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 2013.
Commission File Number: 000-24762
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):
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
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):
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information contained in this Form 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 below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- .
EXHIBIT INDEX
Exhibit
Description of Exhibit
99.1
Press release dated July 30, 2013 regarding financial results for the quarter ended June 30, 2013.
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, thereunto duly authorized.
| FirstService Corporation (Registrant) |
||
| Date: July 30, 2013 | /s/ JOHN B. FRIEDRICHSEN John B. Friedrichsen Senior Vice President and Chief Financial Officer |
EXHIBIT 99.1
Colliers International posts EBITDA growth of 40% & completes consolidation of Colliers Germany
FirstService Residential generates strong revenue growth & completes re-branding
FirstService pays first ever quarterly dividend on its common shares
Operating highlights:
| Three months ended | Six months ended | |||
| June 30 | June 30 | |||
| 2013 | 2012 | 2013 | 2012 | |
| Revenues (millions) | $ 601.9 | $ 593.2 | $ 1,100.0 | $ 1,083.2 |
| Adjusted EBITDA (millions) (note 1) | 46.4 | 41.2 | 57.0 | 52.0 |
| Adjusted EPS (note 2) | 0.58 | 0.45 | 0.40 | 0.35 |
TORONTO, July 30, 2013 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV) (Nasdaq:FSRV) today reported results for its second quarter ended June 30, 2013. All amounts are in US dollars.
Revenues for the second quarter were $601.9 million, a 1% increase relative to the same quarter in the prior year, Adjusted EBITDA (note 1) was $46.4 million, up 13% and Adjusted EPS (note 2) was $0.58, a 29% increase versus the prior year quarter. GAAP EPS was a loss of $0.21 per share in the quarter, versus $0.28 for the same quarter a year ago, and was negatively impacted by $0.29 due to accelerated amortization of intangible assets in the current quarter related to the re-branding of the Company's residential property management operations.
For the six months ended June 30, 2013, revenues were $1.1 billion, a 2% increase relative to the comparable prior year period, Adjusted EBITDA was $57.0 million, up 10%, and Adjusted EPS was $0.40, up 14% versus the prior year period. GAAP EPS for the six month period was a loss of $0.75, compared to a loss of $0.27 in the prior year period.
"There were several highlights to our second quarter," said Jay S. Hennick, Founder and Chief Executive Officer of FirstService. "Colliers International posted very strong growth in EBITDA and completed the consolidation of all of its operations in Germany; our residential property management business completed a significant milestone by re-branding all 18 regional operations across North America as "FirstService Residential"; we simplified our capital structure by eliminating our outstanding preferred shares; and we instituted our first ever dividend on our common shares. Looking forward, we expect FirstService to deliver strong year over year EBITDA and EPS growth for the balance of the year," he concluded.
About FirstService Corporation
FirstService Corporation is a global leader in the rapidly growing real estate services sector. 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 top global players in commercial real estate; FirstService Residential, the largest manager of residential communities in North America; and Property Services, a leading North American provider of essential property services delivered through company-owned operations, franchise systems and contractor networks.
FirstService generates over US$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
Colliers International revenues totalled $311.7 million for the second quarter, up 7% relative to the prior year quarter. Revenue growth was comprised of 4% internal growth measured in local currencies, a 1% unfavourable impact from foreign currency translation and 4% growth from recent acquisitions. Internal growth was primarily driven by year over year increases in investment sales brokerage and appraisal in the Americas region. Adjusted EBITDA was $25.1 million, up 40% from $17.9 million reported in the prior year quarter, with a significant portion of the increase attributable to improved productivity and efficiency.
FirstService Residential revenues were $234.8 million for the second quarter, up 10% relative to the prior year quarter. Revenue growth was comprised of 9% internal growth and 1% from recent acquisitions. Adjusted EBITDA for the quarter was $15.0 million compared to $18.8 million in the prior year period. The decrease reflected pre-announced and planned expenses associated with re-branding, including enhancements to the information technology platform and other related costs, totalling $4.0 million during the quarter.
Property Services revenues totalled $55.4 million, down 37% versus the prior year period. Revenues increased 12% at FirstService Brands, the Company's property service franchise operations, offset by a 66% reduction in revenues at the Field Asset Services property preservation and distressed asset management operations. Adjusted EBITDA for the second quarter was $8.9 million (including $8.4 million from FirstService Brands) up from $8.6 million in the prior year quarter, and reflects the stabilization of Field Asset Services at current revenue levels.
Corporate costs were $2.6 million in the second quarter, relative to $4.1 million in the prior year period. The prior year's costs were negatively impacted by an accrual for a loss under the Company's high retention self-insurance program.
Re-branding to "FirstService Residential"
In June 2013, the Company's residential property management division, which had operated as 18 separate brands in markets across North America, re-branded under the "FirstService Residential" name. The adoption of common branding was designed to signify the Company's market leadership, commitment to service excellence and to leverage the Company's industry-leading strengths to the benefit of clients and shareholders. The legacy trademarks and trade names were subject to accelerated amortization resulting in $11.2 million of additional, non-cash amortization expense during the quarter ended June 30, 2013.
Changes in Capital Structure and New Quarterly Common Share Dividend
On May 3, 2013, the Company completed a plan to simplify the Company's capital structure and initiate a dividend on the Subordinate Voting Shares and Multiple Voting Shares (together the "Common Shares"). The plan involved the elimination of the 7% Cumulative Preference Shares, Series 1 (the "Preferred Shares") by way of a partial redemption immediately followed by a conversion of all remaining Preferred Shares into Subordinate Voting Shares. The Company paid $39.2 million in cash on redemption, and issued 2.9 million new Subordinate Voting Shares from treasury on conversion. The Company paid its first quarterly Common Share dividend of $0.10 per share on July 10, 2013.
Conference Call
FirstService will be holding a conference call on Tuesday, July 30, 2013 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 (loss) 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.
| Three months ended | Six months ended | |||
| (in thousands of US$) | June 30 | June 30 | ||
| 2013 | 2012 | 2013 | 2012 | |
| Net earnings (loss) | $ 4,491 | $ 14,649 | $ (3,728) | $ 3,812 |
| Income tax | 1,311 | 6,567 | (743) | 3,861 |
| Other expense (income) | (545) | (125) | (779) | (288) |
| Interest expense, net | 5,892 | 4,266 | 11,064 | 8,773 |
| Operating earnings | 11,149 | 25,357 | 5,814 | 16,158 |
| Depreciation and amortization | 29,594 | 12,253 | 43,092 | 24,722 |
| Acquisition-related items | 3,741 | 2,874 | 5,947 | 9,427 |
| Stock-based compensation expense | 1,943 | 707 | 2,128 | 1,715 |
| Adjusted EBITDA | $ 46,427 | $ 41,191 | $ 56,981 | $ 52,022 |
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 and (iv) stock-based compensation expense. 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 | ||
| 2013 | 2012 | 2013 | 2012 | |
| Net earnings (loss) attributable to common shareholders | $ (6,732) | $ 8,360 | $ (23,259) | $ (8,047) |
| Non-controlling interest redemption increment | 6,268 | (537) | 11,848 | 3,096 |
| Acquisition-related items | 3,741 | 2,874 | 5,947 | 9,427 |
| Amortization of intangible assets (1) | 20,220 | 4,490 | 24,788 | 9,288 |
| Stock-based compensation expense | 1,943 | 707 | 2,128 | 1,715 |
| Income tax on adjustments | (4,655) | (1,858) | (6,694) | (3,951) |
| Non-controlling interest on adjustments | (2,038) | (340) | (2,139) | (864) |
| Adjusted net earnings | $ 18,747 | $ 13,696 | $ 12,619 | $ 10,664 |
| Three months ended | Six months ended | |||
| (in US$) | June 30 | June 30 | ||
| 2013 | 2012 | 2013 | 2012 | |
| Diluted net earnings (loss) per common share | $ (0.21) | $ 0.28 | $ (0.75) | $ (0.27) |
| Non-controlling interest redemption increment | 0.19 | (0.02) | 0.38 | 0.10 |
| Acquisition-related items | 0.11 | 0.08 | 0.19 | 0.29 |
| Amortization of intangible assets, net of tax (1) | 0.44 | 0.09 | 0.54 | 0.19 |
| Stock-based compensation expense, net of tax | 0.05 | 0.02 | 0.04 | 0.04 |
| Adjusted earnings per common share | $ 0.58 | $ 0.45 | $ 0.40 | $ 0.35 |
| (1) Amortization of intangible assets for the three and six month periods ended June 30, 2013 includes $11,184 ($0.29 per common share) of accelerated amortization related to legacy regional trademarks and trade names in connection with residential property management re-branding. | ||||
| 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) | 2013 | 2012 | 2013 | 2012 |
| Revenues | $ 601,922 | $ 593,193 | $ 1,099,974 | $ 1,083,249 |
| Cost of revenues | 391,534 | 386,832 | 731,411 | 717,977 |
| Selling, general and administrative expenses | 165,904 | 165,877 | 313,710 | 314,965 |
| Depreciation | 9,374 | 7,763 | 18,304 | 15,434 |
| Amortization of intangible assets (1) | 20,220 | 4,490 | 24,788 | 9,288 |
| Acquisition-related items (2) | 3,741 | 2,874 | 5,947 | 9,427 |
| Operating earnings | 11,149 | 25,357 | 5,814 | 16,158 |
| Interest expense, net | 5,892 | 4,266 | 11,064 | 8,773 |
| Other expense (income) | (545) | (125) | (779) | (288) |
| Earnings (loss) before income tax | 5,802 | 21,216 | (4,471) | 7,673 |
| Income tax | 1,311 | 6,567 | (743) | 3,861 |
| Net earnings (loss) | 4,491 | 14,649 | (3,728) | 3,812 |
| Non-controlling interest share of earnings | 4,097 | 4,366 | 4,537 | 3,843 |
| Non-controlling interest redemption increment | 6,268 | (537) | 11,848 | 3,096 |
| Net earnings (loss) attributable to Company | (5,874) | 10,820 | (20,113) | (3,127) |
| Preferred share dividends | 858 | 2,460 | 3,146 | 4,920 |
| Net earnings (loss) attributable to common shareholders | $ (6,732) | $ 8,360 | $ (23,259) | $ (8,047) |
| Net earnings (loss) per common share | ||||
| Basic | $ (0.21) | $ 0.28 | $ (0.75) | $ (0.27) |
| Diluted | $ (0.21) | $ 0.28 | $ (0.75) | $ (0.27) |
| Adjusted earnings per common share (3) | $ 0.58 | $ 0.45 | $ 0.40 | $ 0.35 |
| Weighted average common shares (thousands) | ||||
| Basic | 32,119 | 30,029 | 31,116 | 30,006 |
| Diluted | 32,437 | 30,355 | 31,492 | 30,366 |
| Notes to Condensed Consolidated Statements of Earnings (Loss) | ||||
| (1) Amortization of intangible assets for the three and six month periods ended June 30, 2013 includes $11,184 of accelerated amortization related to legacy regional trademarks and trade names in connection with residential property management re-branding. | ||||
| (2) Acquisition-related items include transaction costs, contingent acquisition consideration fair value adjustments, and contingent acquisition consideration-related compensation expense. | ||||
| (3) See definition and reconciliation above. | ||||
| Condensed Consolidated Balance Sheets | ||
| (in thousands of US dollars) | ||
| (unaudited) | June 30, 2013 | December 31, 2012 |
| Assets | ||
| Cash and cash equivalents | $ 90,840 | $ 108,684 |
| Restricted cash | 5,079 | 3,649 |
| Accounts receivable | 341,060 | 328,455 |
| Inventories | 15,550 | 14,918 |
| Prepaid expenses and other current assets | 65,907 | 54,835 |
| Current assets | 518,436 | 510,541 |
| Other non-current assets | 23,518 | 20,300 |
| Fixed assets | 102,408 | 107,011 |
| Deferred income tax | 111,884 | 99,464 |
| Goodwill and intangible assets | 652,721 | 580,594 |
| Total assets | $ 1,408,967 | $ 1,317,910 |
| Liabilities and shareholders' equity | ||
| Accounts payable and accrued liabilities | $ 370,184 | $ 401,805 |
| Other current liabilities | 44,674 | 27,054 |
| Long-term debt - current | 36,822 | 39,038 |
| Current liabilities | 451,680 | 467,897 |
| Long-term debt - non-current | 438,818 | 298,167 |
| Convertible unsecured subordinated debentures | 76,992 | 77,000 |
| Other liabilities | 34,416 | 48,259 |
| Deferred income tax | 42,428 | 34,683 |
| Non-controlling interests | 192,941 | 151,969 |
| Shareholders' equity | 171,692 | 239,935 |
| Total liabilities and equity | $ 1,408,967 | $ 1,317,910 |
| Supplemental balance sheet information | ||
| Total debt | $ 552,632 | $ 414,205 |
| Total debt excluding convertible debentures | 475,640 | 337,205 |
| Total debt, net of cash | 461,792 | 305,521 |
| Total debt excluding convertible debentures, net of cash | 384,800 | 228,521 |
| Consolidated Statements of Cash Flows | ||||
| (in thousands of US dollars) | ||||
| Three months ended | Six months ended | |||
| June 30 | June 30 | |||
| (unaudited) | 2013 | 2012 | 2013 | 2012 |
| Cash provided by (used in) | ||||
| Operating activities | ||||
| Net earnings | $ 4,491 | $ 14,649 | $ (3,728) | $ 3,812 |
| Items not affecting cash: | ||||
| Depreciation and amortization | 29,594 | 12,253 | 43,092 | 24,722 |
| Deferred income tax | (11,293) | (3,289) | (16,298) | (10,486) |
| Other | 183 | 3,560 | 1,405 | 4,552 |
| 22,975 | 27,173 | 24,471 | 22,600 | |
| Changes in non cash working capital | ||||
| Accounts receivable | (4,034) | (35,669) | 2,969 | (9,239) |
| Payables and accruals | (5,413) | 21,958 | (88,948) | (50,627) |
| Other | 4,276 | 4,449 | 12,511 | 872 |
| Net cash provided by (used in) operating activities | 17,804 | 17,911 | (48,997) | (36,394) |
| Investing activities | ||||
| Acquisition of businesses, net of cash acquired | (7,499) | (554) | (34,688) | (13,205) |
| Purchases of fixed assets | (6,445) | (7,429) | (12,106) | (14,299) |
| Other investing activities | 421 | 579 | (3,636) | 451 |
| Net cash used in investing activities | (13,523) | (7,404) | (50,430) | (27,053) |
| Financing activities | ||||
| Increase in long-term debt, net | 46,037 | 6,417 | 138,435 | 62,351 |
| Redemption of Preferred Shares | (39,232) | -- | (39,232) | -- |
| Purchases of non-controlling interests | (1,540) | (2,592) | (2,529) | (1,631) |
| Dividends paid to preferred shareholders | (249) | (2,460) | (2,537) | (4,920) |
| Other financing activities | (499) | (2,470) | (5,839) | (13,542) |
| Net cash provided by (used in) financing activities | 4,517 | (1,105) | 88,298 | 42,258 |
| Effect of exchange rate changes on cash | (5,516) | (362) | (6,715) | 427 |
| Increase (decrease) in cash and cash equivalents | 3,282 | 9,040 | (17,844) | (20,762) |
| Cash and cash equivalents, beginning of period | 87,558 | 67,997 | 108,684 | 97,799 |
| Cash and cash equivalents, end of period | $ 90,840 | $ 77,037 | $ 90,840 | $ 77,037 |
| 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 | |||||
| 2013 | |||||
| Revenues | $ 311,668 | $ 234,802 | $ 55,408 | $ 44 | $ 601,922 |
| Adjusted EBITDA | 25,084 | 14,983 | 8,932 | (2,572) | 46,427 |
| Operating earnings (1) | 9,919 | (43) | 4,805 | (3,532) | 11,149 |
| 2012 | |||||
| Revenues | $ 291,635 | $ 214,052 | $ 87,455 | $ 51 | $ 593,193 |
| Adjusted EBITDA | 17,879 | 18,826 | 8,597 | (4,111) | 41,191 |
| Operating earnings | 10,725 | 12,768 | 6,599 | (4,735) | 25,357 |
| Commercial | Residential | ||||
| Real Estate | Property | Property | |||
| Services | Management | Services | Corporate | Consolidated | |
| Six months ended June 30 | |||||
| 2013 | |||||
| Revenues | $ 558,757 | $ 441,373 | $ 99,744 | $ 100 | $ 1,099,974 |
| Adjusted EBITDA | 27,701 | 25,918 | 8,576 | (5,214) | 56,981 |
| Operating earnings (1) | 3,344 | 7,708 | 2,275 | (7,513) | 5,814 |
| 2012 | |||||
| Revenues | $ 504,905 | $ 405,941 | $ 172,301 | $ 102 | $ 1,083,249 |
| Adjusted EBITDA | 15,911 | 30,984 | 11,471 | (6,344) | 52,022 |
| Operating earnings | (3,644) | 20,836 | 7,203 | (8,237) | 16,158 |
| (1) Operating earnings for the Residential Property Management segment for the three and six month periods ended June 30, 2013 are after $11,184 of accelerated amortization related to legacy regional trademarks and trade names in connection with re-branding. | |||||
CONTACT: Jay S. Hennick
Founder & CEO
D. Scott Patterson
President & COO
John B. Friedrichsen
Senior Vice President & CFO
(416) 960-9500