Operating highlights:

Three months ended

Six months ended

June 30

2021

2020

2021

2020

Revenues (millions)

831.6

621.6

1,542.7

1,255.4

Adjusted EBITDA (millions) (note 1)

89.9

71.2

149.6

115.1

Adjusted EPS (note 2)

1.21

0.86

1.87

1.23

GAAP Operating Earnings

61.4

44.9

95.3

60.9

GAAP EPS

0.83

0.64

1.32

0.77

TORONTO, July 27, 2021 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV, NASDAQ:FSV) today reported very strong results for its second quarter ended June 30, 2021. All amounts are in US dollars.

Consolidated revenues for the second quarter were $831.6 million, a 34% increase relative to the same quarter in the prior year, including 25% organic growth. Adjusted EBITDA (note 1) increased 26% to $89.9 million, and Adjusted EPS (note 2) was $1.21, representing 41% growth over the prior year quarter. During the second quarter, FirstService reported GAAP Operating Earnings of $61.4 million, up from $44.9 million in the prior year period. The GAAP diluted earnings per share was $0.83 in the quarter, compared to $0.64 for the same quarter a year ago.

For the six months ended June 30, 2021, consolidated revenues were $1.54 billion, a 23% increase relative to the comparable prior year period, Adjusted EBITDA was $149.6 million, up 30%, and Adjusted EPS was $1.87, an increase of 52% versus the prior year period. FirstService's GAAP Operating Earnings were $95.3 million in the current year period, versus $60.9 million in the prior year. The GAAP diluted earnings per share for the six months year-to-date was $1.32, compared to $0.77 in the prior year period.

"The strong results for this second quarter reflect an acceleration of activity in many of our brands and a resumption of amenity services approaching normalized levels in our property management business," said Scott Patterson, Chief Executive Officer of FirstService. "We are very pleased with our performance in the face of a challenging labour market. Recruitment and adding resources to our talented teams is a focus area for us to further capitalize on the strong market demand," 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$3.0 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". More information is available at www.ﬁrstservice.com.

Segmented Quarterly Results

FirstService Residential revenues were $406.2 million for the second quarter, up 20% compared to the prior year quarter, including organic growth of 16%. The strong revenue performance in the quarter reflected a significant increase in labour-driven services, including our amenity management offering which benefited from the reopening of client facilities in the aftermath of the pandemic. Adjusted EBITDA for the quarter was $46.5 million, versus $37.2 million in the prior year period. GAAP Operating Earnings were $40.4 million, versus $32.0 million for the second quarter of last year. Margin expansion in the division during the quarter was positively impacted by an increase in higher margin ancillary revenues, primarily related to continued strong home resale activity.

FirstService Brands revenues during the second quarter grew to $425.4 million, up 50% relative to the prior year period. Organic growth was 36%, with the balance from recent tuck-under acquisitions. Top-line growth was driven by robust home improvement performance, with strong increases both year-over-year and on a sequential quarterly basis. Growth was also very strong in our restoration operations, which benefited from increased weather-related activity and large loss claims relative to last year. Adjusted EBITDA for the second quarter was $48.2 million, versus $35.8 million in the prior year period. GAAP Operating Earnings were $30.7 million, versus $17.4 million in the prior year quarter. Margin compression resulted from the increased contribution mix of restoration operations to the Brands division for the current quarter, as well as reinvestment in our service lines relative to the pandemic-driven cost reductions in the prior year second quarter.

Corporate costs, as presented in Adjusted EBITDA, were $4.8 million in the second quarter, relative to $1.9 million in the prior year period. On a GAAP basis, corporate costs for the quarter were $9.8 million, relative to $4.4 million in the prior year period. The year-over-year cost increase reflects higher compensation expense compared to the prior year second quarter, which included significant COVID-19 expense reductions.

Conference Call

FirstService will be holding a conference call on Tuesday, July 27, 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.

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						Six months ended
(in thousands of US$)	June 30						June 30
	2021			2020			2021			2020

Net earnings	$	44,020		$	29,917		$	67,863		$	35,697
Income tax		14,280			9,603			22,000			11,149
Other income, net		(888	)		(147	)		(2,756	)		(376	)
Interest expense, net		3,971			5,530			8,158			14,417
Operating earnings		61,383			44,903			95,265			60,887
Depreciation and amortization		23,674			23,488			46,899			46,995
Acquisition-related items		(107	)		397			(206	)		802
Stock-based compensation expense		4,903			2,443			7,690			6,412
Adjusted EBITDA	$	89,853		$	71,231		$	149,648		$	115,096

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						Six months ended
(in thousands of US$)	June 30						June 30
	2021			2020			2021			2020

Net earnings	$	44,020		$	29,917		$	67,863		$	35,697
Non-controlling interest share of earnings		(1,596	)		(3,326	)		(5,363	)		(5,081	)
Acquisition-related items		(107	)		397			(206	)		802
Amortization of intangible assets		10,408			10,864			20,420			22,225
Stock-based compensation expense		4,903			2,443			7,690			6,412
Income tax on adjustments		(3,981	)		(3,460	)		(7,309	)		(7,446	)
Non-controlling interest on adjustments		(177	)		(298	)		(352	)		(520	)
Adjusted net earnings	$	53,470		$	36,537		$	82,743		$	52,089

	Three months ended						Six months ended
(in US$)	June 30						June 30
	2021			2020			2021			2020

Diluted net earnings per share	$	0.83		$	0.64		$	1.32		$	0.77
Non-controlling interest redemption increment		0.13			(0.01	)		0.09			(0.04	)
Acquisition-related items		-			0.01			-			0.02
Amortization of intangible assets, net of tax		0.17			0.18			0.33			0.37
Stock-based compensation expense, net of tax		0.08			0.04			0.13			0.11
Adjusted earnings per share	$	1.21		$	0.86		$	1.87		$	1.23

FIRSTSERVICE CORPORATION
Condensed Consolidated Statements of Earnings
(in thousands of US dollars, except per share amounts)
		Three months						Six months
		ended June 30						ended June 30
		2021			2020			2021			2020

Revenues	$	831,630		$	621,597		$	1,542,696		$	1,255,428

Cost of revenues		554,676			412,010			1,045,488			847,159
Selling, general and administrative expenses		192,004			140,799			355,250			299,585
Depreciation		13,266			12,624			26,479			24,770
Amortization of intangible assets		10,408			10,864			20,420			22,225
Acquisition-related items (1)		(107	)		397			(206	)		802
Operating earnings		61,383			44,903			95,265			60,887
Interest expense, net		3,971			5,530			8,158			14,417
Other income		(888	)		(147	)		(2,756	)		(376	)
Earnings before income tax		58,300			39,520			89,863			46,846
Income tax		14,280			9,603			22,000			11,149
Net earnings		44,020			29,917			67,863			35,697
Non-controlling interest share of earnings		1,596			3,326			5,363			5,081
Non-controlling interest redemption increment		5,725			(531	)		3,910			(1,791	)
Net earnings attributable to Company	$	36,699		$	27,122		$	58,590		$	32,407

Net earnings per common share
Basic	$	0.84		$	0.64		$	1.34		$	0.77
Diluted		0.83			0.64			1.32			0.77


Adjusted earnings per share (2)	$	1.21		$	0.86		$	1.87		$	1.23

Weighted average common shares (thousands)
Basic		43,830			42,397			43,764			41,977
Diluted		44,365			42,710			44,287			42,322

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)

June 30, 2021

December 31, 2020

Assets

Cash and cash equivalents

176,616

184,295

Restricted cash

30,805

24,643

Accounts receivable

466,091

418,890

Prepaid and other current assets

213,533

191,488

Current assets

887,045

819,316

Other non-current assets

16,349

14,970

Fixed assets

133,073

126,569

Operating lease right-of-use assets

156,858

153,185

Goodwill and intangible assets

1,119,131

1,082,500

Total assets

2,312,456

2,196,540

Liabilities and shareholders' equity

Accounts payable and accrued liabilities

364,053

349,692

Other current liabilities

141,297

102,266

Operating lease liabilities - current

37,826

35,315

Long-term debt - current

56,755

56,478

Current liabilities

599,931

543,751

Long-term debt - non-current

515,590

533,126

Operating lease liabilities - non-current

130,098

128,793

Other liabilities

101,606

96,093

Deferred income tax

40,507

41,345

Redeemable non-controlling interests

201,229

193,034

Shareholders' equity

723,495

660,398

Total liabilities and equity

2,312,456

2,196,540

Supplemental balance sheet information

Total debt

572,345

589,604

Total debt, net of cash

395,729

405,309

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

Cash provided by (used in)

Operating activities
Net earnings	$	44,020	$	29,917		$	67,863	$	35,697
Items not affecting cash:
Depreciation and amortization	23,674		23,488		46,899				46,995
Deferred income tax	(981)		(2,149)		(1,730)				(4,205)
Other	5,024		1,845		7,998				5,669
	71,737		53,101		121,030				84,156

Changes in non-cash working capital
Accounts receivable	(46,938)		11,911		(38,686)				32,893
Payables and accruals	18,552		28,814		(8,368)				18,335
Other	36,661		19,396		32,747				17,657
Net cash provided by operating activities		80,012		113,222			106,723		153,041

Investing activities
Acquisition of businesses, net of cash acquired		(37,082)		-			(39,603)		-
Purchases of fixed assets		(15,766)		(6,733)			(29,103)		(22,081)
Other investing activities		(2,210)		(603)			(4,276)		(786)
Net cash used in investing activities		(55,058)		(7,336)			(72,982)		(22,867)

Financing activities
Increase in long-term debt, net		19,748		(105,072)			(17,905)		(121,924)
Proceeds received on common share issuance		-		150,008			-		150,008
Purchases of non-controlling interests, net		(2,009)		(11,316)			(5,400)		(15,067)
Dividends paid to common shareholders		(7,999)		(6,867)			(15,191)		(13,091)
Distributions paid to non-controlling interests		(5,286)		-			(7,156)		(50)
Other financing activities		264		(1,164)			9,861		1,228
Net cash provided by (used in) financing activities		4,718		25,589			(35,791)		1,104

Effect of exchange rate changes on cash		323		626			533		(284)

Increase (decrease) in cash, cash equivalents and restricted cash		29,995		132,101			(1,517)		130,994

Cash, cash equivalents and restricted cash, beginning of period		177,426		133,184			208,938		134,291

Cash, cash equivalents and restricted cash, end of period	$	207,421	$	265,285		$	207,421	$	265,285

Segmented Results
(in thousands of US dollars)


		FirstService		FirstService
		Residential		Brands		Corporate		Consolidated

Three months ended June 30

2021
	Revenues	$	406,221	$	425,409	$	-	$	831,630
	Adjusted EBITDA		46,494		48,171		(4,812)		89,853

	Operating earnings		40,404		30,749		(9,770)		61,383

2020
	Revenues	$	338,153	$	283,444	$	-	$	621,597
	Adjusted EBITDA		37,245		35,844		(1,858)		71,231

	Operating earnings		31,980		17,364		(4,441)		44,903



		FirstService		FirstService
		Residential		Brands		Corporate		Consolidated

Six months ended June 30

2021
	Revenues	$	756,701	$	785,995	$	-	$	1,542,696
	Adjusted EBITDA		75,901		81,578		(7,831)		149,648

	Operating earnings		63,648		47,255		(15,638)		95,265

2020
	Revenues	$	677,816	$	577,612	$	-	$	1,255,428
	Adjusted EBITDA		61,135		57,790		(3,829)		115,096

	Operating earnings		49,404		22,271		(10,788)		60,887

COMPANY CONTACTS:

D. Scott Patterson

President & CEO

Jeremy Rakusin

Chief Financial Officer

(416) 960-9566

FirstService Reports Very Strong Second Quarter Results