FirstService Brands Drives Double-Digit Revenue and Earnings Growth

Operating highlights:

TORONTO, July 26, 2017 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV) (NASDAQ:FSV) today reported results for its second quarter ended June 30, 2017. All amounts are in US dollars.

Revenues for the second quarter were $434.9 million, a 13% increase relative to the same quarter in the prior year, Adjusted EBITDA (note 1) increased 18% to $47.6 million, and Adjusted EPS (note 2) was $0.61, a 17% increase versus the prior year quarter. GAAP Operating Earnings were $35.8 million, relative to $30.8 million in the prior year period. GAAP diluted earnings per share was $0.50 in the quarter, versus $0.35 for the same quarter a year ago.

For the six months ended June 30, 2017, revenues were $810.8 million, a 17% increase relative to the comparable prior year period, Adjusted EBITDA was $68.3 million, up 29%, and Adjusted EPS was $0.77, a 28% increase versus the prior year period. GAAP Operating Earnings were $45.4 million, relative to $35.1 million in the prior year period. GAAP diluted EPS for the six months year-to-date was $0.63, compared to $0.30 in the prior year period.

“We are pleased to report another strong quarter, with FirstService Residential results in line with our expectations and FirstService Brands delivering double digit organic growth across its largest service lines,” said Scott Patterson, Chief Executive Officer of FirstService. “Our Brands businesses benefited from robust home improvement spending and market activity levels and these indicators continue to trend positively as we look out to the second half of this year,” he concluded.

About FirstService Corporation
FirstService Corporation is a North American leader in the essential outsourced property services sector, serving its customers through two industry-leading service platforms: FirstService Residential - North America’s largest manager of residential communities; and FirstService Brands - one of North America’s largest providers of essential property services delivered through individually branded franchise systems and company-owned operations.

FirstService generates more than US$1.5 billion in annual revenues and has more than 17,000 employees across North America. With significant insider ownership and an experienced management team, FirstService has a long-term track record of creating value and superior returns for shareholders. The common shares of FirstService trade on the NASDAQ under the symbol “FSV” and on the Toronto Stock Exchange under the symbol “FSV”. More information is available at www.firstservice.com.

Segmented Quarterly Results
FirstService Residential revenues were $302.9 million for the second quarter, up 5% versus the prior year quarter, including 4% organic growth. Adjusted EBITDA for the quarter was $28.7 million, versus $26.4 million in the prior year period. The results for our FirstService Residential division were driven by strong top-line growth in certain high-rise markets, including South Florida, New York, Toronto and Dallas. Margin improvement reflected efficient labour cost management across our operations. GAAP Operating Earnings were $23.2 million, versus $21.4 million for the second quarter of last year.

FirstService Brands revenues grew to $132.0 million, up 37% relative to the prior year period. Revenue growth was comprised of 11% organic growth and the balance from recent acquisitions. Adjusted EBITDA for the second quarter was $22.1 million, up from $16.7 million in the prior year period. The second quarter was driven by strength across our largest franchised systems and company-owned operations. Paul Davis Restoration capitalized on heightened market activity, while Century Fire Protection continued to broaden its service offering within its geographic footprint. Healthy housing market fundamentals contributed to strong performance at California Closets and other franchised systems, including CertaPro Painters, Floor Coverings International and Pillar To Post Home Inspectors. Top-line growth resulted in strong profitability across our businesses, with the division margin modestly lower during the second quarter versus the prior year period due to increased mix from our lower margin company-owned operations. GAAP Operating Earnings were $16.8 million, versus $13.1 million in the prior year quarter.

Corporate costs, as presented in Adjusted EBITDA, were $3.2 million in the second quarter, relative to $2.9 million in the prior year period. On a GAAP basis, corporate costs for the quarter were $4.2 million, relative to $3.6 million in the prior year period.

Conference Call
FirstService will be holding a conference call on Wednesday, July 26, 2017 at 11:00 a.m. Eastern Time to discuss the quarter’s results. The number to use for this call is 416-623-0333 for Toronto area callers or 1-855-353-9183 for all other callers, passcode 30080# for both. The call will be simultaneously webcast and can be accessed live or after the call at www.firstservice.com in the “Investors / Newsroom” section.

Forward-looking Statements
This press release includes or may include forward-looking statements.  Forward-looking statements include the Company’s financial performance outlook and statements regarding goals, beliefs, strategies, objectives, plans or current expectations.  These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different from any future results, performance or achievements contemplated in the forward-looking statements.  Such factors include: (i) general economic and business conditions, which will, among other things, impact demand for the Company’s services and the cost of providing services; (ii) the ability of the Company to implement its business strategy, including the Company’s ability to acquire suitable acquisition candidates on acceptable terms and successfully integrate newly acquired businesses with its existing businesses; (iii) changes in or the failure to comply with government regulations; and (iv) other factors which are described in the Company’s filings with applicable Canadian and United States securities regulatory authorities (which factors are adopted herein).

Summary financial information is provided in this press release.  This press release should be read in conjunction with the Company's quarterly financial statements and MD&A to be made available on SEDAR at www.sedar.com.

Notes

1. Reconciliation of net earnings to adjusted EBITDA:

Adjusted EBITDA is defined as net earnings, adjusted to exclude: (i) income tax; (ii) other expense (income); (iii) interest expense; (iv) depreciation and amortization; (v) acquisition-related items; and (vi) stock-based compensation expense. We use adjusted EBITDA to evaluate our own operating performance and our ability to service debt, as well as an integral part of our planning and reporting systems. Additionally, we use this measure in conjunction with discounted cash flow models to determine the Company’s overall enterprise valuation and to evaluate acquisition targets. We present adjusted EBITDA as a supplemental measure because we believe such measure is useful to investors as a reasonable indicator of operating performance because of the low capital intensity of the Company’s service operations. We believe this measure is a financial metric used by many investors to compare companies, especially in the services industry. This measure is not a recognized measure of financial performance under GAAP in the United States, and should not be considered as a substitute for operating earnings, net earnings or cash flow from operating activities, as determined in accordance with GAAP. Our method of calculating adjusted EBITDA may differ from other issuers and accordingly, this measure may not be comparable to measures used by other issuers. A reconciliation of net earnings to adjusted EBITDA appears below.

2. Reconciliation of net earnings and diluted net earnings per share to adjusted net earnings and adjusted net earnings per share:

Adjusted earnings per share is defined as diluted net earnings per share, adjusted for the effect, after income tax, of: (i) the non-controlling interest redemption increment; (ii) acquisition-related items; (iii) amortization expense related to intangible assets recognized in connection with acquisitions; (iv) stock-based compensation expense; and (v) a stock-based compensation tax adjustment related to a US GAAP change. We believe this measure is useful to investors because it provides a supplemental way to understand the underlying operating performance of the Company and enhances the comparability of operating results from period to period. Adjusted earnings per share is not a recognized measure of financial performance under GAAP, and should not be considered as a substitute for diluted net earnings per share, as determined in accordance with GAAP. Our method of calculating this non-GAAP measure may differ from other issuers and, accordingly, this measure may not be comparable to measures used by other issuers. A reconciliation of net earnings to adjusted net earnings and of diluted net earnings per share to adjusted earnings per share appears below.

Notes to Condensed Consolidated Statements of Earnings (Loss)
(1) Acquisition-related items include transaction costs, and contingent acquisition consideration fair value adjustments.
(2) See definition and reconciliation above.

COMPANY CONTACTS:

D. Scott Patterson
President & CEO
            
Jeremy Rakusin
Chief Financial Officer

(416) 960-9500