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spk01: Welcome to Douglas Elliman's first quarter 2023 earnings conference call. This call is being recorded and simultaneously webcast. An archived version of the webcast will be available on the investor relations section of the company's website located at investors.elliman.com for one year.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. Reconciliations to adjusted EBITDA and adjusted net income 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 would like to turn the call over to the Chairman, President, and Chief Executive Officer of Douglas Elliman Howard Lorber. Please go ahead.
spk02: Good morning, and thank you for joining us. With me today are Richard Lampin, our Chief Operating Officer, Brian Kirkland, our Chief Financial Officer, and Scott Durkin, President and CEO of Douglas Hellman Realty, our residential real estate brokerage business. On today's call, we will discuss Douglas Hellman's financial results for the three months ended March 31st, 2023, and then our thoughts on the current operating environment as well as trends in residential real estate. All number presented this morning will be as of March 31st, 2023, unless otherwise stated. We will then provide closing comments and open the call for questions. First, let us discuss Douglas Elliman's financial results for the three months ended March 31st, 2023. We are pleased with the unwavering dedication that Douglas Elliman agents have displayed this quarter, even admit amid the current challenges facing the U.S. residential real estate market. As we have mentioned on previous calls, after reaching a generational peak in 2021, the residential real estate industry faced significant challenges in 2022 due to sharp increases in interest rates, ongoing market volatility, and sustained listing inventory shortages in the luxury markets we serve. Although Douglas Ellman outperformed the industry in 2022 because of stable pricing in our luxury markets, as well as the competitive advantage from our strong development marketing business, our results in the second half of 2022 and thus far in 2023 have been impacted by these industry-wide headwinds. In the first quarter Douglas Hellman reported 214 million in revenues compared to 308.9 million in the 2022 period. Net loss attributed to Douglas Hellman for the first quarter was 15.1 million or 20 cents per diluted share compared to net income of 6.5 million or 0.8 cents per diluted share in the 2022 period. Adjusted EBITDA attributed to Douglas Hellman was a loss of 14.4 million in the quarter compared to income of $12.7 million in the 2022 period. For comparison purposes, our real estate brokerage segment reported an operating loss of $14.1 million in the first quarter of 2023 compared to income of $14.5 million in the first quarter of 2022. Adjusted EBITDA attributed to Douglas Hellman's real estate brokerage segment was a loss of $9.7 million in the first quarter of 2023 compared to income of 17.7 million in the first quarter of 2022. Adjusted net loss attributed to Douglas-Sullman was 14.3 million or 19 cents per share in the first quarter compared to adjusted net income of 6.5 million or 8 cents per share in the 2022 period. Now we will discuss our outlook on the operating environment for Douglas-Sullman as well as trends in residential real estate. While we expect this challenging operating environment to continue, And to impact our results in the first half of 2023, we are encouraged by some improvements in trends we are seeing. Specifically, our first quarter 2023 results were sequentially flat with the fourth quarter of 2022 in terms of revenue, number of transactions, gross transaction value, and average selling price per home. Second, following two quarters of significant declines in listings, the first quarter of 2023 saw a 40% increase in listings from the fourth quarter of 2022. Given the conversion of listings to revenues generally takes three to nine months, this is an encouraging sign for the second half of 2023. Importantly, the luxury markets in which Douglas Ellman operates are usually the first markets to emerge from a down cycle as buyers are less mortgage reliant. We also expect listings to increase and a tight supply of inventory to gradually ease as consumers adjust to higher interest rates and sellers adjust price expectations. Douglas Elliman's strong financial position and cost reduction strategy make it well positioned to successfully navigate near-term industry challenges. We maintained ample liquidity with cash and cash equivalents of approximately $124 million and no debt as of March 31, 2023. Our strong balance sheet underscores Douglas Elliman's long history of profitability and provides us flexibility to adjust to various market conditions. This liquidity continues to provide us with a competitive advantage in growing our core brokerage business, as well as scaling our overhead expenses when entering new markets. We have also made thoughtful efforts to adjust our cost structure to fit our business more appropriately. In the first quarter, we reduced headcount by approximately 35 positions, cut costly sponsorships, streamlined advertising, and commenced a program to begin consolidating office space. We believe that these changes will result in a more nimble Douglas Elliman without significantly impacting the aging experience. Based on these encouraging trends and our solid financial profile, we continue to be optimistic about Douglas Elliman and the significant growth opportunities we see in our luxury markets to capture market share by leveraging our key strengths, which include, first and most importantly, our global network, and our strong relationship with our 6,900 outstanding agents. These agents include some of the industry's most celebrated teams and individuals, and we remain very proud of our 86% agent retention rate. We are also proud to operate our preeminent Douglas Elliman developed marketing business. For the 12 months ending March 31, 2023, we signed and brought to market $6.3 billion in of gross transaction value to the pipeline of our development marketing business. This will provide long-term value as these transactions close over the next several years. In summary, Douglas Elliman is weathering the current macroeconomic challenges, and we believe our differentiated platform and the existing strength of our business make us well-positioned 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 agents. With that, we will be happy to answer questions. Operator?
spk01: Thank you. We will now begin the question and answer session. If you have a question, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, simply press star 1 again.
spk00: Again, that is star 1 to ask a question. One moment, please.
spk01: As there are no questions at this time, we would like to thank you for joining us on Douglas Element's first quarter 2023 earnings conference call. We hope you have a good day, and this will conclude our call.
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