FirstService Reports First Quarter Results Colliers International Continues to Deliver Strong Growth in Revenues and Profits Operating highlights: Three months ended March 31 2013 2012 Revenues (millions) $ 498.1 $ 490.1 Adjusted EBITDA (millions) (note 1) 10.6 10.8 Adjusted EPS (note 2) (0.20) (0.10) TORONTO, April 26, 2013 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV) (Nasdaq:FSRV) (TSX:FSV.PR.U) today reported results for its first quarter ended March 31, 2013. All amounts are in US dollars. Revenues for the first quarter were $498.1 million, a 2% increase relative to the same quarter in the prior year, Adjusted EBITDA (note 1) was $10.6 million, down from $10.8 million and Adjusted EPS (note 2) was a loss of $0.20, versus a loss of $0.10 reported in the prior year quarter. GAAP EPS was a loss of $0.55 per share in the quarter, flat with the same quarter a year ago. "Results for the seasonally slow first quarter were better than anticipated as revenues at Colliers International, FirstService Residential and FirstService Brands were all up strongly versus the prior year," said Jay S. Hennick, Founder and Chief Executive Officer of FirstService. As expected, results from Field Asset Services were down considerably from the prior year quarter due to sharp declines in foreclosure volumes associated with the recovery in the US economy. Colliers International had much stronger bottom line performance reflecting market share gains and continued growth through multi-market assignments, corporate services and investment and capital market activities," he concluded. On March 28, 2013, FirstService announced the acquisition of Colliers Germany, adding market-leading players in Munich, Stuttgart and Berlin and oversight of important relationships with affiliates in Dusseldorf and Frankfurt. The acquisition further strengthens Colliers' real estate services platform in Europe and complements the acquisition of Colliers UK last year. On April 3, 2013, FirstService also announced plans to simplify its capital structure and initiate a dividend on its Subordinate Voting Shares and Multiple Voting Shares (together, the "Common Shares"). The plan involves the elimination of its 7% Cumulative Preference Shares, Series 1 (the "Preferred Shares") on May 3, 2013 by way of a partial redemption immediately followed by a conversion of all remaining Preferred Shares into Subordinate Voting Shares. The Company expects to pay $39.5 million in cash on redemption, and issue approximately 2.9 million Subordinate Voting Shares from treasury on the conversion. Subject to the elimination of the Preferred Shares, the Company expects to pay its first quarterly Common Share dividend of $0.10 on or about June 30, 2013. 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 2.3 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 Quarterly Results Commercial Real Estate Services revenues totalled $247.1 million for the first quarter, up 16% relative to the prior year quarter. Internal growth of 5% was primarily attributable to strong revenue growth in the Asia Pacific region, particularly in Australia, with the balance of growth coming from acquisitions completed within the past year. Adjusted EBITDA for the seasonally slow quarter was $2.6 million, versus a loss of $2.0 million reported in the prior year quarter and was positively impacted by operating leverage from revenue growth through multi-market assignments, corporate services and investment and capital market activities. Residential Property Management revenues were $206.6 million for the first quarter, up 8% relative to the prior year quarter. Revenue growth was comprised of 7% internal growth due to new property management contract wins, with the balance from acquisitions completed within the past year. Adjusted EBITDA for the quarter was $10.9 million, versus $12.2 million in the prior year period, with the decline attributable to a reduction in higher-margin ancillary services revenues, as well as costs incurred in connection with rebranding and information technology investments. Property Services revenues totalled $44.3 million, versus $84.8 million in the prior year period. FirstService Brands generated $26.8 million of revenues, up 13% due to improvements in franchisee productivity, while Field Asset Services revenues were down due to a significant decline in volumes of distressed properties under management. Adjusted EBITDA for the quarter was a loss of $0.4 million, versus a profit of $2.9 million in the prior year quarter. FirstService Brands generated a loss of $0.2 million in this seasonally slow quarter, an improvement from the loss of $0.8 million generated in the prior year period, while Field Asset Services results were impacted by the revenue decline. Corporate costs were $2.6 million in the first quarter, up from $2.2 million in the prior year period and were impacted by deal costs for an acquisition that was ultimately not completed. Conference Call FirstService will be holding a conference call on Friday, April 26, 2013 at 11:00 a.m. Eastern Time to discuss results for the first 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 quarterly financial statements and MD&A to be made available on SEDAR at www.sedar.com. Notes 1. Reconciliation of net earnings (loss) to Adjusted EBITDA: Adjusted EBITDA is defined as net earnings (loss), adjusted to exclude: (i) income tax; (ii) other (income) expense; (iii) interest expense; (iv) depreciation and amortization; (v) acquisition-related items; and (vi) stock-based compensation expense. The Company uses Adjusted EBITDA to evaluate its own operating performance, its ability to service debt, and 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 a measure is useful to investors as a reasonable indicator of operating performance, due to the low capital intensity of the Company's 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 loss to Adjusted EBITDA appears below. Three months ended (in thousands of US dollars) March 31 2013 2012 Net loss $ (8,219) $ (10,837) Income tax (2,054) (2,706) Other (income) expense (234) (163) Interest expense, net 5,172 4,507 Operating earnings (5,335) (9,199) Depreciation and amortization 13,498 12,469 Acquisition-related items 2,206 6,553 Stock-based compensation expense 185 1,008 Adjusted EBITDA $ 10,554 $ 10,831 2. Reconciliation of net earnings (loss) and diluted net earnings (loss) per common share to adjusted net earnings (loss) and adjusted earnings (loss) per common share: Adjusted earnings (loss) per 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 expense related to intangible assets recognized in connection with acquisitions and (iv) stock-based compensation expense. 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 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 net loss attributable to common shareholders to adjusted net earnings (loss) and of diluted net earnings (loss) per common share to adjusted earnings (loss) per common share appears below. Three months ended (in thousands of US dollars) March 31 2013 2012 Net loss attributable to common shareholders $ (16,527) $ (16,407) Non-controlling interest redemption increment 5,580 3,633 Acquisition-related items 2,206 6,553 Amortization of intangible assets 4,568 4,798 Stock-based compensation expense 185 1,008 Income tax on adjustments (2,039) (2,093) Non-controlling interest on adjustments (101) (524) Adjusted net loss $ (6,128) $ (3,032) Three months ended (in US dollars) March 31 2013 2012 Net loss per common share $ (0.55) $(0.55) Non-controlling interest redemption increment 0.19 0.12 Acquisition-related items 0.07 0.21 Amortization of intangible assets, net of tax 0.09 0.10 Stock-based compensation expense, net of tax -- 0.02 Adjusted loss per common share $ (0.20) $ (0.10) FIRSTSERVICE CORPORATION Condensed Consolidated Statements of Earnings (Loss) (in thousands of US dollars, except per share amounts) Three months ended March 31 (unaudited) 2013 2012 Revenues $ 498,052 $ 490,056 Cost of revenues 339,877 331,145 Selling, general and administrative expenses 147,806 149,088 Depreciation 8,930 7,671 Amortization of intangible assets 4,568 4,798 Acquisition-related items (1) 2,206 6,553 Operating loss (5,335) (9,199) Interest expense, net 5,172 4,507 Other (income) expense (234) (163) Loss before income tax (10,273) (13,543) Income tax (2,054) (2,706) Net loss (8,219) (10,837) Non-controlling interest share of earnings 440 (523) Non-controlling interest redemption increment 5,580 3,633 Net loss attributable to Company (14,239) (13,947) Preferred share dividends 2,288 2,460 Net loss attributable to common shareholders $ (16,527) $ (16,407) Net loss per common share Basic $ (0.55) $ (0.55) Diluted $ (0.55) $ (0.55) Adjusted loss per common share (2) $ (0.20) $ (0.10) Weighted average common shares (thousands) Basic 30,101 29,983 Diluted 30,448 30,384 Notes to Condensed Consolidated Statements of Earnings (Loss) (1) Acquisition-related items include contingent acquisition consideration fair value adjustments, contingent acquisition consideration-related compensation expense, and transaction costs. In the quarter ended March 31, 2012, these amounts included transaction costs of $2,075 and a reclassification of accumulated other comprehensive earnings of $2,553, both related to Colliers International UK. (2)See definition and reconciliation above. Condensed Consolidated Balance Sheets (in thousands of US dollars) (unaudited) March 31, 2013 December 31, 2012 Assets Cash and cash equivalents $ 87,558 $ 108,684 Restricted cash 6,268 3,649 Accounts receivable 337,529 328,455 Prepaid and other current assets 47,833 51,618 Deferred income tax 18,133 18,135 Current assets 497,321 510,541 Other non-current assets 22,403 20,300 Fixed assets 105,115 107,011 Deferred income tax 106,959 99,464 Goodwill and intangible assets 659,076 580,594 Total assets $ 1,390,874 $ 1,317,910 Liabilities and shareholders' equity Accounts payable and accrued liabilities $ 368,337 $ 401,805 Other current liabilities 26,780 27,054 Long-term debt - current 36,798 39,038 Current liabilities 431,915 467,897 Long-term debt - non-current 392,805 298,167 Convertible unsecured subordinated debentures 76,992 77,000 Other liabilities 33,711 48,259 Deferred income tax 49,618 34,683 Non-controlling interests 180,647 151,969 Shareholders' equity 225,186 239,935 Total liabilities and equity $ 1,390,874 $ 1,317,910 Supplemental balance sheet information Total debt $ 506,595 $ 414,205 Total debt excluding convertible debentures 429,603 337,205 Total debt, net of cash 419,037 305,521 Total debt excluding convertible debentures, 342,045 228,521 net of cash Condensed Consolidated Statements of Cash Flows (in thousands of US dollars) Three months ended March 31 (unaudited) 2013 2012 Cash provided by (used in) Operating activities Net loss $ (8,219) $ (10,837) Items not affecting cash: Depreciation and amortization 13,498 12,469 Deferred income tax (5,005) (7,197) Other 1,222 992 1,496 (4,573) Changes in non cash working capital Accounts receivable 7,003 26,430 Payables and accruals (83,535) (72,585) Other 8,235 (3,577) Net cash used in operating activities (66,801) (54,305) Investing activities Acquisition of businesses, net of cash acquired (27,189) (12,651) Purchases of fixed assets (5,661) (6,870) Other investing activities (4,057) (128) Net cash used in investing activities (36,907) (19,649) Financing activities Increase in long-term debt, net 92,398 55,934 Purchases of non-controlling interests (989) 961 Dividends paid to preferred shareholders (2,288) (2,460) Other financing activities (5,340) (11,072) Net cash provided by financing activities 83,781 43,363 Effect of exchange rate changes on cash (1,199) 789 Decrease in cash and cash equivalents (21,126) (29,802) Cash and cash equivalents, beginning of period 108,684 97,799 Cash and cash equivalents, end of period $87,558 $ 67,997 Segmented Revenues, Adjusted EBITDA and Operating Earnings (Loss) (in thousands of US dollars) Commercial Residential Real Estate Property Property (unaudited) Services Management Services Corporate Consolidated Three months ended March 31 2013 Revenues $ 247,089 $ 206,571 $ 44,336 $ 56 $498,052 Adjusted EBITDA 2,617 10,935 (356) (2,642) 10,554 Operating earnings (6,575) 7,751 (2,530) (3,981) (5,335) (loss) 2012 Revenues $ 213,270 $ 191,889 $ 84,846 $ 51 $ 490,056 Adjusted EBITDA (1,968) 12,158 2,874 (2,233) 10,831 Operating earnings (14,369) 8,068 604 (3,502) (9,199) (loss) CONTACT: Jay S. Hennick Founder & CEO D. Scott Patterson President & COO John B. Friedrichsen Senior Vice President & CFO (416) 960-9500
FirstService Reports First Quarter Results
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