Operating highlights:

Three months ended

Nine months ended

September 30

2023

2022

2023

2022

Revenues (millions)

1,117.1

960.5

3,255.3

2,725.7

Adjusted EBITDA (millions) (note 1)

111.9

95.5

312.4

249.2

Adjusted EPS (note 2)

1.25

1.17

3.56

3.02

GAAP Operating Earnings

73.6

62.7

196.8

151.6

GAAP EPS

0.73

0.77

2.10

1.86

TORONTO, Oct. 26, 2023 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV, NASDAQ:FSV) today reported results for its third quarter ended September 30, 2023. All amounts are in US dollars.

Consolidated revenues for the third quarter were $1.12 billion, a 16% increase relative to the same quarter in the prior year, including 10% organic growth. Adjusted EBITDA (note 1) increased 17% to $111.9 million, and Adjusted EPS (note 2) was $1.25, up 7% versus the prior year quarter. During the third quarter, FirstService reported GAAP Operating Earnings of $73.6 million, up from $62.7 million in the prior year period. The GAAP diluted earnings per share was $0.73 in the quarter, compared to $0.77 for the same quarter a year ago.

For the nine months ended September 30, 2023, consolidated revenues were $3.26 billion, a 19% increase relative to the comparable prior year period, Adjusted EBITDA was $312.4 million, up 25%, and Adjusted EPS was $3.56, up 18% versus the prior year period. FirstService's GAAP Operating Earnings were $196.8 million in the current year period, versus $151.6 million in the prior year. The GAAP diluted earnings per share for the nine months year-to-date was $2.10, compared to $1.86 in the prior year period.

"We are pleased to report another very good quarter on the back of continued impressive organic growth across our service lines," said Scott Patterson, Chief Executive Officer of FirstService. "With our financial results thus far in 2023, we are well-positioned to deliver on our expectations of strong performance for the full 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$4.2 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 Quarterly Results

FirstService Residential revenues were $537.8 million for the third quarter, up 12% compared to the prior year quarter, including organic growth of 9%. The growth was driven by both new client contract wins and an expanded offering of services with existing clients across most markets. Adjusted EBITDA for the quarter was $56.6 million, versus $49.6 million in the prior year period. GAAP Operating Earnings were $49.0 million, versus $41.7 million for the third quarter of last year. Operating margins were relatively in line with the prior year period.

FirstService Brands revenues during the third quarter grew to $579.3 million, up 20% relative to the prior year period. Organic growth was 11%, with the balance from recent tuck-under acquisitions. All of our service lines contributed to the revenue growth, highlighted by organic strength at our Century Fire and restoration brands. Adjusted EBITDA for the third quarter was $60.7 million, up from $48.8 million in the prior year period. GAAP Operating Earnings were $33.9 million, versus $28.2 million in the prior year quarter. Margin expansion within the division was due to the operating leverage benefits arising from the strong revenue growth within our restoration and Century Fire service lines.

Corporate costs, as presented in Adjusted EBITDA, were $5.3 million in the third quarter, relative to $3.0 million in the prior year period. On a GAAP basis, corporate costs for the quarter were $9.4 million, relative to $7.1 million in the prior year period, with the year-over-year cost increase primarily driven by the impact of foreign exchange.

Conference Call

FirstService will be holding a conference call on Thursday, October 26, 2023 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/BI79338a5b77274924b0c7ab34bcc28475 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/5xx45775 . 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, 2022 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, 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
	2023			2022		2023			2022

Net earnings	$	45,858		$	41,341	$	123,238		$	100,668
Income tax		16,447			13,830		44,266			34,168
Other expense (income), net		(702	)		779		(5,215	)		566
Interest expense, net		11,956			6,759		34,541			16,166
Operating earnings		73,559			62,709		196,830			151,568
Depreciation and amortization		33,146			26,901		94,062			79,723
Acquisition-related items		1,274			1,774		5,032			3,921
Stock-based compensation expense		3,957			4,117		16,461			13,973
Adjusted EBITDA	$	111,936		$	95,501	$	312,385		$	249,185


A reconciliation of segment operating earnings to segment Adjusted EBITDA appears below.

(in thousands of US$)

Three months ended, September 30, 2023		FirstService			FirstService
		Residential			Brands		Corporate

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	)


Three months ended, September 30, 2022		FirstService			FirstService
		Residential			Brands		Corporate

Operating earnings (loss)	$	41,658		$	28,178	$	(7,127	)
Depreciation and amortization		6,813			20,066		22
Acquisition-related items		1,173			581		20
Stock-based compensation expense		-			-		4,117
Adjusted EBITDA	$	49,644		$	48,825	$	(2,968	)


Nine months ended, September 30, 2023		FirstService			FirstService
		Residential			Brands		Corporate

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	)


Nine months ended, September 30, 2022		FirstService			FirstService
		Residential			Brands		Corporate

Operating earnings (loss)	$	108,311		$	67,598	$	(24,341	)
Depreciation and amortization		21,020			58,635		68
Acquisition-related items		1,191			2,606		124
Stock-based compensation expense		-			-		13,973
Adjusted EBITDA	$	130,522		$	128,839	$	(10,176	)

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
	2023			2022			2023			2022

Net earnings	$	45,858		$	41,341		$	123,238		$	100,668
Non-controlling interest share of earnings		(4,406	)		(2,904	)		(10,215	)		(5,919	)
Acquisition-related items		1,274			1,774			5,032			3,921
Amortization of intangible assets		14,454			12,202			40,296			35,066
Stock-based compensation expense		3,957			4,117			16,461			13,973
Income tax on adjustments		(4,787	)		(4,243	)		(14,757	)		(12,750	)
Non-controlling interest on adjustments		(321	)		(280	)		(852	)		(714	)
Adjusted net earnings	$	56,029		$	52,007		$	159,203		$	134,245

	Three months ended						Nine months ended
(in US$)	September 30						September 30
	2023			2022			2023			2022

Diluted net earnings per share	$	0.73		$	0.77		$	2.10		$	1.86
Non-controlling interest redemption increment		0.20			0.10			0.42			0.27
Acquisition-related items		0.03			0.04			0.11			0.09
Amortization of intangible assets, net of tax		0.23			0.19			0.66			0.57
Stock-based compensation expense, net of tax		0.06			0.07			0.27			0.23
Adjusted earnings per share	$	1.25		$	1.17		$	3.56		$	3.02

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
				2023			2022		2023			2022

Revenues			$	1,117,109		$	960,455	$	3,255,288		$	2,725,734

Cost of revenues				756,561			661,097		2,211,088			1,875,406
Selling, general and administrative expenses				252,569			207,974		748,276			615,116
Depreciation				18,692			14,699		53,766			44,657
Amortization of intangible assets				14,454			12,202		40,296			35,066
Acquisition-related items (1)				1,274			1,774		5,032			3,921
Operating earnings				73,559			62,709		196,830			151,568
Interest expense, net				11,956			6,759		34,541			16,166
Other expense (income), net				(702	)		779		(5,215	)		566
Earnings before income tax				62,305			55,171		167,504			134,836
Income tax				16,447			13,830		44,266			34,168
Net earnings				45,858			41,341		123,238			100,668
Non-controlling interest share of earnings				4,406			2,904		10,215			5,919
Non-controlling interest redemption increment				8,801			4,260		18,894			11,921
Net earnings attributable to Company			$	32,651		$	34,177	$	94,129		$	82,828

Net earnings per common share
	Basic		$	0.73		$	0.77	$	2.11		$	1.87
	Diluted			0.73			0.77		2.10			1.86


Adjusted earnings per share (2)			$	1.25		$	1.17	$	3.56		$	3.02

Weighted average common shares (thousands)
		Basic		44,613			44,201		44,529			44,179
		Diluted		44,853			44,496		44,772			44,511

Notes to Condensed Consolidated Statements of Earnings

(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)

		September 30, 2023		December 31, 2022

Assets
Cash and cash equivalents		$	150,045	$	136,219
Restricted cash			27,841		23,129
Accounts receivable			737,771		635,942
Prepaid and other current assets			341,185		313,582
	Current assets		1,256,842		1,108,872
Other non-current assets			24,106		38,549
Fixed assets			181,344		167,012
Operating lease right-of-use assets			210,799		205,544
Goodwill and intangible assets			1,377,629		1,254,537
	Total assets	$	3,050,720	$	2,774,514


Liabilities and shareholders' equity
Accounts payable and accrued liabilities		$	401,300	$	398,313
Other current liabilities			194,919		153,866
Operating lease liabilities - current			50,341		49,145
Long-term debt - current			37,008		35,665
	Current liabilities		683,568		636,989
Long-term debt - non-current			753,960		698,798
Operating lease liabilities - non-current			175,485		168,557
Other liabilities			87,845		78,178
Deferred income tax			66,567		51,097
Redeemable non-controlling interests			266,105		233,429
Shareholders' equity			1,017,190		907,466
	Total liabilities and equity	$	3,050,720	$	2,774,514


Supplemental balance sheet information
Total debt		$	790,968	$	734,463
Total debt, net of cash			640,923		598,244


Consolidated Statements of Cash Flows
(in thousands of US dollars)
			Three months ended						Nine months ended
			September 30						September 30
			2023			2022			2023			2022

Cash provided by (used in)

Operating activities
Net earnings		$	45,858		$	41,341		$	123,238		$	100,668
Items not affecting cash:
	Depreciation and amortization		33,146			26,901			94,062			79,723
	Deferred income tax		55			(609	)		(636	)		(1,813	)
	Other		5,034			4,819			16,032			16,295
			84,093			72,452			232,696			194,873

Changes in non-cash working capital
	Accounts receivable		45,576			(22,960	)		(76,777	)		(1,226	)
	Payables and accruals		(29,489	)		(4,397	)		(18,497	)		(39,847	)
	Other		(16,215	)		(56,520	)		32,492			(101,925	)
Net cash provided by (used in) operating activities			83,965			(11,425	)		169,914			51,875

Investing activities
Acquisition of businesses, net of cash acquired			(19,366	)		(7,530	)		(112,816	)		(7,530	)
Purchases of fixed assets			(23,465	)		(19,076	)		(67,669	)		(55,454	)
Other investing activities			(1,496	)		(2,032	)		(240	)		(16,001	)
Net cash used in investing activities			(44,327	)		(28,638	)		(180,725	)		(78,985	)

Financing activities
Increase (decrease) in long-term debt, net			(29,196	)		60,089			55,849			65,818
Purchases of non-controlling interests, net			(564	)		(2,158	)		(4,174	)		(21,337	)
Dividends paid to common shareholders			(10,033	)		(8,949	)		(29,013	)		(25,930	)
Distributions paid to non-controlling interests			(2,450	)		(3,649	)		(6,922	)		(6,251	)
Other financing activities			(3,508	)		(2,437	)		13,636			4,172
Net cash provided by (used in) financing activities			(45,751	)		42,896			29,376			16,472

Effect of exchange rate changes on cash			577			1,180			(27	)		1,549

Increase (decrease) in cash, cash equivalents and restricted cash			(5,536	)		4,013			18,538			(9,089	)

Cash, cash equivalents and restricted cash, beginning of period			183,422			181,169			159,348			194,271

Cash, cash equivalents and restricted cash, end of period		$	177,886		$	185,182		$	177,886		$	185,182


Segmented Results
(in thousands of US dollars)

		FirstService		FirstService
		Residential		Brands		Corporate			Consolidated

Three months ended September 30

2023
	Revenues	$	537,828	$	579,281	$	-		$	1,117,109
	Adjusted EBITDA		56,575		60,692		(5,331	)		111,936

	Operating earnings		49,001		33,935		(9,377	)		73,559

2022
	Revenues	$	478,562	$	481,893	$	-		$	960,455
	Adjusted EBITDA		49,644		48,825		(2,968	)		95,501

	Operating earnings		41,658		28,178		(7,127	)		62,709


		FirstService		FirstService
		Residential		Brands		Corporate			Consolidated

Nine months ended September 30

2023
	Revenues	$	1,500,542	$	1,754,746	$	-		$	3,255,288
	Adjusted EBITDA		144,281		181,284		(13,180	)		312,385

	Operating earnings		120,908		105,865		(29,943	)		196,830

2022
	Revenues	$	1,330,134	$	1,395,600	$	-		$	2,725,734
	Adjusted EBITDA		130,522		128,839		(10,176	)		249,185

	Operating earnings		108,311		67,598		(24,341	)		151,568

COMPANY CONTACTS:

D. Scott Patterson

Chief Executive Officer

Jeremy Rakusin

Chief Financial Officer

(416) 960-9566

FirstService Reports Third Quarter 2023 Results