dcsimg
Home > Market Activity > Get Quotes > News > News Article

FirstService Corporation Subordinate Voting Shares

Exchange: TSX Exchange | Nov 18, 2017, 11:44 PM EST

FSV
$ 86.02 real time data Change Up
Change:
0.40 (0.47%)
Volume:
38,952
Real-time price
Day Low 85.70
Day High 86.55


 Back
,
FirstService Reports Strong Third Quarter Results

FirstService Brands Drives Double-Digit Revenue Growth

Operating highlights:

  Three months ended Nine months ended
  September 30 September 30
  2017 2016 2017 2016
             
Revenues (millions)$456.5 $409.1 $1,267.3 $1,101.8
Adjusted EBITDA (millions) (note 1) 53.1  46.7  121.5  99.7
Adjusted EPS (note 2) 0.74  0.62  1.52  1.22
             
GAAP Operating Earnings 34.5  36.6  79.9  71.6
GAAP EPS 0.42  0.43  1.05  0.74

TORONTO, Oct. 25, 2017 (GLOBE NEWSWIRE) --  FirstService Corporation (TSX:FSV) (NASDAQ:FSV) today reported results for its third quarter ended September 30, 2017. All amounts are in US dollars.

Revenues for the third quarter were $456.5 million, a 12% increase relative to the same quarter in the prior year, Adjusted EBITDA (note 1) increased 14% to $53.1 million, and Adjusted EPS (note 2) was $0.74, a 19% increase versus the prior year quarter. GAAP Operating Earnings were $34.5 million, relative to $36.6 million in the prior year period. GAAP diluted earnings per share was $0.42 in the quarter, versus $0.43 for the same quarter a year ago.

For the nine months ended September 30, 2017, revenues were $1.27 billion, a 15% increase relative to the comparable prior year period, Adjusted EBITDA was $121.5 million, up 22%, and Adjusted EPS was $1.52, a 25% increase versus the prior year period. GAAP Operating Earnings were $79.9 million, relative to $71.6 million in the prior year period. GAAP diluted EPS for the nine months year-to-date was $1.05, compared to $0.74 in the prior year period.

“We are pleased to report another solid quarter, reflecting a continuation of our strong financial performance during the first half of the year,” said Scott Patterson, Chief Executive Officer of FirstService. “The positive themes driving our businesses remain intact and we expect a strong finish to the 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 $314.6 million for the third quarter, up 5% versus the prior year quarter, including 3% organic growth. Adjusted EBITDA for the quarter was $33.3 million, versus $28.9 million in the prior year period. Growth was relatively balanced geographically, reflecting contract wins across our business and new development in certain markets. Margin expansion resulted from continued broad-based initiatives driving operational efficiencies. GAAP Operating Earnings were $27.8 million, versus $23.5 million for the third quarter of last year.

FirstService Brands revenues during the third quarter grew to $141.9 million, up 30% relative to the prior year period and including 10% organic growth. Adjusted EBITDA for the third quarter was $23.2 million, up from $20.3 million in the prior year period. The third quarter was driven by strong double-digit organic growth across our company-owned operations at Paul Davis Restoration, California Closets and Century Fire Protection. Tuck-under acquisitions within each of these businesses further augmented top-line growth. The lower margin during the third quarter compared to the prior year period was due to increased mix from our faster growing, lower margin company-owned operations, as well as weak performance at Service America. GAAP Operating Earnings were $11.2 million, versus $16.2 million in the prior year quarter, with the decrease being attributable to a goodwill impairment charge at Service America, as described below.

Corporate costs, as presented in Adjusted EBITDA, were $3.4 million in the third quarter, relative to $2.4 million in the prior year period. On a GAAP basis, corporate costs for the quarter were $4.4 million, relative to $3.1 million in the prior year period. Foreign exchange accounted for a majority of the increase versus the prior year quarter.

Goodwill Impairment Charge
During the quarter, the Company concluded that it was necessary to take a non-cash goodwill impairment charge in its FirstService Brands segment as a result of weak operating performance within its Service America business. The amount of the charge is $6.2 million, and represents 5.5% of goodwill related to the FirstService Brands segment prior to the charge and 2% of the Company’s consolidated goodwill prior to the charge. This non-cash impairment does not affect the Company’s liquidity, cash flow or compliance with debt covenants.

Conference Call
FirstService will be holding a conference call on Wednesday, October 25, 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) goodwill impairment charges; (vi) acquisition-related items; and (vii) 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 Nine months ended
(in thousands of US$)September 30 September 30
  2017  2016  2017  2016 
             
Net earnings$21,141  $22,938  $52,026  $42,527 
Income tax 12,221   11,427   22,018   22,539 
Other income, net (1,317)  (71)  (1,522)  (172)
Interest expense, net 2,499   2,284   7,378   6,739 
Operating earnings 34,544   36,578   79,900   71,633 
Depreciation and amortization 10,382   10,048   30,233   25,956 
Goodwill impairment charge 6,150   -   6,150   - 
Acquisition-related items 1,180   (541)  1,951   (148)
Stock-based compensation expense 893   618   3,237   2,223 
Adjusted EBITDA$53,149  $46,703  $121,471  $99,664 

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) goodwill impairment charges; (v) stock-based compensation expense; and (vi) 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.

  Three months ended Nine months ended
(in thousands of US$)September 30 September 30
  2017  2016  2017  2016 
             
Net earnings$21,141  $22,938  $52,026  $42,527 
Non-controlling interest share of earnings (2,582)  (2,863)  (6,741)  (5,179)
Acquisition-related items 1,180   (541)  1,951   (148)
Amortization of intangible assets 3,589   4,475   10,340   9,700 
Goodwill impairment charge 6,150   -   6,150   - 
Stock-based compensation expense 893   618   3,237   2,223 
Stock-based compensation tax adjustment for US GAAP change (1,307)  -   (5,930)  - 
Income tax on adjustments (1,748)  (2,006)  (5,269)  (4,658)
Non-controlling interest on adjustments (112)  (78)  (274)  (173)
Adjusted net earnings$27,204  $22,543  $55,490  $44,292 
             
  Three months ended Nine months ended
(in US$)September 30 September 30
  2017  2016  2017  2016 
             
Diluted net earnings per share$0.42  $0.43  $1.05  $0.74 
Non-controlling interest redemption increment 0.08   0.12   0.19   0.29 
Acquisition-related items 0.03   (0.01)  0.05   - 
Amortization of intangible assets, net of tax 0.06   0.07   0.16   0.15 
Goodwill impairment charge 0.17   -   0.17   - 
Stock-based compensation expense, net of tax 0.02   0.01   0.06   0.04 
Stock-based compensation tax adjustment for US GAAP change (0.04)  -   (0.16)  - 
Adjusted earnings per share$0.74  $0.62  $1.52  $1.22 
             


FIRSTSERVICE CORPORATION
Condensed Consolidated Statements of Earnings
(in thousands of US dollars, except per share amounts)
     Three months  Nine months
     ended September 30  ended September 30
(unaudited)  2017   2016   2017   2016 
               
Revenues $456,520  $409,083  $1,267,347  $1,101,773 
               
Cost of revenues  317,100   292,389   891,450   781,329 
Selling, general and administrative expenses  87,164   70,609   257,663   223,003 
Depreciation  6,793   5,573   19,893   16,256 
Amortization of intangible assets  3,589   4,475   10,340   9,700 
Goodwill impairment charge  6,150   -   6,150   - 
Acquisition-related items (1)  1,180   (541)  1,951   (148)
Operating earnings  34,544   36,578   79,900   71,633 
Interest expense, net  2,499   2,284   7,378   6,739 
Other income  (1,317)  (71)  (1,522)  (172)
Earnings before income tax  33,362   34,365   74,044   65,066 
Income tax  12,221   11,427   22,018   22,539 
Net earnings  21,141   22,938   52,026   42,527 
Non-controlling interest share of earnings  2,582   2,863   6,741   5,179 
Non-controlling interest redemption increment  3,096   4,311   6,829   10,534 
Net earnings attributable to Company  $15,463  $15,764  $38,456  $26,814 
               
Net earnings per common share             
 Basic $0.43  $0.44  $1.07  $0.75 
 Diluted  0.42   0.43   1.05   0.74 
              
               
Adjusted earnings per share (2) $0.74  $0.62  $1.52  $1.22 
               
Weighted average common shares (thousands)            
  Basic  35,926   35,989   35,909   35,986 
  Diluted  36,587   36,449   36,566   36,393 

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.


Condensed Consolidated Balance Sheets     
(in thousands of US dollars)
      
       
(unaudited)September 30, 2017 December 31, 2016
       
Assets     
Cash and cash equivalents$62,212 $43,384
Restricted cash 16,577  13,450
Accounts receivable 184,451  164,074
Prepaid and other current assets 72,935  58,146
Deferred income tax -  24,738
 Current assets 336,175  303,792
Other non-current assets 4,493  5,115
Fixed assets 80,985  73,083
Deferred income tax 569  1,693
Goodwill and intangible assets 421,296  387,281
 Total assets$843,518 $770,964
       
       
Liabilities and shareholders' equity     
Accounts payable and accrued liabilities$153,751 $142,966
Other current liabilities 43,085  38,813
Long-term debt - current 2,575  1,043
 Current liabilities 199,411  182,822
Long-term debt - non-current 292,180  249,866
Other liabilities 40,119  23,729
Deferred income tax 8,370  31,167
Redeemable non-controlling interests 108,319  102,352
Shareholders' equity 195,119  181,028
 Total liabilities and equity$843,518 $770,964
       
       
Supplemental balance sheet information     
Total debt$294,755 $250,909
Total debt, net of cash 232,543  207,525


Consolidated Statements of Cash Flows       
(in thousands of US dollars)
    Three months ended  Nine months ended
    September 30  September 30
(unaudited)  2017   2016   2017   2016 
              
Cash provided by (used in)            
              
Operating activities            
Net earnings $21,141  $22,938  $52,026  $42,527 
Items not affecting cash:            
 Depreciation and amortization  10,383   10,048   30,234   25,955 
 Goodwill impairment charge  6,150   -   6,150   - 
 Deferred income tax  (103)  4,473   260   3,379 
 Other  434   49   (1,668)  585 
    38,005   37,508   87,002   72,446 
              
Changes in non-cash working capital            
 Accounts receivable  (13,905)  7,768   (19,491)  (13,083)
 Payables and accruals  (2,284)  12,845   (7,559)  32,411 
 Other  5,249   (9,415)  16,314   (2,774)
Net cash provided by operating activities  27,065   48,706   76,266   89,000 
              
Investing activities            
Acquisition of businesses, net of cash acquired  (22,504)  (3,353)  (35,049)  (80,434)
Purchases of fixed assets  (7,185)  (6,101)  (26,075)  (20,079)
Other investing activities  (143)  (2,656)  (5,831)  (10,104)
Net cash used in investing activities  (29,832)  (12,110)  (66,955)  (110,617)
              
Financing activities            
Increase in long-term debt, net  12,082   (17,156)  42,552   42,218 
Sale (purchases) of non-controlling interests, net  -   (218)  (5,468)  41 
Dividends paid to common shareholders  (4,403)  (4,092)  (12,743)  (11,513)
Distributions paid to non-controlling interests  (700)  (1,180)  (3,049)  (4,244)
Repurchases of Subordinate Voting Shares  (6,114)  -   (13,530)  (1,349)
Other financing activities  665   (933)  1,274   (91)
Net cash (used in) provided by financing activities  1,530   (23,579)  9,036   25,062 
              
Effect of exchange rate changes on cash  355   (122)  481   175 
              
Increase (decrease) in cash and cash equivalents  (882)  12,895   18,828   3,620 
              
Cash and cash equivalents, beginning of period  63,094   36,285   43,384   45,560 
              
Cash and cash equivalents, end of period $62,212  $49,180  $62,212  $49,180 
              
      


Segmented Results
(in thousands of US dollars)
             
           
  FirstService FirstService    
(unaudited)Residential Brands Corporate Consolidated
             
Three months ended September 30           
             
2017           
 Revenues$314,631 $141,889 $-  $456,520
 Adjusted EBITDA 33,320  23,188  (3,359)  53,149
             
 Operating earnings 27,786  11,201  (4,443)  34,544
             
2016           
 Revenues$299,920 $109,163 $-  $409,083
 Adjusted EBITDA 28,873  20,272  (2,442)  46,703
             
 Operating earnings 23,484  16,219  (3,125)  36,578
             
             
           
  FirstService FirstService    
  Residential Brands Corporate Consolidated
             
Nine months ended September 30           
             
2017           
 Revenues$883,384 $383,963 $-  $1,267,347
 Adjusted EBITDA 76,449  54,186  (9,164)  121,471
             
 Operating earnings 60,104  32,487  (12,691)  79,900
             
2016           
 Revenues$838,384 $263,389 $-  $1,101,773
 Adjusted EBITDA 66,986  40,197  (7,519)  99,664
             
 Operating earnings 50,973  30,666  (10,006)  71,633


COMPANY CONTACTS:

D. Scott Patterson
President & CEO
           
Jeremy Rakusin
Chief Financial Officer
           
(416) 960-9500

Primary Logo

Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. View delay times for all exchanges. Market Data powered by QuoteMedia. See the QuoteMedia Terms of Use.