EX-99.1 2 exh_991.htm PRESS RELEASE EdgarFiling

EXHIBIT 99.1

FirstService Reports Fourth Quarter and Full Year Results

Double-Digit Annual Revenue and Operating Earnings Growth

Operating highlights:

    Three months ended   Year ended  
    December 31   December 31  
    2023   2022   2023   2022  
                           
Revenues (millions) $ 1,079.3   $ 1,020.1   $ 4,334.5   $ 3,745.8  
Adjusted EBITDA (millions) (note 1)   103.3     102.5     415.7     351.7  
Adjusted EPS (note 2)   1.11     1.22     4.66     4.24  
                           
GAAP Operating Earnings   48.1     67.5     244.9     219.0  
GAAP EPS   0.14     0.86     2.24     2.72  
                           

TORONTO, Feb. 06, 2024 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX: FSV; NASDAQ: FSV) today announced fourth quarter and full year results for the year ended December 31, 2023. All amounts are in US dollars.

Consolidated revenues for the fourth quarter were $1.08 billion, a 6% increase relative to the same quarter in the prior year. Adjusted EBITDA (note 1) was $103.3 million, up 1%, and Adjusted EPS (note 2) was $1.11, versus $1.22 in the prior year quarter.

Operating Earnings for the quarter were $48.1 million, relative to $67.5 million in the prior year period, with the decrease attributable to contingent acquisition consideration fair value adjustments on prior tuck-under acquisitions. Diluted EPS was $0.14 per share in the quarter, compared to $0.86 for the same quarter a year ago.

For the year ended December 31, 2023, consolidated revenues were $4.33 billion, a 16% increase relative to the prior year, including 10% organic growth. Adjusted EBITDA was $415.7 million, up 18%, and Adjusted EPS was $4.66, versus the prior year of $4.24. Operating Earnings were $244.9 million, versus $219.0 million in the prior year period. Diluted earnings per share was $2.24, compared to $2.72 in the prior year.

“We are pleased with our fourth quarter performance which lined up with our expectations,” said Scott Patterson, Chief Executive Officer of FirstService. “For the full year, we delivered double-digit organic top-line growth and strong profitability across both divisions, as our brands continued to realize share gains in their respective markets,” he concluded.

About FirstService Corporation
FirstService Corporation is a North American leader in the property services sector serving its customers through two industry leading 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$4.3 billion in annual revenues and has approximately 29,000 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”, and are included in the S&P/TSX 60 Index. More information is available at www.firstservice.com.

Segmented Fourth Quarter Results
FirstService Residential generated revenues of $496.3 million for the fourth quarter, up 12% relative to the prior year quarter, including 9% organic growth. Growth was driven by new contract wins, with particularly strong performance at our sited labour communities. Adjusted EBITDA was $43.5 million, an increase of 14% compared to $38.1 million reported in the prior year period. Operating Earnings were $34.1 million, versus $30.6 million for the fourth quarter of last year. Operating margins were relatively in-line with the prior year quarter.

FirstService Brands recorded revenues of $583.0 million, up 1% versus $578.0 million in the prior year period. Revenues declined 7% on an organic basis due to milder weather patterns at our restoration operations, compared to the significant loss claims activity from hurricanes Ian and Fiona in the prior year quarter. The division top-line performance included very strong growth at Century Fire together with solid contribution from our home services brands, partially offsetting the restoration-driven headwinds. Adjusted EBITDA for the quarter was $61.1 million, compared to $67.4 million in the prior year quarter. Operating Earnings were $20.6 million, versus $44.0 million in the prior year quarter. The segment Adjusted EBITDA margin (note 1) decline was primarily attributable to lower profitability in our restoration operations due to the reduced weather-related activity during the period. The operating earnings margin was further impacted by contingent acquisition consideration fair value adjustments.

Corporate costs, as presented in Adjusted EBITDA (note 1), were $1.2 million in the fourth quarter, relative to $3.0 million in the prior year period. Corporate costs for the quarter were $6.7 million, relative to $7.1 million in the prior year period.

Segmented Full Year Results
FirstService Residential reported revenues of $2.0 billion, up 13% relative to 2022, including 10% organic growth and the balance from tuck-under acquisitions. The strong organic growth was primarily driven by new contract wins, together with contribution from increased labour-related and ancillary services with our existing clients. Adjusted EBITDA was $187.8 million, up 11% versus the prior year. Operating Earnings were $155.0 million, compared to $138.9 million in the prior year. Operating margins were in-line with the prior year.

FirstService Brands revenues were $2.34 billion, up 18% versus the prior year, and comprised of 11% organic growth with the balance from acquisitions. All service lines contributed to the division’s organic revenue growth, including an exceptionally strong increase over the prior year at our Century Fire Protection operations. Adjusted EBITDA for the year was $242.4 million, up 23% relative to the prior year. Operating Earnings were $126.5 million, versus $111.6 million a year ago. The segment Adjusted EBITDA margin was positively impacted by operating leverage realized from the strong top-line performance in our restoration and Century Fire businesses. The operating earnings margin was slightly down due to acquisition-related items, primarily contingent acquisition consideration fair value adjustments.

Corporate costs, as presented in Adjusted EBITDA, were $14.4 million for the full year, relative to $13.2 million in the prior year. Corporate costs were $36.6 million, relative to $31.5 million a year ago, with the increase driven primarily by stock-based compensation expense.

Conference Call & Presentation
FirstService will be holding a conference call on Tuesday, February 6, 2024 at 11:00 a.m. Eastern Time to discuss the results for the fourth quarter and full year.

This call is being webcast live at the Company’s website at www.firstservice.com. Participants may register for the call here https://register.vevent.com/register/BI3a29ed98b6cc4f77b35613631b9849bb to receive the dial-in number and their unique PIN. To join the webcast in listen only mode, use this link: https://edge.media-server.com/mmc/p/d4d3hvrj . It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call).

Forward-looking Statements
This press release includes or may include forward-looking statements. Much of this information can be identified by words such as “expect to,” “expected,” “will,” “estimated” or similar expressions suggesting future outcomes or events. FirstService believes the expectations reflected in such forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. 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 FirstService’s services and the cost of providing services; (ii) the ability of FirstService to implement its business strategy, including FirstService’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 FirstService’s annual information form for the year ended December 31, 2022 under the heading “Risk factors” (a copy of which may be obtained at www.sedarplus.ca) and Annual Report on Form 40-F filed with the United States Securities and Exchange Commission (a copy of which may be obtained at www.sec.gov), and subsequent filings (which factors are adopted herein). Forward-looking statements contained in this press release are made as of the date hereof and are subject to change. All forward-looking statements in this press release are qualified by these cautionary statements. Unless otherwise required by applicable securities laws, we do not intend, nor do we undertake any obligation, to update or revise any forward-looking statements contained in this press release to reflect subsequent information, events, results or circumstances or otherwise.

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

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. The Company uses Adjusted EBITDA to evaluate its own operating performance and its ability to service debt, as well as an integral part of its planning and reporting systems. Additionally, this measure is used in conjunction with discounted cash flow models to determine the Company’s overall enterprise valuation and to evaluate acquisition targets. Adjusted EBITDA is presented as a supplemental measure because the Company believes such measure is useful to investors as a reasonable indicator of operating performance because of the low capital intensity of its service operations. The Company believes 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. The Company’s 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.

  Three months ended   Twelve months ended
(in thousands of US$) December 31   December 31
  2023     2022     2023     2022  
                       
Net earnings $ 23,783     $ 44,339     $ 147,021     $ 145,007  
Income tax   12,051       14,806       56,317       48,974  
Other income, net   (595 )     (712 )     (5,810 )     (146 )
Interest expense, net   12,823       9,025       47,364       25,191  
Operating earnings   48,062       67,458       244,892       219,026  
Depreciation and amortization   33,872       30,417       127,934       110,140  
Acquisition-related items   16,485       599       21,517       4,520  
Stock-based compensation expense   4,924       4,073       21,385       18,046  
Adjusted EBITDA $ 103,343     $ 102,547     $ 415,728     $ 351,732  


A reconciliation of segment operating earnings to segment Adjusted EBITDA appears below.        
                         
(in thousands of US$)                      
                         
                         
Three months ended December 31, 2023       FirstService   FirstService      
          Residential   Brands     Corporate(1)
                         
Operating earnings (loss)     $ 34,136     $ 20,603   $ (6,677 )  
Depreciation and amortization       8,373       25,477     22    
Acquisition-related items       1,002       14,992     491    
Stock-based compensation expense       -       -     4,924    
Adjusted EBITDA     $ 43,511     $ 61,072   $ (1,240 )  
                         
                         
Three months ended December 31, 2022       FirstService   FirstService      
          Residential     Brands     Corporate(1)
                         
Operating earnings (loss)     $ 30,562     $ 44,040   $ (7,144 )  
Depreciation and amortization       7,591       22,804     22    
Acquisition-related items       (38 )     594     43    
Stock-based compensation expense       -       -     4,073    
Adjusted EBITDA     $ 38,115     $ 67,438   $ (3,006 )  
                         
                         
                         
Year ended December 31, 2023       FirstService   FirstService      
          Residential   Brands     Corporate(1)
                         
Operating earnings (loss)     $ 155,044     $ 126,468   $ (36,620 )  
Depreciation and amortization       33,114       94,729     91    
Acquisition-related items       (366 )     21,159     724    
Stock-based compensation expense       -       -     21,385    
Adjusted EBITDA     $ 187,792     $ 242,356   $ (14,420 )  
                         
                         
Year ended December 31, 2022       FirstService   FirstService      
          Residential     Brands     Corporate(1)
                         
Operating earnings (loss)     $ 138,873     $ 111,638   $ (31,485 )  
Depreciation and amortization       28,611       81,439     90    
Acquisition-related items       1,153       3,200     167    
Stock-based compensation expense       -       -     18,046    
Adjusted EBITDA     $ 168,637     $ 196,277   $ (13,182 )  
                         
                         
Segment Adjusted EBITDA margin is defined as segment Adjusted EBITDA divided by segment revenues.  
                         
(1) Corporate costs represent corporate overhead expenses not directly attributable to reportable segments and are therefore unallocated within segment operating earnings (loss) and Adjusted EBITDA.  

 

2. Reconciliation of net earnings and net earnings (loss) per common share to adjusted net earnings and adjusted net earnings per share:

Adjusted EPS 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 of intangible assets recognized in connection with acquisitions; and (iv) stock-based compensation expense. The Company believes 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 EPS is not a recognized measure of financial performance under GAAP, and should not be considered as a substitute for diluted net earnings per common share, as determined in accordance with GAAP. The Company’s 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 diluted net earnings per common share to Adjusted EPS appears below.

    Three months ended   Twelve months ended
(in thousands of US$) December 31   December 31
    2023     2022     2023     2022  
                         
Net earnings $ 23,783     $ 44,339     $ 147,021     $ 145,007  
Non-controlling interest share of earnings   (3,925 )     (3,462 )     (14,140 )     (9,381 )
Acquisition-related items   16,485       599       21,517       4,520  
Amortization of intangible assets   13,942       13,659       54,238       48,725  
Stock-based compensation expense   4,924       4,073       21,385       18,046  
Income tax on adjustments   (4,905 )     (4,611 )     (19,662 )     (17,361 )
Non-controlling interest on adjustments   (665 )     (254 )     (1,517 )     (968 )
Adjusted net earnings $ 49,639     $ 54,343     $ 208,842     $ 188,588  
                         
    Three months ended   Twelve months ended
(in US$) December 31   December 31
    2023     2022     2023     2022  
                         
Diluted net earnings per share $ 0.14     $ 0.86     $ 2.24     $ 2.72  
Non-controlling interest redemption increment   0.30       0.06       0.72       0.33  
Acquisition-related items   0.36       0.01       0.47       0.10  
Amortization of intangible assets, net of tax   0.23       0.22       0.88       0.79  
Stock-based compensation expense, net of tax   0.08       0.07       0.35       0.30  
Adjusted earnings per share $ 1.11     $ 1.22     $ 4.66     $ 4.24  


FIRSTSERVICE CORPORATION
Operating Results
(in thousands of US$, except per share amounts)
          Three months     Twelve months
          ended December 31     ended December 31
      2023       2022       2023       2022  
                             
Revenues   $ 1,079,260     $ 1,020,101     $ 4,334,548     $ 3,745,835  
                             
Cost of revenues     735,920       690,314       2,947,008       2,565,720  
Selling, general and administrative expenses     244,921       231,313       993,197       846,429  
Depreciation     19,930       16,758       73,696       61,415  
Amortization of intangible assets     13,942       13,659       54,238       48,725  
Acquisition-related items (1)     16,485       599       21,517       4,520  
Operating earnings     48,062       67,458       244,892       219,026  
Interest expense, net     12,823       9,025       47,364       25,191  
Other income, net     (595 )     (712 )     (5,810 )     (146 )
Earnings before income tax     35,834       59,145       203,338       193,981  
Income tax     12,051       14,806       56,317       48,974  
Net earnings     23,783       44,339       147,021       145,007  
Non-controlling interest share of earnings     3,925       3,462       14,140       9,381  
Non-controlling interest redemption increment     13,596       2,631       32,490       14,552  
Net earnings attributable to Company   $ 6,262     $ 38,246     $ 100,391     $ 121,074  
                             
Net earnings per common share                        
                             
    Basic   $ 0.14     $ 0.86     $ 2.25     $ 2.74  
    Diluted     0.14       0.86       2.24       2.72  
                             
Adjusted earnings per share (2)   $ 1.11     $ 1.22     $ 4.66     $ 4.24  
                             
Weighted average common shares (thousands)                        
    Basic     44,639       44,420       44,556       44,175  
    Diluted     44,874       44,499       44,795       44,494  

(1) Acquisition-related items include transaction costs, and contingent acquisition consideration fair value adjustments.
(2) See definition and reconciliation above.

Condensed Consolidated Balance Sheets          
(in thousands of US$)
           
             
  December 31, 2023   December 31, 2022
             
Assets          
Cash and cash equivalents $ 187,617   $ 136,219
Restricted cash   19,260     23,129
Accounts receivable   848,230     635,942
Other current assets   311,889     313,582
  Current assets   1,366,996     1,108,872
Other non-current assets   34,418     38,549
Fixed assets   204,188     167,012
Operating lease right-of-use assets   218,299     205,544
Goodwill and intangible assets   1,807,836     1,254,537
  Total assets $ 3,631,737   $ 2,774,514
             
             
Liabilities and shareholders' equity          
Accounts payable and accrued liabilities $ 477,077   $ 398,313
Other current liabilities   211,661     153,866
Operating lease liabilities - current   50,898     49,145
Long-term debt - current   37,132     35,665
  Current liabilities   776,768     636,989
Long-term debt - non-current   1,144,975     698,798
Operating lease liabilities - non-current   183,923     168,557
Other liabilities   115,938     78,178
Deferred income tax   53,024     51,097
Redeemable non-controlling interests   332,963     233,429
Shareholders' equity   1,024,146     907,466
  Total liabilities and equity $ 3,631,737   $ 2,774,514
             
             
Supplemental balance sheet information          
Total debt $ 1,182,107   $ 734,463
Total debt, net of cash   994,490     598,244


Condensed Consolidated Statements of Cash Flows              
(in thousands of US$)
    Three months ended   Twelve months ended
    December 31   December 31
    2023       2022       2023       2022  
                                 
Cash provided by (used in)                              
                                 
Operating activities                              
Net earnings $ 23,783     $ 44,339     $ 147,021     $ 145,007  
Items not affecting cash:                              
Depreciation and amortization     33,872       30,417       127,934       110,140  
Deferred income tax     (18,413 )     9,249       (19,049 )     7,436  
Other     18,384       2,076       34,416       18,371  
      57,626       86,081       290,322       280,954  
                                 
Changes in non-cash working capital                              
Accounts receivable     (23,039 )     (68,445 )     (99,816 )     (69,671 )
Payables and accruals     44,153       28,729       25,656       (11,118 )
Other     36,040       7,653       68,532       (94,272 )
                                 
Contingent acquisition consideration paid   (4,334 )     -       (4,334 )     -  
Net cash provided by operating activities   110,446       54,018       280,360       105,893  
                                 
Investing activities                              
Acquisition of businesses, net of cash acquired   (434,366 )     (44,464 )     (547,182 )     (51,994 )
Purchases of fixed assets   (25,065 )     (22,155 )     (92,734 )     (77,609 )
Other investing activities   (6,173 )     (15,196 )     (6,413 )     (31,197 )
Net cash used in investing activities   (465,604 )     (81,815 )     (646,329 )     (160,800 )
                                 
Financing activities                              
Increase in long-term debt, net   390,998       14,338       446,847       80,156  
Purchases of non-controlling interests, net   (111 )     (114 )     (4,285 )     (21,451 )
Dividends paid to common shareholders   (10,042 )     (8,954 )     (39,055 )     (34,884 )
Distributions paid to non-controlling interests   (454 )     -       (7,376 )     (8,061 )
Other financing activities   4,178       (2,960 )     17,814       3,022  
Net cash provided by financing activities   384,569       2,310       413,945       18,782  
                                 
Effect of exchange rate changes on cash   (420 )     (347 )     (447 )     1,202  
                                 
Increase (decrease) in cash, cash equivalents and restricted cash   28,991       (25,834 )     47,529       (34,923 )
                                 
Cash, cash equivalents and restricted cash, start of period   177,886       185,182       159,348       194,271  
                                 
Cash, cash equivalents and restricted cash, end of period $ 206,877     $ 159,348     $ 206,877     $ 159,348  
                                 
                                 


Segmented Results
(in thousands of US$)
                         
                     
    FirstService   FirstService        
  Residential   Brands   Corporate   Consolidated
                         
Three months ended December 31                      
                         
2023                      
  Revenues $ 496,281   $ 582,979   $ -     $ 1,079,260
  Adjusted EBITDA (1)   43,511     61,072     (1,240 )     103,343
  Operating earnings   34,136     20,603     (6,677 )     48,062
                         
2022                      
  Revenues $ 442,124   $ 577,977   $ -     $ 1,020,101
  Adjusted EBITDA   38,115     67,438     (3,006 )     102,547
  Operating earnings   30,562     44,040     (7,144 )     67,458
                         
                         
                     
    FirstService   FirstService        
    Residential   Brands   Corporate   Consolidated
                         
Year ended December 31                      
                         
2023                      
  Revenues $ 1,996,823   $ 2,337,725   $ -     $ 4,334,548
  Adjusted EBITDA   187,792     242,356     (14,420 )     415,728
  Operating earnings   155,044     126,468     (36,620 )     244,892
                         
2022                      
  Revenues $ 1,772,258   $ 1,973,577   $ -     $ 3,745,835
  Adjusted EBITDA   168,637     196,277     (13,182 )     351,732
  Operating earnings   138,873     111,638     (31,485 )     219,026
                         
                         
  (1) See definition and reconciliation on pages 5 and 6.            

COMPANY CONTACTS:

D. Scott Patterson
Chief Executive Officer

Jeremy Rakusin
Chief Financial Officer

(416) 960-9566