Howard Lorber, President and CEO, Douglas Elliman
Illustration by Lanette Behiry/Real Estate News

$17.8M settlement took a bite out of Douglas Elliman profits 

The company said despite the hit to its bottom line in Q1, the settlement will reduce uncertainties and let it focus on cost reduction and market expansion.

May 10, 2024
3 minutes

Recent settlements in the commissions lawsuits cut deep into Douglas Elliman's first-quarter earnings, but they will protect the company's future, company leaders said.

President and CEO Howard Lorber told investors in an earnings call Friday morning that despite the hit to the company's bottom line, he's pleased to have the litigation in the rearview mirror.

The April 29 settlements in the Gibson and Umpa cases "will also resolve other similar pending litigation," Lorber said. "The settlement agreement reflects our commitment to mitigating future uncertainties and limiting legal costs. It is not an admission of liability or of the validity of any claim."

The company reported a net loss of $41.5 million, considerably more than the $23.8 million loss reported in the same quarter of 2023, due almost exclusively to a $17.75 million litigation settlement charge.

Without that charge, Elliman's losses would have been nearly flat year-over-year.

The settlement includes an initial payment of $7.75 million, due June 12, and up to two additional $5 million contingent payments through December 31, 2027, according to the company.

Elliman also acknowledged that its market share in New York has decreased slightly but said that was balanced by a robust expansion of operations in Florida and new developments in Texas and Las Vegas.

What Douglas Elliman had to say

During the earnings call, the brokerage's leadership focused heavily on its efforts to reduce costs.

Chief Financial Officer Bryant Kirkland said the company will continue to cut costs as the market copes with high mortgage rates and tight inventory, noting it had eliminated 100 positions in the past year.

"This is a seasonal business at times, so expenses move from quarter to quarter in a different way," he said. "However, we have cut as much as $18.9 million over the last 12 months, about $3 million of that (the majority) was advertising; the remainder was in personnel and sponsorships and travel."

Lorber also assured investors that the company will continue to reduce expenses to bring itself closer to at least breaking even. "We're not going to sit here and just keep it the way it is now and hope that the market changes quicker than it may or may not," he said.

"We're also trying to do it judiciously, not doing everything at once, and spreading it out, and also making sure that we're not affecting the experience, our customers' experience," he said. 

"Obviously our customers, to us, are our brokers."

Key numbers

Revenue: $200 million, down from $214 million for the same period last year.

Cash and cash equivalents: $91.5 million at the end of the first quarter.

Net income/loss: A loss of $41.5 million, compared to a loss of $23.8 million for the first quarter of 2023.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): A loss of $18.2 million, compared to a loss of $17.6 million for the same period last year.

Transactions: 4,477, down from 4,627 for the same period last year.

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