MARCUS & MILLICHAP, INC. 2024
Earnings Conference
Call May 8, 2024
First Quarter 2024
1
FORWARD-LOOKING STATEMENTS
This release includes forward-looking statements, including our expectations regarding the long-term outlook of the commercial real estate transaction market and our positioning within it, our belief relating to the Company's long-term growth, our assessment of the key factors influencing the Company's business outlook for 2024 and the execution of our capital return program, including a semi-annual dividend and the stock repurchase program. Statements about our beliefs and expectations and statements containing the words "may," "could," "would," "should," "will," "continue," "predict," "potential," "believe," "expect," "anticipate," "plan," "estimate," "target," "project," "intend," "goal," "well- positioned," and similar expressions constitute forward-looking statements.
These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future results or performance expressed in or suggested by forward-looking statements in this earnings press release. Investors are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Any forward-looking statements speak only as of the date of this earnings press release and, except to the extent required by applicable securities laws, the Company expressly disclaims any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.
Important factors that could cause such differences include, but are not limited to: (1) general uncertainty in the capital markets, a worsening of economic conditions, and the rate and pace of economic recovery following an economic downturn; (2) changes in our business operations; (3) market trends in the commercial real estate market or the general economy, including the impact of inflation and increased interest rates; (4) our ability to attract and retain qualified senior executives, managers and investment sales and financing professionals; (5) the impact of forgivable loans and related expense resulting from the recruitment and retention of agents; (6) the effects of increased competition on our business; (7) our ability to successfully enter new markets or increase our market share; (8) our ability to successfully expand our services and businesses and to manage any such expansions; (9) our ability to retain existing clients and develop new clients; (10) our ability to keep pace with changes in technology; (11) any business interruption or technology failure, including cybersecurity risks and ransomware attacks, and any related impact on our reputation; (12) changes in interest rates, availability of capital, tax laws, employment laws or other government regulation affecting our business; (13) our ability to successfully identify, negotiate, execute and integrate accretive acquisitions; and (14) other risk factors included under "Risk Factors" in our most recent Annual Report on Form 10-K.
2
CONFERENCE CALL PARTICIPANTS
Hessam Nadji
President, Chief Executive Officer
and Director
Steve DeGennaro
Chief Financial Officer
3
MMI Financial Highlights
2024 FIRST QUARTER HIGHLIGHTS
Financial Highlights | YoY | |
Revenue | $129.1 million | (16.6)% |
Net Loss | $(10.0) million | 71.2 % |
Adjusted EBITDA | $(10.1) million | 35.8 % |
Operational Highlights | YoY | |
Sales Volume | $9.7 billion | (7.0)% |
Transaction Closings | 1,564 | (13.4)% |
Number of Investment Sales and Financing | 1,722 | (7.6)% |
Professionals as of March 31, 2024 | ||
5
2024 FIRST QUARTER BROKERAGE HIGHLIGHTS
YoY | ||
Sales Volume | $5.7 billion | (20.6)% |
Transaction Closings | 1,102 | (13.8)% |
Number of Investment Sales Professionals as | 1,624 | (8.4)% |
of March 31, 2024 | ||
Real Estate Brokerage Commissions Revenue
$109.5 million
(18.9)%
Revenue by | Transactions by | Transactions by | ||
Transaction Size | Property Type | Region | ||
$20M+, | <$1M, 4% | Other, 26% | Northeast / | |
15% | Multifamily, | Mid-Atlantic, | ||
10% |
28% | ||
Western, 38% | ||
Southeast, 20% | ||
$10- | Office, 8% | |
$20M, | ||
14% | Midwest / | |
Mountain / | ||
$1-$10M, | South / | |
Southwest, 32% | ||
67% | ||
Retail, 38% | ||
6
2024 FIRST QUARTER FINANCING HIGHLIGHTS
YoY | ||
Sales Volume | $1.6 billion | (3.9)% |
Transaction Closings | 234 | (16.1)% |
Number of Financing Professionals as of | 98 | 6.5% |
March 31, 2024 | ||
Financing Fees Revenue | $14.4 million | (9.1)% |
Transactions by | Transactions by |
Property Type | Region |
Other, 17% | Northeast / |
Mid-Atlantic, | |
11% |
Multifamily, 51%
Office, 4% | Southeast, 8% |
Western, 50% | |
Retail, 28% | Midwest / |
Mountain / | |
South / | |
Southwest, 31% |
7
Market Highlights
TOTAL EMPLOYMENT WELL ABOVE PRE-PANDEMIC LEVEL, RECENT GROWTH PACE A FACTOR IN DELAYED FED RATE EASING
Total Employment (Millions)
Total Employment | Job Openings vs. Unemployed | |||||||||||||||||||||||
Total Employment | Job Openings | Unemployed | ||||||||||||||||||||||
160 | +27.7M | 24 | ||||||||||||||||||||||
Average Monthly Job Growth: | (Millions) | 2.4M Labor Shortage | ||||||||||||||||||||||
2021: 604K | +22.6M | |||||||||||||||||||||||
152 | 2022: 377K | 18 | ||||||||||||||||||||||
2023: 251K | ||||||||||||||||||||||||
2024*: 276K | Openings/Unemployed | |||||||||||||||||||||||
144 | 12 | |||||||||||||||||||||||
+8.2M | ||||||||||||||||||||||||
8.8M | ||||||||||||||||||||||||
136 | 6 | 6.4M | ||||||||||||||||||||||
Job | ||||||||||||||||||||||||
128 | -2.6M | -8.7M | -21.9M | |||||||||||||||||||||
0 | ||||||||||||||||||||||||
2001 | 2003 | 2005 | 2007 | 2009 | 2011 | 2013 | 2015 | 2017 | 2019 | 2021 | 2024* | 2001 | 2003 | 2005 | 2007 | 2009 | 2011 | 2013 | 2015 | 2017 | 2019 | 2021 | 2024* |
* Through March; job openings through February | |
Sources: BLS | 9 |
MOST AGGRESSIVE FED RATE HIKES SINCE 1980 DISRUPTING CRE MARKETS; QUANTITATIVE TIGHTENING INCREASING LONG-TERM RATES
Rate
10-Year Treasury vs. Fed Funds Rate
10-Year Treasury | Fed Funds Rate | |
6.0%
4.5%
3.0%
1.5%
0.0% | ||||||||||||||||||
16 | 16 | - | - | 18 | 18 | 19 | 19 | 20 | 20 | 21 | 21 | 22 | 22 | 23 | 23 | 24 | ||
- | - | 17 | 17 | - | - | - | - | - | - | - | - | - | - | - | - | - | ||
Apr | Oct Apr | |||||||||||||||||
Oct | Apr | Oct | Apr | Oct Apr | Oct | Apr | Oct Apr | Oct Apr | Oct Apr |
Fed Holdings (Trillions August 2023 Dollars)
Inflation Adjusted Fed Balance Sheet
Notes & Bonds
MBS
TIPS/TIPS Inflation Compensation/Agencies/Bills
$10.0
$7.5
$5.0
$2.5
$0.0 | ||||||
2013 2014 2015 2016 2017 2018 | 20192020 | |||||
20082009 2010 | 2012 | 20212023 | ||||
2011 | 2024* | |||||
* Through April 17
10-Year treasury and Fed Funds rate through April 24
Adjusted for inflation using Core PCE10 Sources: Real Capital Analytics, Federal Reserve
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Marcus & Millichap Inc. published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 12:19:10 UTC.
