FirstService Reports Strong Fourth Quarter and Full Year Results
TORONTO, Feb. 10, 2016 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV) (NASDAQ:FSV) today announced strong fourth quarter and full year results for the year ended December 31, 2015. All amounts are in US dollars.
Revenues for the fourth quarter were $316.1 million, a 12% increase relative to the same quarter in the prior year. Adjusted EBITDA (note 1) was $22.3 million, up 67%, and Adjusted EPS (note 2) was $0.28, up 115% from the prior year quarter. GAAP diluted EPS was $0.09 per share in the quarter, compared to a loss of $0.10 for the same quarter a year ago.
For the year ended December 31, 2015, revenues were $1.26 billion, a 12% increase relative to the prior year. Adjusted EBITDA was $103.0 million, up 37%. Adjusted EPS was $1.20, up 43% versus the prior year of $0.84. GAAP diluted EPS for the year was $0.59, compared to $0.36 in the prior year. The prior year was negatively impacted by higher than expected employee medical benefits expenses in our FirstService Residential operations.
“We completed our inaugural year-end as an independent public company with very strong fourth quarter and annual financial performance for 2015. Both our FirstService Residential and FirstService Brands divisions delivered excellent results, each spurred by double digit top-line growth as well as significant operating margin expansion at FirstService Residential,” said Scott Patterson, Chief Executive Officer of FirstService. “We expect to continue to deliver mid-to-high single digit organic growth across our operations, benefiting from both the attractive macroeconomic fundamentals in our markets as well as our ability to capture market share by leveraging our strengths and competitive advantages.”
About FirstService Corporation
FirstService Corporation is a North American leader in the property services sector serving its customers through two industry leading 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$1.2 billion in annual revenues and has more than 15,000 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. 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 Fourth Quarter Results
FirstService Residential revenues totalled $251.0 million for the fourth quarter, up 10% relative to $227.9 million in the prior year quarter. The revenue increase was comprised of 8% organic growth (9% on a local currency basis) and 2% growth from recent acquisitions. Adjusted EBITDA was $13.7 million, almost double the $6.9 million reported in the prior year period. Fourth quarter performance was driven by broad-based top-line growth across our entire service offering, as well as continuing operating efficiencies. Prior period results were impacted by $3.0 million of incremental employee medical benefits costs.
FirstService Brands revenues totalled $65.1 million, up 20% versus $54.3 million in the prior year period. The increase was comprised of 13% organic growth (14% on a local currency basis) and 7% from recent acquisitions. Organic growth was driven by very strong results at California Closets and our smaller, faster-growing systems. Adjusted EBITDA for the quarter was $11.3 million, up 25% versus the prior year quarter.
Corporate costs were $2.7 million in the fourth quarter, relative to $2.6 million in the prior year period.
Segmented Full Year Results
FirstService Residential revenues were $1.0 billion, up 11% relative to 2014, with the increase comprised of 8% organic growth (9% on a local currency basis) and 3% from acquisitions. Organic growth was primarily driven by competitive contract wins and strong new development business. Adjusted EBITDA was $68.9 million, up 51% versus the prior year, which reflected significant regional operating improvements. Prior year results were impacted by $9.0 million of incremental employee medical benefits costs and $1.9 million of non-recurring expenses related to the down-sizing of our homeowner collection business incurred during the year.
FirstService Brands revenues for the year totalled $246.6 million, up 16% versus the prior year, comprised of organic growth of 10% (11% on a local currency basis) and 6% from acquisitions. Adjusted EBITDA for the year was $43.0 million, up 14% relative to the prior year. Most of the brands benefited from operating leverage on royalties relating to increasing system-wide sales, partially offset by weather-related flat performance at Paul Davis Restoration and investments incurred towards executing on our California Closets centralized manufacturing strategy.
Corporate costs were $8.8 million for the full year, relative to $8.4 million in the prior year.
During the fourth quarter, the Company repurchased 511,594 Subordinate Voting Shares on the open market under its Normal Course Issuer Bid (“NCIB”) at an average price of $38.05 per share. All shares purchased under the NCIB were cancelled. The Company is authorized to repurchase up to an additional 2,628,406 Subordinate Voting Shares under its NCIB, which expires on August 23, 2016.
Conference Call & Presentation
FirstService will be holding a conference call on Wednesday, February 10, 2016 at 11:00 a.m. Eastern Time to discuss results for the fourth quarter and full year. The call will be simultaneously web cast and can be accessed live or after the call at www.firstservice.com in the Investors / Newsroom section.
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 consolidated financial statements and MD&A to be made available on SEDAR at www.sedar.com.
1. Reconciliation of net earnings from continuing operations 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; (vi) stock-based compensation expense; and (vii) spin-off transaction costs. The Company uses adjusted EBITDA to evaluate its own operating performance and its ability to service debt, as well as an integral part of its planning and reporting systems. Additionally, this measure is used in conjunction with discounted cash flow models to determine the Company’s overall enterprise valuation and to evaluate acquisition targets. Adjusted EBITDA is presented as a supplemental measure because the Company believes such measure is useful to investors as a reasonable indicator of operating performance because of the low capital intensity of its service operations. The Company believes 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 from continuing operations or cash flow from operating activities, as determined in accordance with GAAP. The Company’s 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 from continuing operations to adjusted EBITDA appears below.
2. Reconciliation of net earnings from continuing operations and net earnings (loss) per common share from continuing operations to adjusted net earnings and adjusted net earnings per share:
Adjusted EPS is defined as diluted net earnings (loss) per share, adjusted for the effect, after income tax, of: (i) the non-controlling interest redemption increment; (ii) acquisition-related items; (iii) amortization of intangible assets recognized in connection with acquisitions; (iv) stock-based compensation expense; (v) spin-off transaction costs; and (vi) a spin-off tax charge. The Company believes 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 EPS is not a recognized measure of financial performance under GAAP, and should not be considered as a substitute for diluted net earnings per common share from continuing operations, as determined in accordance with GAAP. The Company’s 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 diluted net earnings (loss) per common share from continuing operations to adjusted EPS appears below.
(1) Acquisition-related items include transaction costs, and contingent acquisition consideration fair value adjustments.
COMPANY CONTACTS: D. Scott Patterson President & CEO Jeremy Rakusin Chief Financial Officer (416) 960-9500