GlobeNewswire Inc | Feb 9, 2021 07:30AM EST

February 09, 2021

Strong Organic Growth Supported by Robust Restoration Activity

Operating highlights:

Three months ended Year ended December 31 December 31 2020 2019 2020 2019 Revenues $ 775.1 $ 675.6 $ 2,772.4 $ 2,407.4 (millions)Adjusted EBITDA(millions) 79.9 63.9 283.7 235.2 (note 1)Adjusted EPS 1.02 0.66 3.46 3.00 (note 2) GAAP Operating 49.4 31.4 169.4 (174.4 ) ^Earnings (1)GAAP EPS 0.50 0.13 2.02 (6.58 ) ^ (1) (1) Includes $314.4 million of expense associated with the settlement ofthe long-term incentive arrangement with FirstService's Founderand Chairman.

TORONTO, Feb. 09, 2021 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX: FSV; NASDAQ: FSV) today announced very strong fourth quarter and full year results for the year ended December 31, 2020. All amounts are in US dollars.

Revenues for the fourth quarter were $775.1 million, a 15% increase relative to the same quarter in the prior year. Adjusted EBITDA (note 1) was $79.9 million, up 25%, and Adjusted EPS (note 2) was $1.02, up 55% from the prior year quarter. GAAP Operating Earnings were $49.4 million, relative to $31.4 million in the prior year period. GAAP diluted EPS was $0.50 per share in the quarter, compared to $0.13 for the same quarter a year ago.

For the year ended December 31, 2020, revenues were $2.77 billion, a 15% increase relative to the prior year. Adjusted EBITDA was $283.7 million, up 21%, and Adjusted EPS was $3.46, up 15% versus the prior year of $3.00. GAAP Operating Earnings were $169.4 million, compared to a GAAP Operating Loss of $174.4 million in the prior year period, reflecting the settlement of the long-term incentive arrangement (LTIA) with FirstServices Founder and Chairman in the amount of $314.4 million during the second quarter of 2019. GAAP earnings per share was $2.02 versus a GAAP loss per share of $6.58 in the prior year.

We capped off the year with a very strong fourth quarter, largely driven by organic growth, said Scott Patterson, Chief Executive Officer of FirstService. We are proud of our performance throughout 2020, demonstrating strength and stability in the face of the pandemic, and we look forward to capitalizing on our growth opportunities as the environment improves, he concluded.

About FirstService CorporationFirstService Corporation is a North American leader in the property services sector serving its customers through two industry leading platforms: FirstService Residential - North Americas largest manager of residential communities; and FirstService Brands - one of North Americas largest providers of essential property services delivered through individually branded franchise systems and company-owned operations.

FirstService generates approximately US$2.8 billion in annual revenues and has approximately 24,000 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. The common shares of FirstService trade on the NASDAQ under the symbol FSV and on the Toronto Stock Exchange under the symbol FSV. More information is available at www.rstservice.com.

Segmented Fourth Quarter ResultsFirstService Residential revenues totalled $362.5 million for the fourth quarter, up 4% relative to $347.1 million in the prior year quarter. This organic top-line growth was bolstered by strong ancillary services, particularly from robust home resales across North America and increased maintenance and project management activity in certain markets. Adjusted EBITDA was $35.5 million, compared to $29.8 million reported in the prior year period. GAAP Operating Earnings were $28.0 million, versus $23.3 million for the fourth quarter of last year. Margin improvement was due to higher margin ancillary revenue, primarily tied to home resales.

FirstService Brands revenues totalled $412.5 million, up 26% versus $328.5 million in the prior year period. The increase included 18% organic growth, with the balance from recent tuck-under acquisitions. Organic growth for the quarter was principally driven by Global Restoration, which continued to capitalize on weather-related and large loss claims arising from increased storm activity during the preceding third quarter. Adjusted EBITDA for the quarter was $48.6 million, up 28% versus the prior year quarter. GAAP Operating Earnings were $28.1 million, versus $13.9 million in the prior year quarter. The division EBITDA margin was relatively in line with the prior year quarter, while the operating earnings margin improved year-over-year due to accelerated intangible asset amortization in 2019 arising from the large Global Restoration acquisition.

Corporate costs, as presented in Adjusted EBITDA were $4.2 million in the fourth quarter, relative to $3.9 million in the prior year period. On a GAAP basis, corporate costs for the quarter were $6.6, relative to $5.8 million in the prior year period.

Segmented Full Year ResultsFirstService Residential revenues were $1.42 billion for the full year, slightly higher than in 2019. Our top-line was adversely impacted by COVID-related client facility closures, which affected our delivery of amenity management services for most of 2020. Adjusted EBITDA was $138.4 million, up 6% versus the prior year. GAAP Operating Earnings were $112.6 million, compared to $104.7 million in the prior year. Margin improvement was largely due to an increase in higher margin ancillary revenue, principally tied to strong home resale activity levels.

FirstService Brands revenues for the year totalled $1.36 billion, up 36% versus the prior year, comprised of 8% organic growth and the balance from recent acquisitions, including full-year contribution from the significant Global Restoration transaction, which closed in mid-2019. Organic revenue growth was strong at Global Restoration, which capitalized on increased storm-related activity relative to the prior year. Top-line growth within the division was tempered by a decline in our home improvement service lines, which were negatively impacted by COVID-related, government-mandated stay at home measures for a significant portion of the year. Adjusted EBITDA for the year was $155.1 million, up 31% relative to the prior year. GAAP Operating Earnings were $78.8 million, versus $60.6 million a year ago. The earnings margins in the division modestly declined due to the full-year contribution of lower margin Global Restoration operations in 2020.

Corporate costs, as presented in Adjusted EBITDA, were $9.8 million for the full year, relative to $13.7 million in the prior year, with the decrease primarily attributable to foreign exchange. On a GAAP basis, corporate costs were $21.9 million, relative to $339.7 million a year ago, with the decrease primarily attributable to the settlement of the LTIA in the second quarter of 2019.

Conference Call & PresentationFirstService will be holding a conference call on Tuesday, February 9, 2021 at 11:00 a.m. Eastern Time to discuss the results for the fourth quarter and full year. The number to use for this call is toll-free 1) 1-888-241-0551 or 2) 647-427-3415 for international callers. 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 StatementsThis 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 FirstServices services and the cost of providing services; (ii) the ability of FirstService to implement its business strategy, including FirstServices 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 FirstServices annual information form for the year ended December 31, 2019 under the heading Risk factors (a copy of which may be obtained at www.sedar.com) and Annual Report on Form 40-F filed with the United States Securities and Exchange Commission (a copy of which may be obtained at www.sec.gov), 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 www.sedar.com.

Notes1. 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) settlement of the LTIA. 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 Companys 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 Companys 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 Twelve months ended(in thousands of US$) December 31 December 31 2020 2019 2020 2019 Net earnings (loss) $ 32,927 $ 13,568 $ 109,590 $ (227,631 )Income tax 11,747 6,497 35,865 27,147 Other expense 284 338 (361 ) (6,015 )(income)Interest expense, net 4,437 11,020 24,318 32,080 Operating earnings 49,395 31,423 169,412 (174,419 )(loss)Depreciation and 25,203 28,524 98,382 79,557 amortizationSettlement oflong-term incentive - - - 314,379 arrangementAcquisition-related 2,548 2,166 4,300 7,539 itemsStock-based 2,748 1,744 11,628 8,126 compensation expenseAdjusted EBITDA $ 79,894 $ 63,857 $ 283,722 $ 235,182

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

Adjusted EPS 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 of intangible assets recognized in connection with acquisitions; (iv) stock-based compensation expense; (v) a stock-based compensation tax adjustment related to a US GAAP change; and (vi) settlement of the LTIA. 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 EPS 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 Companys 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 per common share to Adjusted EPS appears below.

Three months ended Twelve months ended(in thousands of December 31 December 31US$) 2020 2019 2020 2019 Net earnings (loss) $ 32,927 $ 13,568 $ 109,590 $ (227,631 )Non-controllinginterest share of (513 ) (1,612 ) (6,354 ) (7,874 )earningsSettlement oflong-term incentive - - - 314,379 arrangementAcquisition-related 2,548 2,166 4,300 7,539 itemsAmortization of 11,048 16,463 46,464 38,698 intangible assetsStock-basedcompensation 2,748 1,744 11,628 8,126 expenseStock-basedcompensation tax - - - (2,854 )adjustment for USGAAP changeIncome tax on (3,587 ) (5,321 ) (15,104 ) (13,470 )adjustmentsNon-controllinginterest on (304 ) (492 ) (1,127 ) (1,034 )adjustmentsAdjusted net $ 44,867 $ 26,516 $ 149,397 $ 115,879 earnings Three months ended Twelve months ended(in US$) December 31 December 31 2020 2019 2020 2019 Diluted netearnings (loss) per $ 0.50 $ 0.13 $ 2.02 $ (6.51 )shareNon-controllinginterest redemption 0.24 0.17 0.37 0.42 incrementSettlement oflong-term incentive - - - 8.13 arrangementAcquisition-related 0.05 0.04 0.10 0.16 itemsAmortization ofintangible assets, 0.18 0.29 0.77 0.72 net of taxStock-basedcompensation 0.05 0.03 0.20 0.15 expense, net of taxStock-basedcompensation tax - - - (0.07 )adjustment for USGAAP changeAdjusted earnings $ 1.02 $ 0.66 $ 3.46 $ 3.00 per share

FIRSTSERVICE CORPORATIONOperating Results(in thousands of US$, except per share amounts) Three months Twelve months ended December 31 ended December 31 2020 2019 2020 2019 Revenues $ 775,055 $ 675,594 $ 2,772,415 $ 2,407,410 Cost of revenues 528,272 453,072 1,871,798 1,634,097 Selling, generaland administrative 169,637 160,409 628,523 546,257 expensesDepreciation 14,155 12,061 51,918 40,859 Amortization of 11,048 16,463 46,464 38,698 intangible assetsSettlement oflong-term incentive - - - 314,379 arrangementAcquisition-related 2,548 2,166 4,300 7,539 items (1)Operating earnings 49,395 31,423 169,412 (174,419 )(loss)Interest expense, 4,437 11,020 24,318 32,080 netOther expense 284 338 (361 ) (6,015 )(income)Earnings (loss) 44,674 20,065 145,455 (200,484 )before income taxIncome tax 11,747 6,497 35,865 27,147 Net earnings (loss) 32,927 13,568 109,590 (227,631 )Non-controllinginterest share of 513 1,612 6,354 7,874 earningsNon-controllinginterest redemption 10,389 6,719 15,977 16,105 incrementNet earnings (loss)attributable to $ 22,025 $ 5,237 $ 87,259 $ (251,610 )Company Net earnings (loss) per common share Basic $ 0.51 $ 0.13 $ 2.04 $ (6.58 ) Diluted 0.50 0.13 2.02 (6.58 ) Adjusted earnings $ 1.02 $ 0.66 $ 3.46 $ 3.00 per share (2) Weighted averagecommon shares (thousands) Basic 43,577 39,750 42,756 38,225 Diluted 44,091 40,141 43,184 38,662

(1)Acquisition-related items include transaction costs, and contingent acquisition consideration fair value adjustments.(2)See definition and reconciliation above.

Condensed Consolidated Balance Sheets (in thousands of US$) December 31, 2020 December 31, 2019 Assets Cash and cash equivalents $ 184,295 $ 121,198Restricted cash 24,643 13,093Accounts receivable 418,890 393,730Other current assets 191,488 140,115 Current assets 819,316 668,136Other non-current assets 14,970 11,824Fixed assets 126,569 131,545Operating lease right-of-use assets 153,185 132,893Goodwill and intangible assets 1,082,500 1,011,071 Total assets $ 2,196,540 $ 1,955,469 Liabilities and shareholders' equity Accounts payable and accrued liabilities $ 349,692 $ 241,670Other current liabilities 102,266 80,369Operating lease liabilities - current 35,315 30,622Long-term debt - current 56,478 5,545 Current liabilities 543,751 358,206Long-term debt - non-current 533,126 761,078Operating lease liabilities - 128,793 111,247non-currentOther liabilities 96,093 66,150Deferred income tax 41,345 58,239Redeemable non-controlling interests 193,034 174,662Shareholders' equity 660,398 425,887 Total liabilities and equity $ 2,196,540 $ 1,955,469 Supplemental balance sheet information Total debt $ 589,604 $ 766,623Total debt, net of cash 405,309 645,425

Condensed Consolidated Statements of Cash Flows(in thousands of US$) Three months ended Twelve months ended December 31 December 31 2020 2019 2020 2019 Cash provided by (used in) Operating activitiesNet earnings $ 32,927 $ 13,568 $ 109,590 $ (227,631 )Items not affecting cash: Depreciation and 25,203 28,524 98,382 79,557 amortization Settlement of long-term - (38,218 ) - 251,503 incentive arrangement Deferred (11,715 ) (10,431 ) (18,054 ) (8,988 ) income tax Other 4,152 1,258 12,307 2,258 50,567 (5,299 ) 202,225 96,699 Changes inoperating 46,238 48,486 89,540 11,109 assets andliabilitiesNet cashprovided by 96,805 43,187 291,765 107,808 operatingactivities Investing activitiesAcquisition ofbusinesses, net (34,052 ) (24,747 ) (98,559 ) (579,863 )of cashacquiredDisposal ofbusiness, net - - - 13,030 of cashdisposedPurchases of (8,514 ) (12,520 ) (39,415 ) (46,628 )fixed assetsOther investing (2,958 ) (1,639 ) (4,288 ) (1,504 )activitiesNet cash usedin investing (45,524 ) (38,906 ) (142,262 ) (614,965 )activities Financing activitiesIncrease(decrease) in (15,500 ) (182,606 ) (179,287 ) 429,859 long-term debt,netProceedsreceived on - 191,737 150,008 191,737 common shareissuanceSale(purchases) of (1,441 ) 2,761 (20,231 ) (30,648 )non-controllinginterests, netDividends paidto common (7,189 ) (5,886 ) (27,448 ) (22,044 )shareholdersDistributionspaid to - - (5,084 ) (5,725 )non-controllinginterestsOther financing (1,303 ) 1,415 6,846 (2,037 )activitiesNet cashprovided by(used in) (25,433 ) 7,421 (75,196 ) 561,142 financingactivities Effect ofexchange rate 725 187 340 462 changes on cash Increase incash, cash 26,573 11,889 74,647 54,447 equivalents andrestricted cash Cash, cashequivalents andrestricted 182,365 122,402 134,291 79,844 cash, start ofperiod Cash, cashequivalents andrestricted $ 208,938 $ 134,291 $ 208,938 $ 134,291 cash, end ofperiod

Segmented Results(in thousands of US$) FirstService FirstService Residential Brands Corporate Consolidated Three monthsended December 31 2020 Revenues $ 362,549 $ 412,506 $ - $ 775,055 Adjusted 35,484 48,632 (4,222 ) 79,894 EBITDA Operating 27,951 28,064 (6,620 ) 49,395 earnings 2019 Revenues $ 347,087 $ 328,507 $ - $ 675,594 Adjusted 29,800 38,001 (3,944 ) 63,857 EBITDA Operating 23,309 13,927 (5,813 ) 31,423 earnings FirstService FirstService Residential Brands Corporate Consolidated Year ended December 31 2020 Revenues $ 1,415,121 $ 1,357,294 $ - $ 2,772,415 Adjusted 138,424 155,100 (9,802 ) 283,722 EBITDA Operating 112,555 78,786 (21,929 ) 169,412 earnings 2019 Revenues $ 1,411,998 $ 995,412 $ - $ 2,407,410 Adjusted 130,583 118,298 (13,699 ) 235,182 EBITDA Operating earnings 104,706 60,586 (339,711 ) (174,419 ) (loss)

COMPANY CONTACTS:

D. Scott PattersonPresident & CEO

Jeremy RakusinChief Financial Officer

(416) 960-9566