Douglas Elliman Q4 2024 Earnings Call Transcript

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March 11, 2025

There are 3 speakers on the call.

Operator

Welcome to Douglas Elements Fourth Quarter and Full Year twenty twenty four 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 An archived version of the webcast will be available on the Investor Relations section of the company's website located at investors.element.com for one year. During this call, the terms adjusted EBITDA and adjusted net income or adjusted net loss will be used.

Operator

These terms are non GAAP financial measures and should be considered in addition to, but not as a substitute for, other measures of financial performance prepared in accordance with GAAP. Reconciliations to adjusted EBITDA, adjusted net income 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 or implied by forward looking statements. These risks are described in more detail in the company's Securities and Exchange Commission filings.

Operator

Now, I would like to turn the call over to Chief Executive Officer of Douglas Elliman, Michael S. Lebowitz.

Speaker 1

Good morning, and thank you for joining us. First, I am proud to report on the progress we have made since I was named Chief Executive Officer of Douglas Elliman in October as we lead this storied company through an exciting new chapter. With me today on the call is Brian Kirkland, our Chief Financial Officer. On today's call, we will discuss the current operating environment and Douglas Elliman's financial results for the three months and year ended 12/31/2024. All numbers presented this morning will be as of 12/31/2024, unless otherwise stated.

Speaker 1

We will then provide closing comments and open the call for questions. Before we turn to our fourth quarter twenty twenty four results, I would like to start by summarizing the value we are creating at Tugus Element. We are building momentum. Our revenues increased in the fourth quarter of twenty twenty four by 13.6 from revenues in the fourth quarter of twenty twenty three. Our cash receipts in January and February of twenty twenty five were approximately 30% more than cash receipts in January and February of twenty twenty four.

Speaker 1

Our agents and employees are energized as we lead Douglas Elliman into a new era. We were honored once again to be ranked as the most trusted real estate brokerage in 2025 by LifeStory Research, an independent research firm. This ranking underscores the power of the Elliman brand providing our agents. Building on this trust and the power of our name, we are executing a strategic plan to continue to expand our revenue base with growth initiatives focused on recruiting and international expansion. And we will be mindful of reducing costs as we now analyze all investments and ensure they achieve our internal return on investment targets.

Speaker 1

Our newly created strategic M and A and business development unit continues to explore complementary acquisitions and ancillary businesses to analyze investments to ensure they achieve ROI targets. The initiatives are transforming Douglas Elliman into a company with a diversified revenue streams and a sustainable growth engine and an industry leader driving innovation and technology. With that, I will turn it over to Bryant, who will discuss our performance and the trend shaping the residential real estate industry.

Speaker 2

Thank you, Michael. And the management team remains focused on Douglas Elliman's transformation. We are confident that the improvement in financial results that began in the second and third quarters of twenty twenty four is positioning Douglas Elliman for long term success. The fourth quarter results indicate our core operations are beginning to benefit from the expense reductions management has implemented as well as the significant investments made in our development marketing division. Before reviewing the financial performance, we will provide some updates on trends in home sale pricing and development marketing as well as accolades earned in some of our key markets.

Speaker 2

First, pricing for home sales remained strong. In the fourth quarter, our industry best average price per transaction rose to 1,640,000 per home sale compared to $1,580,000 per home sale in the comparable 2023 period. For the year, our average price per transaction is $1,670,000 per home sale compared to $1,590,000 in the 2023 period. We believe these data points are illustrative of Douglas Elliman's expertise in the luxury and ultra luxury residential real estate markets that we are proud to serve. Second, our development marketing division remains the preeminent industry player with a pipeline of actively managed projects of approximately $27,700,000 in gross transaction value.

Speaker 2

Approximately $18,100,000,000 of gross transaction value is in Florida alone. In addition to this active pipeline, we have another $5,000,000,000 of gross transaction value coming to market through March 2026. We believe this foundation of business bodes well for the future as we will recognize commission income from these projects when they close, which is generally between 2025 and 2029. We have already begun to see the momentum of this pipeline in the fourth quarter of twenty twenty four with development marketing's revenue increased to $25,500,000 from $9,500,000 in the twenty twenty three fourth quarter. Third, many of our brokerages continue to outperform their peers.

Speaker 2

We were recently named number one brokerage by sales volume on Long Island and the Hamptons and in 2024 eclipsed sales records in Aspen, North Miami and on the North Fork Of Long Island. Transitioning to updates on our expense structure. We continue to manage investments across our markets by focusing on return on investments. In 2024, we reduced our operating expenses by $19,700,000 from 2023 after excluding commissions, depreciation and amortization, unusual litigation settlement and related expense, restructuring expenses and non cash stock compensation expenses. Now turning to Douglas Elliman's financial results for the three months ended 12/31/2024.

Speaker 2

Douglas Elliman has maintained ample liquidity with cash and cash equivalents at 12/31/2024 of approximately $135,000,000 as well as investments in U. S. Treasury securities of another $10,000,000 for a total of 145,000,000 Historically, the first quarter is usually cash flow negative because of the seasonality of our business and the timing of annual cash bonuses, which are paid in March. However, the decline in cash investments in 2025 to date has been significantly lower than previous years because of the increase in January and February cash receipts compared to 2024. I am pleased to report after adjusting for the annual bonus payments, our liquidity remains strong with adjusted cash, cash equivalents and investments totaling approximately $140,000,000 as of 03/10/2025.

Speaker 2

The strength of our balance sheet provides a competitive advantage for Douglas Elliman as we implement the plan Michael has discussed earlier. Moving on to the operating performance of the business in the fourth quarter. Total settlement reported $243,300,000 in revenues compared to $214,100,000 in the twenty twenty three fourth quarter. Net loss for the fourth quarter was $6,000,000 or $0.07 per diluted share compared to $14,800,000 or $0.18 per diluted share in the twenty twenty three fourth quarter. Adjusted EBITDA for the fourth quarter were a loss of $5,400,000 compared to a loss of $16,100,000 in the twenty twenty three fourth quarter.

Speaker 2

Adjusted net income in the fourth quarter was $2,400,000 or $0.03 a share compared to adjusted net loss of $13,700,000 or $0.17 per share in the twenty twenty three fourth quarter. Now turning to Douglas Elliman's financial results for the year ended 12/31/2024. Douglas Elliman reported $995,600,000 in revenues compared to $955,600,000 in 2023. That loss attributed to Douglas Elliman was $76,300,000 or $0.91 per diluted share compared to $42,600,000 or $0.52 per diluted share in 2023. Adjusted EBITDA for the year ended 12/31/2024 were a loss of $17,800,000 compared to a loss of $39,900,000 in 2023.

Speaker 2

Adjusted net loss for the year ended 12/31/2024 was $24,000,000 or $0.29 per diluted share compared to $40,100,000 or $0.49 per diluted share in 2023. Thank you for your attention and back to you, Michael.

Speaker 1

Thanks, Brian. When we last spoke in November, I told you that I took on the CEO role because I believe in the strength of the Douglas Elliman brand and its bright future. These results show we are performing extremely well and our best days ahead are ahead for this company. With that, we will be happy to answer any questions. Operator?

Operator

Thank you. And I am seeing no questions 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.

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Douglas Elliman Q4 2024
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