per transaction. So it's not extremely low market. But I think that the agents are happy, happier anyway doing well. I guess there's been a little disappointment because I think most of us thought that we have a rate cut in the Q1, which obviously is not going to happen now. But I think once that happens, which hopefully now will be the Q2, that I think that it's going to be a great boom for the industry. Speaker 200:18:51Great. I appreciate all the thoughts. Operator00:18:57We'll go next to Ahmed Mairi with Jefferies. Speaker 300:19:03Good morning. This is Ahmed from Jefferies. I guess my first question is about the macro environment. I was just hoping you could share some color on what you're seeing there and when comps start to accelerate in terms of volume this year? Speaker 100:19:22So you're talking about compared to our competitors? Speaker 300:19:27No. In terms of like call it year over year. Speaker 100:19:32Yes, again year over year obviously we have there's a lack of inventory in most markets, especially in the strong markets and the low tax states. So that I believe once there is a rate cut that that will push a lot more into the market and we will be doing substantially more business as rates come down. And our new development business is a key part of the company is a key part of Douglas Elliman and we have a great very strong business there. And that's generally speaking at the high end of the market. And we're still pretty new in markets like Texas and there's a great upside to Texas. Speaker 100:20:33We now have we have 3 offices. We have Austin, Dallas and Houston and we're looking at maybe another market or so in Texas. So we think that's a great market to be in. We're also looking at others at other markets, but we're looking pretty much at the low tax or no tax states to expand on a macro basis. Speaker 300:20:57Got it. That's great color on the markets. Actually, if you could maybe expand a little more on just what markets are seeing better demand or which markets maybe you're more concerned about? Speaker 100:21:13Yes. Well, I mean, what I think the ones that we're more concerned about are the ones that are taxing people out of their states. We're in California, but California is very difficult, okay, very difficult because they keep adding taxes and it's pretty tough. And California was also a state that always had higher commission payouts to brokers than the East Coast. So that's a tough one. Speaker 100:21:51I think that's probably the toughest of the markets that we're in. But I think that think look I think BK, do you want to comment? Speaker 400:22:00Yes, I'll be happy to and good morning. I think one part about our story is our luxury brand is permeating throughout the country as there shifts in the population. If you look at Florida, California and new markets, they increased from 41% of revenues in the Q4 last year to 40 6% this year. Florida alone went from 20.5% to 25% of the market of our total revenues. So that was a significant increase. Speaker 400:22:32And we are continuing to see a lot of strong demand in Florida. As Howard mentioned earlier, there's $13,800,000,000 in inventory that we have that we're currently selling in our development marketing. Speaker 100:22:50And the backlog of others that will be coming on to the market? Speaker 400:22:52Yes. And that number in Florida, I believe, is $5,800,000 $5,800,000,000 Howard. Speaker 300:23:02Got it. That's helpful. And then just one last one for me. This is really like I guess I couldn't find it, so apologies if I missed this on your filings. But just trying to understand your development business. Speaker 300:23:13Could you maybe explain again what's like the timing of, I guess, recognition of cash and revenues on that? Speaker 100:23:29BKs. Yes. I'll be happy Speaker 400:23:32to take that. So generally, when a deposit is received in development marketing, we record that as a liability or deferred revenue and we recognize the commission that we pay to our agent as a cost as a deferred cost. So we do not recognize profit on the new development until units start to close because under the accounting rules, a sale occurs when all items have been met to close that sale. So that's when revenue was recognized. So there is a deferred liability on the books. Speaker 400:24:10I believe the number is about $63,000,000 and the deferred cost related to commitments we paid on is about $41,000,000 The difference of that twenty $1,000,000 will be recognized over time generally that that's 4 years. Speaker 100:24:23The other advantage is this is going to help our margins. Missions on new development sales are less than regular resales. Speaker 300:24:39Got it. Yes, that's very helpful. Speaker 400:24:42Yes. I gave a number earlier. Coming to market on new development this year is $9,700,000,000 Florida of that is 5,100,000,000 Speaker 100:24:55That's not including what's already on the market? Speaker 400:24:58That's correct. Speaker 100:24:59Hasn't closed yet. Speaker 300:25:04Perfect. Thank you. Operator00:25:09Ladies and gentlemen, those are all the questions that we have for today. Thank you for joining us on Douglas Elliman's quarterly earnings conference call. We hope you have a good day and this will conclude our call.Read morePowered by