Q4 2023 Douglas Elliman Inc Earnings Call

Operator: www.mytrendyphone.co.uk Please subscribe. Welcome to Douglas Elliman's fourth quarter and full year 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 An archived version of the webcast will be available on the Investor Relations section of the company's website, located at investors.elliman.com, for one year. During this call, the terms Adjusted EBITDA and Adjusted Net Income will be used. These terms are non-GAAP financial measures and should be considered in addition to, but not as a substitute for, other measures of financial performance prepared in accordance with GAAP.

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Welcome to Douglas elements fourth quarter, and full year 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An archived version of the webcast will be available on the Investor Relations section of the company's website located at investors Dot Ellemann dot com for one year.

During this call the terms adjusted EBITDA and adjusted net income will be used.

These terms are non-GAAP financial measures and should be considered in addition to but not as a substitute for other measures of financial performance prepared in accordance with GAAP.

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.

Operator: 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. Now, I'd like to turn the call over to the Chairman, President, and Chief Executive Officer of Douglas Elliman, Howard Lorber. Please go ahead.

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.

Now I'd like to turn the call over to the Chairman President and Chief Executive Officer of Douglas Elliman Howard Lorber. Please go ahead.

Howard M. Lorber: Good morning, and thank you for joining us. With me today are Richard Lampin, our Chief Operating Officer, and Brian Kirkland, our Chief Financial Officer. Scott Durkin, President and CEO of Douglas Elliman Realty, a residential real estate broker. Before turning to financial results, we want to reference the ongoing Sitzer-Burnett and other resulting litigation in the residential real estate business. Given this is an act of litigation, we are not going to comment or speak to potential outcomes.

Good morning, and thank you for joining US with me today are Richard <unk>, Our Chief operating Officer, Brian Kirkland, Our Chief Financial Officer, Scott <unk>, President and CEO of Douglas Elliman Realty, a residential real estate brokerage business.

Before turning to financial results, we wanted to reference the ongoing Sarah Barnett and other resulting litigation and the residential real estate brokerage industry.

Given this is active litigation, we are not going to comment or speak to potential outcomes.

Howard M. Lorber: We also intend to do calls to answer questions on these matters. Since the verdict, more than 20 cases have been filed nationally, of which Douglas Elliman is currently aware of seven that involve us or one of its subsidiaries as a defense. Plaintiffs in certain of those actions are seeking to centralize these lawsuits for the federal judge who presided over the Sid Soberno trial in Missouri, and 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 and brokers, including by weighing in on settlements reached by others, is currently defending the cases pending, and has a number of pre-trial motions that will or have been brought. We believe the lawsuits, which are still in the very early stages and will likely take years to litigate, lack merit, and we intend to stop them.

So intend to decline to answer questions on these matters.

Since the <unk> more than 20 cases have been filed nationally.

Selman is currently aware of seven.

All of us or one of its subsidiaries as a defendant.

Gibson certain of those actions is seeking to centralize these lawsuits before the federal judge who presided over the schizophrenia trial and Missouri. So.

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.

So this element is currently defending the cases pending against it and has a number of pretrial motions, there will or happy boy, we believe lawsuits, which are still in the very early stages and will likely take years to litigate lack merit and we intend to challenge them.

Howard M. Lorber: As we begin to discuss our fourth quarter performance, we are enormously proud to share that Douglas Elliman was recently named the most trusted real estate brokerage firm in the United States as part of the America's Most Trusted series by Life Story Realtors. This tremendous accomplishment is a testament to the hard work of our world-class agency and their unwavering commitment to our clients across the market. Now turning to Douglas Elliman's financial results for the three months ended December 31st, 2023. Please note that all numbers presented this morning will be as of December 31st, 2023, unless otherwise stated.

As we begin to discuss our fourth quarter performance. We are enormously proud to share that Douglas Elliman was recently named the most trusted real estate brokerage firm in the United States as part of the Americas, Most trusted series by life story research.

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 as financial results for the three months ended December 31 2023.

Please note that all numbers presented this morning will be as of December 31st 2023, unless otherwise stated.

Howard M. Lorber: We are pleased that Douglas Elliman continued to outperform many of its peers in the fourth quarter of 2020, despite ongoing industry-wide headwinds and impact. We attribute our solid performance to three factors. Stable pricing in our luxury markets, where buyers are less sensitive to interest rate pressure, competitive advantage provided by Douglas Elliman's strong development market and their world-class agents. In the fourth quarter of 2023, Douglas Elliman reported $214.1 million in revenue, which was paid to $207.3 million in the fourth quarter of 2020. Net loss attributed to Douglas Elliman for the fourth quarter was $14.8 million, or $0.18 per diluted share, compared to $18.4 million or $0.23 per diluted share in the 2022 period, and Justin Iberta attributed to Douglas Elliman in the fourth quarter was a loss of $17.5 million, compared to $17.1 million.

We are pleased that Douglas Elliman continued to outperform many of its peers in the fourth quarter of 2023 despite.

Ongoing industry wide headwinds that impact results.

We attribute our solid performance to three factors stable pricing in a luxury market, where buyers are less sensitive to interest rate pressures.

The competitive advantage provided by Douglas Elliman strong development marketing business.

World Class agents.

For the fourth quarter of 2023, Douglas Elliman reported $214 1 million in revenues compared to $207 3 million in the fourth quarter of 2022.

Net loss attributed to <unk> for the fourth quarter was $14 8 million or <unk> 18 per diluted share compared to $18 4 million or <unk> 23 per diluted share in the 2022 period.

Adjusted EBITDA attributed to the summit in the fourth quarter or a loss of $17 5 million compared to $17 1 million in the 2022 period.

Howard M. Lorber: For comparison purposes, our real estate brokerage segment reported an operating loss of $16.4 million this quarter, and Pat to $15.6 million in 2022, and adjusted EBITDA attributed to the..., approximately a loss of $12.5 million compared to $12.6 million in the 2020 budget. Just the net loss attributed to Douglas Elliman in the fourth quarter was $14.5 million, or $0.18 per share, compared to $18.4 million, or $0.23 per share, in the 20-22 period.

For comparison purposes, our real estate brokerage segment reported an operating loss of $16 $4 million this quarter compared to $15 6 million in 2022 period and adjusted EBITDA attributed to this segment were approximately a loss of $12 5 million compared to $12 6 million in the 2022 period.

Adjusted net loss attributed to talk to somebody in the fourth quarter was $14 5 million or <unk> 18 per share compared to $18 4 million or <unk> 23 per share in the 2022 periods.

Howard M. Lorber: Now turning to Douglas Ellman's results for the year ended December 31st, 2020. Douglas Ellman reported 956 million in revenues for the year ended December 31, 2023, compared to 1.15 billion in 2020. The net loss attributed to Douglas Elliman was $42.6 million, or $0.52 per diluted share, compared to $5.6 million, or $0.08 per diluted share, in 2012. Justin Iveda should be the Tadoga Salmon for the year, or a loss of 40.7%, compared to an income of $15 million in 2020. Our real estate brokerage segment reported an operating loss of $36.8 million for the year compared to operating income of $22 million, and Justin Ibada attributed to the real estate brokerage segment a loss of $21.5 million, compared to Ankama's $34.5 million. Just the net loss attributed to Douglas Elliman was $40.9 million, or $0.50 per share for the year, compared to $6.2 million, or $0.08 per share in

Now turning to Douglas <unk> results for the year ended December 31 2023.

<unk> reported a $956 million in revenues for the year ended December 31 2023.

<unk> to 1.15 billion in 2022.

Net loss attributed to Douglas Elliman was $42 6 million or <unk> 52 cents per diluted share compared to $5 6 million or <unk> <unk> per diluted share in 2022.

Adjusted EBITDA should be at Adobe summit for the year were a loss of $40 7 million compared to income of $15 million in 2022.

Our real estate brokerage segment reported an operating loss of $36 8 million for the year compared to operating income of $22 million in 2022.

Adjusted EBITDA attributed to the real estate brokerage segment were a loss of $21 5 million compared to income of $34 5 million in 2022.

Adjusted net loss attributed to Douglas Elliman was $40 9 million or <unk> 50 per share for the year compared to $6 2 million or <unk> <unk> 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.

Howard M. Lorber: Now we will discuss our outlook on the current operating environment for Douglas Elliman, as well as trends we are seeing in residents. We have previously discussed the cyclical nature of our... Generationally, high mortgage rates have driven sustained listing inventory shortages across our luxury markets for almost two years. These shortages have resulted in significantly lower transactions during this time.

We have previously discussed the cyclical nature of our industry Generationally high mortgage rates have driven sustained listing inventory shortages across our luxury markets for almost two years.

Or does it.

Have resulted in significantly lower transactions during this time.

While we expect these industry wide challenges, we will continue to impact our results for the first quarter of 2024.

Howard M. Lorber: Well, we expect these industry-wide challenges will continue to impact our results in the first quarter of 2020, but we remain encouraged by improvements in the fourth quarter of 2023 specifically. The fourth quarter saw our first increase in year-over-year quarterly revenues since the first quarter of 2022, which was driven by higher activity across the markets we serve, particularly in Florida. Generally, the strongest markets tend to be the first to emerge from a downturn.

We remain encouraged by improvements in the fourth quarter of 2023, specifically.

The fourth quarter saw our first increase in year over year quarterly revenues since the first quarter of 2022, which was driven by higher activity across the markets, we serve particularly in Florida.

Generally the strongest markets tend to be the first markets to emerge from the downturn.

Howard M. Lorber: This trend has continued in 2024 as our commission receipts have improved on a year-over-year basis in January and February of 2024. We believe this signals that the market is beginning to adjust to higher, 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 fourth quarter 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 fourth quarter of 2023.

This trend has continued in 2024 as a commission receipts have improved on a year over year basis in January and 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 fourth quarter 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 fourth quarter of 2022.

Howard M. Lorber: 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 2024. Our gross transaction value increased to $7.9 billion in the fourth quarter of 2023 from $7.5 billion in the fourth quarter of 2022, and transaction volume increased by approximately 5.2% in the fourth quarter. Consistent with the increase in transactions, our average sales price per transaction remained an industry-best $1.58 million in the fourth quarter. This was flat compared to the third quarter of 2023 and the fourth quarter 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 2024.

Our gross transaction value increased to $7 9 billion in the fourth quarter of 2023 from seven 5 billion in the fourth quarter of 2022.

Transaction volume increased by approximately five 2% in the fourth quarter.

Consistent with the increase in transactions, our average sales price per transaction remained an industry best one $5 8 million in the fourth quarter.

This was flat compared to the third quarter of 2023 in the fourth quarter of 2022.

We believe that consistency in average price per transaction reflects the strengths of the luxury markets, we operated as well as Douglas elements reputation for offering the finest properties and client experience in real estate.

Howard M. Lorber: 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. Due to our solid financial position and cost reduction strategy, Douglas Elliman is well positioned to successfully navigate near-term industry challenges. Our strong balance sheet underscores a long history of profitability in managing various market conditions.

Due to our solid financial position a cost reduction strategy Douglas element is well positioned to successfully navigate near term industry challenges.

This element of strong balance sheet underscores our long history of profitability and managing various market conditions.

Howard M. Lorber: We have maintained ample liquidity with cash and cash equivalents of approximately $120 million, or $1.31 per Common Share and Zero Debt. Throughout the year, we have continued to adjust our cost structure to better fit our business, including additional head count reductions, cutting costly sponsorships, streamlining advertising, and commencing a program to consolidate our future. Our cost reduction efforts have been judicious, and the results of our strategy are beginning to flow down. Our real estate brokerage segment reduced its operating expenses, including commission expense, restructuring, and other non-case expenses, by $2.2 million in the fourth quarter of 2020, representing a decline of approximately 3.2% compared to the prior year. We believe these efforts will continue to create a more nimble Douglas Elliman without significantly impacting the aging experience.

We have maintained ample liquidity with cash and cash equivalents of approximately $120 million or $1 31.

For common share and zero debt.

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

Our cost reduction efforts have been judicious on the results of our strategy are beginning to flow to the bottom line.

Our real estate brokerage segment reduced its operating expenses, including commission expense restructuring and other non cash expenses by $2 2 million in the fourth quarter of 2023, representing a decline of approximately three 2% compared to the prior year period.

We believe these efforts will continue to create a more nimble Douglas element without significantly impacting the agent experience. We are proud to share that our agent retention rate stands 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 a world class network of agents and our development marketing business.

Howard M. Lorber: We are proud to share that our aging retention rates stand at 92%, and we continue to attract the industry's best. 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 market. 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, www. TheBusinessProfessor.com, As of December 31st, 2023, our development and marketing... had an active pipeline of signed and new projects of $21.6 billion gross transaction value, including $13.8 billion of gross transaction value in Florida alone, and further $9.7 billion of additional transaction value from our development marketing, scheduled to come to market in the next

We believe our development marketing business is creating a foundation for long term value at 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.

As of December 31, 2023, our development and marketing business had an active pipeline of signed and new projects of $21 6 billion gross transaction value, including $13 8 billion of gross transaction value in Florida alone.

Further $9 7 billion 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, there was a settlement continues to meet the current macroeconomic challenges and we believe our differentiated platform and the underlying strength of our business position positions us for long term growth and success.

A proven management team is to assess successful history of navigating many economic cycles and applying our financial discipline that balances the importance of maintaining revenues and managing operating expenses to create long term stockholder value.

Howard M. Lorber: We believe this bodes well for the future as we will recognize commission income from these projects as they close in the coming year. In summary, Douglas Elliman continues to meet the current macroeconomic challenges, and we believe our differentiated platform and the underlying strength of our business position us for long-term growth and success. Our proven management team has a successful history of navigating many economic cycles and employing financial discipline that balances the importance of maintaining revenues and managing operating expenses to create a long-term cycle, looking ahead in addition to driving operational efficiency.

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.

With that we will be happy to answer your questions operator.

Thank you operator at this time.

At this time, if you would like to ask a question. Please press star one on your telephone keypad, you may remove yourself from the queue at any time by pressing star two.

Operator: 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'll be happy to answer questions. Thank you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2.

And once again that is star one to ask a question and star two to remove yourself, we will pause for only a moment. This simple quick question queue.

Okay.

We will take our first question from Soham both Li Please go ahead.

Operator: Once again, that is star 1 to ask a question and star 2 to remove yourself. We will pause for only a moment to symbol the question queue. Thank you. We'll take our first question from Soham Bosley. Please go ahead. One moment, please. Can you hear me?

One moment.

Please.

Can you hear me if I misheard you.

Your line is open. Please go ahead.

Hi can you all hear me.

Operator: Hi, mister. Your line is open, please go ahead. Hi, can you all hear me?

Yes, yes, now we got it.

Hi, great. Good morning, everyone hope you're doing well.

Operator: Yes, now we can. Hi, great. Good morning, everyone. Hope you're doing well.

So this looks like the second quarter in a row, where you've taken some market share at least compared to the national stats, which is great, but I know youre 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 or should we sort of think about this as more of a function of your end markets.

Howard M. Lorber: So this looks like it's the second 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? Or should we sort of think about this more as a function of, you know, your end markets just outperforming sort of the national markets here? I 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 uh, be the same. We're not interested in going to every single market just to say that we have it; more markets, more brokers, they don't have anywhere near what we have in average price for sales, so we think that uh... this is the right strategy for our customers. Got it. Okay. And it looks like your commission split was up another 210 basis points this quarter. It was sort of in the same ballpark last quarter.

Outperforming sort of the national markets here.

I would say that generally speaking you know the.

The high end markets to perform better.

And that's why.

We are pretty much stuck to the high end markets in our expansion is going to be.

Going to be the same.

We're not interested.

And going to every single market just to say that we have.

More markets more and more brokers, but they don't have anywhere near where we have an average price.

On the sales. So we think that this is the right strategy for our company.

Got it okay.

And then it looks like your commission split was up another 210 basis points. This quarter. It was sort of in the same ballpark last quarter or so can you just maybe speak to the drivers of the increase there and are you seeing more competition for agents today or is that just a function of mix.

Howard M. Lorber: So can you maybe speak to the drivers of the increase there? And are you seeing more competition for agents today? Or is that just a function of the mix?

Howard M. Lorber: And should we sort of expect this trend to continue? Well, I think it's both those things you mentioned. Surely, there's been a lot of competition. You know, companies are trading agents back and forth, and many times they're giving cash bonuses when they sign up and higher splits, and this should have been going on for years, probably for about six or seven years. I think it's sort of slowed down at this particular point.

Can we sort of expect this trend to continue.

Well I think it's both those things you mentioned surely there's been a lot of competition.

These are.

Trading agents back and forth and many times they're good.

<unk>.

Cash bonuses when they sign up higher.

Higher splits and this has been going on now for a number of years, probably for about six or seven years and.

I think it's sort of slowed down at this particular point.

Howard M. Lorber: And my guess is that as the market improves and brokers are doing better and better, that maybe will come down. It's not positive that I would say it'll come down because it's hard to take something back that you've already given, but at least our new agent and so forth will be at a lower level, and that will help mediate. Okay, understood. And then, Brian, on the operating expenses, it looks like the G&A line was a little higher quarter-over-quarter. Were there any one-time items to call out there?

And my guess is that as the market improves.

Brokers are doing better and better.

The.

That maybe will come down.

It's not positive that I would say it will come down because its hard to take something back that you've already given but at least Brian new agent and so forth will be at a lower level and that will help mediate these increases.

Okay understood.

Brian on the operating expenses.

Looks like the G&A line was a little higher quarter over quarter were there any onetime 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.

Brian Kirkland: And then how should we think about sort of the quarterly run rate for just total OPEX excommissions in 2024? So, good morning first, and you're correct. The GNA line was higher.

So.

Good morning burst.

Youre correct in the G&A line was higher some of that relates to the timing of expenses, particularly between the third quarter or fourth quarter related to.

Brian Kirkland: Some of that relates to the timing of expenses, particularly between the third quarter and the fourth quarter 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. In particular, we discussed in our prior calls about the $4 million 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 other areas of the business. I mean, just lastly, is Scott on the call?

Yeah.

Hey, bets that we sponsor as well as insurance and obviously also there was an increase in professional fees during the quarter.

Going forward.

We would we would say we'd like where we are but we are going to be making more meaningful cuts in 2024 in particular, we discussed in our prior calls about a $4 million lease running golf and in addition to that we are making meaningful cuts in our property management Division.

Some of those cuts to go over to the other areas of the business.

Got it and then just lastly, Scott.

Got on the call.

He is right.

Hello.

Yes.

Operator: He is right. Hello. This one's for Scott, I guess. Scott or Howard?

I guess this is just one for Scott I guess, Scott or Howard.

Howard M. Lorber: I guess, just wondering, you guys all speak to agents daily. Can you maybe give us a feel for what conversations with agents are like today? You know, is there concern around sort of, you know, just the uncertain environment today? Or do you feel like they feel good about adapting to whatever may come ahead?

I guess I'm just wondering you guys I'll speak to agents daily can you just maybe give us a feel for where conversations with agents are going like today is there concern around sort of just uncertain environment today or do you feel like.

I feel good about adapting to whatever may come ahead.

Yes.

Thank God most of them are.

Adapting to what will ever come ahead.

And as soon as I said, we're not going to comment on the litigation.

Howard M. Lorber: Yeah, I think that most of them are, and we have a great group of agents, you know, in high-end markets that do, you know, high, very high-end sales, and of course, we are, have, do have... but still high compared to, you know, the whole country, where the company really started. Shabbat shalom, a lower end market, but still that's a market probably that averages about 600,000, uh... six hundred thousand dollars, uh... for a transaction, so it's not an extremely low market, but I i i i I think that uh... the agents are happier, anyway. I guess there's been a little disappointment because I think most of us thought that I appreciate all the thoughts and comments. Thank you so much. We'll go next to Ahmed Meri with Jefferies. Good morning, this is Ahmed from Jeffries.

But I feel that.

We have a great group of agents.

And the high end markets that do high very high end sales.

Of course, we are half to half.

Markets that are lower end, but still high compared to the whole country.

Long Island is.

Where the company really started.

As.

A lower end market, but still lots of market probably that averages about 600000.

$600000.

Yes.

Our transaction, so it's not extremely low market, but.

I think that.

The agents are are happy.

Happier anyway, and doing well I guess theres been a little disappointment, because I think most of US thought that we would have a rate cut in the first quarter, which obviously is not going to happen now.

I think once that happens, which hopefully now will be the second quarter.

That I think that.

It's going to be great boom for the for the industry.

Great I appreciate all the thoughts.

Thank you.

Well go next Ahmed <unk> with Jefferies.

Okay.

Good morning. This is Amit from Jefferies. I guess my first question is about.

Howard M. Lorber: I guess my first question is about the macro environment. I was hoping you could share some color on what you're seeing there and when comps start to accelerate in terms of volume this year. So, you're talking about compared to our competitors. No, in terms of, like, call, like, year over year.

The macro environment I was just hoping you could share some color on what youre seeing there and when comps start to accelerate in terms of volume this year.

So.

Youre talking about compared to our competitors.

No in terms of like for like year over year.

Well, yes, again year over year obviously.

Howard M. Lorber: Oh, yeah, again, year over year, obviously, especially in the storm markets and the low-tax states. So that.

We have theres, a lack of inventory in most markets.

And especially in strong markets and the low tax states.

So that that.

Howard M. Lorber: I believe once there is a rate cut, that that will push a lot more into the market, and we will do substantially, substantially more business as rates come down. You know, our new development business is a key part of Douglas Elliman, and we have a great, very strong, very strong business there. And that's, generally speaking, at the high end of the market. And we're still pretty new to markets like Texas, and there's a great upside to Texas. We now have three offices.

I believe.

Once there is a rate cut.

That will push a lot more intense.

And to the market and we will be doing substantially more subsea.

Substantially more business.

As rates come down.

And.

Our new development business as it can.

Part of that is a key part of.

Douglas Elliman.

We have a great very strong very strong business there.

Generally speaking at the high end of the market.

And we're still pretty new in markets like Texas.

And there is great upside to Texas, we now have we have three offices, we have Austin, Dallas and Houston.

Howard M. Lorber: We have Austin, Dallas, and Houston, and they were looking at maybe another market or so in Texas. So we think that's a great market. We're also looking at other markets, but we're looking pretty much at the low-tax or no-tax state. I have two expectations, and on the Mac, it will be. Got it. That's a great color on the markets.

And there we're looking at maybe in other markets. So in Texas. So we think thats a great market to be in.

We're also looking at others at other markets, but we're looking at pretty much at the low tax or no tax states.

<unk> expanded.

On a macro basis.

Got it that's great color on the market. So actually if you could maybe expand a little more on just.

Howard M. Lorber: Actually, if you could maybe expand a little more on just what markets are seeing, you know, better, better demand or which markets maybe you're more concerned about? I think the ones that we're more concerned about are the ones that are taxing people out of their states. You know, we're in California, but California is very different. Okay, very difficult because they are adding taxes, and you know, it's a... pretty tough. And California was also a state that always had higher commission payouts to brokers than the East Coast. So that's, you know, that's a tough one; that's probably the toughest of the markets that we're in. But I think that, uh, I think, you know, look, I think, uh, BK, do you want to comment? Yes, I'll be happy to, and good morning.

What markets are seeing.

Better.

Better demand or which markets, maybe you're more concerned about.

Yes.

Well, yes, I mean, I think the ones that were more concerned about are the ones that are taxing people out of their states.

We were in California, but California is very difficult very difficult because that Keith.

Adding taxes.

<unk>.

Yes.

It's it's.

It's pretty it's pretty tough.

And California is also a state that always had higher commission payouts to brokers than the east coast.

So that's that.

That's a tough one.

I think that's probably the toughest of the markets that we're in.

But I think that.

I think look I think Kevin you want to comment, yes, I'll be happy to and good morning.

Brian Kirkland: I think one part about our story is that our luxury brand is permeating throughout the country as there are shifts in the population. If you look at Florida, California, new markets, they increased from 41% of revenues in the fourth quarter last year to 46% this year. Florida alone went from 20.5% to 25% of our total revenue, so that was a significant increase. And we are continuing to see a lot of strong demand in Florida. As Howard mentioned earlier, there's 13.8 billion in inventory that we have that we're currently selling in our development market, and a backlog of others that will be coming on. Yeah. And that number in Florida, I believe is 5.8 million, 5.8 billion, Howard.

I think one one part about our story is our luxury brand is permeating throughout the country.

Shifts in the population.

If you look at Florida, California, and new market they increased.

From 41% of revenues in the fourth quarter last year to <unk> 46. This year, Florida alone went from 25% to 20% to 25% of the market to our of our total revenues.

That was a significant increase.

We are continuing to see a lot of strong demand in Florida as Howard mentioned earlier, there's 13 8 billion.

Inventory that we have that we're currently selling in our development marketing.

And the backlog.

On the backlog of others that will be coming onto the market.

And that number in Florida, I believe with $5 8 million $5 9 billion hours.

Yes.

Got it that's helpful and then.

Howard M. Lorber: Got it. That's helpful. And then just one last one for me, this really is, I guess I couldn't find it.

Just one last one for me this is really I.

I guess I couldnt find it so apologies.

Brian Kirkland: So apologies for missing this in your filings, but just trying to understand your development business. Could you maybe explain, again, what's the timing of, I guess, recognition of cash and revenues on 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 is recognized. So there is a deferred liability on the books. I believe the number is about $63 million, and the deferred costs related to commissions we paid are about $41 million. The difference of that $20 million will be recognized over time, generally in the next four years.

I missed this on your filings, but just trying to understand your development business could you maybe explain again.

What's like the timing of them.

I guess recognition of cash and on revenues on that.

Yeah.

Yes.

So generally win win win a deposit is received and development marketing, we record that as a liability or deferred revenue and we recognize a.

The commission that we pay to our agent as I call. It the deferred cost so we do not recognize.

Profit on the new development until unit starting to close because under the accounting rules.

<unk> occurs when al.

The items have been back to closeout. So so that's one revenue with recognized.

So there is a deferred liability on the books I believe the number's about $63 million of the deferred costs related to commissions, we pay down it was about 41 million. The difference of that 20 million will be recognized over time generally then that's four years.

Brian Kirkland: The other advantage is, and this is going to help our margins, commissions on new development sales are less than regular resales. Got it. Yeah, that's pretty helpful. Yes, I gave a number earlier coming to market only development this year is 9.7 billion Florida of that is 5.1. That's not including what's already on the market.

And the other.

Jason This is going to have our margins.

Commissions on new development sales are less than regular resales.

Okay got it.

That's very helpful.

Yes, I gave a number earlier coming to market on new development. This year is $9 7 billion in Florida that is $5 1 billion.

That's no that's not including what is already on the market.

Howard M. Lorber: That's correct; it hasn't closed yet. Perfect, thank you. Ladies and gentlemen, those are all the questions that we have for today.

Correct.

Hasnt closed yet.

Perfect. Thank you.

Yeah.

Okay.

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

Operator: 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. Thank you. Thank you. Thank you.

Okay.

Okay.

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Okay.