UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended March 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DOUGLAS ELLIMAN INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation Commission File Number (I.R.S. Employer Identification No.) incorporation or orga ...

Douglas Elliman, Inc. (NYSE:DOUG) Q1 2023 Earnings Conference Call May 10, 2023 8:30 AM ET Company Participants Howard Lorber - Chairman, President & CEO Conference Call Participants Operator Welcome to Douglas Elliman's First Quarter 2023 Earnings Conference Call. The 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 An archived version of the webcast will be available on the Investor Relations section of the company's website located at investors.elliman.com for 1 year. During this call, the terms adjust ...

Table of Contents SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________ Form 10-K _____________________________________________ ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Fiscal Year Ended December 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 _____________________________________________ DOUGLAS ELLIMAN INC. (Exact name of registrant as specified in its ...

Financial Data and Key Metrics Changes - Adjusted EBITDA attributed to the real estate brokerage segment was a loss of $12.6 million in Q4 2022 compared to income of $21.3 million in Q4 2021 [1] - Adjusted net loss attributed to Douglas Elliman was $18.4 million or $0.24 per share in Q4 2022 compared to adjusted net income of $18.6 million or $0.24 per share in Q4 2021 [1] - For the full year 2022, Douglas Elliman reported $1.15 billion in revenues compared to $1.35 billion in 2021 [20] Business Line Data and Key Metrics Changes - Douglas Elliman reported $207.3 million in revenues for Q4 2022 compared to $334 million in Q4 2021 [19] - Adjusted EBITDA attributed to Douglas Elliman was a loss of $17.1 million in Q4 2022 compared to income of $21.3 million in Q4 2021 [35] - The real estate brokerage segment reported an operating loss of $15.6 million in 2022 compared to operating income of $19.2 million in 2021 [35] Market Data and Key Metrics Changes - The residential real estate industry faced significant headwinds in 2022, with transaction volume and the value of existing home sales each declining by more than 30% [30] - Douglas Elliman outperformed the industry with transaction volume and gross transaction volume declining by approximately 18% and 16%, respectively [30] - Limited inventory in luxury markets has kept prices stable despite market challenges [15] Company Strategy and Development Direction - The company is focused on strategic market expansion, continued recruitment of talent, and further adoption of innovative solutions to empower agents [36] - Douglas Elliman has entered new markets such as Las Vegas, Dallas, and D.C., which represent approximately $50 billion of total available annual gross transaction value [32] - The company plans to consolidate office space and reduce expenses, which is expected to begin to reduce rent expenses during 2023 and more significantly in the second half of 2024 [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the current operating environment is challenging but believes that tight supply will gradually ease as consumers adjust to higher interest rates [31] - The luxury markets are expected to be the last to enter a down cycle and the first to emerge, presenting significant growth opportunities when market uncertainty subsides [31] - Management emphasized the importance of maintaining revenue while managing operating expenses to create long-term stockholder value [36] Other Important Information - The company paid a dividend of $0.05 per share during the fourth quarter and expects dividends to be a key component of capital allocation going forward [2] - As of December 31, 2022, the company had $164 million in cash and cash equivalents with no long-term debt, providing a competitive advantage for growth [17] Q&A Session Summary Question: Can you elaborate on the current environment and any changes across regions? - Management acknowledged that the first quarter would likely reflect similar trends to the fourth quarter, with some regions performing better or worse based on inventory and activity levels [8] Question: What are the expected impacts of the initiatives around expenses? - Management indicated that they have eliminated certain marketing expenses and expect to see reductions in expenses from consolidating office space and freezing hiring [9][18] Question: Is there a potential for stock buybacks given the cash position? - Management noted that their ability to buy back stock is limited until two years post-spin-off from Vector Group, but they view the stock as a good value [40]

Douglas Elliman Inc. (NYSE:DOUG) Q3 2022 Earnings Conference Call November 4, 2022 8:00 AM ET Company Participants Howard M. Lorber – Chairman, President and Chief Executive Officer Conference Call Participants Daniel Fannon – Jefferies Operator Welcome to Douglas Elliman, Inc.’s Third Quarter 2022 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 investo ...

Financial Performance - Total transactions for the year ended September 30, 2022, were 30,520, a significant increase from 22,213 in 2021, representing a growth of approximately 37.5%[86] - Gross transaction value reached $48.9 billion for the year ended September 30, 2022, compared to $36.3 billion in 2021, marking an increase of about 34.5%[86] - Net income attributed to Douglas Elliman Inc. for the last twelve months ended September 30, 2022, was $32,981 thousand, up from $12,793 thousand in the previous year, reflecting a growth of approximately 157.5%[86] - Adjusted EBITDA attributed to Douglas Elliman was $53,360 thousand for the last twelve months ended September 30, 2022, compared to $32,052 thousand in 2021, indicating an increase of around 66.6%[86] Revenue and Operating Income - Revenue for the real estate brokerage segment for the three months ended September 30, 2022, was $272,588 thousand, a decrease from $354,161 thousand in the same period of 2021[94] - Operating income for the real estate brokerage segment for the three months ended September 30, 2022, was $1,503 thousand, down from $25,514 thousand in 2021[94] - Total operating loss for the company for the three months ended September 30, 2022, was $5,186 thousand, compared to an operating income of $25,514 thousand in the same period of 2021[94] - Revenues for the three months ended September 30, 2022, were $272,588, a decline of $81,573 (23.0%) compared to $354,161 for the same period in 2021, primarily due to lower commission revenues from existing home sales[95] - Operating income decreased to $37,619 for the nine months ended September 30, 2022, compared to $82,925 in 2021, primarily due to reduced revenues and increased expenses[110] Expenses - Operating expenses decreased to $277,774 for the three months ended September 30, 2022, down $50,873 from $328,647 in 2021, mainly due to declines in real estate brokerage commissions[95] - Real estate agent commissions expense was $195,836 for the three months ended September 30, 2022, compared to $257,098 in 2021, with the percentage of revenues decreasing to 71.8% from 72.6%[100] - Sales and marketing expenses increased to $22,703 for the three months ended September 30, 2022, from $20,237 in 2021, driven by additional promotional activities[100] - Technology expenses rose to $5,527 for the three months ended September 30, 2022, compared to $4,388 in 2021, reflecting enhancements to the agent technology platform[100] - Technology expenses increased to $16,809 for the nine months ended September 30, 2022, compared to $11,302 in 2021, driven by enhancements to the "MyDouglas" agent portal and other technology initiatives[110] Cash Flow and Investments - Cash provided from operations was $5,208 for the nine months ended September 30, 2022, a significant decline from $93,436 in 2021, attributed to lower operating income and increased expenses[117] - Cash used in investing activities was $9,667 for the nine months ended September 30, 2022, compared to $6,553 in 2021, with capital expenditures of $6,207 and PropTech investments of $3,235[117] - Cash used in financing activities was $22,741 for the nine months ended September 30, 2022, including dividends of $12,120 and debt repayment of $9,396[118] - As of September 30, 2022, cash and cash equivalents were approximately $192,734, which, along with cash from operations, is expected to meet liquidity needs over the next twelve months[118] - New Valley Ventures had investments in PropTech companies valued at approximately $13,771, representing about 2% of Douglas Elliman's total assets of approximately $580 million[112] Risks and Uncertainties - The company faces significant risks and uncertainties that could materially affect actual results compared to forward-looking statements, including economic conditions and regulatory changes[126] - The impact of the Inflation Reduction Act of 2022 and the Tax Cuts and Jobs Act of 2017 on market conditions is a key concern for the company[126] - The company has to manage expenses effectively, including corporate expenses as a standalone public entity[126] - There is a lack of operating history as a public company, which presents additional challenges and costs[126] - The company must satisfy obligations under the Transition Services Agreement with Vector Group to avoid operational disruptions[126] - The company acknowledges that expectations in forward-looking statements may not be attained, indicating potential material deviations[127] - Market risk disclosures are referenced in the Management's Discussion and Analysis of Financial Condition and Results of Operations[129]

Douglas Elliman Inc. (NYSE:DOUG) Q2 2022 Earnings Conference Call August 5, 2022 7:30 AM ET Company Participants Howard Lorber - Chairman, President and Chief Executive Officer Bryant Kirkland - Senior Vice President, Treasurer and Chief Financial Officer Conference Call Participants Dan Fannon - Jefferies John Massocca - Ladenburg Thalmann Operator Welcome to Douglas Elliman Inc.’s Second Quarter 2022 Conference Call. During this call, the terms adjusted net income and adjusted EBITDA will be used. These t ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's financial statements, management's discussion and analysis of financial condition, market risk disclosures, and internal controls [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the period ended June 30, 2022, show decreased net income and operating cash flow, stable total assets, and slightly reduced total liabilities Condensed Consolidated Balance Sheet Data (Unaudited) | Balance Sheet Items | June 30, 2022 (thousands of USD) | December 31, 2021 (thousands of USD) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 202,134 | 211,623 | | Total current assets | 272,023 | 280,805 | | Total assets | 594,738 | 595,169 | | **Liabilities & Equity** | | | | Total current liabilities | 109,859 | 132,467 | | Total liabilities | 298,801 | 313,296 | | Total stockholders' equity | 295,937 | 281,873 | Condensed Consolidated Statements of Operations (Unaudited) | Metric (thousands of USD) | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | 364,359 | 391,975 | 673,259 | 664,751 | | Operating income | 14,628 | 43,183 | 22,507 | 57,411 | | Net income | 10,219 | 39,472 | 16,504 | 53,437 | | Diluted EPS | $0.13 | $0.51 | $0.21 | $0.69 | Condensed Consolidated Statements of Cash Flows (Unaudited, Six Months Ended June 30) | Cash Flow Activity (thousands of USD) | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | 2,837 | 72,107 | | Net cash used in investing activities | (6,543) | (6,915) | | Net cash used in financing activities | (14,109) | (1,399) | | Net (decrease) increase in cash | (17,815) | 63,793 | - The company's business is segmented into Real Estate Brokerage and Corporate and Other. For Q2 2022, the Real Estate Brokerage segment generated operating income of **$21.6 million**, while the Corporate and Other segment had an operating loss of **$6.9 million**[74](index=74&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the decline in Q2 2022 revenue and operating income due to market conditions and increased standalone public company expenses, while highlighting strategic investments and dividend initiation - The company operates through two business segments: Real Estate Brokerage (via Douglas Elliman Realty) and Corporate and other (holding company operations and PropTech investments via New Valley Ventures)[80](index=80&type=chunk) Key Business Metrics (Six Months Ended June 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total transactions | 15,001 | 15,558 | | Gross transaction value (billions of USD) | $25.3 | $25.3 | | Adjusted EBITDA attributed to Douglas Elliman (millions of USD) | $31.9 | $61.6 | - As of June 30, 2022, New Valley Ventures had investments with a carrying value of approximately **$11.7 million** in PropTech companies. New investments in H1 2022 include Envoy, Audience, and Tongo[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - The company initiated a quarterly cash dividend of **$0.05 per share** in March 2022, expected to result in annual dividend payments of approximately **$16.3 million**[115](index=115&type=chunk) [Results of Operations - Q2 2022 vs Q2 2021](index=27&type=section&id=Results%20of%20Operations%20-%20Q2%202022%20vs%20Q2%202021) Q2 2022 total revenues decreased by 7.0% to $364.4 million, with operating income falling sharply to $14.6 million due to lower home sales and increased operating costs Q2 Performance Comparison (thousands of USD) | Metric | Q2 2022 | Q2 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $364,359 | $391,975 | (7.0%) | | Operating Income | $14,628 | $43,183 | (66.1%) | - The decline in Real Estate Brokerage revenue was primarily due to a **$30.1 million** decrease in existing home sales in Florida and a **$3.7 million** decrease in the Northeast, partially offset by an **$11.1 million** increase in the West region (including Texas)[96](index=96&type=chunk) - The Corporate and Other segment reported an operating loss of **$6.9 million** in Q2 2022, reflecting expenses associated with operating as a standalone public company post-Distribution[99](index=99&type=chunk) [Results of Operations - Six Months 2022 vs 2021](index=30&type=section&id=Results%20of%20Operations%20-%20Six%20Months%202022%20vs%202021) For the six months ended June 30, 2022, revenues increased by 1.3% to $673.3 million, but operating income significantly decreased by 60.8% due to higher operating expenses Six-Month Performance Comparison (thousands of USD) | Metric | Six Months 2022 | Six Months 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $673,259 | $664,751 | 1.3% | | Operating Income | $22,507 | $57,411 | (60.8%) | - The increase in commission and brokerage income was driven by strong performance in New York City (**+$24.1 million**) and the West region (**+$21.9 million**, including Texas), offsetting declines in Florida (**-$24.8 million**) and the Northeast (**-$9.9 million**) markets[106](index=106&type=chunk) - Technology expenses increased from **$6.9 million** to **$11.3 million** year-over-year due to enhancements to the 'MyDouglas' agent portal, increased use of StudioPro CRM, and the introduction of the Elliman Showroom platform[108](index=108&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is interest rate fluctuations, which it manages through its operating, financing, and long-term investment strategies - The company's principal market risk exposure stems from fluctuations in interest rates[116](index=116&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during Q2 2022 - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[127](index=127&type=chunk) - There were no changes in internal control over financial reporting during Q2 2022 that materially affected, or are reasonably likely to materially affect, internal controls[128](index=128&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, and information regarding unregistered sales of equity securities [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation, but management anticipates no material adverse effect on its financial condition, as most claims are insurance-covered - The company is involved in litigation through the normal course of business, but does not expect the outcomes to have a material adverse effect on its financial condition[63](index=63&type=chunk)[131](index=131&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) Key risks include reduced homebuyer financing due to rising interest rates and increased regulatory scrutiny on industry commission practices, potentially disrupting business operations - A significant risk is the lack of financing for homebuyers at favorable rates, as Federal Reserve policy has led to significantly increased mortgage interest rates, which could lower transaction volume or home prices[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - The company faces risks from potential industry structure changes and increased regulatory scrutiny, with the Department of Justice's withdrawal from a settlement with the National Association of Realtors (NAR) indicating a focus on anticompetitive behavior related to commissions, which could disrupt the business[136](index=136&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not issue or sell any unregistered equity securities during the three months ended June 30, 2022 - No unregistered equity securities were issued or sold by the company during the three months ended June 30, 2022[142](index=142&type=chunk)

Financial Data and Key Metrics Changes - Douglas Elliman reported revenues of $308.9 million for Q1 2022, an increase from $272.8 million in Q1 2021, driven by increased commission and brokerage income in luxury markets [5][13] - Gross transaction value rose to $11.7 billion for Q1 2022, up from $10.1 billion in Q1 2021, with a total of $52.8 billion in gross transaction value over the last 12 months [5][13] - Net income for Q1 2022 was $6.5 million or $0.08 per diluted share, compared to $14 million or $0.18 per share in the prior year [13][16] - Adjusted EBITDA for Q1 2022 was $12.7 million, down from $16.4 million in Q1 2021 [14] Business Line Data and Key Metrics Changes - The real estate brokerage segment reported operating income of $14.5 million for Q1 2022, slightly up from $14.2 million in Q1 2021, with adjusted EBITDA of $17.7 million compared to $16.4 million in the previous year [15] Market Data and Key Metrics Changes - New York City remains the largest market with $17.3 billion in gross transaction value over the last 12 months, while South Florida reported $14.7 billion [8] - Average selling price in New York City and South Florida remained around $2 million per home, with market shares of 21% and 20% respectively [8] Company Strategy and Development Direction - The company is focused on expanding its footprint in luxury markets and enhancing its technology offerings, including the MyDouglas agent portal [9][10] - Douglas Elliman aims to create shareholder value through market expansion, adoption of PropTech solutions, and recruitment of top talent [11] Management's Comments on Operating Environment and Future Outlook - Management noted that the business has not been materially impacted by higher mortgage rates, particularly in luxury markets where cash transactions are more common [6] - The company anticipates continued demand for housing due to limited supply and the growing importance of millennial and international buyers [6][20] Other Important Information - Douglas Elliman maintained a strong balance sheet with cash of $203.7 million as of March 31, 2022, positioning the company favorably in the market [16] - The company initiated a $0.05 per share dividend for stockholders, indicating a commitment to capital allocation [17] Q&A Session Summary Question: What percentage of transactions are cash buyers? - Management indicated that cash transactions vary by market, but higher-end deals often involve less reliance on mortgages, suggesting resilience against rising interest rates [18] Question: How should growth in fixed costs be modeled for 2022? - Management discussed categorizing costs into activity-based, non-activity based, and expansion costs, noting a recent increase in general administrative costs due to returning to office operations [22][25] Question: What is the current broker count and recruitment strategy? - Management confirmed ongoing recruitment efforts in core markets like New York and South Florida, as well as significant hiring in newer markets like Texas [28] Question: Is there a focus on M&A for growth? - Management expressed a balanced approach to growth through both recruitment and small acquisitions, emphasizing the value of the Douglas Elliman brand in attracting agents [29] Question: Were there any one-time costs in Q1? - Management noted that there were some one-time costs in general administrative expenses, with an expectation of around $18 million for the year [30]

[Filing Information](index=1&type=section&id=Filing%20Information) This section details the document type, filing entity, filer classification, and outstanding common stock shares - The document is a **Quarterly Report (Form 10-Q)** for the period ended **March 31, 2022**, filed by DOUGLAS ELLIMAN INC[2](index=2&type=chunk) - The registrant is classified as a **Non-accelerated filer**[4](index=4&type=chunk) - As of May 6, 2022, Douglas Elliman Inc. had **81,235,626 shares of common stock outstanding**[4](index=4&type=chunk) [PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Douglas Elliman Inc. Condensed Combined Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Douglas%20Elliman%20Inc.%20Condensed%20Combined%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides the unaudited condensed combined consolidated financial statements, including the balance sheets, statements of operations, statements of stockholders' equity, statements of cash flows, and accompanying notes, for Douglas Elliman Inc. for the periods presented [Condensed Combined Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Combined%20Consolidated%20Balance%20Sheets) This section presents the company's financial position at specific dates, detailing assets, liabilities, and stockholders' equity | Metric | March 31, 2022 ($ Thousands) | December 31, 2021 ($ Thousands) | | :---------------------- | :--------------------------- | :------------------------------ | | Total Assets | 588,227 | 595,169 | | Total Liabilities | 301,104 | 313,296 | | Total Stockholders' Equity | 287,123 | 281,873 | [Condensed Combined Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Combined%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over specific periods, including revenues, operating income, and net income | Metric | Three Months Ended March 31, 2022 ($ Thousands) | Three Months Ended March 31, 2021 ($ Thousands) | | :---------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Total Revenues | 308,900 | 272,776 | | Operating Income | 7,879 | 14,228 | | Net Income Attributed to Douglas Elliman Inc. | 6,510 | 13,965 | | Per Basic Common Share | 0.08 | 0.18 | | Per Diluted Common Share | 0.08 | 0.18 | [Condensed Combined Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Combined%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity accounts over time, reflecting transactions with owners and comprehensive income | Metric | January 1, 2022 ($ Thousands) | March 31, 2022 ($ Thousands) | | :-------------------------------------- | :---------------------------- | :--------------------------- | | Total Douglas Elliman Inc. Stockholders' Equity | 279,934 | 285,034 | | Non-controlling Interest | 1,939 | 2,089 | | Total Stockholders' Equity | 281,873 | 287,123 | - During the three months ended March 31, 2022, the company paid **dividends on common stock of $4,062 thousand** and recognized **stock-based compensation of $2,652 thousand**[14](index=14&type=chunk) [Condensed Combined Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Combined%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by the company across operating, investing, and financing activities | Cash Flow Activity | Three Months Ended March 31, 2022 ($ Thousands) | Three Months Ended March 31, 2021 ($ Thousands) | | :---------------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Net cash (used in) provided by operating activities | (6,780) | 13,993 | | Net cash used in investing activities | (1,815) | (597) | | Net cash used in financing activities | (6,834) | (21) | | Net (decrease) increase in cash, cash equivalents and restricted cash | (15,429) | 13,375 | [Notes to Condensed Combined Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Combined%20Consolidated%20Financial%20Statements) These notes provide detailed information on the company's significant accounting policies, revenue recognition, credit losses, leases, long-term investments, equity method investments, notes payable, contingencies, income taxes, fair value measurements, and segment information, offering context to the financial statements [1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=7&type=section&id=1.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the fundamental accounting principles and methods used in preparing the financial statements - Douglas Elliman Inc. is engaged in **real estate services and property technology (PropTech) investment business**[18](index=18&type=chunk) - The company became a **standalone entity** after its distribution from Vector Group Ltd. in December 2021, impacting the comparability of financial results with prior periods due to changes in operations and capitalization[18](index=18&type=chunk) | Related Party Transactions (Q1) | 2022 ($ Thousands) | 2021 ($ Thousands) | | :------------------------------ | :----------------- | :----------------- | | Transition Services Agreement | 1,050 | N/A | | Aircraft Lease Agreement | 491 | N/A | | Real Estate Commissions | 900 | 2,357 | - The company is evaluating **ASU 2021-08**, 'Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,' effective for fiscal years beginning after December 15, 2022[31](index=31&type=chunk) [2. REVENUE RECOGNITION](index=10&type=section&id=2.%20REVENUE%20RECOGNITION) This section details the company's policies and methods for recognizing revenue from various sources and regions | Revenue Source & Region (Q1) | 2022 ($ Thousands) | 2021 ($ Thousands) | | :----------------------------- | :----------------- | :----------------- | | **Total Revenue:** | **308,900** | **272,776** | | New York City | 113,515 | 88,140 | | Northeast | 50,508 | 56,840 | | Southeast | 89,040 | 82,860 | | West | 55,837 | 44,936 | | **Commission & Other Brokerage Income - Existing Home Sales:** | | | | New York City | 92,388 | 70,135 | | Northeast | 50,079 | 56,250 | | Southeast | 80,824 | 75,553 | | West | 51,884 | 41,078 | - The company recognized **$8,069 thousand in revenue** for the three months ended March 31, 2022, that was included in contract liabilities balances at December 31, 2021[35](index=35&type=chunk) [3. CURRENT EXPECTED CREDIT LOSSES](index=11&type=section&id=3.%20CURRENT%20EXPECTED%20CREDIT%20LOSSES) This section describes the company's methodology and provisions for estimating and accounting for credit losses on financial assets | Metric | March 31, 2022 ($ Thousands) | December 31, 2021 ($ Thousands) | | :-------------------------------------- | :--------------------------- | :------------------------------ | | Allowance for credit losses (agent receivables) | 8,833 | 8,607 | | Allowance for Credit Losses Rollforward (Q1 2022) | January 1, 2022 ($ Thousands) | Current Period Provision ($ Thousands) | Write-offs ($ Thousands) | March 31, 2022 ($ Thousands) | | :------------------------------------------------ | :---------------------------- | :------------------------------------- | :----------------------- | :--------------------------- | | Real estate broker agent receivables | 8,607 | 558 | 332 | 8,833 | [4. LEASES](index=11&type=section&id=4.%20LEASES) This section provides information on the company's lease arrangements, including lease costs, terms, and payment obligations | Lease Cost (Q1) | 2022 ($ Thousands) | 2021 ($ Thousands) | | :---------------- | :----------------- | :----------------- | | Operating lease cost | 8,169 | 8,135 | | Short-term lease cost | 257 | 200 | | Variable lease cost | 985 | 956 | | Less: Sublease income | (121) | (88) | | Total lease cost | 9,290 | 9,203 | - The weighted average remaining lease term for operating leases was **7.42 years** as of March 31, 2022[43](index=43&type=chunk) - Total undiscounted lease payments for operating leases as of March 31, 2022, were **$213,571 thousand**[43](index=43&type=chunk) [5. LONG-TERM INVESTMENTS](index=13&type=section&id=5.%20LONG-TERM%20INVESTMENTS) This section details the company's long-term investment portfolio, including PropTech securities and other fair value investments | Investment Type | March 31, 2022 ($ Thousands) | December 31, 2021 ($ Thousands) | | :------------------------------------ | :--------------------------- | :------------------------------ | | PropTech convertible trading debt securities | 3,077 | 2,222 | | Long-term investment securities at fair value | 2,332 | 1,534 | | PropTech investments at cost | 4,363 | 4,338 | | Total investments | 9,772 | 8,094 | | Less PropTech current convertible trading debt securities | 2,376 | — | | Total long-term investments | 7,396 | 8,094 | | Net Gains Recognized on Long-Term Investment Securities (Q1) | 2022 ($ Thousands) | 2021 ($ Thousands) | | :----------------------------------------------------------- | :----------------- | :----------------- | | PropTech convertible trading debt securities | 154 | — | | Long-term investments at fair value | 598 | 34 | | Total net gains | 752 | 34 | - During Q1 2022, New Valley Ventures invested **$701 thousand** into convertible notes of two additional PropTech ventures[46](index=46&type=chunk) - The company had **unfunded commitments of $1,460 thousand** related to long-term investment securities at fair value as of March 31, 2022[47](index=47&type=chunk) [6. EQUITY METHOD INVESTMENTS](index=14&type=section&id=6.%20EQUITY%20METHOD%20INVESTMENTS) This section describes the company's investments accounted for using the equity method, including ownership percentages and exposure to loss | Investment Type | March 31, 2022 ($ Thousands) | December 31, 2021 ($ Thousands) | | :---------------------- | :--------------------------- | :------------------------------ | | Ancillary services ventures | 2,508 | 2,521 | - The company's ownership percentages in equity-method investments ranged from **17% to 50%** as of March 31, 2022[50](index=50&type=chunk) - The maximum exposure to loss from equity method investments was **$2,508 thousand** as of March 31, 2022[52](index=52&type=chunk) [7. NOTES PAYABLE AND OTHER OBLIGATIONS](index=14&type=section&id=7.%20NOTES%20PAYABLE%20AND%20OTHER%20OBLIGATIONS) This section outlines the company's outstanding debt instruments and other financial obligations, including their maturities | Obligation Type | March 31, 2022 ($ Thousands) | December 31, 2021 ($ Thousands) | | :------------------------------ | :--------------------------- | :------------------------------ | | Notes payable | 9,375 | 12,500 | | Other | 199 | 203 | | Total notes payable and other obligations | 9,574 | 12,703 | | Less: Current maturities | (9,405) | (12,527) | | Amount due after one year | 169 | 176 | - The remaining principal of **$9,375 thousand** for notes payable is due in 2022[54](index=54&type=chunk) [8. CONTINGENCIES](index=15&type=section&id=8.%20CONTINGENCIES) This section addresses potential future liabilities arising from legal proceedings and other uncertain events - The company is involved in litigation through the normal course of business[57](index=57&type=chunk) - Management believes the resolution of these matters will **not have a material adverse effect** on the financial position, results of operations, or cash flows[57](index=57&type=chunk) [9. INCOME TAXES](index=16&type=section&id=9.%20INCOME%20TAXES) This section details the company's income tax provision, including the impact of its standalone public company status | Income Tax Metric (Q1) | 2022 ($ Thousands) | 2021 ($ Thousands) | | :--------------------- | :----------------- | :----------------- | | Income before provision for income taxes | 9,202 | 14,246 | | Income tax expense | 2,917 | 281 | - After the Distribution, Douglas Elliman Inc. and its subsidiaries became a **separate taxable entity** for federal and state income tax purposes, leading to a change in the calculation of income tax provision[59](index=59&type=chunk) [10. INVESTMENTS AND FAIR VALUE MEASUREMENTS](index=17&type=section&id=10.%20INVESTMENTS%20AND%20FAIR%20VALUE%20MEASUREMENTS) This section provides information on the valuation methodologies and fair value hierarchy for the company's investments | Asset Type (Fair Value) | March 31, 2022 ($ Thousands) | December 31, 2021 ($ Thousands) | | :---------------------- | :--------------------------- | :------------------------------ | | Total Assets | 50,953 | 55,817 | | Level 1 (Money market funds) | 44,975 | 51,492 | | Level 2 (Certificates of deposit) | 569 | 569 | | Level 3 (PropTech convertible trading debt securities) | 3,077 | 2,222 | - Fair values of **Level 3 PropTech convertible trading debt securities** are derived using a discounted cash flow model with a probability-weighted expected return method[64](index=64&type=chunk) - Unobservable inputs for Level 3 valuations at March 31, 2022, include **interest rates (4%-8%)**, **maturity (Feb 2023 - Dec 2023)**, **volatility (40.7%-73.6%)**, and **discount rates (28.22%-46.66%)**[64](index=64&type=chunk) [11. SEGMENT INFORMATION](index=19&type=section&id=11.%20SEGMENT%20INFORMATION) This section presents financial data broken down by the company's operating segments, including revenues and operating income | Segment Performance (Q1) | Real Estate Brokerage 2022 ($ Thousands) | Corporate and Other 2022 ($ Thousands) | Total 2022 ($ Thousands) | | :----------------------- | :--------------------------------------- | :------------------------------------- | :----------------------- | | Revenues | 308,900 | — | 308,900 | | Operating income (loss) | 14,541 | (6,662) | 7,879 | | Adjusted EBITDA attributed to Douglas Elliman | 17,662 | (4,935) | 12,727 | | Segment Performance (Q1) | Real Estate Brokerage 2021 ($ Thousands) | Corporate and Other 2021 ($ Thousands) | Total 2021 ($ Thousands) | | :----------------------- | :--------------------------------------- | :------------------------------------- | :----------------------- | | Revenues | 272,776 | — | 272,776 | | Operating income (loss) | 14,228 | — | 14,228 | | Adjusted EBITDA attributed to Douglas Elliman | 16,351 | — | 16,351 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, liquidity, and capital resources for the three months ended March 31, 2022, compared to the prior year. It details revenue and expense drivers, segment performance, and key business metrics, highlighting the impact of operating as a standalone public company [Overview](index=20&type=section&id=Overview) This section introduces the company's business segments and the impact of its recent transition to a standalone public entity - Douglas Elliman Inc. operates in **two business segments**: Real Estate Brokerage and Corporate and Other[71](index=71&type=chunk)[72](index=72&type=chunk) - The Real Estate Brokerage segment operates the **largest residential brokerage company** in the New York metropolitan area and in other key regions[71](index=71&type=chunk) - The company became a **standalone public company on December 29, 2021**, after its distribution from Vector Group, which impacts the comparability of financial results with prior periods[73](index=73&type=chunk) [Key Business Metrics and Non-GAAP Financial Measures](index=20&type=section&id=Key%20Business%20Metrics%20and%20Non-GAAP%20Financial%20Measures) This section presents crucial operational and financial performance indicators, including non-GAAP adjustments, for evaluating the company's business | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Total Transactions | 7,212 | 7,094 | | Gross Transaction Value (in billions) | $11.7 | $10.1 | | Average Transaction Value per Transaction (in thousands) | $1,620.4 | $1,427.8 | | Number of Principal Agents | 5,174 | 4,954 | | Net Income Attributed to Douglas Elliman Inc. ($ Thousands) | 6,510 | 13,965 | | Net Income Margin | 2.11% | 5.12% | | Adjusted EBITDA Attributed to Douglas Elliman ($ Thousands) | 12,727 | 16,351 | | Adjusted EBITDA Attributed to Douglas Elliman Margin | 4.12% | 5.99% | - **Adjusted EBITDA attributed to Douglas Elliman** is a non-GAAP financial measure that adjusts net income for depreciation and amortization, investment income, stock-based compensation, income taxes, and other items[79](index=79&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section analyzes the company's financial outcomes, detailing revenue, expenses, and profitability trends [Three months ended March 31, 2022 Compared to Three months ended March 31, 2021](index=24&type=section&id=Three%20months%20ended%20March%2031%2C%202022%20Compared%20to%20Three%20months%20ended%20March%2031%2C%202021) This section compares the company's financial performance for the first quarter of 2022 against the same period in 2021, highlighting key changes in revenues, expenses, and income | Metric (Q1) | 2022 ($ Thousands) | 2021 ($ Thousands) | Change ($ Thousands) | Change (%) | | :-------------------- | :----------------- | :----------------- | :------------------- | :--------- | | Revenues | 308,900 | 272,776 | 36,124 | 13.2% | | Operating Expenses | 301,021 | 258,548 | 42,473 | 16.4% | | Operating Income | 7,879 | 14,228 | (6,349) | (44.6%) | | Other Income | 1,323 | 18 | 1,305 | 7250% | | Income Before Provision for Income Taxes | 9,202 | 14,246 | (5,044) | (35.4%) | | Income Tax Expense | 2,917 | 281 | 2,636 | 938.1% | - The increase in revenues was primarily due to **increased revenues from existing home sales** in the Real Estate Brokerage segment, driven by home-buying trends post-COVID-19 lockdowns[87](index=87&type=chunk) - The decline in operating income was due to **expenses associated with operating as a standalone public company** and non-cash stock compensation expense[87](index=87&type=chunk) [Real Estate Brokerage](index=25&type=section&id=Real%20Estate%20Brokerage) This section focuses on the financial performance of the company's primary real estate brokerage segment, including revenue and expense drivers | Real Estate Brokerage Segment (Q1) | 2022 ($ Thousands) | % of Revenues 2022 | 2021 ($ Thousands) | % of Revenues 2021 | | :--------------------------------- | :----------------- | :----------------- | :----------------- | :----------------- | | Revenues | 308,900 | 100% | 272,776 | 100% | | Commissions and other brokerage income | 295,109 | 95.5% | 259,100 | 95.0% | | Real estate agent commissions | 223,422 | 72.3% | 197,017 | 72.2% | | General and administrative | 26,168 | 8.5% | 19,307 | 7.1% | | Technology | 5,293 | 1.7% | 3,497 | 1.3% | | Operating income | 14,541 | 4.7% | 14,228 | 5.2% | - **Commission and other brokerage income increased by $36,009 thousand**, driven by existing home sales in New York City, West, and Southeast regions, and expansion into the Texas region[90](index=90&type=chunk) - Technology expenses increased due to refinements of the cloud-based 'MyDouglas' agent portal, StudioPro agent concierge service, and the introduction of new applications for payment processing and streamlined escrow services[92](index=92&type=chunk) [Corporate and Other](index=26&type=section&id=Corporate%20and%20Other) This section details the financial results of the corporate and other segment, primarily reflecting overhead and investment activities - The Corporate and Other segment reported an **operating loss of $6,662 thousand** for Q1 2022[94](index=94&type=chunk) - The loss was primarily due to expenses, including non-cash stock compensation, associated with operating as a **standalone publicly traded company** after the Distribution[94](index=94&type=chunk) [Summary of PropTech Investments](index=26&type=section&id=Summary%20of%20PropTech%20Investments) This section provides an overview of the company's investments in property technology ventures and their financial impact - As of March 31, 2022, New Valley Ventures held approximately **$7,396 thousand in PropTech investments**, representing about **1% of Douglas Elliman's total assets**[95](index=95&type=chunk) - New PropTech investments during Q1 2022 included **Envoy (shared mobility company)** and **Audience (subscription-based platform for hand-written notes)**[95](index=95&type=chunk)[96](index=96&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to generate and manage cash, its financial flexibility, and capital allocation strategies | Cash, Cash Equivalents and Restricted Cash (Q1) | 2022 ($ Thousands) | 2021 ($ Thousands) | | :---------------------------------------------- | :----------------- | :----------------- | | Net (decrease) increase | (15,429) | 13,375 | - **Cash used in operations was $6,780 thousand** in Q1 2022, a decline from $13,993 thousand provided in Q1 2021, due to lower operating income and higher discretionary compensation payments[97](index=97&type=chunk) - **Cash used in investing activities was $1,815 thousand** in Q1 2022, including $926 thousand for PropTech investments and $849 thousand for capital expenditures[97](index=97&type=chunk) - **Cash used in financing activities was $6,834 thousand** in Q1 2022, primarily due to $4,062 thousand in dividends and $3,129 thousand in debt repayment[98](index=98&type=chunk) - The company contemplates continuing to pay a **quarterly cash dividend of $0.05 per share**, which would result in annual dividends of approximately **$16,200 thousand**[99](index=99&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to market risks from fluctuations in interest rates and may face risks from foreign currency exchange rates and equity prices in the future. These risks are managed through regular operating and financing activities and long-term investment strategy - The company is exposed to market risks principally from **fluctuations in interest rates**[100](index=100&type=chunk) - Future market risks could include **foreign currency exchange rates and equity prices**[100](index=100&type=chunk) - These risks are minimized through regular operating and financing activities and the company's long-term investment strategy[100](index=100&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective as of March 31, 2022. There were no material changes in internal control over financial reporting during the first quarter of 2022 - The company's disclosure controls and procedures were evaluated and concluded to be **effective as of March 31, 2022**[111](index=111&type=chunk) - There were **no material changes in internal control over financial reporting** during the first quarter of 2022[112](index=112&type=chunk) [PART II. OTHER INFORMATION](index=29&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the normal course of business, as described in Note 8 to the financial statements - The company is involved in litigation through the normal course of business[115](index=115&type=chunk) - Further details on legal proceedings are provided in **Note 8** of the condensed combined consolidated financial statements[115](index=115&type=chunk) [Item 1A. Risk Factors](index=29&type=page&id=Item%201A.%20Risk%20Factors) There are no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - There are **no material changes** from the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2021[116](index=116&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity securities were issued or sold by the company during the three months ended March 31, 2022 - **No equity securities not registered** under the Securities Act were issued or sold by the company during the three months ended March 31, 2022[117](index=117&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists all documents filed as exhibits to the report, including agreements and certifications - The exhibits include an **Amendment to Employment Agreement (10.1)**, **Certifications of Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32.1)**, and various **Inline XBRL Taxonomy Extension documents** (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[119](index=119&type=chunk) [SIGNATURE](index=31&type=section&id=SIGNATURE) This section formally attests to the accuracy and completeness of the report, signed by an authorized officer - The report was signed on behalf of Douglas Elliman Inc. by **J. Bryant Kirkland III, Senior Vice President, Treasurer and Chief Financial Officer**, on **May 11, 2022**[122](index=122&type=chunk)