Marcus & Millichap, Inc. (MMI) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Marcus & Millichap's annual meeting conference call. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, George Marcus, Co-Chairman of Marcus & Millichap. Please go ahead, sir.

I am delighted to welcome all of you to the annual stockholders meeting of Marcus & Millichap, Inc., which will now come to order. I am George Marcus, and as Co-Chairman of the Board of Directors, I will be presiding over this meeting because of the unfortunate circumstances presented by the global pandemic that we are holding a virtual meeting over the Internet. We pray that everyone is safe and sound, and we are extremely grateful to all of our dedicated employees and brokers for doing business safely and remotely under this new paradigm. We also thank our loyal clients, vendors and other associates for their support, patience and cooperation. This crisis will end as they all do. We look forward to meeting again in person next year. Let me begin by introducing our directors who are all in attendance. I'm delighted to introduce Bill Millichap, my Co-Chairman and Co-Founder of Marcus & Millichap. Hessam Nadji, our CEO, Norma Lawrence, Nick McClanahan, Lauralee Martin, George Shaheen and Don Watters, all Board members of our company. Also present on this call are a number of our company officers and representatives from Ernst & Young, the company's independent accountants. This afternoon, our program will proceed as follows: first, I will conduct the official business of the 2020 annual meeting. There are certain formalities that we need to fulfill at the meeting. I ask that you bear with me so we can meet these formalities. Next, after the formal business of the meeting, Hessam Nadji, the CEO, will provide a short review of our business. The first order of business is an affidavit from AST, the company's transfer agent, certifying that each stockholder of record as of March 6, 2020, was mailed an official notice of this meeting, together with the proxy statement, proxy card, annual report and other material necessary to vote at this meeting. Steve Hoffman of the American Stock Transfer and Trust Company, AST, has been appointed to serve as inspector of elections. He is responsible for tabulating the results of the voting. Let me now call on Steve Hoffman.

We have examined the proxies received as of yesterday, and over 95% of the shares of common stock entitled to vote at this meeting are represented by proxies.

Thank you. We have a quorum, and the meeting may now proceed. We will address the matters in this agenda shown on your screen. The first matter to be voted upon is the election of the Class I members of the Board of Directors, Hessam Nadji, Norma Lawrence, have been nominated to serve for a 3-year term, expiring in 2023 Annual Meeting of Stockholders or until their successors are duly elected and qualified. The second matter to be voted on concerns the appointment of the company's independent auditors. The Board of Directors has appointed Ernst & Young as the company's independent public accounting firm for the year ending December 31, 2020. Ernst & Young has been able to serve our company for many years and has done an outstanding job. Thirdly, we are asked to -- our shareholders on an advisory basis to approve the compensation of the company's named executive officers as discussed in the proxy statement. We will now open the meeting to any questions about any of the 3 matters before the stockholders. If you register with your 11-digit voting control number, previously provided by AST, and wish to ask questions, you may do so by clicking the Chatbox icon located in the top of your screen and then type your question into the question box found at the bottom of the screen to submit your written question. I will return after waiting a minute for questions, if any. As of now, there are no questions received. We will now proceed to vote on each of these matters. We will be open for Internet voting for the next few minutes. It is not necessary for stockholders to vote today as they have already sent in their proxy cards or voted electronically or telephonically unless they wish to change their vote. Those stockholders who wish to vote today should have received a required 11-digit control number from AST. If you would like to vote today, please click on the proxy voting site link located on the left-hand side of your screen and follow the instructions. We will provide additional time for voting, and I will return shortly. [Voting]

The sound of silence. I'm not going to sing. I declare the polls closed. I ask the inspector of elections to present the preliminary results of the voting. Steve?

Upon tabulation of the preliminary votes, Hessam Nadji and Norma Lawrence have been elected as directors until the 2023 Annual Meeting. The appointment of Ernst & Young as the company's independent auditor has also been ratified. Additionally, the stockholders approved, on an advisory basis, the compensation of the company's named executive officers.

Thank you, and congratulations to our directors on their reelection. I will ask that the report of the inspector of elections be filed with the secretary. And the final results will also be reported in a Form 8-K to be filed with the SEC following this meeting. Let me now call on Hessam Nadji, the CEO, to provide a brief update on our business. Hessam?

Thank you, George. Good afternoon, everyone. As we reported on our year-end 2019 earnings call and annual report, last year, MMI was once again the market leader in overall investment sales and within the Private Client segment. Our Private Client segment leadership continues to be an important hallmark as this vital market accounts for more than 83% of all commercial property sales in the United States. We closed a record almost $50 billion in sales and financing volume last year and nearly 10,000 transactions and grew the platform to over 2,000 professionals in 82 offices throughout North America. In light of a more challenging market environment with declining overall sales of 4%, revenue of $806 million was essentially flat with the previous year's record level, which had increased over 13%. Net income of $77 million was 12% lower due to the strategic investments in technology, branding, infrastructure and key acquisitions we believe will drive long-term growth. On that point, we ended the year with the strong -- with the strongest brand and financial position in the company's nearly 50-year history. These will be key advantages as we execute our long-term growth plan, still driven by 3 essential elements: the first, gaining additional market share in the highly fragmented private client segment, which we already dominate; second, further expanding into larger transactions and specialty segments, many of which provide exceptional growth opportunity for MMI; and last but certainly not least, growing our financing division, MMCC. Making strategic acquisitions at a strategic level has been a key part of executing this growth plan. And we have gained substantial momentum over the past 18 months. Of course, our business has been adversely impacted by the shelter-in-place mandate and the economic shutdown since the middle of March. We're executing a variety of actions to help our clients and our team through this disruption. At the same time, we're very focused on preserving the company's strong financial position and being prepared to lead in the eventual recovery. I look forward to sharing the details on our plan and results of the first quarter on our call next week. I will now turn the call back over to George. George?

Thank you, Hessam. These are challenging times for all humanity. No doubt, no doubt. Something unique and incredibly unprepared to handle, but we are doing it. We are persevering. And hopefully, we will improve our results because of the challenges that we're faced. We urge all of you to continue to be safe and vigilant. There being no further business to come before this meeting, the 2020 annual meeting of the stockholders of Marcus & Millichap, Inc. are now adjourned -- is now adjourned, excuse me. That concludes our meeting today. Thank you all for attending this stockholders' meeting. We look forward to seeing you in person next year.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.