FirstService Reports Strong Fourth Quarter Results

FirstService Reports Strong Fourth Quarter Results

Colliers International Posts Record Growth in Revenue and EBITDA

Operating highlights:

                                   Three months ended Year ended
                                    December 31        December 31
                                   2012     2011    2012      2011
                                                              
Revenues (millions)                 $632.5  $594.9 $2,305.5 $2,224.2
Adjusted EBITDA (millions) (note 1) 54.9    44.5   155.7    161.6
Adjusted EPS (note 2)               0.68    0.52   1.62     1.81

TORONTO, Feb. 13, 2013 (GLOBE NEWSWIRE) -- FirstService Corporation
(TSX:FSV)(Nasdaq:FSRV)(TSX:FSV.PR.U) today reported results for its fourth
quarter and year ended December 31, 2012. All amounts are in US dollars.

Revenues for the fourth quarter were $632.5 million, a 6% increase relative to
the same quarter in the prior year, Adjusted EBITDA (note 1) was $54.9
million, up 23%, and Adjusted EPS (note 2) was $0.68, up 31% from the prior
year quarter. GAAP EPS was $0.14 per share in the quarter, compared to $2.01
for the same quarter a year ago. The GAAP EPS for the prior year quarter was
significantly impacted by the reversal of a deferred income tax valuation
allowance amounting to $1.80 per share; excluding this, GAAP EPS would have
been $0.21.

For the year ended December 31, 2012, revenues were $2.31 billion, a 4%
increase relative to the prior year, while Adjusted EBITDA was $155.7 million,
down 4% from the prior year. Adjusted EPS was $1.62, down 10% versus the prior
year. GAAP EPS for the year was a loss of $0.12, compared to $2.03 in the
prior year. The GAAP EPS reported in the prior year was significantly impacted
by the reversal of a deferred income tax valuation allowance amounting to
$1.46 per share; excluding this, GAAP EPS would have been $0.57.

"FirstService reported strong fourth quarter results, with revenues for the
full year hitting a record of $2.3 billion on the basis of strong performances
from each of Colliers International, FirstService Residential and FS Brands,"
said Jay S. Hennick, Founder and Chief Executive Officer of FirstService.
"Unfortunately, earnings declined from the previous year as results from Field
Asset Services, our property preservation and distressed asset management
operation, fell off significantly due to challenging market conditions. Strong
results from Field Asset Services during the recent financial crisis together
with solid results from FirstService Residential and FS Brands allowed us to
strategically invest in our Colliers International commercial real estate
business at the right time in the cycle and those investments are beginning to
pay off handsomely for FirstService shareholders," he concluded.

About FirstService Corporation

FirstService Corporation is a global leader in the rapidly growing real estate
services sector, one of the largest markets in the world. As one of the
largest property managers in the world, FirstService manages more than 2.5
billion square feet of residential and commercial properties through its three
industry-leading service platforms: Colliers International, one of the largest
global players in commercial real estate services; FirstService Residential,
North America's largest manager of residential communities; and the Property
Services division, one of North America's largest providers of essential
property services delivered through company-owned operations, franchise
systems and contractor networks.

FirstService generates over US$2.3 billion in annual revenues and has more
than 23,000 employees worldwide. More information about FirstService is
available at www.firstservice.com

Segmented Fourth Quarter Results

Commercial Real Estate Services revenues totalled $369.9 million for the
fourth quarter, up 23% relative to the prior year quarter. Revenue growth was
comprised of 10% internal growth measured in local currencies, a 1% favourable
impact from foreign currency translation and 12% growth from recent
acquisitions. Internal growth was led by the Americas and Asia Pacific
regions, both of which had solid year over year growth in brokerage, property
management and project management activity. Adjusted EBITDA was $42.8 million,
up 46% versus the prior year quarter. The Adjusted EBITDA margin was 11.6%, up
190 basis points over the prior year period.

Residential Property Management revenues totalled $206.6 million for the
fourth quarter, up 10% relative to the prior year quarter. Revenue growth was
comprised of 9% internal growth from new property management contract wins and
1% from recent acquisitions. Adjusted EBITDA was $11.8 million, down 2% versus
the prior year period.

Property Services revenues totalled $56.0 million, down 48% from the prior
year period. Adjusted EBITDA for the quarter was $3.2 million, down $6.5
million or 67% versus the prior year quarter. The reductions in revenues and
Adjusted EBITDA were attributable to a significant decline in property
preservation and distressed asset management volumes.

Corporate costs were $2.8 million in the fourth quarter, relative to $6.5
million in the prior year period, primarily as a result of the elimination of
performance-based compensation costs in accordance with the Company's
performance-based executive compensation plan.

Segmented Full Year Results

Commercial Real Estate Services annual revenues for 2012 totalled $1.17
billion, up 18% relative to the prior year. Revenue growth was comprised of 9%
internal growth measured in local currencies, a 1% unfavourable impact from
foreign currency translation and 10% growth from recent acquisitions. Adjusted
EBITDA for 2012 was $78.9 million, up 52% versus the prior year. The Adjusted
EBITDA margin increased 150 basis points relative to the prior year, primarily
due to increased broker productivity in the Americas region and improved
back-office efficiencies.

Full year Residential Property Management revenues were $839.2 million, up 10%
relative to 2011.Revenue growth was comprised of 7% internal growth from new
property management contact wins, while acquisitions accounted for 3% of
revenue growth. Adjusted EBITDA was $64.3 million, up 3% versus the prior
year.

Property Services revenues for the full year totalled $295.7 million, down 37%
versus the prior year. Adjusted EBITDA for the year was $24.0 million, down
$37.7 million or 61% relative to the prior year, as a result of a significant
decline in volumes in the property preservation and distressed asset
management operations as well as one-time costs incurred to downsize and align
the cost structure to current revenue run rates.

Corporate costs were $11.6 million for the full year, relative to $14.4
million in the prior year. The current year's results were positively impacted
by the elimination of performance-based executive compensation costs in
accordance with the Company's performance-based executive compensation plan.

Stock Repurchases

During the fourth quarter of 2012, the Company purchased 35,000 Subordinate
Voting Shares and 146,000 Preferred Shares on the open market under its Normal
Course Issuer Bid ("NCIB") at an average price of $28.66 per share and $25.23
per share, respectively. The Company is authorized to repurchase up to an
additional 2,515,000 Subordinate Voting Shares and 500 Preferred Shares under
its NCIB, which expires on June 6, 2013.

Conference Call

FirstService will be holding a conference call on Wednesday, February 13, 2013
at 11:00 a.m. Eastern Time to discuss results for the fourth quarter.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.

Forward-looking Statements

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.

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; (vi) stock-based compensation
expense; and (vii) reorganization charges. 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 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 to Adjusted EBITDA appears below.

(in thousands of US$)            Three months ended  Twelve months ended
                                 December 31         December 31
                                2012     2011     2012      2011
                                                            
Net earnings                     $17,548 $78,327 $40,933  $101,743
Income tax                       9,034    (56,329) 20,304    (26,807)
Other expense (income)           (690)    2,778    (2,441)   6,317
Interest expense, net            5,079    4,056    19,601    16,808
Operating earnings               30,971   28,832   78,397    98,061
Depreciation and amortization    16,067   12,718   53,502    50,926
Acquisition-related items        2,856    1,701    16,326    4,649
Stock-based compensation expense 4,985    349      7,435     2,335
Reorganization charge            --      885      --       5,590
Adjusted EBITDA                  $54,879 $44,485 $155,660 $161,561

2. Reconciliation of net earnings (loss) attributable to common shareholders
and net earnings (loss) per common share to adjusted net earnings and adjusted
net earnings per common share:

Adjusted earnings per common share is defined as diluted net earnings (loss)
per common 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) impairment loss on
equity investments; (vi) reorganization charges; and (vii) deferred income tax
asset valuation allowances related to tax loss carry-forwards. 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 earnings per common share 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, 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 to adjusted earnings per common share appears below.

(in thousands of US$)                 Three months ended  Twelve months ended
                                      December 31         December 31
                                     2012     2011     2012      2011
                                                                 
Net earnings (loss) attributable to   $4,294  $65,595 $(3,753) $64,139
common shareholders
Non-controlling interest redemption   7,290    1,246    21,131    12,941
increment
Acquisition-related items             2,856    1,701    16,326    4,649
Amortization of intangible assets     4,658    4,597    18,690    20,265
Stock-based compensation expense      4,986    349      7,435     2,335
Impairment loss on equity investment  --      3,092    --       3,092
Reorganization charge                 --      885      --       5,590
Income tax on adjustments             (3,212)  (2,089)  (9,135)   (9,764)
Deferred income tax asset valuation   --      (63,193) --       (49,745)
allowance
Non-controlling interest on           (283)    3,630    (1,368)   1,850
adjustments
Adjusted net earnings                 $20,589 $15,813 $49,326  $55,352
                                                                 
                                                                 
(in US$)                              Three months ended  Twelve months ended
                                      December 31         December 31
                                     2012     2011     2012      2011
                                                                 
                                                                 
Diluted net earnings (loss) per       $0.14   $2.01   $(0.12)  $2.03
common share
Non-controlling interest redemption   0.24     0.04     0.69      0.42
increment
Acquisition-related items             0.09     0.05     0.51      0.14
Amortization of intangible assets,    0.10     0.09     0.38      0.41
net of tax
Stock-based compensation expense, net 0.11     0.01     0.16      0.05
of tax
Impairment loss on equity investment  --      0.10     --       0.10
Reorganization charge, net of tax     --      0.02     --       0.12
Deferred income tax asset valuation   --      (1.80)   --       (1.46)
allowance
Adjusted net earnings per common      $0.68   $0.52   $1.62    $1.81
share



FIRSTSERVICE CORPORATION
Condensed Consolidated Statements of Earnings (Loss)
(in thousands of US dollars, except per share amounts)
                                                    
                           Three months              Twelve months
                            ended December 31         ended December 31
(unaudited)                2012         2011       2012         2011
                                                                
Revenues                    $632,534    $594,893  $ 2,305,537  $
                                                                    2,224,171
                                                                
Cost of revenues           410,674       398,566     1,518,034     1,436,214
Selling, general and        171,966       153,076     639,278       634,321
administrative expenses
Depreciation               11,409        8,121       34,812        30,661
Amortization of intangible  4,658         4,597       18,690        20,265
assets
Acquisition-related items   2,856         1,701       16,326        4,649
(1)
Operating earnings          30,971        28,832      78,397        98,061
Interest expense, net      5,079        4,056      19,601       16,808
Other expense (income)     (690)        2,778      (2,441)      6,317
Earnings before income tax 26,582       21,998     61,237       74,936
Income tax (2)             9,034        (56,329)   20,304       (26,807)
Net earnings                17,548       78,327     40,933       101,743
Non-controlling interest    3,676        9,026      13,952       14,692
share of earnings
Non-controlling interest    7,290        1,246      21,131       12,941
redemption increment
Net earnings attributable   6,582        68,055     5,850        74,110
to Company
Preferred share dividends  2,288        2,460      9,603        9,971
Net earnings (loss)
attributable to common      $4,294      $65,595   $(3,753)    $64,139
shareholders
                                                                
Net earnings (loss) per                                          
common share
                                                                
Basic                       $0.14       $2.19     $(0.12)     $2.13
                                                                
Diluted (3)                 $0.14       $2.01     $(0.12)     $2.03
                                                                
Adjusted diluted net
earnings per common share   $0.68       $0.52     $1.62       $1.81
(4)
                                                                
Weighted average common                                          
shares (thousands)
Basic                      30,064        29,941      30,026        30,094
Diluted (5)                30,419        30,298      30,376        30,551
                                                                
Notes to Condensed Consolidated Statements of Earnings
(1) Acquisition-related items include contingent acquisition consideration
fair value adjustments, contingent acquisition consideration-related
compensation expense, settlements of contingent liabilities of acquired
entities initially recognized at the acquisition date and transaction costs.
(2) Income tax expense for the three months ended December 31, 2011 includes a
$63,193 reversal of valuation allowance related to deferred income tax assets;
income tax expense for the year ended December 31, 2011 includes a $49,745
valuation allowance reversal.
(3) The calculation of diluted net earnings per common share is impacted by
the potentially dilutive effect of convertible debentures, which are
convertible into common shares. For the three months ended December 31, 2012,
the numerator of the calculation is increased by nil (2011 - $901) and the
denominator is increased by nil (2011 - 2,750 shares). For the year ended
December 31, 2012, the numerator of the calculation is increased by nil (2011
- $3,604) and the denominator is increased by nil (2011 - 2,750 shares).
(4) See definition and reconciliation above.
(5) Excluding the potentially dilutive effect of convertible debentures (see
note 3 above).



Condensed Consolidated Balance Sheets
(in thousands of US dollars)
                                                           
(unaudited)                               December 31, 2012 December 31, 2011
                                                           
Assets                                                     
Cash and cash equivalents                 $108,684        $97,799
Restricted cash                           3,649             4,493
Accounts receivable                       328,455           286,019
Other current assets                      51,618            45,366
Deferred income tax                       18,135            16,527
Current assets                             510,541           450,204
Other non-current assets                  20,300            17,028
Deferred income tax                       99,464            87,940
Fixed assets                              107,011           94,150
Goodwill and intangible assets            580,594           584,396
Total assets                               $1,317,910      $1,233,718
                                                           
Liabilities and shareholders' equity                       
Accounts payable and accrued liabilities  $401,805        $354,220
Other current liabilities                 27,054            23,657
Long-term debt - current                  39,038            216,373
Current liabilities                        467,897           594,250
Long-term debt - non-current              298,167           100,042
Convertible debentures                    77,000            77,000
Other liabilities                         48,259            39,243
Deferred income tax                       34,683            38,160
Non-controlling interests                 151,969           141,404
Shareholders' equity                      239,935           243,619
Total liabilities and equity               $1,317,910      $1,233,718
                                                           
Supplemental balance sheet information                      
Total debt                                $414,205        $393,415
Total debt excluding convertible           337,205           316,415
debentures
Total debt, net of cash                   305,521           295,616
Total debt excluding convertible           228,521           218,616
debentures, net of cash



Consolidated Statements of Cash Flows
(in thousands of US dollars)
                                                       
                                   Three months ended   Twelve months ended
                                    December 31          December 31
(unaudited)                        2012      2011     2012      2011
                                                                
Cash provided by (used in)                                      
                                                                
Operating activities                                            
Net earnings                       $17,548  $78,327 $40,933  $101,743
Items not affecting cash:                                       
Depreciation and amortization      16,067    12,718   53,502    50,926
Deferred income tax                (1,186)   (64,354) (18,660)  (64,512)
Other                              1,123     3,646    5,062     9,623
                                   33,552    30,337   80,837    97,780
                                                                
Changes in operating assets and     50,595    27,225   22,154    (17,566)
liabilities
Net cash provided by operating      84,147    57,562   102,991   80,214
activities
                                                                
Investing activities                                            
Acquisition of businesses, net of   (4,774)   (911)    (19,153)  (22,975)
cash acquired
Purchases of fixed assets          (21,774)  (13,360) (44,395)  (37,400)
Other investing activities         1,120     2,322    1,694     1,529
Net cash used in investing          (25,428)  (11,949) (61,854)  (58,846)
activities
                                                                
Financing activities                                            
Increase in long-term debt, net    (19,447)  3,525    19,235    73,962
Purchases of non-controlling        (2,265)   (20,161) (6,432)   (55,607)
interests (net)
Dividends paid to preferred         (2,288)   (2,460)  (9,603)   (9,971)
shareholders
Other financing activities         (10,853)  (4,885)  (35,339)  (30,639)
Net cash used in financing          (34,853)  (23,981) (32,139)  (22,255)
activities
                                                                
Effect of exchange rate changes on  497       (1,517)  1,887     (1,673)
cash
                                                                
Increase (decrease) in cash and     24,363    20,115   10,885    (2,560)
cash equivalents
                                                                
Cash and cash equivalents,          84,321    77,684   97,799    100,359
beginning of period
                                                                
Cash and cash equivalents, end of   $108,684 $97,799 $108,684 $97,799
period



Segmented Revenues, Adjusted EBITDA and Operating Earnings
(in thousands of US dollars)
                                                             
                     Commercial  Residential Property
(unaudited)          Real Estate Property    Services   Corporate Consolidated
                     Services    Management
                                                             
Three months ended                                            
December 31
                                                             
2012                                                         
Revenues             $369,873  $206,630  $55,975  $56     $632,534
Adjusted EBITDA      42,754     11,757     3,161     (2,793)  54,879
Operating earnings   28,588     6,526      (620)     (3,523)  30,971
                                                             
2011                                                         
Revenues             $300,367  $187,883  $106,577 $66     $594,893
Adjusted EBITDA      29,243     12,050     9,704     (6,512)  44,485
Operating earnings   20,400     8,943      6,359     (6,870)  28,832
                                                             
                     Commercial  Residential Property
                    Real Estate Property    Services   Corporate Consolidated
                     Services    Management
                                                             
Twelve months ended                                           
December 31
                                                             
2012                                                         
Revenues             $1,170,427 $839,167  $295,725 $218    $2,305,537
Adjusted EBITDA      78,949     64,282     24,046    (11,617) 155,660
Operating earnings   33,796     45,870     13,744    (15,013) 78,397
                                                             
2011                                                         
Revenues             $994,579  $760,501  $468,903 $188    $2,224,171
Adjusted EBITDA      51,900     62,320     61,703    (14,362) 161,561
Operating earnings   22,379     47,202     45,421    (16,941) 98,061

CONTACT: Jay S. Hennick
         Founder & CEO
        
         D. Scott Patterson
         President & COO
        
         John B. Friedrichsen
         Senior Vice President & CFO
        
         (416) 960-9500
 
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