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FirstService Reports First Quarter Results



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
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