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

Hello, and welcome to the Annual Meeting of Stockholders of Marcus & Millichap, Incorporated. Please note that today's meeting is being recorded. During the meeting, we will have a question and answer session. You can submit a written question at any time by clicking on the message icon at the top of your screen. Please note that your registered name will be announced along with your question during the Q&A session. Following the formal portion of the meeting, guests will not be able to submit questions. Please also note that all participants are in listen-only mode. If you experience technical difficulties during the meeting, please click on the support link on the broadcast screen. It is now my pleasure to turn today's meeting over to Mr. George Marcus, Chairman of the Board. The floor is yours.

Welcome to the annual stockholders meeting of Marcus & Millichap, Incorporated, which will now come to order. I am George Marcus. As the Chairman of the Board of Directors, I will be presiding over this meeting. Because of the ongoing pandemic, we are holding a virtual meeting over the internet. Again, this year, we are extremely grateful to all of our dedicated employees and brokers for their dedication and perseverance throughout this pandemic, and it's been very difficult for everyone. We are also thanking our loyal clients, vendors, and other associates for their support, patience, and cooperation. Let me begin by introducing our directors who are all in attendance: Hessam Nadji, our CEO; Norma Lawrence, Nick McClanahan, Lauralee Martin, George Shaheen and Don Waters. I also want to acknowledge the passing of my longtime partner and wonderful friend who helped co-found the company, Bill Millichap. Bill's insightful leadership laid a strong foundation for the company and his presence is missed by all of us. Also present on the call are a number of our company officers and representatives from Ernst & Young, and the -- the company's independent accountants. This afternoon, our program will proceed as follows. First, I will conduct the official business of the 2021 Annual Meeting. There are certain formalities that we must fulfill at this meeting. I ask that you bear with me so that we meet all the formalities. Next, after the formal business of the meeting, Hessam Nadji will provide a short review of our business. The first order of business is the affidavit from AST, the company's transfer agent, certifying that each stockholder of record as of March 8th, 2021, 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 this morning, and over 94% of the shares of common stock entitled to vote at this meeting are represented by proxies.

We have a quorum, and this meeting may now proceed. We will address the matters in the agenda shown on your screen. The first matter to be voted upon is the election of Class 2 members of the Board of Directors. Lauralee Martin and Nicholas McClanahan have been nominated to serve for a three-year term expiring on 2024 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 31st, 2021. Ernst & Young has ably served as auditors for many, many years. Thirdly, we asked 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 two-digit voting control number previously provided by AST and wish to ask questions, you may do so by clicking the chat box icon located on the top of your screen, and then type your question into the question box found at the bottom of the screen to submit their written questions. I will return after the waiting of a minute or two for questions, if any. So far there were 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 if they have already sent in their proxy cards or voted electronically or telephonically, unless if they have wished to change their vote. Those stockholders who wish to vote today should have received a required 11-digit control number from the AST. If you would like to vote today, please click on the proxy voting site link located on your left-hand side of your screen and follow the instructions. We will provide additional time for voting and I will return shortly. I declare the polls closed. Ask the inspector of elections to present the preliminary results of the voting. Steve?

Upon tabulation of the preliminary votes, Lauralee E. Martin and Nicholas F. McClanahan have been elected as directors until the 2024 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 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, and good afternoon, everyone. 2020 was of course defined by our pandemic response, which started with the safety and health of our team first and foremost, and transitioning the company to full remote operations and 100% business continuity, which we achieved by mid-March of last year. Defensively, we reduced expenses decisively to protect the firm and our balance sheet. Offensively, we significantly increased our client outreach, market overview webcasts, business development initiatives and continued investments in technology and strategic acquisitions. I'm happy to report that, for the year, MMI closed nearly 9,000 transactions and $43.4 billion in sales volume, achieved adjusted EBITDA of $76 million, net income of $42 million, and operating cashflow of $82 million. Despite the ability to bring on three firms as part of our acquisition strategy, we actually increased the company's cash reserves during the challenging year. We're once again the top investment brokerage firm in the United States by transaction count, having the largest investment specialized sales force of over 2,000, and comfortably outperformed the market trends in 2020. We're positioned extremely well to continue our growth plan and look forward to executing on our strategic initiatives in 2021 and beyond. Back to you, George.

Thank you, Hessam. The past year has been challenging and uncertain. I'm proud to report that due to everyone's dedication and energy, we have preserved and improved, and I am so confident that we will continue that progress. Thank you for your efforts. There being no further business to come before this meeting, the 2021 annual meeting of the stockholders of Marcus & Millichap is now adjourned. That concludes our meeting today. Thank you for attending the stockholders meeting.

[inaudible]. Board meeting.

This concludes the meeting. You may now disconnect.