Operating highlights:

Three months ended

Nine months ended

September 30

2021

2020

2021

2020

Revenues (millions)

849.4

741.9

2,392.1

1,997.4

Adjusted EBITDA (millions) (note 1)

94.2

88.7

243.8

203.8

Adjusted EPS (note 2)

1.50

1.19

3.36

2.44

GAAP Operating Earnings

61.5

59.1

156.8

120.0

GAAP EPS

1.03

0.75

2.35

1.52

TORONTO, Oct. 26, 2021 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV, NASDAQ:FSV) today reported strong results for its third quarter ended September 30, 2021. All amounts are in US dollars.

Consolidated revenues for the third quarter were $849.4 million, a 14% increase relative to the same quarter in the prior year, including 8% organic growth. Adjusted EBITDA (note 1) increased 6% to $94.2 million, and Adjusted EPS (note 2) was $1.50, representing 26% growth over the prior year quarter. During the third quarter, FirstService reported GAAP Operating Earnings of $61.5 million, up from $59.1 million in the prior year period. The GAAP diluted earnings per share was $1.03 in the quarter, compared to $0.75 for the same quarter a year ago.

For the nine months ended September 30, 2021, consolidated revenues were $2.39 billion, a 20% increase relative to the comparable prior year period, Adjusted EBITDA was $243.8 million, up 20%, and Adjusted EPS was $3.36, an increase of 38% versus the prior year period. FirstService's GAAP Operating Earnings were $156.8 million in the current year period, versus $120.0 million in the prior year. The GAAP diluted earnings per share for the nine months year-to-date was $2.35, compared to $1.52 in the prior year period.

"We are pleased that all of our businesses contributed in delivering strong organic growth," said Scott Patterson, Chief Executive Officer of FirstService. "This performance was particularly impressive, given the ongoing labour and resource constraints which limited our ability to drive further growth. Market demand indicators remain strong and provide us with confidence in navigating through the challenging macroeconomic environment," 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$3.1 billion in annual revenues and has approximately 24,000 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 Results

FirstService Residential revenues were $423.1 million for the third quarter, up 13% compared to the prior year quarter, including organic growth of 8% and the remaining contribution from recent tuck-under acquisitions. Revenue growth in the quarter reflected ongoing contract wins and was augmented by increased labour-driven services in our amenity management offering related to further client facility reopenings in the aftermath of the pandemic. Adjusted EBITDA for the quarter was $45.1 million, versus $41.8 million in the prior year period. GAAP Operating Earnings were $38.0 million, versus $35.2 million for the third quarter of last year. Margins decreased during the quarter as a result of increased wage inflation compared to the prior year.

FirstService Brands revenues during the third quarter grew to $426.4 million, up 16% relative to the prior year period. Organic growth was 9%, with the balance from recent tuck-under acquisitions. Top-line growth was broad-based across all of our service lines, including double-digit organic growth at our home improvement brands and Century Fire Protection. Adjusted EBITDA for the third quarter was $53.0 million, versus $48.7 million in the prior year period. GAAP Operating Earnings were $31.1 million, versus $28.5 million in the prior year quarter. The division margin decline was due to increased supply chain costs and associated labour cost increases during the third quarter.

Corporate costs, as presented in Adjusted EBITDA, were $3.9 million in the third quarter, relative to $1.8 million in the prior year period. On a GAAP basis, corporate costs for the quarter were $7.5 million, relative to $4.5 million in the prior year period. The year-over-year cost increase reflects higher compensation expense compared to the prior year third quarter, which included significant COVID-19 expense reductions.

Conference Call

FirstService will be holding a conference call on Tuesday, October 26, 2021 at 11:00 a.m. Eastern Time to discuss the quarter's results. The numbers to use for this call are 1) toll-free 1-888-241-0551; or 2) for international callers, 647-427-3415. 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. 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, 2020 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.

COMPANY CONTACTS:

D. Scott Patterson

President & CEO

Jeremy Rakusin

Chief Financial Officer

(416) 960-9566

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. 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
	2021			2020			2021			2020

Net earnings	$	52,872		$	40,966		$	120,735		$	76,663
Income tax		17,321			12,969			39,321			24,118
Other income, net		(12,539	)		(269	)		(15,295	)		(645	)
Interest expense, net		3,873			5,464			12,031			19,881
Operating earnings		61,527			59,130			156,792			120,017
Depreciation and amortization		23,977			26,184			70,876			73,179
Acquisition-related items		5,152			950			4,946			1,752
Stock-based compensation expense		3,540			2,468			11,230			8,880
Adjusted EBITDA	$	94,196		$	88,732		$	243,844		$	203,828

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; 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 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
	2021			2020			2021			2020

Net earnings	$	52,872		$	40,966		$	120,735		$	76,663
Non-controlling interest share of earnings		(1,564	)		(760	)		(6,927	)		(5,841	)
Acquisition-related items		5,152			950			4,946			1,752
Amortization of intangible assets		10,567			13,191			30,987			35,416
Stock-based compensation expense		3,540			2,468			11,230			8,880
Income tax on adjustments		(3,668	)		(4,071	)		(10,977	)		(11,517	)
Non-controlling interest on adjustments		(404	)		(303	)		(756	)		(823	)
Adjusted net earnings	$	66,495		$	52,441		$	149,238		$	104,530

	Three months ended						Nine months ended
(in US$)	September 30						September 30
	2021			2020			2021			2020

Diluted net earnings per share	$	1.03		$	0.75		$	2.35		$	1.52
Non-controlling interest redemption increment		0.13			0.17			0.22			0.13
Acquisition-related items		0.11			0.02			0.11			0.04
Amortization of intangible assets, net of tax		0.17			0.21			0.50			0.60
Stock-based compensation expense, net of tax		0.06			0.04			0.18			0.15
Adjusted earnings per share	$	1.50		$	1.19		$	3.36		$	2.44

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
			2021			2020			2021			2020

Revenues			$	849,431		$	741,932		$	2,392,127		$	1,997,360

Cost of revenues				579,309			496,367			1,624,797			1,343,526
Selling, general and administrative expenses				179,466			159,301			534,716			458,886
Depreciation				13,410			12,993			39,889			37,763
Amortization of intangible assets				10,567			13,191			30,987			35,416
Acquisition-related items (1)				5,152			950			4,946			1,752
Operating earnings				61,527			59,130			156,792			120,017
Interest expense, net				3,873			5,464			12,031			19,881
Other income (2)				(12,539	)		(269	)		(15,295	)		(645	)
Earnings before income tax				70,193			53,935			160,056			100,781
Income tax				17,321			12,969			39,321			24,118
Net earnings				52,872			40,966			120,735			76,663
Non-controlling interest share of earnings				1,564			760			6,927			5,841
Non-controlling interest redemption increment				5,693			7,379			9,603			5,588
Net earnings attributable to Company			$	45,615		$	32,827		$	104,205		$	65,234

Net earnings per common share
	Basic		$	1.04		$	0.76		$	2.38		$	1.54
	Diluted			1.03			0.75			2.35			1.52


Adjusted earnings per share (3)			$	1.50		$	1.19		$	3.36		$	2.44

Weighted average common shares (thousands)
		Basic		43,865			43,476			43,798			42,480
		Diluted		44,471			43,942			44,351			42,868

Notes to Condensed Consolidated Statements of Earnings

(1) Acquisition-related items include transaction costs, and contingent acquisition consideration fair value adjustments.

(2) Other income includes a $12.5 million pre-tax gain from the divestiture of a small, non-core operation in the FirstService Residential segment.

(3) See definition and reconciliation above.

Condensed Consolidated Balance Sheets

(in thousands of US dollars)

September 30, 2021

December 31, 2020

Assets

Cash and cash equivalents

140,861

184,295

Restricted cash

31,262

24,643

Accounts receivable

534,279

418,890

Prepaid and other current assets

223,442

191,488

Current assets

929,844

819,316

Other non-current assets

17,430

14,970

Fixed assets

134,791

126,569

Operating lease right-of-use assets

156,708

153,185

Goodwill and intangible assets

1,155,621

1,082,500

Total assets

2,394,394

2,196,540

Liabilities and shareholders' equity

Accounts payable and accrued liabilities

400,015

349,692

Other current liabilities

134,922

102,266

Operating lease liabilities - current

38,740

35,315

Long-term debt - current

56,378

56,478

Current liabilities

630,055

543,751

Long-term debt - non-current

509,270

533,126

Operating lease liabilities - non-current

128,885

128,793

Other liabilities

105,191

96,093

Deferred income tax

40,078

41,345

Redeemable non-controlling interests

212,814

193,034

Shareholders' equity

768,101

660,398

Total liabilities and equity

2,394,394

2,196,540

Supplemental balance sheet information

Total debt

565,648

589,604

Total debt, net of cash

424,787

405,309

Consolidated Statements of Cash Flows
(in thousands of US dollars)
			Three months ended						Nine months ended
			September 30						September 30
			2021			2020			2021			2020

Cash provided by (used in)

Operating activities
Net earnings		$	52,872		$	40,966		$	120,735		$	76,663
Items not affecting cash:
	Depreciation and amortization		23,978			26,184			70,877			73,179
	Deferred income tax		(995	)		(2,134	)		(2,725	)		(6,339	)
	Other		(3,998	)		2,486			4,000			8,155
			71,857			67,502			192,887			151,658

Changes in non-cash working capital
	Accounts receivable		(41,135	)		(27,384	)		(79,821	)		5,509
	Payables and accruals		22,073			34,295			13,705			52,630
	Other		(24,254	)		(32,494	)		8,493			(14,837	)
Net cash provided by operating activities			28,541			41,919			135,264			194,960

Investing activities
Acquisition of businesses, net of cash acquired			(46,408	)		(64,507	)		(86,011	)		(64,507	)
Disposition of business, net of cash disposed			15,780			-			15,780			-
Purchases of fixed assets			(13,245	)		(8,820	)		(42,348	)		(30,901	)
Other investing activities			(1,836	)		(544	)		(6,112	)		(1,330	)
Net cash used in investing activities			(45,709	)		(73,871	)		(118,691	)		(96,738	)

Financing activities
Increase in long-term debt, net			(6,922	)		(41,863	)		(24,827	)		(163,787	)
Proceeds received on common share issuance			-			-			-			150,008
Purchases of non-controlling interests, net			(276	)		(3,723	)		(5,676	)		(18,790	)
Dividends paid to common shareholders			(7,999	)		(7,168	)		(23,190	)		(20,259	)
Distributions paid to non-controlling interests			(1,057	)		(3,368	)		(8,213	)		(3,418	)
Other financing activities			(1,345	)		5,255			8,516			6,483
Net cash used in financing activities			(17,599	)		(50,867	)		(53,390	)		(49,763	)

Effect of exchange rate changes on cash			(531	)		(101	)		2			(385	)

Increase (decrease) in cash, cash equivalents and restricted cash			(35,298	)		(82,920	)		(36,815	)		48,074

Cash, cash equivalents and restricted cash, beginning of period			207,421			265,285			208,938			134,291

Cash, cash equivalents and restricted cash, end of period		$	172,123		$	182,365		$	172,123		$	182,365

Segmented Results
(in thousands of US dollars)


		FirstService		FirstService
		Residential		Brands		Corporate			Consolidated

Three months ended September 30

2021
	Revenues	$	423,069	$	426,362	$	-		$	849,431
	Adjusted EBITDA		45,083		53,009		(3,896	)		94,196

	Operating earnings		37,998		31,074		(7,545	)		61,527

2020
	Revenues	$	374,756	$	367,176	$	-		$	741,932
	Adjusted EBITDA		41,805		48,678		(1,751	)		88,732

	Operating earnings		35,200		28,451		(4,521	)		59,130



		FirstService		FirstService
		Residential		Brands		Corporate			Consolidated

Nine months ended September 30

2021
	Revenues	$	1,179,770	$	1,212,357	$	-		$	2,392,127
	Adjusted EBITDA		120,984		134,587		(11,727	)		243,844

	Operating earnings		101,646		78,329		(23,183	)		156,792

2020
	Revenues	$	1,052,572	$	944,788	$	-		$	1,997,360
	Adjusted EBITDA		102,940		106,468		(5,580	)		203,828

	Operating earnings		84,604		50,722		(15,309	)		120,017

FirstService Reports Strong Third Quarter Results