FirstService Reports Record Second Quarter Results

Strong Internal Growth at Colliers International, FirstService Residential and FirstService Brands

Adjusted EBITDA Up by More Than 40% at Colliers International

Operating highlights:

TORONTO, July 29, 2014 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV) (Nasdaq:FSRV) today reported results for its second quarter ended June 30, 2014. All amounts are in US dollars and all percentage revenue variances are calculated on a local currency basis.

Revenues for the second quarter were $660.7 million, a 16% increase relative to the same quarter in the prior year, Adjusted EBITDA (note 1) was $59.7 million, up 32% and Adjusted EPS (note 2) was $0.74, a 30% increase versus the prior year quarter. GAAP EPS from continuing operations was $0.26 per share in the quarter, versus a loss of $0.21 for the same quarter a year ago. Prior year quarter results were negatively impacted by $0.29 per share resulting from accelerated amortization of intangible assets relating to the re-branding of the Company's residential property management operations.

For the six months ended June 30, 2014, revenues were $1.21 billion, a 17% increase relative to the comparable prior year period, Adjusted EBITDA was $82.0 million, up 48%, and Adjusted EPS was $0.82, up 110% versus the prior year period. GAAP EPS from continuing operations for the six month period was $0.11 per share, compared to a loss of $0.74 in the prior year period.

"Once again, FirstService delivered outstanding results in the second quarter," said Jay S. Hennick, Founder and Chief Executive Officer of FirstService. "Colliers International grew revenues by 22% with EBITDA up by more than 40% and margins up 170 basis points to 9.6%. FirstService Residential continued to deliver excellent top-line growth with multiple contract wins across the entire North American platform. FirstService Brands also had an outstanding quarter with EBITDA up 27% and margins up 250 basis points to almost 22%. Finally, cash flows almost tripled from the same quarter one year ago. With strong operating results and cash flow, ample financial capacity and multiple growth opportunities, FirstService is better positioned than ever to continue delivering outstanding results for the balance of 2014 and beyond," he concluded.

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. FirstService manages more than 2.5 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 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$2.5 billion in annual revenues and has more than 24,000 employees world-wide. With significant insider ownership and an experienced management team, FirstService has a long-term track record of creating value and superior returns for shareholders since becoming a publically listed company in 1993. The common shares of FirstService trade on the NASDAQ under the symbol "FSRV" and on the Toronto Stock Exchange under the symbol "FSV". More information is available at www.firstservice.com.

Segmented Quarterly Results

Colliers International revenues totalled $368.5 million for the second quarter compared to $308.5 million in the prior year quarter, up 22%. Revenue growth was comprised of 16% internal growth and 6% growth from recent acquisitions. Internal growth was primarily driven by stronger investment sales and leasing activity in all three regions – Europe, Asia Pacific and the Americas. Adjusted EBITDA was $35.3 million, up 44% from the prior year quarter, with a significant portion of the increase attributable to operating leverage.

FirstService Residential revenues were $236.7 million for the second quarter, up 9% relative to the prior year quarter. Revenue growth was comprised of 7% internal growth and 2% from recent acquisitions. Adjusted EBITDA for the quarter was $14.6 million, up from $13.6 million in the prior year period. Current period operating results were impacted by (i) substantial increases in employee medical benefits costs in the US which are expected to continue impacting results for the next twelve months and (ii) a reduction in higher-margin property transfer and disclosure fees resulting from a reduction in home re-sales in managed communities which is consistent with home re-sale numbers nationally. Prior period results were impacted by re-branding and related costs as a result of the adoption of the "FirstService Residential" brand.

FirstService Brands revenues grew to $55.5 million, up 12% versus the prior year period, with 11% internal growth and 1% from acquisitions completed during the quarter. Adjusted EBITDA for the second quarter was $12.2 million, up 27% over the prior year period. The FirstService Brands results have been revised for all periods to include the Service America business unit, which has been transitioned to FirstService Brands from FirstService Residential. Service America generated revenues of $13.1 million for the second quarter, relative to $13.0 million in the prior year quarter. Service America provides HVAC and plumbing services to residential and commercial customers in Florida and is expected to be better able to grow and share best practices and other benefits within the FirstService Brands segment.

Corporate costs were $2.4 million in the second quarter, relative to $2.6 million in the prior year period, and were positively impacted by changes in foreign exchange rates.

Stock Repurchases

During the quarter, the Company repurchased 105,200 Subordinate Voting Shares on the open market under its Normal Course Issuer Bid ("NCIB") at an average price of US$49.38 per share. All shares purchased under the NCIB were cancelled. The Company is authorized to repurchase up to an additional 2,974,800 Subordinate Voting Shares under its NCIB, which expires on June 8, 2015.

Conference Call

FirstService will be holding a conference call on Tuesday, July 29, 2014 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 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 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 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 appears below.

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