News Column

Marcus & Millichap, Inc. Reports Strong Financial Results for Second Quarter 2014

August 23, 2014



By a News Reporter-Staff News Editor at Investment Weekly News -- Marcus & Millichap, Inc., (the "Company", "Marcus and Millichap") (NYSE: MMI), a leading national brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services, reported financial results for its second quarter ended June 30, 2014. Second Quarter 2014 Highlights Revenue increased 27.3% to $134.3 million compared to the second quarter of the prior year, with real estate brokerage commissions up 28.7%.

Sales volume increased 21.0% to $7.1 billion compared to the second quarter of the prior year.

The number of transactions was 1,907 representing an increase of 232 transactions, or 13.9% as compared to the second quarter of the prior year.

Net income increased to $12.8 million, compared to $8.0 million in the second quarter of the prior year. Earnings per common share was $0.33 (Basic and Diluted).

Adjusted EBITDA was $24.0 million, compared to $17.1 million in the second quarter of the prior year. Year-to-Date Highlights Revenue increased 42.3% to $248.9 million compared to the first half of the prior year, with real estate brokerage commissions up 45.3%.

Net income was $19.6 million, compared to $9.6 million compared to the first half of the prior year. Earnings per common share was $0.50 (Basic and Diluted).

Adjusted EBITDA was $37.5 million, compared to $21.1 million in the first half of the prior year.

Commenting on the Company's results, John J. Kerin, Marcus & Millichap's President and Chief Executive Officer, said, "The momentum we generated early in the year continued into the second quarter, producing strong results for the Company throughout the first-half of 2014. Revenues in the second quarter grew by 27.3% year-over-year for the quarter and 42.3% year to date due to the strength in our core private client market as well as positive results related to our various growth initiatives."

Kerin continued, "We saw strong increases in our second quarter key operating metrics for our real estate brokerage business, including average number of sales professionals, total number of transactions and total sales volume over the same period in the prior year. While our growth continues to be driven by transactions for retail and multi-family properties, I am pleased with our expansion in the office and hospitality groups. We also remain focused on expanding our geographic footprint with strong growth in the second quarter from regions in the eastern United States. Key market indicators and our business pipeline remain favorable." Second Quarter 2014 Results Total revenues for the second quarter of 2014 were $134.3 million, compared to $105.5 million for the same period in the prior year, an increase of $28.8 million, or 27.3%. The increase in total revenues is primarily a result of increases in revenues from real estate brokerage commissions which increased to $123.3 million for the three months ended June 30, 2014 from $95.8 million for the same period in the prior year, an increase of $27.5 million or 28.7%. This increase was primarily driven by a combination of an increase in the number of investment sales transactions and an increase in the average commission size, offset by a slight decrease in average commission rates during the three months ended June 30, 2014 as compared to the same period in the prior year. Financing fees and other revenues contributed the remaining increase in total revenues.

Total operating expenses for the second quarter of 2014 were $112.5 million, compared to $91.3 million for the same period in the prior year, an increase of $21.2 million, or 23.3%. The increase was primarily driven by an $18.1 million increase 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 59.3% compared to 58.3% 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 who are compensated at higher commission rates. In addition, selling, general and administrative expense increased by $3.0 million, or 10.4% during the second quarter of 2014 as compared to the same period in the prior year. The increase was due primarily to (i) an increase in salaries and related benefits driven by an increase in headcount in the areas of recruiting and corporate support in connection with our growth and with being a public company; (ii) an increase in legal costs and accruals; (iii) an increase in management performance related compensation driven by the increase in operating results; and (iv) increases in other expense categories primarily driven by our business growth. The increases were partially offset by a decrease in stock-based compensation expense due to the replacement of the pre-IPO stock-based compensation award program.

Keywords for this news article include: Finance, Real Estate, Marcus & Millichap Inc..

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Source: Investment Weekly News


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