8-K
Douglas Elliman Inc. (DOUG)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 5, 2022
| DOUGLAS ELLIMAN INC. |
|---|
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | |||||
|---|---|---|---|---|---|
| (State or Other Jurisdiction of Incorporation) | 001-41054 | 87-2176850 | |||
| --- | --- | --- | --- | ||
| (Commission File Number) | (I.R.S. Employer Identification No.) | ||||
| 4400 Biscayne Boulevard | Miami | Florida | 33137 | ||
| (Address of Principal Executive Offices) | (Zip Code) |
(305) 579-8000
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities Registered Pursuant to 12(b) of the Act:
| Title of each class: | Trading | Name of each exchange |
|---|---|---|
| Symbol(s) | on which registered: | |
| Common stock, par value $0.01 per share | DOUG | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On August 5, 2022, Douglas Elliman Inc. (NYSE:DOUG) (the “Company” or “Douglas Elliman”) announced its financial results for the three and six months ended June 30, 2022. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information in Item 2.02 of this Current Report on Form 8-K and the related Exhibit attached hereto are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
The Company has prepared materials for presentation to investors. The materials are furnished (not filed) as Exhibit 99.2 to this Current Report on Form 8-K pursuant to Regulation FD.
Non-GAAP Financial Measures
Exhibit 99.2 contains the Non-GAAP Financial Measures discussed below.
Please refer to Current Reports on Form 8-K dated May 10, 2022 and March 1, 2022 for reconciliations of financial measures prepared in accordance with GAAP to Non-GAAP Financial Measures.
Adjusted EBITDA attributed to Douglas Elliman, Adjusted Operating Expenses, and financial measures for all periods presented, including the last twelve months (“LTM”) ended June 30, 2022, (hereafter, referred to as “the Non-GAAP Financial Measures”) are financial measures not prepared in accordance with generally accepted accounting principles (“GAAP”). The Company believes that the Non-GAAP Financial Measures are important measures that supplement discussion and analysis of its results of operations and enhance an understanding of its operating performance. The Company believes the Non-GAAP Financial Measures provide investors and analysts with a useful measure of operating results unaffected by differences in capital structures and ages of related assets among otherwise comparable companies.
Management uses the Non-GAAP Financial Measures as measures to review and assess operating performance of the Company's business, and management does and investors should review both the overall performance (GAAP net income) and the operating performance (the Non-GAAP Financial Measures) of the Company's business. While management considers the Non-GAAP Financial Measures to be important, they should be considered in addition to, but not as substitutes for or superior to, other measures of financial performance prepared in accordance with GAAP, such as operating income, net income and cash flows from operations. In addition, the Non-GAAP Financial Measures are susceptible to varying calculations and the Company's measurement of the Non-GAAP Financial Measures may not be comparable to those of other companies.
EBITDA is defined as net income before, interest, taxes, non-controlling interest, depreciation and amortization. Non-GAAP Financial Measures include change in fair value of contingent liability. For purposes of Adjusted EBITDA only, adjustments include equity in earnings from equity-method investments, stock-based compensation expense, and other, net.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements, which involve risk and uncertainties. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may be,” “continue’” “could,” “potential,” “objective,” “plan,” “seek,” “predict,” “project” and “will be” and similar expressions are intended to identify forward-looking statements. The Company’s actual results could differ significantly from the results discussed in such forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those discussed under the heading “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for period ended June 30, 2022, when filed, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Current Report on Form 8-K. The Company undertakes no obligation to (and expressly disclaims any obligation to) revise or update any forward-looking statement, whether as a result of new information, subsequent events, or otherwise (except as may be required by law), in order to reflect any event or circumstance which may arise after the date of this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibit
(d) Exhibits.
| Exhibit No. | Exhibit |
|---|---|
| 99.1 | Press Release issued on August 5, 2022, regarding financial results for the second quarter ended June 30, 2022. |
| 99.2 | Investor presentation of Douglas Elliman Inc. dated August 2022 (furnished pursuant to Regulation FD). |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DOUGLAS ELLIMAN INC. | |
|---|---|
| By: | /s/ J. Bryant Kirkland III |
| J. Bryant Kirkland III | |
| Senior Vice President, Treasurer and Chief Financial Officer |
Date: August 5, 2022
Document
FOR IMMEDIATE RELEASE
| Contact: | Stephen Larkin, Douglas Elliman Inc.<br>917-902-2503 |
|---|---|
| Emily Claffey/Benjamin Spicehandler/Columbia Clancy | |
| FGS Global | |
| 212-687-8080 | |
| Abi Genis | |
| FGS Global - Europe | |
| +44 (0)20 3178 8914 | |
| J. Bryant Kirkland III, Douglas Elliman Inc. | |
| 305-579-8000 |
DOUGLAS ELLIMAN INC. REPORTS SECOND QUARTER 2022 FINANCIAL RESULTS
Company Achieves Record Revenues in the First Half of 2022
Second Quarter 2022 Highlights:
•Delivered the second-highest quarterly revenue total in history in the second quarter of 2022, despite a challenging macroeconomic environment
•Consolidated revenues of $364.4 million, a decline of 7.0% or $27.6 million compared to the prior year period
◦For the second quarter of 2022, Douglas Elliman’s real estate brokerage segment achieved gross transaction value of approximately $13.6 billion, compared to approximately $15.1 billion for the second quarter of 2021.
◦For the second quarter of 2022, Douglas Elliman’s real estate brokerage segment reported an average price per transaction of $1.7 million.
•Consolidated operating income of $14.6 million and real estate brokerage segment operating income of $21.6 million compared to $43.2 million and $43.2 million, respectively, in the prior year period
•Net income attributed to Douglas Elliman of $10.2 million, or $0.13 per diluted common share, compared to net income of $39.5 million, or $0.51 per diluted common share, in the prior year period
•Adjusted EBITDA attributed to Douglas Elliman of $19.2 million compared to $45.3 million in the prior year period, reflecting stand-alone public company expenses
•Adjusted EBITDA attributed to real estate brokerage segment of $24.4 million compared to $45.3 million in the prior year period
Year-to-Date 2022 Highlights:
•Reported record revenues for the first half of 2022
•Consolidated revenues of $673.3 million, an increase of 1.3% or $8.5 million compared to the prior year period
◦For the six months ended June 30, 2022, Douglas Elliman’s real estate brokerage segment achieved gross transaction value of approximately $25.3 billion, compared to approximately $25.3 billion for the six months ended June 30, 2021.
◦For the six months ended June 30, 2022, Douglas Elliman’s real estate brokerage segment reported an average price per transaction of $1.7 million.
•Consolidated operating income of $22.5 million and real estate brokerage segment operating income of $36.1 million compared to $57.4 million and $57.4 million, respectively, in the prior year period
•Net income attributed to Douglas Elliman of $16.8 million, or $0.21 per diluted common share, compared to net income of $53.4 million, or $0.69 per diluted common share, in the prior year period
•Adjusted EBITDA attributed to Douglas Elliman of $31.9 million compared to $61.6 million in the prior year period, reflecting stand-alone public company expenses
•Adjusted EBITDA attributed to real estate brokerage segment of $42.1 million compared to $61.6 million in the prior year period
Last Twelve Months Ended June 30, 2022 Highlights:
•Consolidated revenues of $1.4 billion
◦For the last twelve months ended June 30, 2022 and the year ended December 31, 2021, Douglas Elliman’s real estate brokerage segment achieved gross transaction value of approximately $51.2 billion and $51.2 billion, respectively.
◦For the last twelve months ended June 30, 2022, Douglas Elliman’s real estate brokerage segment reported an average price per transaction of $1.6 million.
•Consolidated operating income of $67.2 million and real estate brokerage segment operating income of $80.8 million
•Net income attributed to Douglas Elliman of $62.2 million
•Adjusted EBITDA attributed to Douglas Elliman of $81.0 million
•Adjusted EBITDA attributed to real estate brokerage segment of $91.2 million
MIAMI, FL, August 5, 2022 - Douglas Elliman Inc. (NYSE:DOUG) today announced financial results for the three and six months ended June 30, 2022.
“Douglas Elliman delivered the second highest quarterly revenue total in our company’s history this past quarter—and achieved a record-setting revenue for the six months ended June 30, 2022,” said Howard M. Lorber, Chairman and Chief Executive Officer of Douglas Elliman. “We are extremely proud of our team for delivering another successful quarter and we look forward to accelerating our momentum as we capitalize on significant opportunities in the U.S. residential real estate market.”
GAAP Financial Results
Three months ended June 30, 2022. Second quarter 2022 revenues were $364.4 million, compared to revenues of $392.0 million in the second quarter of 2021. The Company recorded operating income of $14.6 million in the second quarter of 2022, compared to operating income of $43.2 million in the second quarter of 2021. Net income attributed to Douglas Elliman for the second quarter of 2022 was $10.2 million, or $0.13 per diluted common share, compared to net income of $39.5 million, or $0.51 per diluted common share, in the second quarter of 2021.
Six months ended June 30, 2022. For the six months ended June 30, 2022, revenues were $673.3 million, compared to revenues of $664.8 million for the six months ended June 30, 2021. The Company recorded operating income of $22.5 million for the six
months ended June 30, 2022, compared to operating income of $57.4 million for the six months ended June 30, 2021. Net income attributed to Douglas Elliman for the six months ended June 30, 2022 was $16.8 million, or $0.21 per diluted common share, compared to a net income of $53.4 million, or $0.69 per diluted common share, for the six months ended June 30, 2021.
Non-GAAP Financial Measures
Non-GAAP financial measures include an adjustment for change in fair value of contingent liability (for purposes of Adjusted EBITDA and Adjusted Net Income) and income related to Tax Disaffiliation indemnification (for purposes of Adjusted Net Income, which is included in other, net for Adjusted EBITDA). For purposes of Adjusted EBITDA only, adjustments also include stock-based compensation, equity in earnings (losses) from equity method investments and other, net. Reconciliations of non-GAAP financial measures to the comparable GAAP financial results for the three and six months ended June 30, 2022 and 2021 and the last twelve months ended June 30, 2022 are included in Tables 2, 3 and 4.
Three months ended June 30, 2022 compared to the three months ended June 30, 2021
Adjusted EBITDA attributed to Douglas Elliman (as described in Table 2 attached hereto) were $19.2 million for the second quarter of 2022, compared to $45.3 million for the second quarter of 2021.
Adjusted EBITDA attributed to Douglas Elliman’s real estate brokerage segment (as described in Table 2 attached hereto) were $24.4 million for the second quarter of 2022, compared to $45.3 million for the second quarter of 2021.
Adjusted Net Income attributed to Douglas Elliman (as described in Table 3 attached hereto) was $9.7 million, or $0.12 per diluted share, for the second quarter of 2022, and $43.1 million, or $0.55 per diluted share, for the second quarter of 2021.
Six months ended June 30, 2022 compared to the six months ended June 30, 2021
Adjusted EBITDA attributed to Douglas Elliman (as described in Table 2 attached hereto) were $31.9 million for the six months ended June 30, 2022, compared to $61.6 million for the six months ended June 30, 2021.
Adjusted EBITDA attributed to Douglas Elliman’s real estate brokerage segment (as described in Table 2 attached hereto) were $42.1 million for the six months ended June 30, 2022, compared to $61.6 million for the six months ended June 30, 2021.
Adjusted Net Income attributed to Douglas Elliman (as described in Table 3 attached hereto) was $16.2 million, or $0.20 per diluted share, for the six months ended June 30, 2022, and $57.0 million, or $0.73 per diluted share, for the six months ended June 30, 2021.
Last twelve months ended June 30, 2022
For the last twelve months ended June 30, 2022, revenues were $1.4 billion. The Company recorded operating income of $67.2 million for the last twelve months ended June 30, 2022. Net income attributed to Douglas Elliman for the last twelve months ended June 30, 2022 was $62.2 million.
For the last twelve months ended June 30, 2022, Adjusted EBITDA attributed to Douglas Elliman (as described in Table 2 attached hereto) were $81.0 million. Adjusted EBITDA attributed to Douglas Elliman’s real estate brokerage segment (as described in Table 2 attached hereto) were $91.2 million for the last twelve months ended June 30, 2022.
Gross Transaction Value
For the three months ended June 30, 2022, Douglas Elliman’s subsidiary, Douglas Elliman Realty, LLC, achieved gross transaction value of approximately $13.6 billion, compared to approximately $15.1 billion for the three months ended June 30, 2021. For the three months ended June 30, 2022, Douglas Elliman’s real estate brokerage segment reported an average price per transaction of $1.7 million.
For the six months ended June 30, 2022, Douglas Elliman’s subsidiary, Douglas Elliman Realty, LLC, achieved gross transaction value of approximately $25.3 billion compared to approximately $25.3 billion for the six months ended June 30, 2021. For the six months ended June 30, 2022, Douglas Elliman’s real estate brokerage segment reported an average price per transaction of $1.7 million.
For the last twelve months ended June 30, 2022 and the year ended December 31, 2021, Douglas Elliman’s subsidiary, Douglas Elliman Realty, LLC, achieved gross transaction value of approximately $51.2 billion and $51.2 billion, respectively. For the last twelve months ended June 30, 2022, Douglas Elliman’s real estate brokerage segment reported an average price per transaction of $1.6 million.
Consolidated Balance Sheet
Douglas Elliman maintained a strong balance sheet with cash and cash equivalents of $202.1 million at June 30, 2022. This significant liquidity places the Company in a position of strength in the market.
Conference Call to Discuss Second Quarter 2022 Results
As previously announced, the Company will host a conference call and webcast on Friday August 5, 2022 at 7:30 AM (ET) to discuss its second quarter 2022 results. Investors can access the call by dialing 888-330-2506 and entering 46689 as the conference ID number. The call will also be available via live webcast at https://events.q4inc.com/attendee/484294423. Webcast participants should allot extra time to register before the webcast begins.
A replay of the call will be available shortly after the call ends on August 5, 2022 through August 19, 2022. To access the replay, dial 800-770-2030 and enter 466898 as the conference ID number. The archived webcast will also be available at https://events.q4inc.com/attendee/484294423 for one year.
Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted Net Income, and financial measures for the last twelve months (“LTM”) ended June 30, 2022 (referred to as the “Non-GAAP Financial Measures”) are financial measures not prepared in accordance with generally accepted accounting principles (“GAAP”). The Company believes that the Non-GAAP Financial Measures are important measures that supplement discussion and analysis of its results of operations and enhance an understanding of its operating performance.
The Company believes the Non-GAAP Financial Measures provide investors and analysts with a useful measure of operating results unaffected by differences in capital structures and ages of related assets among otherwise comparable companies.
Management uses the Non-GAAP Financial Measures as measures to review and assess operating performance of the Company’s business, and management does and investors should review both the overall performance (GAAP net income) and the operating performance (the Non-GAAP Financial Measures) of the Company’s business. While management considers the Non-GAAP Financial Measures to be important, they should be considered in addition to, but not as substitutes for or superior to, other measures of financial performance prepared in accordance with GAAP, such as operating income, net income and cash flows from operations. In addition, the Non-GAAP Financial Measures are susceptible to varying calculations and the Company’s measurement of the Non-GAAP Financial Measures may not be comparable to those of other companies. Attached hereto as Tables 2, 3 and 4 is information relating to the Company’s Non-GAAP Financial Measures for the three and six months ended June 30, 2022 and 2021 and the last twelve months ended June 30, 2022.
About Douglas Elliman Inc.
Douglas Elliman Inc. (NYSE: DOUG, “Douglas Elliman”) owns Douglas Elliman Realty, LLC, which is one of the largest residential brokerage companies in the United States with operations in New York City, Long Island, Westchester, Connecticut, New Jersey, the Hamptons, Massachusetts, Florida, California, Colorado, Texas and Nevada. 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. Additional information concerning Douglas Elliman is available on its website, www.elliman.com.
Investors and others should note that we may post information about Douglas Elliman on our website at www.elliman.com or, if applicable, on our accounts on Facebook, Instagram, LinkedIn, TikTok, Twitter, YouTube or other social media platforms. It is possible that the postings or releases could include information deemed to be material information. Therefore, we encourage investors, the media and others interested in Douglas Elliman to review the information we post on our website at www.elliman.com and on our social media accounts.
Forward-Looking and Cautionary Statements
This press release includes forward-looking statements within the meaning of the federal securities law. All statements other than statements of historical or current facts made in this document are forward-looking. We identify forward-looking statements in this document by using words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may be,” “continue” “could,” “potential,” “objective,” “plan,” “seek,” “predict,” “project” and “will be” and similar words or phrases or their negatives. Forward-looking statements reflect our current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons.
Risks and uncertainties that could cause our actual results to differ significantly from our current expectations are described in our 2021 Annual Report on Form 10-K and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022. We undertake no responsibility to publicly update or revise any forward-looking statement except as required by applicable law.
[Financial Tables Follow]
TABLE 1
DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
For comparability purposes, Douglas Elliman Inc. (NYSE: DOUG) began operating as a standalone public company on December 30, 2021 and did not incur any material public company expenses until the first quarter of 2022. Douglas Elliman Inc. also became a full taxpayer after it became a standalone public company on December 30, 2021.
| Three Months Ended | Six Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||
| (Unaudited) | (Unaudited) | |||||||
| Revenues: | ||||||||
| Commissions and other brokerage income | $ | 348,831 | $ | 376,033 | $ | 643,940 | $ | 635,133 |
| Property management | 10,046 | 9,901 | 19,245 | 19,169 | ||||
| Other ancillary services | 5,482 | 6,041 | 10,074 | 10,449 | ||||
| Total revenues | 364,359 | 391,975 | 673,259 | 664,751 | ||||
| Expenses: | ||||||||
| Real estate agent commissions | 267,182 | 283,651 | 490,604 | 480,668 | ||||
| Sales and marketing | 22,136 | 19,741 | 41,442 | 39,095 | ||||
| Operations and support | 19,563 | 16,999 | 37,654 | 34,249 | ||||
| General and administrative | 32,875 | 22,887 | 65,705 | 42,194 | ||||
| Technology | 5,989 | 3,417 | 11,282 | 6,914 | ||||
| Depreciation and amortization | 1,986 | 2,097 | 4,065 | 4,220 | ||||
| Operating income | 14,628 | 43,183 | 22,507 | 57,411 | ||||
| Other income (expenses): | ||||||||
| Interest income | 32 | 25 | 71 | 72 | ||||
| Equity in (losses) earnings from equity-method investments | (114) | 75 | 418 | 75 | ||||
| Change in fair value of contingent liability | — | (3,596) | — | (3,523) | ||||
| Investment and other income | 1,219 | 493 | 1,971 | 391 | ||||
| Income before provision for income taxes | 15,765 | 40,180 | 24,967 | 54,426 | ||||
| Income tax expense | 5,546 | 708 | 8,463 | 989 | ||||
| Net income | 10,219 | 39,472 | 16,504 | 53,437 | ||||
| Net loss attributed to non-controlling interest | 27 | — | 252 | — | ||||
| Net income attributed to Douglas Elliman Inc. | $ | 10,246 | $ | 39,472 | $ | 16,756 | $ | 53,437 |
| Per basic common share: | ||||||||
| Net income applicable to common shares attributed to Douglas Elliman Inc. | $ | 0.13 | $ | 0.51 | $ | 0.21 | $ | 0.69 |
| Per diluted common share: | ||||||||
| Net income applicable to common shares attributed to Douglas Elliman Inc. | $ | 0.13 | $ | 0.51 | $ | 0.21 | $ | 0.69 |
TABLE 2
DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
Table 2 provides a reconciliation of GAAP to Non-GAAP financial measures. For comparability purposes, Douglas Elliman Inc. (NYSE: DOUG) began operating as a standalone public company on December 30, 2021 and did not incur any material public company expenses until the first quarter of 2022. Its expenses incurred in its public company operations are reported in the Corporate and Other Segment and the operations of its brokerage businesses are reported in the Real Estate Brokerage Segment.
| LTM | Year Ended | Three Months Ended | Six Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | December 31, | June 30, | June 30, | |||||||||
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||
| Net income attributed to Douglas Elliman Inc. | $ | 62,157 | $ | 98,838 | $ | 10,246 | $ | 39,472 | $ | 16,756 | $ | 53,437 |
| Interest income | (82) | (83) | (32) | (25) | (71) | (72) | ||||||
| Income tax expense | 9,607 | 2,133 | 5,546 | 708 | 8,463 | 989 | ||||||
| Net loss attributed to non-controlling interest | (438) | (186) | (27) | — | (252) | — | ||||||
| Depreciation and amortization | 8,406 | 8,561 | 1,986 | 2,097 | 4,065 | 4,220 | ||||||
| EBITDA | $ | 79,650 | $ | 109,263 | $ | 17,719 | $ | 42,252 | $ | 28,961 | $ | 58,574 |
| Equity in (earnings) losses from equity-method investments (a) | (65) | 278 | 114 | (75) | (418) | (75) | ||||||
| Change in fair value of contingent liability | (1,876) | 1,647 | — | 3,596 | — | 3,523 | ||||||
| Stock-based compensation expense (b) | 5,311 | — | 2,659 | — | 5,311 | — | ||||||
| Other, net | (2,109) | (529) | (1,219) | (493) | (1,971) | (391) | ||||||
| Adjusted EBITDA | 80,911 | 110,659 | 19,273 | 45,280 | 31,883 | 61,631 | ||||||
| Adjusted EBITDA attributed to non-controlling interest | 86 | 40 | (71) | — | 46 | — | ||||||
| Adjusted EBITDA attributed to Douglas Elliman | $ | 80,997 | $ | 110,699 | $ | 19,202 | $ | 45,280 | $ | 31,929 | $ | 61,631 |
| Operating income by Segment: | ||||||||||||
| Real estate brokerage | $ | 80,803 | $ | 102,098 | $ | 21,575 | $ | 43,183 | $ | 36,116 | $ | 57,411 |
| Corporate and other | (13,609) | — | (6,947) | — | (13,609) | — | ||||||
| Total | $ | 67,194 | $ | 102,098 | $ | 14,628 | $ | 43,183 | $ | 22,507 | $ | 57,411 |
| Real estate brokerage segment | ||||||||||||
| Operating income | $ | 80,803 | $ | 102,098 | $ | 21,575 | $ | 43,183 | $ | 36,116 | $ | 57,411 |
| Depreciation and amortization | 8,406 | 8,561 | 1,986 | 2,097 | 4,065 | 4,220 | ||||||
| Stock-based compensation | 1,859 | — | 934 | — | 1,859 | — | ||||||
| Adjusted EBITDA | 91,068 | 110,659 | 24,495 | 45,280 | 42,040 | 61,631 | ||||||
| Adjusted EBITDA attributed to non-controlling interest | 86 | 40 | (71) | — | 46 | — | ||||||
| Adjusted EBITDA attributed to Douglas Elliman | $ | 91,154 | $ | 110,699 | $ | 24,424 | $ | 45,280 | $ | 42,086 | $ | 61,631 |
| Corporate and other segment | ||||||||||||
| Operating loss | $ | (13,609) | $ | — | $ | (6,947) | $ | — | $ | (13,609) | $ | — |
| Stock-based compensation | 3,452 | — | 1,725 | — | 3,452 | — | ||||||
| Adjusted EBITDA attributed to Douglas Elliman | $ | (10,157) | $ | — | $ | (5,222) | $ | — | $ | (10,157) | $ | — |
a.Represents equity in earnings recognized from the Company’s investment in certain real estate businesses that are accounted for under the equity method and are not consolidated in the Company’s financial results.
b.Represents amortization of stock-based compensation. $934 and $1,859 is attributable to the Real estate brokerage segment for the three and six months ended June 30, 2022, and $1,725 and $3,452 is attributable to the Corporate and other segment for the three and six months ended June 30, 2022.
TABLE 3
DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED NET INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
Table 3 provides a reconciliation of GAAP to Non-GAAP financial measures. For comparability purposes, Douglas Elliman Inc. (NYSE: DOUG) began operating as a standalone public company on December 30, 2021 and did not incur any material public company expenses until the first quarter of 2022. Douglas Elliman Inc. also became a full taxpayer after it became a standalone public company on December 30, 2021.
| Three Months Ended | Six Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||
| Net income attributed to Douglas Elliman Inc. | $ | 10,246 | $ | 39,472 | $ | 16,756 | $ | 53,437 |
| Change in fair value of contingent liability | — | 3,596 | — | 3,523 | ||||
| Income related to Tax Disaffiliation indemnification | (553) | — | (553) | — | ||||
| Total adjustments | (553) | 3,596 | (553) | 3,523 | ||||
| Adjusted Net Income attributed to Douglas Elliman Inc. | $ | 9,693 | $ | 43,068 | $ | 16,203 | $ | 56,960 |
| Per diluted common share: | ||||||||
| Adjusted Net Income applicable to common shares attributed to Douglas Elliman Inc. | $ | 0.12 | $ | 0.55 | $ | 0.20 | $ | 0.73 |
TABLE 4
DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
RECONCILIATION OF REVENUES
(Unaudited)
(Dollars in Thousands)
| LTM | Year Ended | Three Months Ended | Six Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | December 31, | June 30, | June 30, | |||||||||
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||
| Revenues: | ||||||||||||
| Commissions and other brokerage income | $ | 1,301,223 | $ | 1,292,416 | $ | 348,831 | $ | 376,033 | $ | 643,940 | $ | 635,133 |
| Property management | 37,421 | 37,345 | 10,046 | 9,901 | 19,245 | 19,169 | ||||||
| Other ancillary services | 23,002 | 23,377 | 5,482 | 6,041 | 10,074 | 10,449 | ||||||
| Total revenues | $ | 1,361,646 | $ | 1,353,138 | $ | 364,359 | $ | 391,975 | $ | 673,259 | $ | 664,751 |
| Gross transaction value (in billions) | $ | 51.2 | $ | 51.2 | $ | 13.6 | $ | 15.1 | $ | 25.3 | $ | 25.3 |
| Total transactions (absolute) | 31,843 | 32,400 | 7,789 | 8,464 | 15,001 | 15,558 |
dougq222invpres
June 2021 / Confidential Investor Presentation August 2022
2 Disclaimer This document and any related oral presentation does not constitute an offer or invitation to subscribe for, purchase or otherwise acquire any securities or other instruments of Douglas Elliman Inc. (“Douglas Elliman Inc.”, “DOUG” or “the Company”) or its subsidiaries and nothing contained herein or its presentation shall form the basis of any contract or commitment whatsoever. The distribution of this document and any related oral presentation in certain jurisdictions may be restricted by law and persons into whose possession this document or any related oral presentation comes should inform themselves about, and observe, any such restriction. Any failure to comply with these restrictions may constitute a violation of the laws of any such other jurisdiction. The information contained herein does not constitute investment, legal, accounting, regulatory, taxation or other advice and the information does not take into account your investment objectives or legal, accounting, regulatory, taxation or financial situation or particular needs. You are solely responsible for forming your own opinions and conclusions on such matters and the market and for making your own independent assessment of the information. You are solely responsible for seeking independent professional advice in relation to the information and any action taken on the basis of the information. The following presentation may contain "forward-looking statements,” including any statements that may be contained in the presentation that reflect the Company’s expectations or beliefs with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement made by or on behalf of the Company, including the risk that changes in Douglas Elliman Inc.’s capital expenditures impact its expected free cash flow and the other risk factors described in Douglas Elliman Inc.’s annual report on Form 10-K for the year ended December 31, 2021 and Form 10-Q for the quarterly period ended June 30, 2022, when filed with the SEC. Please also refer to Douglas Elliman Inc.'s Current Reports on Form 8-K, filed on March 1, 2022 and August 5, 2022 (Commission File Number 1-41054) as filed with the SEC for information, including cautionary and explanatory language, relating to Non-GAAP Financial Measures in this Presentation labeled "Adjusted". Results actually achieved may differ materially from expected results included in these forward-looking statements as a result of these or other factors. Due to such uncertainties and risks, potential investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date on which such statements are made. The Company disclaims any obligation to, and does not undertake to, update or revise and forward- looking statements in this presentation.
3 Investment Highlights Cutting-edge property technology supportive of agent recruitment, retention and productivity Strong platform for continued growth Favorable dynamics in the U.S. residential real estate marketExperienced management team with substantial real estate expertise and a track record of driving growth Attractive financial profile with significant operating leverage and balance sheet strength Comprehensive solution provides for multiple revenue streams and monetization of valuable agent relationships Industry-leading brand name with a strong presence in most major U.S. luxury markets Unique Investment Opportunity in Tech-Enabled Residential Real Estate Brokerage with Comprehensive Suite of Real Estate Solutions, Industry-leading Brand Name and Talented Team of Employees and Agents
4 Founded in 1911 as a pioneer in the real estate industry that has continued to challenge the status quo through innovation and high- quality service provided by best-in-class real estate agents Leading brand associated with service, luxury and forward thinking operating in markets that are primarily densely populated international finance and technology hubs offering housing inventory at premium price points Core residential real estate brokerage and new development sales and marketing (“DEDM”) services complemented with ancillary services including property management, title and escrow services Comprehensive suite of technology-enabled real estate solutions that bring efficiency, market intelligence and competitive advantage to our agents while supporting agent recruitment, retention and productivity Technology powered by leading providers and our investments in innovative PropTech companies keeps our agents on the cutting edge with solutions that can be quickly integrated into our infrastructure, while also allowing us to remain asset-light In recent years, revenue growth along with recent cost reductions have driven an increase in profitability Well-positioned to capitalize on attractive opportunities in the large and growing U.S. residential real estate market Douglas Elliman at a Glance Bryant Kirkland Senior Vice President, Treasurer and Chief Financial Officer Marc Bell Senior Vice President, Secretary and General Counsel David Ballard Senior Vice President, Enterprise Efficiency and Chief Technology Officer Howard Lorber Chairman, President and Chief Executive Officer Richard Lampen Director, Executive Vice President and Chief Operating Officer Scott Durkin President and Chief Executive Officer, Douglas Elliman Realty LLC Experienced and Skilled Management Team
5 Douglas Elliman’s Geographical Footprint ~6,700 affiliated agents across approximately 110 U.S. offices Alliance with Knight Frank provides an international network of approximately 370 offices across, 50 countries and 17,000 agents #6 Nationally One of the Largest in New York California(3) Colorado(2) Texas Florida(5) New York City New York New Jersey Massachusetts(1) Connecticut GTV: $7.5b Market Share: 6.1% GTV: $1.1b Market Share: 25.5% Entered Market in 2021 GTV: $13.0b Market Share: 18.7% New York City GTV: $17.4b Market Share: 20.8% NYC Metro(4) GTV: $10.6b Market Share: 15.5% Massachusetts GTV: $500m Market Share: 9.9% Source: Miller Samuel reports. Note: Market share and rankings represent LTM 6/30/2022 based on gross transaction value (“GTV”). Figures based on transaction close date. GTV in each selected region represents LTM 6/30/2022. 1) Includes Boston. Market share information does not include 2022 expansion market of Nantucket. 2) Includes Aspen and Snowmass Village. 3) Includes Los Angeles (Westside and Downtown), Malibu, Malibu Beach, Orange County and San Diego County. 4) Includes Long Island, North Fork, Hamptons, Greenwich and Westchester County. 5) Includes Boca Raton / Highland Beach, Coral Gables, Delray Beach, Fort Lauderdale, Palm Beach Gardens, Jupiter, Manalapan, Miami, Palm Beach, St. Petersburg, Tampa, Wellington and West Palm Beach. Market share information does not include 2022 expansion markets of Vero Beach and Ponte Vedra Beach. Entered Market in 2022 Las Vegas
6 1) Source: Mortgage Bankers Association – MBA Mortgage Finance Forecast May 2022. 2) Source: Board of Governors of the Federal Reserve System (U.S.) – Households; Owners' Equity in Real Estate, October 2021. 3) Source: National Association of Realtors – Profile of International Transactions in U.S. Residential Real Estate 2021 Highly Attractive Dynamics in the U.S. Residential Real Estate Market Consistent Growth in New and Existing Home Sales and Increasing Home Ownership Rates(1) 5,334 5,678 6,127 5,934 6,057 688 828 771 808 849 6,022 6,506 6,898 6,742 6,906 2019 2020 2021 2022E 2023E Existing Home Sales New Home Sales (thousands) From December 31, 2019 to September 30, 2021, U.S. homeowner equity increased by 31.3% to approximately $26.4 trillion(2) $74.9 $53.0 $33.2 $33.0 $22.0 $78.1 $67.9 $44.7 $41.0 $32.4 $153.0 $120.9 $77.9 $74.0 $54.4 2017 2018 2019 2020 2021 Non-U.S. Resident U.S. Resident Return of International Buyers Present Opportunity for Future Growth(3) ($ billions) Recent increase in U.S. residential volume occurred without significant activity by international buyers – a traditional underpinning of the luxury residential market
7 4.9% 9.1% 16.9% 5.1% 3.7% 2019 2020 2021 2022E 2023E 1) Source: National Association of Realtors – 2022 Home Buyers and Sellers Generational Trends Report. 2) Source: National Association of Realtors – Q1 2022 Economic Outlook. Represents existing home price appreciation. Highly Attractive Dynamics in the U.S. Residential Real Estate Market (Cont.) Significant Home Price Appreciation(2) Benefiting from aforementioned increased demand as well as supply constraints given record low inventories Millennials Represent Largest Homebuying Generation in the Housing Market(1) 2% 43% 22% 17% 12% 4% Gen Z Millennials Gen X Younger Baby Boomers (1955 - 1964) Older Baby Boomers (1946 - 1954) Silent Generation (% of home buyers) Recent Home Buying Trends Indicate a Desire for Increased Mobility Remote Work Flexibility Increased Demand for Greater Space Increased Demand for Multiple Homes
8 Comprehensive Solution Provides for Multiple Revenue Streams • DEDM offers expertise in sales, leasing and marketing for new developments throughout key markets in the United States and internationally New Sales and Development Marketing Platform • Advising sellers: Assist in pricing a property and preparing it for sale, advertising, showing to prospective buyers and negotiating terms of sale and closing transaction • Advising buyers: Locating / showing properties and assisting in negotiating terms of sale and closing transaction Residential Real Estate Brokerage • Acts in the capacity of a title insurance agent and sells title insurance to property buyers and mortgage lenders • Leading escrow services provider in select markets including holding escrow funds trust account, delivering documents for property recording and releasing funds to the seller and appropriate parties Title Insurance & Escrow Services • Full range of fee-based management services for cooperative, condominium and rental apartment buildings in New York City, Nassau County, Long Island City and Westchester County Residential Property Management Services Mortgage Services • In April 2021, Douglas Elliman acquired a 50% interest in a company which originates and markets its mortgage lending services to real estate agents across Douglas Elliman’s Florida market.
9 LTM 6/30/22 Average(4): $1,608.7 Industry-leading Brand Name with a Strong Presence in U.S. Luxury Markets $1,580.0 $1,128.4 $657.3 $555.1 $351.3 Douglas Elliman Compass Realogy Redfin eXp Realty Highest Transaction Values in the Industry Average Selling Price (2021)(3) ($ thousands) Leading Presence in Large Luxury Markets Markets are primarily international finance and technology hubs that are densely populated and offer inventory at premium prices Large national presence augmented by alliance with Knight Frank, providing an international network of approximately 370 offices across 50 countries with approximately 17,000 agents Gaining share in several luxury markets including New York, Florida, California, Texas and Colorado, among others Douglas Elliman is the sixth largest brokerage nationally and one of the largest in New York by sales volume 19% 20% 11% 1% 22% 0% 21% 15% 19% 6% 26% 10% NYC NYC Metro Florida California Colorado Boston 2017 LTM 6/30/22 Market Share by Volume(1) (2) 1) Source: Miller Samuel reports. 2) Includes Long Island, North Fork, Hamptons, Greenwich and Westchester County. 3) Represents average selling price for publicly traded real estate brokerage firms by volume. 4) Represents average for LTM ended 6/30/2022.
10 Cutting-edge Technology Supportive of Agent Recruitment, Retention and Productivity Powered by industry leading technology capabilities developed by innovative PropTech leaders and start-ups • Premier, customizable, mobile-friendly and cloud-based agent portal that integrates all agent resources in one user-friendly suite • Fully mobile-friendly, allowing agents to manage their business anytime, anywhere and on any device, in coordination with Elliman Everywhere platform • AI integrated data assets that back automated and simplified agent workflows that incorporates expansive data-rich dashboards and reports StudioPro • Comprehensive platform which includes a customer relationship management system, digital transaction management and custom DIY marketing templates • Provides agents one place to manage their network, initiate marketing via email, social or print – and even close deals
11 * New Valley Ventures PropTech Investee Company MyDouglas | Complete Set of Capabilities Capabilities Solutions Artificial Intelligence (“AI”) and Predictive Analytics Team Management Agent Social Media • Learning Management System • MyDouglas Team Views • Team Deal Management Agent Brand Management VideoBolt – One-Click Video Creation/Virtual Tours • Elliman.com • Custom Property Websites Listing Management CMA • Home Valuation • MyDouglas – Listing Analytics • Digital Ad Campaigns • StudioPro – Open House Management • Regional Listings Insights Current Clients and Customers StudioPro – CRM • StudioPro – Email Marketing • StudioPro – Marketing Center • Client Portal Services Performance Analytics YTD Total GCI Deals and Volume Summary • Commission Check Tracking Deal Management StudioPro – Transaction Management • Title and Escrow Services • MLS Services – Collaborative Home Search • StudioPro – Listing Tour • Scheduling and Coordination • Digitized eSignature • eNotary service Post-Closing Client and Customer Stewardship Home Services • Client Portal • New Development Marketing • Digital Board Packages (NYC only)
12 Open Architecture Technology Infrastructure Open Architecture Technology Infrastructure, Kept State-of-the-art Through Strategic Investments in Early Stage PropTech Companies with Technology Purpose-built for the Real Estate Industry Key Benefits of Our Technology Strategy Recent PropTech Investments Financial program that gives real estate agents instant access to future commissions Rewards program which allows renters to earn points on payments Dashboard for real estate agents’ marketing, CRM and transaction management Platform that cuts out inefficiencies of home repairs White label client- facing digital concierge service Automated artificial intelligence platform to aid in home buying Benefits to Agents Benefits to Douglas Elliman • Access to a variety of platforms that cater to agents’ preferred way of doing business – Presented as one integrated platform • Cloud-native, plug & play modular infrastructure – Allows new features and functionality to be rolled out quickly with scalability and vendor optionality • Differentiated and early access to new technology • Ability to service clients post-transaction • MyLearning platform enables agents and employees with online tools for growth and development • Better ROI than in-house development – In-house development is costly, takes longer to bring new tech to market and rarely generates the most cutting-edge solutions – Innovation best fostered in smaller, purpose-built technology firms that operate outside of large corporations • Valuation growth of break-through tech firms • Mission critical technology outsourced to best-in-class technology firms – Website hosting, agent portal, deal & listing management, marketing systems and back-office systems • Gain access to distribution network of approximately 6,700 agents nation-wide • Maintain independence and ability to scale and innovate at “start-up speed” • Incentivizes management of young firms to grow broadly, creating industry-wide solutions that go beyond the needs of just one brokerage Benefits to PropTech Firms Platform that has fleets of electric vehicles that can be shared Platform generates hand- written notes on behalf of sales-oriented professionals
13 • Further grow leadership position in NY while entering and expanding into adjoining markets where the Douglas Elliman brand has strong awareness and brand equity, including Florida, California, Colorado and Texas • Recent entry into the Dallas, Austin, Jacksonville and Las Vegas markets • Disciplined regional expansion to protect our luxury brand and keep focus on premium markets • Opportunity to expand markets currently served by more than 50% in terms of annual transaction value Strong Platform for Continued Growth Continue Executing on DEDM Growth Strategy Expand Footprint into Adjoining Markets Expand Ancillary Services to Enhance Client Experience and Drive Growth • Highly successful hybrid platform of matching experienced new development experts with skilled brokerage professionals provides differentiated expertise and real-time market intelligence to clients • Strong pipeline provides clear path to significant growth in near-term and expansion into new markets (e.g., Texas) provides exciting opportunities for medium to long term growth • Technology to be key differentiator in terms of adoption by agents, delivery to clients and disruption of traditional business models $50.9 $64.3 $72.9 $47.4 $81.9 $79.5 2017 2018 2019 2020 2021 LTM 6/30/22 DEDM Revenue ($ millions) Negative COVID-19 Impact Ancillary Offerings Current Future Renovation StagingProperty Management Title Insurance Escrow Security Home Services Market Expansion Opportunity Less than $4bn $4bn - $16bn Greater than $16bn Austin Charleston Clearwater Dallas Denver Jacksonville Las Vegas Nashville Raleigh-Durham Charlotte Sacramento County Salt Lake City San Antonio San Francisco Santa Fe Scottsdale St. Petersburg Tampa Annual Transaction Value 18 markets representing $180bn of Combined Annual Transaction Value(1) 1) Source: Miller Samuel reports. Aggregate annual transaction volume based on 3Q’21 annualized figures for selected growth regions. Mortgage Services
14 California Texas Florida Overview • Purchased Teles Properties in 2017 • Purchased interest in Texas brokerage in 2021 • High profile recruitment of teams in Naples, Vero Beach, Fort Lauderdale and Ponte Vedra Beach in 2021 and 2022 Benefits to Douglas Elliman • Ability to expand in southern California’s luxury markets, such as Beverly Hills, Newport and Brentwood • Added more than $65M Gross Commission Income (“GCI”) and approximately 600 agents and 20 offices • Ability to expand in luxury markets in Texas such as Houston, Dallas and Austin both in residential sales and new development marketing • Added more than $40M GCI, and more than 300 agents in 8 offices • Ability to expand in luxury markets in southwest and north Florida • Added approximately $20M GCI Strong Platform for Continued Growth (Cont.) Continue to Recruit Best-in- class Agents Opportunistically Pursue Acquisitions and Aqui-hires 91% 90% 94% 92% 2019 2020 2021 LTM 6/30/22 1) Retention, in any particular period, is calculated as the quotient of the prior period revenue generated by agents retained in the subject year period divided by the prior year period revenue generated by all agents, whether or not retained. We use retention as a measure of the stability of the agents that are on the Douglas Elliman platform. • We will continue to seek through M&A attractive groups of agents from core and adjacent markets that fit with our brand and accelerate our growth Retention(1) High profile recruitmentHigh retention Long-tenured agents • In 2021, 86% of revenue was attributable to agents with more than 3 years of tenure • In 2019, 2020 and 2021, average retained agent was ~2.5x to ~3.0x more productive than departed agents
15 $201.5 $183.0 $15.2 $19.7 $35.4 $46.6 $15.5 2019 LTM 6/30/22 Other OpEx Technology Activity Driven Operating Expenses Acquisitions Strong Platform for Continued Growth (Cont.) Invest in Compelling PropTech Opportunities that Facilitate Growth and Differentiation Relentlessly Pursue Operational Efficiencies • Grow New Valley Ventures and create a portfolio of PropTech companies that, through our investment and commercial relationships, have access to our operating businesses/distribution, as well as our know-how and experience, to grow their own businesses, while also propelling our growth and competitive differentiation • Invest strategically in early-stage PropTech companies that equip our stakeholders with early and differentiated access to cutting-edge and industry-leading technology built in entrepreneurial environments • Enable us to benefit from potential adjacent revenue streams and valuation growth of breakthrough PropTech firms • Focus on efficiency to continue following recent expense reduction initiatives – $18.5 million of expense savings realized from 2019 to LTM 6/30/2022(2) • Expense discipline a top priority as we seek benefits of operating leverage accompanying future growth Real Estate Brokerage Segment Adjusted Operating Expenses(1) ($ millions) 1) Total operating expenses were $787.6 million for the year ended December 31, 2019, $1.251 billion for the year ended December 31, 2021, as well as $650.8 million and $607.3 million for the six months ended June 30, 2021, and 2022, respectively, and $1.294 billion for the last twelve months ended June 30, 2022. Real Estate Brokerage Segment Adjusted Operating Expenses is a Non-GAAP Measure and a reconciliation from operating expenses to Real Estate Brokerage Segment Adjusted Operating Expenses is included on page 25. Excludes real estate commissions, direct expenses related to ancillary services, depreciation and amortization, loss on disposal of assets, non-cash stock compensation and expenses associated with the Corporate and other segment. 2) Represents other operating expenses. 3) Discretionary compensation and advertising expenses (associated with level of business). (3) $264.8$252.1
DOUGLAS ELLIMAN FINANCIAL OVERVIEW
17 Attractive Financial Profile 1) As of June 30, 2022. Please see page 23, "Balance Sheet" of Douglas Elliman Inc. The Balance Sheet reports $202.1 million of cash and $6.4 million of Notes Payable and Other Obligations. Disciplined expense management drives significant operating leverage Strong performance across KPIs Healthy margins and limited Capital Expenditures requirements drive cash flow conversion, supporting future growth initiatives and stockholder dividends Strong balance sheet with approximately $196 million of net cash(1)
18 Financial Summary 1) Adjusted EBITDA attributed to Douglas Elliman Inc. is a non-GAAP measure. Net income (loss) was $8.5 million, ($46.4) million, $98.8 million and $62.2 million for the years ended December 31, 2019, 2020 and 2021 and for the last twelve months ended June 30, 2022. Please refer to Page 24 for a reconciliation from Net Income to Adjusted EBITDA attributed to Douglas Elliman Inc. 2) Operating (loss) income for the Real estate brokerage segment was ($3.5) million, ($49.3) million, $102.1 million and $80.8 million for the years ended December 31, 2019, 2020 and 2021 and for the last twelve months ended June 30, 2022. Please refer to Page 24 for a reconciliation from Net Income to Adjusted EBITDA for the Real Estate Brokerage Segment. Revenue Capital Expenditures ($ millions) $8.1 $6.1 $4.1 $7.2 2019 2020 2021 LTM 6/30/22 $784.1 $774.0 $1,353.1 $1,361.6 2019 2020 2021 LTM 6/30/22 Adjusted EBITDA attributed to Douglas Elliman Inc. (1) $5.2 $22.1 $110.7 $81.0 0.7% 2.9% 8.2% 5.9% 2019 2020 2021 LTM 6/30/22 Adj. EBITDA Adj. EBITDA Margin Adjusted EBITDA for Real Estate Brokerage Segment (2) $5.2 $22.1 $110.7 $91.2 0.7% 2.9% 8.2% 6.7% 2019 2020 2021 LTM 6/30/22 Adj. EBITDA Adj. EBITDA Margin
19 Business Mix and Growth $18.2 $22.4 $24.6 $25.4 $28.1 $28.8 $29.1 $51.2 $51.2 2014 2015 2016 2017 2018 2019 2020 2021 LTM 6/30/22 LTM 6/30/22 Revenue Gross Transaction Volume ($ billions) $1,221.7M $79.5M $37.4M $23.0M $1.361B Commissions and Other Brokerage Income – Existing Home Sales Commissions and Other Brokerage Income – Development Marketing Property Management Other Ancillary Services
20 Investment Highlights Cutting-edge property technology supportive of agent recruitment, retention and productivity Strong platform for continued growth Favorable dynamics in the U.S. residential real estate marketExperienced management team with substantial real estate expertise and a track record of driving growth Attractive financial profile with significant operating leverage and balance sheet strength Comprehensive solution provides for multiple revenue streams and monetization of valuable agent relationships Industry-leading brand name with a strong presence in most major U.S. luxury markets Unique Investment Opportunity in Tech-Enabled Residential Real Estate Brokerage with Comprehensive Suite of Real Estate Solutions, Industry-leading Brand Name and Talented Team of Employees and Agents
APPENDIX
22 Combined Consolidated Statement of Operations Year Ended Six Months Ended LTM 12/31/2019 12/31/2020 12/31/2021 6/30/2021 6/30/2022 6/30/2022 Revenues: Commissions and other brokerage income $742,414 $733,751 $1,292,416 $635,133 $643,940 $1,301,223 Property management 35,461 35,115 37,345 19,169 19,245 37,421 Other ancillary services 6,233 5,121 23,377 10,449 10,074 23,002 Total revenues $784,108 $773,987 $1,353,138 $664,751 $673,259 1,361,646 Expenses: Real estate agent commissions 525,233 546,948 985,523 480,668 490,604 995,459 Sales and marketing 76,897 64,097 77,174 39,095 41,442 79,521 Operations and support 65,044 49,895 71,641 34,249 37,654 75,046 General and administrative 96,540 76,134 92,798 42,194 65,705 116,309 Technology 15,236 14,858 15,343 6,914 11,282 19,711 Depreciation and amortization 8,638 8,537 8,561 4,220 4,065 8,406 Loss on disposal of assets - 1,169 - - - - Impairments of goodwill and intangible assets - 58,252 - - - - Restructuring expenses - 3,382 - - - - Operating income (loss) ($3,480) ($49,285) $102,098 $57,411 $22,507 $67,194 Other income: Interest income 600 190 83 72 71 82 Equity in earnings (losses) from equity-method investments 8,472 225 (278) 75 418 65 Change in fair value of contingent liability 3,157 2,149 (1,647) (3,523) - 1,876 Investment income 64 843 529 391 1,971 2,109 Income (loss) income before provision for income taxes $8,813 ($46,328) $100,785 $54,426 $24,967 $71,326 Income tax (benefit) expense 354 44 2,133 989 8,463 9,607 Net income (loss) $8,459 ($46,372) $98,652 $53,437 $16,504 $61,719 Net loss attributed to non-controlling interest - - 186 - 252 438 Net income (loss) attributed to Douglas Elliman Inc. $8,459 ($46,372) $98,838 $53,437 $16,756 $62,157 Per diluted common share: Net income (loss) attributed to Douglas Elliman Inc. $0.11 ($0.60) $1.27 $0.69 $0.21 $0.78 ($ thousands, except per share amounts)
23 Consolidated Balance Sheet December 31, June 30, 2021 2022 ASSETS: Current assets: Cash and cash equivalents $211,623 $202,134 Receivables 32,488 31,161 Agent receivables, net 9,192 15,044 Restricted cash and cash equivalents 15,336 6,955 Other current assets 12,166 16,729 Total current assets $280,805 $272,023 Property, plant and equipment, net 39,381 40,572 Operating lease right-of-use assets 123,538 124,184 Long-term investments at fair value 8,094 9,175 Contract assets, net 28,996 34,617 Goodwill 32,571 32,230 Other intangible assets, net 74,421 74,028 Equity-method investments 2,521 2,311 Other assets 4,842 5,598 Total assets $595,169 $594,738 LIABILITIES AND STOCKHOLDERS’ EQUITY: Current liabilities: Current portion of notes payable and other obligations $12,527 $6,275 Current operating lease liabilities 22,666 23,073 Income taxes payable, net 1,240 - Accounts payable 5,874 6,455 Commissions payable 35,766 32,226 Accrued salaries and benefits 25,446 12,851 Contract liabilities 6,689 6,041 Other current liabilities 22,259 22,938 Total current liabilities $132,467 $109,859 Notes payable and other obligations less current portion 176 164 Deferred income taxes, net 11,412 11,605 Non-current operating lease liability 129,496 127,716 Contract liabilities 39,557 49,269 Other liabilities 188 188 Total liabilities $313,296 $298,801 Commitments and contingencies - - Stockholders’ equity Common stock and additional paid-in-capital 279,312 284,623 Retained earnings 622 9,252 Non-controlling interest 1,939 2,062 Total stockholders’ equity $281,873 $295,937 Total liabilities and net investment $595,169 $594,738 ($ thousands)
24 1) Represents equity in (earnings) losses recognized from Douglas Elliman’s investment in an equity method investment that is accounted for under the equity method and is not consolidated in Douglas Elliman’s financial results. 2) Represents restructuring related to Douglas Elliman Realty, LLC’s realignment of administrative support functions, office locations and business model. 3) Represents non-cash intangible asset impairment charges related to the goodwill and trademark of Douglas Elliman Realty, LLC. 4) Represents amortization of stock-based compensation. $1,859 is attributable to the Real estate brokerage segment and $3,452 is attributable to the Corporate and other segment for the six months ended and last twelve months ended June 30, 2022. Adjusted EBITDA Reconciliation Year Ended Six Months Ended LTM 12/31/2019 12/31/2020 12/31/2021 6/30/2021 6/30/2022 6/30/2022 Net income (loss) $8,459 ($46,372) $98,838 $53,437 $16,756 $ 62,157 Interest income, net (600) (190) (83) (72) (71) (82) Income tax expense 354 44 2,133 989 8,463 9,607 Net loss attributed to non-controlling interest - - (186) - (252) (438) Depreciation and amortization 8,638 8,537 8,561 4,220 4,065 8,406 Equity in (earnings) losses from equity method investments(1) (8,472) 225 278 (75) (418) (65) Restructuring(2) - 3,382 - - - - Loss on disposal of assets - 1,169 - - - - Impairments of goodwill and other intangible assets(3) - 58,252 - - - - Change in fair value of contingent liability (3,157) (2,149) 1,647 3,523 - (1,876) Stock-based compensation expense(4) - - - - 5,311 5,311 Other, net (64) (843) (529) (391) (1,971) (2,109) Adjusted EBITDA attributed to non-controlling interest - - 40 - 46 86 Adjusted EBITDA attributed to Douglas Elliman $5,158 $22,055 $110,699 $61,631 $31,929 $80,997 Operating Income by Segment Real estate brokerage ($3,480) ($49,285) $102,098 $57,411 $36,116 $80,803 Corporate and other - - - - (13,609) (13,609) Total ($3,480) ($49,285) $102,098 $57,411 $22,507 $67,194 Adjusted EBITDA Attributed to Douglas Elliman by Segment Real estate brokerage $5,158 $22,055 $110,699 $61,631 $42,086 $91,154 Corporate and other - - - - (10,157) (10,157) Total $5,158 $22,055 $110,699 $61,631 $31,929 $80,997 Number of transactions (absolute) 23,479 22,686 32,400 15,558 15,001 31,843 ($ thousands)
25 Adjusted Operating Expenses Reconciliation Year Ended Year Ended Six Months Ended LTM 12/31/2019 12/31/2021 6/30/2021 6/30/2022 6/30/2022 Total Operating Expenses(1) $787,588 $1,251,040 $607,340 $650,752 $1,294,452 Items excluded from total expenses to determine Real Estate Brokerage Segment Adjusted Operating Expenses Real estate agent commissions (525,233) (985,523) (480,668) (490,604) (995,459) Variable expenses related to ancillary services(2) (1,461) (10,334) (4,486) (4,304) (10,152) Depreciation and amortization (8,638) (8,561) (4,220) (4,065) (8,406) Loss on disposal of assets(3) (136) (186) (19) (10) (177) Non-cash stock compensation - real estate brokerage segment - - - (1,859) (1,859) Operating expenses - Corporate and other segment - - - (13,609) (13,609) Real Estate Brokerage Segment Adjusted Operating Expenses $252,120 $246,436 $117,947 $136,301 $264,790 ($ thousands) 1) Operating expenses include expenses reflected in the Company's Combined Consolidated Statements of Operations (for all periods presented) under the category "Expenses" and classified as "Real estate agent commissions", "Sales and marketing", "Operations and support", "General and administrative", "Technology", "Depreciation and amortization", "Loss on disposal of assets", "Impairments of goodwill and other intangible assets" and "Restructuring". 2) Included in "Operations and support" in the Company's Combined Consolidated Statements of Operations for all periods presented. 3) Included in "General and administrative” on the Company's Combined Consolidated Statements of Operations for all periods presented.