FirstService Reports Strong Fourth Quarter and Full Year Results

Operating highlights:

TORONTO, Feb. 07, 2023 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX: FSV; NASDAQ: FSV) today announced strong fourth quarter and full year results for the year ended December 31, 2022. All amounts are in US dollars.

Consolidated revenues for the fourth quarter were $1.02 billion, a 19% increase relative to the same quarter in the prior year, and driven by 15% organic growth. Adjusted EBITDA (note 1) was $102.5 million, up 23%, and Adjusted EPS (note 2) was $1.22, largely in-line with the prior year quarter. GAAP Operating Earnings were $67.5 million, relative to $44.9 million in the prior year period. GAAP diluted EPS was $0.86 per share in the quarter, compared to $0.70 for the same quarter a year ago.

For the year ended December 31, 2022, consolidated revenues were $3.75 billion, a 15% increase relative to the prior year, including 9% organic growth. Adjusted EBITDA was $351.7 million, up 7%, and Adjusted EPS was $4.24, versus the prior year of $4.57. GAAP Operating Earnings were $219.0 million, versus $201.6 million in the prior year period. GAAP earnings per share was $2.72, compared to $3.05 in the prior year.

“We are very pleased with how we finished the year,” said Scott Patterson, Chief Executive Officer of FirstService. “The strong fourth quarter provides momentum and confidence in our ability to drive continued healthy growth for the coming year,” 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$3.7 billion in annual revenues and has approximately 27,000 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 revenues totalled $442.1 million for the fourth quarter, up 9% relative to the prior year quarter, including 8% organic growth. Growth was driven by continued expansion of our sited labour revenue across most markets as well as new contract wins. Adjusted EBITDA was $38.1 million, an increase of 7% compared to $35.7 million reported in the prior year period. GAAP Operating Earnings were $30.6 million, versus $25.7 million for the fourth quarter of last year. The EBITDA margin was slightly below the prior year quarter, while the operating earnings margin increased year-over-year due to a decrease in amortization expense in connection with recent acquisitions during the current year quarter.

FirstService Brands revenues totalled $578.0 million, up 28% versus $451.3 million in the prior year period. The increase included 20% organic growth, with the balance from recent tuck-under acquisitions. Organic growth for the quarter was strong across our service lines, with particularly robust activity levels at Century Fire Protection and at our restoration operations, the latter of which benefited from the recent Hurricane Ian event. Adjusted EBITDA for the quarter was $67.4 million, up 27% versus the prior year quarter. GAAP Operating Earnings were $44.0 million, versus $28.3 million in the prior year quarter. The division EBITDA margin was in-line with the prior year quarter, while the operating earnings margin increased year-over-year due to lower acquisition-related items in the current year quarter.

Corporate costs, as presented in Adjusted EBITDA were $3.0 million in the fourth quarter, relative to $5.5 million in the prior year period. On a GAAP basis, corporate costs for the quarter were $7.1 million, relative to $9.1 million in the prior year period. The decrease in corporate costs was primarily due to lower incentive compensation expense during 2022.

Segmented Full Year Results
FirstService Residential revenues were $1.77 billion, up 12% relative to 2021, with the increase comprised of 8% organic growth and the balance from acquisitions. Organic growth was primarily due to increased labour-related services compared to the prior year. Adjusted EBITDA was $168.6 million, up 8% versus the prior year. GAAP Operating Earnings were $138.9 million, compared to $127.3 million in the prior year. Operating margins were impacted by wage inflation, as well as higher growth of labour-driven revenues relative to higher margin ancillaries.

FirstService Brands revenues for the year totalled $1.97 billion, up 19% versus the prior year, comprised of 11% organic growth and the balance from tuck-under acquisitions. Organic revenue growth was broad-based across the division and included significant double-digit increases in our home services and Century Fire brands. Adjusted EBITDA for the year was $196.3 million, up 4% relative to the prior year. GAAP Operating Earnings were $111.6 million, versus $106.6 million a year ago. The division margin decline was a result of cost inflationary pressures within some of our businesses, in addition to the combined impact of growth-related platform investments and more tempered weather activity within our restoration operations.

Corporate costs, as presented in Adjusted EBITDA, were $13.2 million for the full year, relative to $17.2 million in the prior year. On a GAAP basis, corporate costs were $31.5 million, relative to $32.2 million a year ago.

Conference Call & Presentation
FirstService will be holding a conference call on Tuesday, February 7, 2023 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/BIcf694f8bff6748f6a2b035a63e119a25 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/yq9rksk2. 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, 2021 under the heading “Risk factors” (a copy of which may be obtained at www.sedar.com) 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.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. 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.

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.

COMPANY CONTACTS:

D. Scott Patterson
Chief Executive Officer

Jeremy Rakusin
Chief Financial Officer

(416) 960-9566