0001171843-12-002693.txt : 20120725 0001171843-12-002693.hdr.sgml : 20120725 20120725082453 ACCESSION NUMBER: 0001171843-12-002693 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20120630 FILED AS OF DATE: 20120725 DATE AS OF CHANGE: 20120725 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTSERVICE CORP CENTRAL INDEX KEY: 0000913353 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 000000000 STATE OF INCORPORATION: A6 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24762 FILM NUMBER: 12977858 BUSINESS ADDRESS: STREET 1: 1140 BAY STREET STREET 2: SUITE 4000 CITY: TORONTO STATE: A6 ZIP: M5S 2B4 BUSINESS PHONE: (416) 960-9500 MAIL ADDRESS: STREET 1: 1140 BAY STREET STREET 2: SUITE 4000 CITY: TORONTO STATE: A6 ZIP: M5S 2B4 6-K 1 f6k_072512.htm FORM 6-K f6k_072512.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
 THE SECURITIES EXCHANGE ACT OF 1934
 
For the month of: July 2012
Commission file number 0-24762
 
FIRSTSERVICE CORPORATION
(Translation of registrant’s name into English)
 
1140 Bay Street, Suite 4000
Toronto, Ontario, Canada
M5S 2B4
(Address of principal executive office)
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F [  ]                                                                Form 40-F [X]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [  ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [  ]

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes [  ]                                                      No [X]

If “Yes” is marked, indicate the file number assigned to the Registrant in connection with Rule 12g3-2(b):  N/A
 
 

 
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.


FIRSTSERVICE CORPORATION
 
Date: July 25, 2012    /s/ John B. Friedrichsen
  Name:  John B. Friedrichsen
  Title:  Senior Vice President and Chief Financial Officer

 
 

 
EXHIBIT INDEX
                              
Exhibit  Description of Exhibit
   
99.1 Quarterly earnings release dated July 25, 2012
EX-99.1 2 exh_991.htm EXHIBIT 99.1 FirstService Reports Second Quarter Results

EXHIBIT 99.1

FirstService Reports Second Quarter Results

Colliers International Delivers 19% Growth Overall; 29% in the US

Operating highlights:

  Three months ended Six months ended
  June 30 June 30
  2012 2011 2012 2011
         
Revenues (millions)  $593.2  $565.5  $1,083.2  $1,043.9
Adjusted EBITDA (millions) (note 1)  41.2  46.8  52.0  69.4
Adjusted EPS (note 2)  0.45  0.54  0.35  0.68

TORONTO, July 25, 2012 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV) (Nasdaq:FSRV) (TSX:FSV.PR.U) today reported results for its second quarter ended June 30, 2012. All amounts are in US dollars.

Revenues for the second quarter were $593.2 million, a 5% increase relative to the same quarter in the prior year, Adjusted EBITDA (note 1) was $41.2 million, relative to $46.8 million and Adjusted EPS (note 2) was $0.45, versus $0.54 reported in the prior year quarter. GAAP EPS was $0.28 per share in the quarter, versus $0.11 for the same quarter a year ago.

For the six months ended June 30, 2012, revenues were $1.1 billion, a 4% increase relative to the comparable prior year period, Adjusted EBITDA was $52.0 million relative to $69.4 million and Adjusted EPS was $0.35, versus $0.68 reported in the prior year period. GAAP EPS for the six month period was a loss of $0.27, compared to a loss of $0.22 in the prior year period.

"Second quarter results reflect very strong year over year gains in revenues and Adjusted EBITDA at Colliers International and another quarter of solid year over year growth at FirstService Residential. As expected, results in Property Services were down relative to the prior year as a result of continued weakness in foreclosure services," said Jay S. Hennick, Founder and Chief Executive Officer of FirstService. "Colliers International results were particularly strong in the US where they were up 29% over the prior year, building on our successful investments in management infrastructure, recruiting and corporate solutions during the past couple of years. FirstService Residential continued to advance its position as North America's largest manager of multi-family residential properties. As long as market conditions remain stable, we expect to finish the year up over last year with growth in revenues, Adjusted EBITDA and Adjusted EPS," he concluded.

About FirstService Corporation

FirstService Corporation is a global leader in the rapidly growing real estate services sector, providing a variety of services in commercial real estate, residential property management and property services. As one of the largest property managers in the world, FirstService manages more than 2.3 billion square feet of residential and commercial properties through its three industry-leading service platforms: Colliers International, one of the largest global players in commercial real estate; FirstService Residential Management, the largest manager of residential communities in North America; and Property Services, one of North America's largest providers of property-related services delivered through franchise and contractor networks.

FirstService generates over $2.3 billion in annual revenues and has more than 23,000 employees worldwide. More information about FirstService is available at www.firstservice.com.

Segmented Quarterly Results

Commercial Real Estate Services revenues totalled $291.6 million for the second quarter, up 19% relative to the prior year quarter. Revenue growth was comprised of 10% internal growth measured in local currencies, a 3% unfavourable impact from foreign currency translation and 12% growth from the recent Colliers UK acquisition. Internal growth was driven by year over year increases in lease brokerage, appraisal and property management, particularly in the Americas region. Adjusted EBITDA was $17.9 million, up from $11.1 million reported in the prior year quarter.

Residential Property Management revenues were $214.1 million for the second quarter, up 9% relative to the prior year quarter. Revenue growth was comprised of 5% internal growth and 4% from recent acquisitions. Adjusted EBITDA for the quarter was $18.8 million compared to $17.9 million in the prior year period.

Property Services revenues totalled $87.5 million, down 29% from $124.0 million in the prior year period, with a 39% reduction in revenues in the property preservation and distressed asset management operations. Revenues declined slightly at the Company's property services franchise brands. Adjusted EBITDA for the second quarter was $8.6 million versus $21.1 million in the prior year quarter.

Corporate costs were $4.8 million in the third quarter, relative to $3.8 million in the prior year period, with the increase attributable to a one-time accrual for a loss under the Company's self-insurance program.

Conference Call

FirstService will be holding a conference call on Wednesday, July 25, 2012 at 11:00 a.m. Eastern Time to discuss the quarter's results. The call will be simultaneously web cast 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; (vi) stock-based compensation expense and (vii) reorganization charges. 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.

  Three months ended Six months ended
(in thousands of US$) June 30 June 30
  2012 2011 2012 2011
         
Net earnings  $14,649  $10,932  $3,812  $9,642
Income tax  6,567  12,041  3,861  16,496
Other expense (income)  (125)  862  (288)  1,939
Interest expense, net  4,266  4,305  8,773  8,686
Operating earnings  25,357  28,140  16,158  36,763
Depreciation and amortization  12,253  13,356  24,722  25,426
Acquisition-related items  2,874  502  9,427  1,374
Stock-based compensation expense  707  476  1,715  1,542
Reorganization charge  --  4,338  --  4,338
Adjusted EBITDA  $41,191  $46,812  $52,022  $69,443

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

Adjusted earnings per common share is defined as diluted net earnings (loss) per common 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; (v) reorganization charges and (vi) deferred income tax valuation allowances related to tax loss carry-forwards. 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 diluted net earnings per common share 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. 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 (loss) attributable to common shareholders to adjusted net earnings and of diluted net earnings (loss) per common share to adjusted earnings per common share appears below.

  Three months ended Six months ended
(in thousands of US$) June 30 June 30
  2012 2011 2012 2011
         
Net earnings (loss) attributable to common shareholders  $8,360  $3,360  $(8,047)  $(6,517)
Non-controlling interest redemption increment  (537)  1,739  3,096  7,555
Acquisition-related items  2,874  502  9,427  1,374
Amortization of intangible assets  4,490  5,773  9,288  10,707
Stock-based compensation expense  707  476  1,715  1,542
Reorganization charge  --  4,338  --  4,338
Income tax on adjustments  (1,858)  (3,568)  (3,951)  (5,680)
Deferred income tax valuation allowance  --  4,731  --  9,005
Non-controlling interest on adjustments  (340)  (734)  (864)  (1,277)
Adjusted net earnings  $13,696  $16,617  $10,664  $21,047
         
  Three months ended Six months ended
(in US$) June 30 June 30
  2012 2011 2012 2011
         
Diluted net earnings (loss) per common share  $0.28  $0.11  $(0.27) $(0.22)
Non-controlling interest redemption increment  (0.02)  0.06  0.10  0.25
Acquisition-related items  0.08  0.02  0.29  0.05
Amortization of intangible assets, net of tax  0.09  0.11  0.19  0.21
Stock-based compensation expense, net of tax  0.02  0.01  0.04  0.03
Reorganization charge  --  0.09  --  0.09
Deferred income tax valuation allowance  --  0.14  --  0.27
Adjusted earnings per common share  $0.45  $0.54  $0.35  $0.68
         
FIRSTSERVICE CORPORATION        
Condensed Consolidated Statements of Earnings (Loss)        
(in thousands of US dollars, except per share amounts)        
  Three months Six months
  ended June 30 ended June 30
(unaudited)  2012 2011 2012 2011
         
Revenues   $593,193  $565,472 $1,083,249  $1,043,854
         
Cost of revenues   386,832  355,819 717,977  656,433
Selling, general and administrative expenses   165,877  167,655 314,965  323,858
Depreciation   7,763  7,583 15,434  14,719
Amortization of intangible assets   4,490  5,773 9,288  10,707
Acquisition-related items (1)   2,874  502 9,427  1,374
Operating earnings  25,357  28,140  16,158  36,763
Interest expense, net   4,266  4,305  8,773  8,686
Other expense (income)   (125)  862  (288)  1,939
Earnings before income tax   21,216  22,973  7,673  26,138
Income tax (2)   6,567  12,041  3,861  16,496
Net earnings   14,649  10,932  3,812  9,642
Non-controlling interest share of earnings   4,366  3,307  3,843  3,553
Non-controlling interest redemption increment   (537)  1,739  3,096  7,555
Net earnings (loss) attributable to Company   10,820  5,886  (3,127) (1,466)
Preferred share dividends   2,460  2,526  4,920  5,051
Net earnings (loss) attributable to common shareholders   $8,360  $3,360  $(8,047) $(6,517)
         
Net earnings (loss) per common share         
Basic   $0.28  $0.11  $ (0.27)  $ (0.22)
         
Diluted   $0.28  $0.11  $ (0.27)  $ (0.22)
         
Adjusted earnings per common share (3)   $0.45  $0.54  $0.35  $0.68
         
Weighted average common shares (thousands)         
Basic   30,029  30,093  30,006  30,184
Diluted   30,355  30,615  30,366  30,701

Notes to Condensed Consolidated Statements of Earnings (Loss)

(1) Acquisition-related items include contingent acquisition consideration fair value adjustments, contingent acquisition consideration-related compensation expense, transaction costs related to the Colliers International UK acquisition and a reclassification of accumulated other comprehensive earnings related to Colliers International UK.

(2) Income tax expense for the three months ended June 30, 2011 includes a $4,731 valuation allowance related to deferred income tax assets; income tax expense for the six months ended June 30, 2011 includes a $9,005 valuation allowance.

(3) See definition and reconciliation above.

Condensed Consolidated Balance Sheets     
(in thousands of US dollars)    
     
(unaudited)  June 30, 2012 December 31, 2011
     
Assets     
Cash and cash equivalents   $77,037   $97,799 
Restricted cash   5,106   4,493 
Accounts receivable   316,268   286,019 
Inventories   18,431   11,831 
Prepaid expenses and other current assets   65,155   50,062 
Current assets   481,997   450,204 
Other non-current assets   21,058   17,028 
Fixed assets   94,032   94,150 
Deferred income tax   96,990   87,940 
Goodwill and intangible assets   577,047   584,396 
Total assets   $1,271,124   $1,233,718 
     
Liabilities and shareholders' equity     
Accounts payable and accrued liabilities   $325,268   $354,220 
Other current liabilities   32,649   23,657 
Long-term debt - current   37,121   216,373 
Current liabilities   395,038   594,250 
Long-term debt - non-current   341,645   100,042 
Convertible unsecured subordinated debentures   77,000   77,000 
Other liabilities   41,028   39,243 
Deferred income tax   37,295   38,160 
Non-controlling interests   138,678   141,404 
Shareholders' equity   240,440   243,619 
Total liabilities and equity   $1,271,124   $1,233,718 
     
Supplemental balance sheet information     
Total debt   $455,766   $393,415 
Total debt excluding convertible debentures   378,766   316,415 
Total debt, net of cash   378,729   295,616 
Total debt excluding convertible debentures, net of cash   301,729   218,616 
     
Consolidated Statements of Cash Flows        
(in thousands of US dollars)        
  Three months ended Six months ended
  June 30 June 30
(unaudited)  2012 2011 2012 2011
         
Cash provided by (used in)         
         
Operating activities         
Net earnings   $14,649  $10,932  $3,812  $9,642
Items not affecting cash:         
Depreciation and amortization   12,253  13,356  24,722  25,426
Deferred income tax   (3,289)  (555) (10,486)  (1,321)
Other   3,686  1,830  4,678  4,820
         
Net cash provided by operating activities before changes   27,299  25,563  22,726  38,567
         
Changes in working capital   (9,262)  (1,438) (58,994)  (63,594)
Net cash provided by (used in) operating activities   18,037  24,125 (36,268)  (25,027)
         
Investing activities         
Acquisition of businesses, net of cash acquired   (554)  (8,689) (13,205)  (9,873)
Purchases of fixed assets   (7,429)  (7,828) (14,299)  (13,172)
Other investing activities   579  30  451  (474)
Net cash used in investing activities   (7,404)  (16,487) (27,053)  (23,519)
         
Financing activities         
Increase (decrease) in long-term debt, net   6,417  (7,002)  62,351  50,943
Purchases of non-controlling interests   (2,592)  (59) (1,631)  (1,497)
Dividends paid to preferred shareholders   (2,460)  (2,526) (4,920)  (5,051)
Other financing activities   (2,596)  (2,369) (13,668)  (16,512)
Net cash (used in) provided by financing activities   (1,231)  (11,956)  42,132  27,883
         
Effect of exchange rate changes on cash   (362)  596  427  1,908
         
Increase (decrease) in cash and cash equivalents   9,040  (3,722) (20,762)  (18,755)
         
Cash and cash equivalents, beginning of period   67,997  85,326  97,799  100,359
         
Cash and cash equivalents, end of period   $77,037  $81,604  $77,037  $81,604
       
Segmented Revenues, Adjusted EBITDA and Operating Earnings      
(in thousands of US dollars)          
           
  Commercial Residential      
  Real Estate Property Property    
 (unaudited) Services Management Services Corporate Consolidated
           
Three months ended June 30          
           
2012           
Revenues  $291,635  $214,052  $87,455  $51  $593,193
Adjusted EBITDA  17,879  18,826  8,597 (4,818)  40,484
 Stock-based compensation          707
           41,191
Operating earnings  10,725  12,768  6,599 (4,735)  25,357
           
2011           
Revenues  $245,731  $195,657  $124,042  $42  $565,472
Adjusted EBITDA  11,086  17,929  21,138 (3,817)  46,336
 Stock-based compensation          476
           46,812
           
Operating earnings  4,053  14,474  13,491 (3,878)  28,140
           
  Commercial Residential      
  Real Estate Property Property    
  Services Management Services Corporate Consolidated
           
Six months ended June 30          
           
2012           
Revenues  $504,905  $405,941  $172,301  $102  $1,083,249
Adjusted EBITDA  15,911  30,984  11,471 (8,059)  50,307
 Stock-based compensation          1,715
           52,022
Operating earnings (3,644)  20,836  7,203 (8,237)  16,158
           
2011           
Revenues  $441,330  $363,891  $238,551  $82  $1,043,854
Adjusted EBITDA  13,659  29,383  32,397 (7,538)  67,901
 Stock-based compensation          1,542
           69,443
           
Operating earnings  685  21,271  22,472 (7,665)  36,763
CONTACT: COMPANY CONTACTS:

         Jay S. Hennick
         Founder & CEO

         D. Scott Patterson
         President & COO

         John B. Friedrichsen
         Senior Vice President & CFO

         (416) 960-9500