Actionable news
0
All posts from Actionable news
Actionable news in MMI: MARCUS & MILLICHAP,

Marcus & Millichap, Inc. Reports Third Quarter 2015 Financial Results

CALABASAS, Calif., Nov 05, 2015 (BUSINESS WIRE) -- Marcus & Millichap, Inc. (the “Company”, “Marcus & Millichap”) MMI, -24.87% a leading national brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services, today reported financial results for the third quarter ended September 30, 2015. Highlights include:

Third Quarter 2015 Results Compared to Third Quarter 2014

  • Total revenues increased 9.9% to $165.9 million, with real estate brokerage commissions up 8.4%.
  • Financing fees revenue increased by 38.2%.
  • Total number of transactions increased by 11.8% with $1 to $10 million private client real estate brokerage transactions increasing by 17.6%.
  • Net income increased to $15.2 million ($0.39 per common share – Basic and Diluted).
  • Adjusted EBITDA increased to $29.6 million.

Nine Months 2015 Results Compared to Nine Months 2014

  • Total revenue increased 21.6% to $485.9 million, with real estate brokerage commissions up 21.2%.
  • Total number of transactions increased by 13.3%.
  • Sales volume grew 15.6% to $26.9 billion.
  • Net income increased to $46.4 million ($1.19 per common share – Basic and Diluted).

“Our third quarter results reflect ongoing success in effectively executing our growth strategy. We realized healthy year over year growth of 10.5% in total brokerage transactions and 17.6% in our $1 to $10 million private client segment, in brokerage,” stated John Kerin, president and CEO. “We also maintained our focus on driving volume in our specialty divisions, and saw financing revenue growth of 38.2% over the third quarter of 2014. We achieved a healthy growth rate despite heightened global economic concerns, negative headlines and increased volatility in the equity markets,” Mr. Kerin added. “While we continue to see normalization in the pace of our transaction growth as anticipated, we believe that our growth plan will continue to drive growth even as the real estate cycle matures.”

Third Quarter 2015 Results Compared to Third Quarter 2014

Total revenues for the third quarter of 2015 were $165.9 million, compared to $150.9 million for the same period in the prior year, an increase of $15.0 million, or 9.9%. The increase in total revenues is primarily a result of growth in revenues from real estate brokerage commissions which amounted to $151.9 million for the three months ended September 30, 2015 compared to $140.2 million for the same period in the prior year, an increase of $11.7 million or 8.4%. This was driven by a combination of the growth in the number of investment sales transactions and average commission rates. The rise in average commission rate is due to an increase in the proportion of our $1 to $10 million private client transactions as compared to our larger transactions in the institutional segment. These transactions generally earn a higher commission rate. Growth in financing fees, contributed the remaining increase in total revenues.

Total operating expenses for the third quarter of 2015 were $138.5 million, compared to $127.2 million for the same period in the prior year, an increase of $11.3 million, or 8.9%. The increase was primarily driven by a $9.7 million or 10.6% rise in cost of services, which are variable commissions paid to the Company’s investment sales professionals and compensation-related costs in connection with our financing activities. Cost of services as a percent of total revenues increased to 61.5% compared to 61.2% for the same period in the prior year primarily due to an increase in the proportion of transactions closed by our more senior investment sales professionals whose commission rates generally increase during the year as they meet certain production thresholds.

Selling, general and administrative expense increased by $1.6 million, or 4.6% during the third quarter of 2015 as compared to the same period in the prior year. The increase was primarily due to (i) salaries and related benefits which are correlated to higher headcount in corporate to support our growth; (ii) sales and promotional expenses driven by marketing expenses to support increased sales activity; (iii) stock-based compensation expense resulting from an increase in the Company’s stock price, which impacted stock-based compensation expense of RSU grants to the Company’s independent contractors, which are required to be measured at fair value and incremental stock-based awards granted since the third quarter of 2014; and (iv) other expense categories primarily driven by our expansion and business growth. The increases were partially offset by a decrease in legal costs due to settlement of outstanding litigation.

Net income for the third quarter of 2015 was $15.2 million or $0.39 per common share (Basic and Diluted) compared to net income of $13.5 million or $0.35 per common share (Basic and Diluted) for the same period in the prior year. Adjusted EBITDA for the third quarter of 2015 was $29.6 million compared to adjusted EBITDA of $25.6 million for the same period in the prior year.

Nine Months 2015 Results Compared to Nine Months 2014

Total revenues for the nine months ended September 30, 2015 were $485.9 million, compared to $399.7 million for the same period in the prior year, an increase of $86.2 million, or 21.6%. Operating expenses for the nine months ended September 30, 2015 were $405.2 million compared to $342.2 million for the same period in the prior year, representing an increase of $62.9 million, or 18.4%. Cost of services as a percent of total revenues increased to 60.4% compared to 60.1% for the same period in the prior year. The Company reported net income for the nine months ended September 30, 2015 of $46.4 million compared with net income of $33.1 million for the same period in the prior year. Adjusted EBITDA for the nine months ended September 30, 2015 was $88.9 million, which represents an increase of $25.7 million, or 40.8%, as compared to $63.1 million in the prior year.

Business Outlook

Commenting on the Company’s business outlook, Mr. Kerin said “Looking...


More