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Operating highlights: |
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| Three months | ||
| ended March 31 | ||
| 2013 | 2012 | |
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|
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| 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, net of cash | 342,045 | 228,521 |
| 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 (loss) | (6,575) | 7,751 | (2,530) | (3,981) | (5,335) |
| 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 (loss) | (14,369) | 8,068 | 604 | (3,502) | (9,199) |