FirstService Reports Strong Third Quarter Results

Strong internal growth at Colliers International, FirstService Residential and FirstService Brands

EBITDA up by more than 30% at Colliers International and FirstService Brands

FirstService Residential completes its re-branding

TORONTO, Oct. 23, 2013 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV) (Nasdaq:FSRV) today reported results for its third quarter ended September 30, 2013. All amounts are in US dollars.

Revenues for the third quarter were $608.3 million, a 9% increase relative to the same quarter in the prior year, Adjusted EBITDA (note 1) was $55.4 million, up 11% and Adjusted EPS (note 2) was $0.68, an 8% increase versus the prior year quarter. GAAP EPS from continuing operations was $0.09 per share in the quarter, versus $0.04 for the same quarter a year ago.

For the nine months ended September 30, 2013, revenues were $1.67 billion, a 9% increase relative to the comparable prior year period, Adjusted EBITDA was $112.0 million, up 15%, and Adjusted EPS was $1.12, up 22% versus the prior year period. GAAP EPS from continuing operations for the nine month period was a loss of $0.61, compared to a loss of $0.28 in the prior year period and was negatively impacted by $0.27 due to accelerated amortization of intangible assets in the current year related to the re-branding of the Company's residential real estate services operations.

"For a number of reasons, we are very pleased with our third quarter results," said Jay S. Hennick, Founder and Chief Executive Officer of FirstService. "Each of our service lines reported strong revenue growth; both Colliers International and FirstService Brands grew their EBITDA by more than 30%; we completed the re-branding at FirstService Residential; we redeemed our outstanding convertible debentures and we successfully completed the sale of Field Asset Services. With so much accomplished, FirstService is positioned better than ever to deliver strong growth in revenue and profits in the future," he concluded.

About FirstService Corporation

FirstService Corporation is a global leader in the rapidly growing real estate services sector. 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 industry-leading operating platforms in Commercial Real Estate Services, delivered through Colliers International, one of the top global players in commercial real estate; Residential Real Estate Services, delivered through FirstService Residential, the largest provider of residential property management services in North America, and Property Services, delivered through FirstService Brands, a leading provider of essential property services delivered through franchise systems and company-owned operations.

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

Colliers International revenues totalled $323.4 million for the third quarter, up 9% relative to the prior year quarter. Revenue growth was comprised of 8% internal growth measured in local currencies, a 3% unfavourable impact from foreign currency translation and 4% growth from recent acquisitions. Internal growth was primarily driven by investment sales and leasing activity in the Europe and Asia Pacific regions. Adjusted EBITDA was $26.6 million, up 31% from the prior year quarter, with a significant portion of the increase attributable to operating leverage from strong internal revenue growth and the impact of recent acquisitions.

FirstService Residential revenues were $243.9 million for the third quarter, up 8% relative to the prior year quarter. Revenue growth was comprised of 7% internal growth and 1% from recent acquisitions. Adjusted EBITDA for the quarter was $19.9 million compared to $21.5 million in the prior year period. During the quarter, $0.7 million of pre-announced and planned expenses associated with re-branding, including enhancements to the information technology platform and other related costs were incurred. In line with reduced volumes of delinquencies and changes in the regulatory environment in several states, the Company recorded a $2.0 million charge to down-size its homeowner fee collection operations after completing a review of these operations during the quarter.

FirstService Brands revenues totalled $40.9 million, up 12% versus the prior year period. Adjusted EBITDA for the third quarter was $13.6 million, up 31% over the prior year period. The Property Services results have been reclassified to exclude Field Asset Services, which has been reported as a discontinued operation for all periods presented.

Corporate costs were $4.7 million in the third quarter, relative to $2.5 million in the prior year period. The increase was attributable to performance-based executive incentive compensation accruals in the current year.

Sale of Field Asset Services

On September 30, 2013, the Company completed the sale of 100% of the equity of Field Asset Services, which was previously reported within the Property Services segment. Field Asset Services has been classified as a discontinued operation and as such the statements of earnings have been reclassified to exclude its results for all periods presented. The sale price was $55.0 million in cash, and resulted in an after-tax loss on sale of $1.3 million.

Stock Repurchases

During the quarter, the Company repurchased 385,600 Subordinate Voting Shares on the open market under its Normal Course Issuer Bid ("NCIB") at an average price of $37.74 per share. All shares purchased under the NCIB were cancelled. The Company is authorized to repurchase up to an additional 2,360,000 Subordinate Voting Shares under its NCIB, which expires on June 6, 2014.

Conference Call

FirstService will be holding a conference call on Wednesday, October 23, 2013 at 11:00 a.m. Eastern Time to discuss the quarter's results. 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 from continuing operations to Adjusted EBITDA:

Adjusted EBITDA is defined as net earnings from continuing operations, 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 from continuing operations 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 from continuing operations to Adjusted EBITDA appears below.

2. Reconciliation of net earnings (loss) attributable to common shareholders and diluted net earnings (loss) per share from continuing operations to adjusted net earnings from continuing operations and adjusted net earnings per share from continuing operations:

Adjusted earnings per share from continuing operations is defined as diluted net earnings (loss) per share from continuing operations, 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 diluted net earnings per share from continuing operations is not a recognized measure of financial performance under GAAP, and should not be considered as a substitute for diluted net earnings per share from continuing operations, 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 (loss) attributable to shareholders to adjusted net earnings from continuing operations and of diluted net earnings (loss) per share from continuing operations to adjusted earnings per share from continuing operations appears below.

CONTACT: COMPANY CONTACTS:
         
         Jay S. Hennick
         Founder & CEO
         
         D. Scott Patterson
         President & COO
         
         John B. Friedrichsen
         Senior Vice President & CFO
         
         (416) 960-9500