FirstService Reports Third Quarter 2024 Results
Operating highlights:
Three months ended
Nine months ended
September 30
September 30
2024
2023
2024
2023
Revenues (millions)
$
1,396.0
$
1,117.1
$
3,851.5
$
3,255.3
Adjusted EBITDA (millions) (note 1)
160.0
111.9
375.8
312.4
Adjusted EPS (note 2)
1.63
1.25
3.66
3.56
GAAP Operating Earnings
125.9
73.6
247.9
196.8
GAAP EPS
1.34
0.73
2.26
2.10
TORONTO, Oct. 24, 2024 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV, NASDAQ:FSV) today reported strong results for its third quarter ended September 30, 2024. All amounts are in US dollars.
Consolidated revenues for the third quarter were $1.40 billion, a 25% increase relative to the same quarter in the prior year. Adjusted EBITDA (note 1) increased 43% to $160.0 million, and Adjusted EPS (note 2) was $1.63, up 30% versus the prior year quarter. During the third quarter, FirstService reported Operating Earnings of $125.9 million, up from $73.6 million in the prior year period. Diluted earnings per share was $1.34 in the quarter, compared to $0.73 for the same quarter a year ago.
For the nine months ended September 30, 2024, consolidated revenues were $3.85 billion, an 18% increase relative to the comparable prior year period, Adjusted EBITDA was $375.8 million, up 20%, and Adjusted EPS was $3.66, versus $3.56 in the prior year period. FirstService's Operating Earnings were $247.9 million in the current year period, versus $196.8 million in the prior year. Diluted earnings per share for the nine months year-to-date was $2.26, compared to $2.10 in the prior year period.
"We are very pleased with our third quarter consolidated financial results which exceeded our internal expectations," said Scott Patterson, Chief Executive Officer of FirstService. "Our strong top and bottom line performance was buoyed by robust and broad-based activity within our restoration operations, and supported by healthy profitability across our other brands. Our continued momentum reinforces our outlook for 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 company-owned operations and franchise systems.
FirstService generates more than US$4.9 billion in annual revenues and has approximately 30,000 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 Quarterly ResultsFirstService Residential revenues were $559.6 million for the third quarter, up 4% compared to the prior year quarter, including organic growth of 3%. Top-line growth moderated compared to recent quarters due to tempered fees and reduced service scope in the face of budgetary pressures impacting our community association clients in certain markets. Adjusted EBITDA for the quarter was $58.6 million, versus $56.6 million in the prior year period. Operating Earnings were $49.1 million, versus $49.0 million for the third quarter of last year. The operating margins for the division were relatively in-line with the prior year.
FirstService Brands revenues during the third quarter grew to $836.5 million, up 44% relative to the prior year period. Strong organic revenue growth of 10% was primarily due to robust activity levels at our restoration operations arising from local weather events and large-loss claims across North America. The recent addition of our Roofing Corp of America operations contributed to the balance of growth in the division. Adjusted EBITDA for the third quarter was $105.8 million, up from $60.7 million in the prior year period. Operating Earnings were $87.1 million, versus $33.9 million in the prior year quarter. Adjusted EBITDA margin expansion was driven by operating leverage from the strong top-line restoration growth, as well as improved margins at our home services brands which benefited from both reduced promotional initiatives and realized operating efficiencies. The further increase in the Operating Earnings margin performance resulted from fair value adjustments to contingent upside earn-out structures related to certain recently completed acquisitions.
Corporate costs, as presented in Adjusted EBITDA (note 1), were $4.4 million in the third quarter, relative to $5.3 million in the prior year period. Corporate costs for the quarter were $10.2 million, relative to $9.4 million in the prior year period.
Conference CallFirstService will be holding a conference call on Thursday, October 24, 2024 at 11:00 a.m. Eastern Time to discuss the quarter's results. 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/BI4fa84b993e5545c3ad11aa7ddb7c3035 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/aecuddsv . 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 StatementsThis 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, 2023 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.
Notes1. 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, net; (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
Nine months ended
(in thousands of US$)
September 30
September 30
2024
2023
2024
2023
Net earnings
$
77,761
$
45,858
$
137,595
$
123,238
Income tax
26,372
16,447
50,971
44,266
Other income, net
(381
)
(702
)
(2,376
)
(5,215
)
Interest expense, net
22,150
11,956
61,707
34,541
Operating earnings
125,902
73,559
247,897
196,830
Depreciation and amortization
41,409
33,146
117,441
94,062
Acquisition-related items
(13,036
)
1,274
(9,130
)
5,032
Stock-based compensation expense
5,699
3,957
19,626
16,461
Adjusted EBITDA
$
159,974
$
111,936
$
375,834
$
312,385
A reconciliation of segment operating earnings to segment Adjusted EBITDA appears below.
(in thousands of US$)
Three months ended, September 30, 2024
FirstService
FirstService
Residential
Brands
Corporate(1)
Operating earnings (loss)
$
49,059
$
87,064
$
(10,221
)
Depreciation and amortization
8,871
32,516
22
Acquisition-related items
660
(13,814
)
118
Stock-based compensation expense
-
-
5,699
Adjusted EBITDA
$
58,590
$
105,766
$
(4,382
)
Three months ended, September 30, 2023
FirstService
FirstService
Residential
Brands
Corporate(1)
Operating earnings (loss)
$
49,001
$
33,935
$
(9,377
)
Depreciation and amortization
9,919
23,204
23
Acquisition-related items
(2,345
)
3,553
66
Stock-based compensation expense
-
-
3,957
Adjusted EBITDA
$
56,575
$
60,692
$
(5,331
)
Nine months ended, September 30, 2024
FirstService
FirstService
Residential
Brands
Corporate(1)
Operating earnings (loss)
$
124,824
$
160,171
$
(37,098
)
Depreciation and amortization
27,067
90,306
68
Acquisition-related items
1,385
(11,685
)
1,170
Stock-based compensation expense
-
-
19,626
Adjusted EBITDA
$
153,276
$
238,792
$
(16,234
)
Nine months ended, September 30, 2023
FirstService
FirstService
Residential
Brands
Corporate(1)
Operating earnings (loss)
$
120,908
$
105,865
$
(29,943
)
Depreciation and amortization
24,741
69,252
69
Acquisition-related items
(1,368
)
6,167
233
Stock-based compensation expense
-
-
16,461
Adjusted EBITDA
$
144,281
$
181,284
$
(13,180
)
(1) Corporate is not an operating segment, but rather represent corporate overhead expenses not directly attributable to reportable segments and are therefore ...
