FirstService Reports Third Quarter 2022 Results

Revenue Growth Remains Strong and Broad-Based

Operating highlights:

 Three months ended Nine months ended
 September 30 September 30
 2022 2021 2022 2021
Revenues (millions)$960.5  $849.4  $2,725.7  $2,392.1 
Adjusted EBITDA (millions) (note 1) 95.5   94.2   249.2   243.8 
Adjusted EPS (note 2) 1.17   1.50(1)  3.02   3.36(1)
GAAP Operating Earnings 62.7   61.5   151.6   156.8 
GAAP EPS 0.77   1.03(1)  1.86   2.35(1)
(1) Includes a $0.21 after-tax gain from the divestiture of a small, non-core operation in the FirstService Residential segment.

TORONTO, Oct. 26, 2022 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX: FSV; NASDAQ: FSV) today reported results for its third quarter ended September 30, 2022. All amounts are in US dollars.

Consolidated revenues for the third quarter were $960.5 million, a 13% increase relative to the same quarter in the prior year, including 8% organic growth. Adjusted EBITDA (note 1) increased 1% to $95.5 million, and Adjusted EPS (note 2) was $1.17, compared to $1.50 in the prior year quarter. During the third quarter, FirstService reported GAAP Operating Earnings of $62.7 million, up from $61.5 million in the prior year period. The GAAP diluted earnings per share was $0.77 in the quarter, compared to $1.03 for the same quarter a year ago.

For the nine months ended September 30, 2022, consolidated revenues were $2.73 billion, a 14% increase relative to the comparable prior year period, Adjusted EBITDA was $249.2 million, up 2%, and Adjusted EPS was $3.02, compared to $3.36 in the prior year period. FirstService’s GAAP Operating Earnings were $151.6 million in the current year period, versus $156.8 million in the prior year. The GAAP diluted earnings per share for the nine months year-to-date was $1.86, compared to $2.35 in the prior year period.

“We delivered yet another quarter of strong double-digit top-line growth, with equal contributions from both of our divisions,” said Scott Patterson, Chief Executive Officer of FirstService. “This broad-based top-line strength has been a consistent driver of our performance during 2022 and we see this momentum continuing as we close out the year,” 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$3.5 billion in annual revenues and has approximately 25,000 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”, and are included in the S&P/TSX 60 index. More information is available at

Segmented Quarterly Results
FirstService Residential revenues were $478.6 million for the third quarter, up 13% compared to the prior year quarter, including organic growth of 8%. New contract wins and increased labour-based services with existing clients drove the strong revenue performance, particularly in our Sun Belt and Mid-Atlantic markets. Adjusted EBITDA for the quarter was $49.6 million, versus $45.1 million in the prior year period. GAAP Operating Earnings were $41.7 million, versus $38.0 million for the third quarter of last year. Operating margins in the division were modestly lower compared to the prior year quarter, due to the higher growth of labour-driven services relative to higher margin ancillaries.

FirstService Brands revenues during the third quarter grew to $481.9 million, up 13% relative to the prior year period. Organic growth was 7%, with the balance from recent tuck-under acquisitions. Revenue growth continued to be exceptionally strong across our home service brands and at Century Fire Protection. Revenues at our restoration operations were relatively in line with the third quarter of 2021, with that prior year quarter benefiting from larger loss claims tied to the significant Hurricane Ida and the Texas Freeze events. Adjusted EBITDA for the third quarter was $48.8 million, versus $53.0 million in the prior year period. GAAP Operating Earnings were $28.2 million, versus $31.1 million in the prior year quarter. Our restoration brands contributed to the margin decline as a result of milder weather-related claims activity combined with ongoing growth investments during the current quarter.

Corporate costs, as presented in Adjusted EBITDA, were $3.0 million in the third quarter, relative to $3.9 million in the prior year period. On a GAAP basis, corporate costs for the quarter were $7.1 million, relative to $7.5 million in the prior year period. The year-over-year cost decrease was primarily driven by lower compensation expense.

Conference Call
FirstService will be holding a conference call on Wednesday, October 26, 2022 at 11:00 a.m. Eastern Time to discuss the quarter’s results. This call is being webcast live at the Company’s website at Participants may register for the call here to receive the dial-in number and their unique PIN. To join the webcast in listen only mode, use this link: . It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call).

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, 2021 under the heading “Risk factors” (a copy of which may be obtained at and Annual Report on Form 40-F filed with the United States Securities and Exchange Commission (a copy of which may be obtained at, 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

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 Nine months ended
(in thousands of US$)September 30 September 30
  2022   2021   2022   2021 
Net earnings$41,341  $52,872  $100,668  $120,735 
Income tax 13,830   17,321   34,168   39,321 
Other expense (income), net 779   (12,539)  566   (15,295)
Interest expense, net 6,759   3,873   16,166   12,031 
Operating earnings 62,709   61,527   151,568   156,792 
Depreciation and amortization 26,901   23,977   79,723   70,876 
Acquisition-related items 1,774   5,152   3,921   4,946 
Stock-based compensation expense 4,117   3,540   13,973   11,230 
Adjusted EBITDA$95,501  $94,196  $249,185  $243,844 

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 Nine months ended
(in thousands of US$)September 30 September 30
  2022   2021   2022   2021 
Net earnings$41,341  $52,872  $100,668  $120,735 
Non-controlling interest share of earnings (2,904)  (1,564)  (5,919)  (6,927)
Acquisition-related items 1,774   5,152   3,921   4,946 
Amortization of intangible assets 12,202   10,567   35,066   30,987 
Stock-based compensation expense 4,117   3,540   13,973   11,230 
Income tax on adjustments (4,243)  (3,668)  (12,750)  (10,977)
Non-controlling interest on adjustments (280)  (404)  (714)  (756)
Adjusted net earnings$52,007  $66,495  $134,245  $149,238 
 Three months ended Nine months ended
(in US$)September 30 September 30
  2022   2021   2022   2021 
Diluted net earnings per share$0.77  $1.03  $1.86  $2.35 
Non-controlling interest redemption increment 0.10   0.13   0.27   0.22 
Acquisition-related items 0.04   0.11   0.09   0.11 
Amortization of intangible assets, net of tax 0.19   0.17   0.57   0.50 
Stock-based compensation expense, net of tax 0.07   0.06   0.23   0.18 
Adjusted earnings per share$1.17  $1.50  $3.02  $3.36 

Condensed Consolidated Statements of Earnings
(in thousands of US dollars, except per share amounts)
  Three months  Nine months
  ended September 30  ended September 30
  2022   2021   2022   2021 
Revenues$960,455  $849,431  $2,725,734  $2,392,127 
Cost of revenues 661,097   579,309   1,875,406   1,624,797 
Selling, general and administrative expenses 207,974   179,466   615,116   534,716 
Depreciation 14,699   13,410   44,657   39,889 
Amortization of intangible assets 12,202   10,567   35,066   30,987 
Acquisition-related items (1) 1,774   5,152   3,921   4,946 
Operating earnings 62,709   61,527   151,568   156,792 
Interest expense, net 6,759   3,873   16,166   12,031 
Other expense (income), net (2) 779   (12,539)  566   (15,295)
Earnings before income tax 55,171   70,193   134,836   160,056 
Income tax 13,830   17,321   34,168   39,321 
Net earnings 41,341   52,872   100,668   120,735 
Non-controlling interest share of earnings 2,904   1,564   5,919   6,927 
Non-controlling interest redemption increment 4,260   5,693   11,921   9,603 
Net earnings attributable to Company$34,177  $45,615  $82,828  $104,205 
Net earnings per common share             
Basic$0.77  $1.04  $1.87  $2.38 
Diluted 0.77   1.03   1.86   2.35 
Adjusted earnings per share (3)$1.17  $1.50  $3.02  $3.36 
Weighted average common shares (thousands)             
Basic 44,201   43,865   44,179   43,798 
Diluted 44,496   44,471   44,511   44,351 

Notes to Condensed Consolidated Statements of Earnings
(1) Acquisition-related items include transaction costs, and contingent acquisition consideration fair value adjustments.
(2) Other income in the prior year quarter includes a $12.5 million pre-tax gain from the divestiture of a small, non-core operation in the FirstService Residential segment.
(3) See definition and reconciliation above.

Condensed Consolidated Balance Sheets     
(in thousands of US dollars)
  September 30, 2022
   December 31, 2021 
Cash and cash equivalents$160,475  $165,665 
Restricted cash 24,707   28,606 
Accounts receivable 556,332   551,564 
Prepaid and other current assets 302,481   218,825 
Current assets 1,043,995   964,660 
Other non-current assets 23,050   21,098 
Fixed assets 154,891   138,066 
Operating lease right-of-use assets 168,515   159,730 
Goodwill and intangible assets 1,207,662   1,225,469 
Total assets$2,598,113  $2,509,023 
Liabilities and shareholders' equity      
Accounts payable and accrued liabilities$366,560  $386,529 
Other current liabilities 139,263   126,460 
Operating lease liabilities - current 47,417   48,047 
Long-term debt - current 35,660   57,436 
Current liabilities 588,900   618,472 
Long-term debt - non-current 681,281   595,368 
Operating lease liabilities - non-current 131,790   122,337 
Other liabilities 73,322   111,919 
Deferred income tax 40,208   42,070 
Redeemable non-controlling interests 210,823   219,135 
Shareholders' equity 871,789   799,722 
Total liabilities and equity$2,598,113  $2,509,023 
Supplemental balance sheet information      
Total debt$716,941  $652,804 
Total debt, net of cash 556,466   487,139 

Consolidated Statements of Cash Flows       
(in thousands of US dollars)
  Three months ended  Nine months ended
  September 30  September 30
  2022   2021   2022   2021 
Cash provided by (used in)           
Operating activities           
Net earnings$41,341  $52,872  $100,668  $120,735 
Items not affecting cash:           
Depreciation and amortization 26,901   23,977   79,723   70,876 
Deferred income tax (609)  (995)  (1,813)  (2,725)
Other 4,819   (3,998)  16,295   4,000 
  72,452   71,856   194,873   192,886 
Changes in non-cash working capital           
Accounts receivable (22,960)  (41,135)  (1,226)  (79,821)
Payables and accruals (4,397)  22,073   (39,847)  13,705 
Other (56,520)  (24,253)  (101,925)  8,494 
Net cash provided by (used in) operating activities (11,425)  28,541   51,875   135,264 
Investing activities           
Acquisition of businesses, net of cash acquired (7,530)  (46,408)  (7,530)  (86,011)
Disposition of business, net of cash disposed -   15,780   -   15,780 
Purchases of fixed assets (19,076)  (13,245)  (55,454)  (42,348)
Other investing activities (2,032)  (1,836)  (16,001)  (6,112)
Net cash used in investing activities (28,638)  (45,709)  (78,985)  (118,691)
Financing activities           
Increase (decrease) in long-term debt, net 60,089   (6,922)  65,818   (24,827)
Purchases of non-controlling interests, net (2,158)  (276)  (21,337)  (5,676)
Financing fees paid (135)  -   (2,468)  - 
Dividends paid to common shareholders (8,949)  (7,999)  (25,930)  (23,190)
Distributions paid to non-controlling interests (3,649)  (1,057)  (6,251)  (8,213)
Other financing activities (2,302)  (1,345)  6,640   8,516 
Net cash provided by (used in) financing activities 42,896   (17,599)  16,472   (53,390)
Effect of exchange rate changes on cash 1,180   (531)  1,549   2 
Increase (decrease) in cash, cash equivalents and restricted cash 4,013   (35,298)  (9,089)  (36,815)
Cash, cash equivalents and restricted cash, beginning of period 181,169   207,421   194,271   208,938 
Cash, cash equivalents and restricted cash, end of period$185,182  $172,123  $185,182  $172,123 

Segmented Results
(in thousands of US dollars)
  FirstService   FirstService         
  Residential   Brands   Corporate   Consolidated 
Three months ended September 30             
Revenues$478,562  $481,893  $-  $960,455 
Adjusted EBITDA 49,644   48,825   (2,968)  95,501 
Operating earnings 41,658   28,178   (7,127)  62,709 
Revenues$423,069  $426,362  $-  $849,431 
Adjusted EBITDA 45,083   53,009   (3,896)  94,196 
Operating earnings 37,998   31,074   (7,545)  61,527 
  FirstService   FirstService         
  Residential   Brands   Corporate   Consolidated 
Nine months ended September 30               
Revenues$1,330,134  $1,395,600  $-  $2,725,734 
Adjusted EBITDA 130,522   128,839   (10,176)  249,185 
Operating earnings 108,311   67,598   (24,341)  151,568 
Revenues$1,179,770  $1,212,357  $-  $2,392,127 
Adjusted EBITDA 120,984   134,587   (11,727)  243,844 
Operating earnings 101,646   78,329   (23,183)  156,792 


D. Scott Patterson
Chief Executive Officer

Jeremy Rakusin
Chief Financial Officer

(416) 960-9566