Financial Data and Key Metrics Changes - Total revenues increased by 9% year over year, reaching $1.4 billion, primarily driven by tuck under acquisitions [5][16] - EBITDA for the quarter rose by 19% to $157 million, reflecting a consolidated margin of 11.1%, up 90 basis points from the previous year [6][16] - Earnings per share increased by 26% compared to the prior year, reaching $1.71 [6][16] Business Line Data and Key Metrics Changes - FirstService Residential revenues grew by 6%, with organic growth at 3% [6][17] - FirstService Brands revenues increased by 11%, with low single-digit organic growth [7][18] - Restoration brands, Paul Davis and First On-site, saw revenues rise by about 6%, with 2% organic growth [7] - Roofing segment revenues were up 25% due to acquisitions, but organic revenues declined by about 10% [10][18] - Century Fire reported a strong quarter with revenues up over 15%, including double-digit organic growth [12][18] Market Data and Key Metrics Changes - The number of claims and jobs in the restoration segment increased, reflecting improved activity levels [8] - Storm-related revenues remained modest, similar to the previous year [9] - The home service brands experienced flat revenues year over year, attributed to weak consumer sentiment [13] Company Strategy and Development Direction - The company aims to achieve high single-digit revenue growth and margin expansion, targeting double-digit EBITDA growth for the year [21][22] - Focus on tuck under acquisitions to enhance growth in existing markets [12][46] - The company is optimistic about pent-up demand and potential interest rate reductions impacting future activity levels [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to mid single-digit organic growth in the residential business despite community budgetary pressures [25][26] - The company anticipates a stronger Q3 with revenues up over 10% in the roofing segment, while organic revenues are expected to be flat [10][22] - Management noted that the restoration business is becoming less reliant on large storm activity, improving revenue stability [35][36] Other Important Information - Operating cash flow for the quarter was $163 million, up 25% year over year [19][20] - The company paid down nearly $70 million of debt during the quarter, reducing leverage to 1.8 times net debt to EBITDA [20] Q&A Session Summary Question: Confidence in residential business organic growth - Management noted that community budgetary pressures are normalizing and do not expect significant impacts on organic growth going forward [25][26] Question: Margin improvement in FirstService Brands - Management confirmed that accelerating top-line growth would lead to higher margins due to operating leverage [27][28] Question: Improvement in roofing business - Management indicated that macroeconomic factors and tariff uncertainties are causing hesitance, but they expect improvement in Q3 [30][31] Question: Restoration business reliance on storm activity - Management clarified that while national accounts are growing, storm activity will still play a significant role in revenue generation [35][36] Question: Fire protection business performance - Management attributed strong performance to growth in repair service and inspection, driven by strategic investments [42][44] Question: M&A opportunities - Management remains open to larger acquisitions if strategic fits arise, despite current macroeconomic conditions [46][47] Question: Home improvement market positioning - Management noted that their positioning caters to a broad spectrum of consumers, with a focus on affluent customers contributing to growth [50][51]

Financial Data and Key Metrics Changes - Total revenues increased by 9% year over year, reaching $1,400,000,000, primarily driven by tuck under acquisitions [5][16] - EBITDA for the quarter rose by 19% to $157,000,000, reflecting a consolidated margin of 11.1%, up 90 basis points from the previous year [6][16] - Earnings per share (EPS) increased by 26% compared to the prior year, reaching $1.71 [6][16] - Year-to-date revenues totaled $2,700,000,000, a 9% increase over the previous year, with adjusted EBITDA of $260,000,000, representing 21% growth [16][21] Business Line Data and Key Metrics Changes - **FirstService Residential**: Revenues increased by 6% to $593,000,000, with organic growth at 3% [6][17] - **FirstService Brands**: Revenues rose by 11% to $823,000,000, with EBITDA up 23% to $95,000,000 and a margin of 11.6%, up 110 basis points [7][19] - **Restoration Brands**: Revenues increased by approximately 6%, with organic growth at 2% [7] - **Roofing Segment**: Revenues increased by 25% due to acquisitions, but organic revenues declined by about 10% [10][11] - **Century Fire**: Revenues grew over 15%, with strong organic growth hitting double digits [12] Market Data and Key Metrics Changes - The number of claims and jobs in the restoration segment increased, reflecting efforts to sign new national accounts [8] - Storm-related revenues remained modest, similar to the previous year [8] - The roofing segment experienced a slowdown in large commercial reroof and new construction projects, but demand drivers remain strong [11][56] Company Strategy and Development Direction - The company aims to achieve high single-digit revenue growth and margin expansion driving towards double-digit EBITDA growth for the year [22] - Focus on tuck under acquisitions to enhance growth in various segments, particularly in fire protection and restoration [12][21] - The company is optimistic about pent-up demand and potential interest rate reductions impacting future activity levels [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to mid single-digit organic growth in the residential business despite community budgetary pressures [26][27] - The company anticipates a stronger Q3 with revenues up over 10% in the roofing segment and flat organic revenues [10][12] - Management noted that the restoration business will continue to benefit from national accounts and improved positioning, which will help during catastrophic events [38] Other Important Information - Operating cash flow for the quarter was $163,000,000, exceeding EBITDA, with a year-to-date cash flow increase of 67% [20][21] - The company paid down nearly $70,000,000 of debt during the quarter, reducing leverage to 1.8 times net debt to EBITDA [21] Q&A Session Summary Question: Confidence in return to mid single-digit organic growth in residential business - Management noted that community budgetary pressures are normalizing and do not expect significant impact on organic growth going forward [26][27] Question: Margin improvement in FirstService Brands with accelerating organic growth - Management confirmed that traditional operating leverage would benefit from accelerating top-line growth, particularly in home improvement and restoration [28][29] Question: Improvement needed for roofing backlog - Management indicated that tariff uncertainty and interest rate expectations are causing hesitation, but they have started to see a pickup in bookings [31][32] Question: Restoration business reliance on large storm activity - Management clarified that while national accounts improve revenue in moderate weather, large storm events will still be significant for the business [37][38] Question: Dynamics behind fire protection business outperforming - Management attributed the growth to increased focus on repair service and inspection, balancing the business between installation and service [44][45] Question: M&A opportunities given current leverage - Management stated that they remain open to larger acquisitions if strategic fit exists, despite focusing on tuck under acquisitions [47][48] Question: Market positioning in home improvement - Management noted that their largest brand, California Closets, caters to a broad spectrum of consumers, with growth influenced by affluent customers [51][52] Question: Volatility in roofing results - Management acknowledged current macro influences on roofing but expressed confidence in their market position and demand drivers [55][56]

Group 1: Earnings Performance - FirstService reported quarterly earnings of $1.71 per share, exceeding the Zacks Consensus Estimate of $1.45 per share, and up from $1.36 per share a year ago, representing an earnings surprise of +17.93% [1] - The company posted revenues of $1.42 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.30%, compared to $1.3 billion in the same quarter last year [2] Group 2: Stock Performance and Outlook - FirstService shares have declined approximately 1.1% since the beginning of the year, while the S&P 500 has gained 8.1% [3] - The current consensus EPS estimate for the upcoming quarter is $1.77 on revenues of $1.48 billion, and for the current fiscal year, it is $5.61 on revenues of $5.56 billion [7] Group 3: Industry Context - The Real Estate - Operations industry, to which FirstService belongs, is currently ranked in the top 37% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - RE/MAX, another company in the same industry, is expected to report a quarterly earnings decline of -14.6% with revenues projected at $73.47 million, down 6.4% from the previous year [9][10]

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) FirstService reported robust Q2 and YTD 2025 financial performance, characterized by strong revenue growth, significant Adjusted EBITDA expansion, and increased profitability across key metrics [Consolidated Financial Performance - Q2 & YTD 2025](index=1&type=section&id=Consolidated%20Financial%20Performance%20-%20Q2%20%26%20YTD%202025) FirstService reported strong financial results for Q2 and the first six months of 2025, demonstrating solid top-line growth and significant operating margin expansion, driving increased profitability across key metrics Consolidated Financial Highlights (Q2 & YTD 2025 vs. 2024) | Metric | Q2 2025 (millions) | Q2 2024 (millions) | Q2 YoY Growth | YTD 2025 (millions) | YTD 2024 (millions) | YTD YoY Growth | | :------------------------- | :----------------- | :----------------- | :------------ | :------------------ | :------------------ | :------------- | | Revenues | $1,415.7 | $1,297.5 | 9% | $2,666.6 | $2,455.5 | 9% | | Adjusted EBITDA (note 1) | $157.1 | $132.5 | 19% | $260.4 | $215.9 | 21% | | Adjusted EPS (note 2) | $1.71 | $1.36 | 26% | $2.63 | $2.03 | 30% | | GAAP Operating Earnings | $97.3 | $83.9 | 16% | $136.5 | $122.0 | 12% | | GAAP Diluted EPS | $1.01 | $0.78 | 29% | $1.07 | $0.92 | 16% | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Scott Patterson expressed satisfaction with the strong financial results, noting that the year-over-year growth profile mirrored the first quarter and positioned the company well to achieve its 2025 goals despite macroeconomic uncertainty - Strong financial results largely mirrored the year-over-year growth profile seen in the first quarter[4](index=4&type=chunk) - Resilient top-line performance and strong profitability across operations during the first half of the year[4](index=4&type=chunk) - Company is well on track to deliver on its goals for 2025 despite continued macroeconomic uncertainty[4](index=4&type=chunk) [About FirstService Corporation](index=1&type=section&id=About%20FirstService%20Corporation) FirstService Corporation is a leading North American provider of essential outsourced property services, operating through its FirstService Residential and FirstService Brands platforms [Company Overview](index=1&type=section&id=Company%20Overview) FirstService Corporation is a leading North American provider of essential outsourced property services, operating through two distinct, industry-leading platforms: FirstService Residential and FirstService Brands - FirstService Corporation is a North American leader in the essential outsourced property services sector[5](index=5&type=chunk) - Operates through two industry-leading service platforms: FirstService Residential (largest manager of residential communities) and FirstService Brands (largest provider of essential property services via company-owned and franchise systems)[5](index=5&type=chunk) Company Scale | Metric | Value | | :------------- | :----------------- | | Annual Revenues | Over US$5.4 billion | | Employees | Approximately 30,000 | | Stock Exchange | NASDAQ (FSV), TSX (FSV) | | Index | S&P/TSX 60 index | [Segmented Performance Analysis](index=1&type=section&id=Segmented%20Performance%20Analysis) FirstService Residential and FirstService Brands both demonstrated strong Q2 2025 revenue and Adjusted EBITDA growth, while corporate costs saw a slight decrease [FirstService Residential](index=1&type=section&id=FirstService%20Residential) FirstService Residential reported a 6% revenue increase and 11% Adjusted EBITDA growth in Q2 2025, driven by 3% organic growth and ongoing efficiency improvements in its client service delivery model FirstService Residential Q2 Performance (2025 vs. 2024) | Metric | Q2 2025 (millions) | Q2 2024 (millions) | YoY Growth | | :---------------- | :----------------- | :----------------- | :--------- | | Revenues | $593.0 | $557.5 | 6% | | Organic Growth | 3% | N/A | N/A | | Adjusted EBITDA | $65.5 | $59.1 | 11% | | Operating Earnings | $51.6 | $49.1 | 5% | - Adjusted EBITDA margin improvement reflected ongoing efficiencies in the property management client service delivery model[8](index=8&type=chunk) - Operating Earnings margin was in-line with the prior year[8](index=8&type=chunk) [FirstService Brands](index=2&type=section&id=FirstService%20Brands) FirstService Brands achieved an 11% revenue increase and 23% Adjusted EBITDA growth in Q2 2025, supported by 1% organic growth, double-digit growth at Century Fire Protection, and contributions from recent tuck-under acquisitions FirstService Brands Q2 Performance (2025 vs. 2024) | Metric | Q2 2025 (millions) | Q2 2024 (millions) | YoY Growth | | :---------------- | :----------------- | :----------------- | :--------- | | Revenues | $822.7 | $740.0 | 11% | | Organic Growth | 1% | N/A | N/A | | Adjusted EBITDA | $95.2 | $77.6 | 23% | | Operating Earnings | $56.5 | $46.3 | 22% | - Organic growth of **1%** was driven by double-digit growth at Century Fire Protection, offsetting lower results in Roofing Corp of America operations[9](index=9&type=chunk) - Recent tuck-under acquisitions across the division also contributed to the top-line increase[9](index=9&type=chunk) - Increase in operating margins was attributable to continued operating process improvements at restoration and home services brands[9](index=9&type=chunk) [Corporate Costs](index=2&type=section&id=Corporate%20Costs) Corporate costs for Q2 2025 decreased slightly compared to the prior year, reflecting a reduction in unallocated corporate overhead expenses Corporate Costs (Q2 2025 vs. 2024) | Metric | Q2 2025 (millions) | Q2 2024 (millions) | YoY Change | | :-------------------- | :----------------- | :----------------- | :--------- | | Corporate costs (Adj. EBITDA basis) | $3.6 | $4.2 | (14%) | | Total Corporate costs | $10.9 | $11.5 | (5%) | - Corporate costs represent corporate overhead expenses not directly attributable to reportable segments and are therefore unallocated within segment operating earnings (loss) and Segment Adjusted EBITDA[20](index=20&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section provides detailed reconciliations and definitions for non-GAAP financial measures, including Adjusted EBITDA and Adjusted EPS, crucial for understanding FirstService's underlying operating performance [Adjusted EBITDA Reconciliation](index=2&type=section&id=Adjusted%20EBITDA%20Reconciliation) This section defines Adjusted EBITDA as a non-GAAP measure used by FirstService to evaluate operating performance, debt servicing ability, and for planning and valuation purposes, providing a detailed reconciliation from net earnings - Adjusted EBITDA is defined as net earnings, adjusted to exclude income tax, other (income) expense, interest expense, depreciation and amortization, acquisition-related items, and stock-based compensation expense[15](index=15&type=chunk) - The Company uses Adjusted EBITDA to evaluate its operating performance, ability to service debt, and as an integral part of its planning and reporting systems, believing it is useful to investors as a reasonable indicator of operating performance due to the low capital intensity of its service operations[15](index=15&type=chunk)[16](index=16&type=chunk) Consolidated Adjusted EBITDA Reconciliation (in thousands of US$) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------- | :------ | :------ | :------- | :------- | | Net earnings | 55,431 | 44,937 | 69,511 | 59,834 | | Income tax | 23,677 | 18,584 | 29,677 | 24,599 | | Other income, net | (996) | (115) | (1,082) | (1,995) | | Interest expense, net | 19,166 | 20,531 | 38,430 | 39,557 | | Operating earnings | 97,278 | 83,937 | 136,536 | 121,995 | | Depreciation and amortization | 45,632 | 39,225 | 89,808 | 76,032 | | Acquisition-related items | 7,662 | 2,306 | 19,895 | 3,906 | | Stock-based compensation expense | 6,556 | 7,019 | 14,155 | 13,927 | | **Adjusted EBITDA** | **157,128** | **132,487** | **260,394** | **215,860** | Segmented Adjusted EBITDA Reconciliation (Q2 2025, in thousands of US$) | Metric | FirstService Residential | FirstService Brands | Corporate | | :-------------------------- | :----------------------- | :------------------ | :-------- | | Operating earnings (loss) | 51,606 | 56,522 | (10,850) | | Depreciation and amortization | 11,789 | 33,820 | 23 | | Acquisition-related items | 2,100 | 4,873 | 689 | | Stock-based compensation expense | - | - | 6,556 | | **Adjusted EBITDA** | **65,495** | **95,215** | **(3,582)** | [Adjusted EPS Reconciliation](index=4&type=section&id=Adjusted%20EPS%20Reconciliation) This section defines Adjusted EPS as a non-GAAP measure that provides a supplemental view of the Company's underlying operating performance and enhances comparability, detailing its reconciliation from diluted net earnings per share and also defining organic growth - Adjusted EPS is defined as diluted net earnings per share, adjusted for the effect, after income tax, of non-controlling interest redemption increment, acquisition-related items, amortization expense related to intangible assets from acquisitions, and stock-based compensation expense[21](index=21&type=chunk) - The Company believes Adjusted EPS is useful to investors for understanding underlying operating performance and enhancing comparability of results from period to period[21](index=21&type=chunk) Adjusted EPS Reconciliation (in US$) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Diluted net earnings per share | $1.01 | $0.78 | $1.07 | $0.92 | | Non-controlling interest redemption increment | 0.13 | 0.16 | 0.35 | 0.32 | | Acquisition-related items | 0.14 | 0.05 | 0.35 | 0.08 | | Amortization of intangible assets, net of tax | 0.30 | 0.26 | 0.57 | 0.49 | | Stock-based compensation expense, net of tax | 0.13 | 0.11 | 0.29 | 0.22 | | **Adjusted earnings per share** | **$1.71** | **$1.36** | **$2.63** | **$2.03** | - Organic growth is defined as revenue growth adjusted to exclude the revenue attributable to acquired businesses for a period of twelve months following their acquisition[23](index=23&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents FirstService's condensed consolidated statements of earnings, balance sheets, and cash flows, providing a comprehensive overview of its financial performance and position [Statements of Earnings](index=5&type=section&id=Statements%20of%20Earnings) The condensed consolidated statements of earnings provide a detailed breakdown of FirstService's revenues, costs, and profitability for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Earnings (in thousands of US$) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :---------- | :---------- | :---------- | :---------- | | Revenues | 1,415,733 | 1,297,459 | 2,666,559 | 2,455,504 | | Cost of revenues | 935,334 | 862,463 | 1,776,802 | 1,651,040 | | Selling, general and administrative expenses | 329,827 | 309,528 | 643,518 | 602,531 | | Depreciation | 25,926 | 22,216 | 51,585 | 43,792 | | Amortization of intangible assets | 19,706 | 17,009 | 38,223 | 32,240 | | Acquisition-related items (1) | 7,662 | 2,306 | 19,895 | 3,906 | | Operating earnings | 97,278 | 83,937 | 136,536 | 121,995 | | Interest expense, net | 19,166 | 20,531 | 38,430 | 39,557 | | Other income, net | (996) | (115) | (1,082) | (1,995) | | Earnings before income tax | 79,108 | 63,521 | 99,188 | 84,433 | | Income tax | 23,677 | 18,584 | 29,677 | 24,599 | | Net earnings | 55,431 | 44,937 | 69,511 | 59,834 | | Net earnings attributable to Company | 46,098 | 35,058 | 48,901 | 41,366 | | Diluted net earnings per share | $1.01 | $0.78 | $1.07 | $0.92 | | Adjusted earnings per share (2) | $1.71 | $1.36 | $2.63 | $2.03 | - Acquisition-related items include contingent acquisition consideration fair value adjustments and transaction costs[25](index=25&type=chunk)[26](index=26&type=chunk) [Balance Sheets](index=6&type=section&id=Balance%20Sheets) The condensed consolidated balance sheets present FirstService's financial position, detailing assets, liabilities, and shareholders' equity as of June 30, 2025, compared to December 31, 2024 Condensed Consolidated Balance Sheets (in thousands of US$) | Asset/Liability Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | **Assets** | | | | Cash and cash equivalents | 201,806 | 227,598 | | Current assets | 1,622,756 | 1,559,353 | | Goodwill and intangible assets | 2,167,862 | 2,110,866 | | Total assets | 4,369,109 | 4,194,852 | | **Liabilities and Shareholders' Equity** | | | | Current liabilities | 931,982 | 850,766 | | Long-term debt - non-current | 1,229,053 | 1,257,143 | | Redeemable non-controlling interests | 460,997 | 449,337 | | Shareholders' equity | 1,251,825 | 1,187,746 | | Total liabilities and equity | 4,369,109 | 4,194,852 | | Total debt | 1,242,283 | 1,298,710 | | Total debt, net of cash | 1,040,477 | 1,071,112 | [Statements of Cash Flows](index=7&type=section&id=Statements%20of%20Cash%20Flows) The consolidated statements of cash flows outline the cash generated and used by FirstService across its operating, investing, and financing activities for the three and six months ended June 30, 2025, and 2024 Consolidated Statements of Cash Flows (in thousands of US$) | Cash Flow Activity | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Net cash provided by operating activities | 162,834 | 130,744 | 204,084 | 121,944 | | Net cash used in investing activities | (78,279) | (152,631) | (123,524) | (209,971) | | Net cash provided by (used in) financing activities | (99,285) | 69,178 | (98,683) | 112,308 | | Increase (decrease) in cash, cash equivalents and restricted cash | (15,408) | 47,414 | (18,816) | 24,632 | | Cash, cash equivalents and restricted cash, end of period | 224,870 | 231,509 | 224,870 | 231,509 | [Additional Information](index=2&type=section&id=Additional%20Information) This section provides details on the upcoming conference call, cautionary statements regarding forward-looking information, and key company contact information [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) FirstService will host a conference call on July 24, 2025, to discuss the second quarter results, with options for live webcast and dial-in participation - Conference call scheduled for Thursday, July 24, 2025, at 11:00 a.m. Eastern Time[11](index=11&type=chunk) - Live webcast available on the Company's website at www.firstservice.com[11](index=11&type=chunk) - Participants can register for the call to receive a dial-in number and unique PIN[11](index=11&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section serves as a cautionary statement regarding forward-looking statements within the press release, highlighting inherent risks and uncertainties that could cause actual results to differ materially from expectations - Press release includes forward-looking statements, identifiable by words like 'expect to,' 'expected,' 'will,' 'estimated'[13](index=13&type=chunk) - Statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[13](index=13&type=chunk) - Factors include general economic and business conditions, ability to implement business strategy (including acquisitions), changes in government regulations, and other factors described in SEC filings[13](index=13&type=chunk) - The Company does not undertake any obligation to update or revise any forward-looking statements unless required by applicable securities laws[13](index=13&type=chunk) [Company Contacts](index=8&type=section&id=Company%20Contacts) Contact information for FirstService Corporation's Chief Executive Officer and Chief Financial Officer is provided for inquiries Company Contacts | Role | Name | Contact | | :---------------- | :--------------- | :-------- | | Chief Executive Officer | D. Scott Patterson | (416) 960-9566 | | Chief Financial Officer | Jeremy Rakusin | (416) 960-9566 |

Core Insights - FirstService Corporation reported strong financial results for the second quarter of 2025, with consolidated revenues of $1.42 billion, reflecting a 9% increase year-over-year [2][3] - Adjusted EBITDA for the quarter was $157.1 million, a 19% increase compared to the same period last year, while Adjusted EPS grew by 26% to $1.71 [2][3] - The company’s GAAP Operating Earnings reached $97.3 million, up from $83.9 million in the prior year, and GAAP diluted EPS was $1.01, an increase from $0.78 [2][3] Financial Performance - For the six months ended June 30, 2025, consolidated revenues totaled $2.67 billion, a 9% increase from the same period in 2024 [3] - Adjusted EBITDA for the first half of 2025 was $260.4 million, up 21%, and Adjusted EPS increased by 30% to $2.63 [3] - GAAP Operating Earnings for the six months were $136.5 million, compared to $122.0 million in the prior year, with GAAP diluted EPS at $1.07, up from $0.92 [3] Segment Performance - FirstService Residential reported revenues of $593.0 million for the second quarter, a 6% increase year-over-year, with an Adjusted EBITDA of $65.5 million, up 11% [7] - FirstService Brands saw revenues grow to $822.7 million, an 11% increase, with Adjusted EBITDA rising 23% to $95.2 million [8] - The increase in operating margins for both segments was attributed to ongoing operational efficiencies and improvements [7][8] Corporate Overview - FirstService Corporation is a leader in the essential outsourced property services sector in North America, operating through two main platforms: FirstService Residential and FirstService Brands [5] - The company generates over $5.4 billion in annual revenues and employs approximately 30,000 people across North America [6] - FirstService is included in the S&P/TSX 60 index and trades on both NASDAQ and the Toronto Stock Exchange under the symbol "FSV" [6]

Company Overview - FirstService Corporation is a North American leader in the property services sector, operating through two main platforms: FirstService Residential, the largest manager of residential communities in North America, and FirstService Brands, a major provider of essential property services through company-owned operations and franchise systems [4]. - The company generates over US$5.3 billion in annual revenues and employs approximately 30,000 individuals across North America [5]. - FirstService's shares are traded on NASDAQ and the Toronto Stock Exchange under the symbol "FSV" and are included in the S&P/TSX 60 index [5]. Upcoming Financial Results - FirstService will release its financial results for the second quarter ended June 30, 2025, on July 24, 2025, at approximately 7:30 am ET [1]. - A conference call to review these results will be held on the same day at 11:00 am ET, hosted by CEO D. Scott Patterson and CFO Jeremy Rakusin [2]. - The conference call will be available via live webcast on the company's website, and a replay will be accessible afterward in the "Investors" section [3].

Core Insights - FirstService Corporation's subsidiary, Century Fire Protection, has acquired two Utah-based fire protection companies, TST Fire Protection and Alliance Fire & Safety, enhancing its service capabilities in the Western U.S. [1][4] Company Overview - FirstService Corporation is a leader in the North American property services sector, operating through two main platforms: FirstService Residential and FirstService Brands [5]. - The company generates over $5.3 billion in annual revenues and employs approximately 30,000 people across North America [6]. Acquisition Details - TST Fire Protection, founded in 1998, specializes in fire sprinkler installation and serves commercial clients in northern Utah [2]. - Alliance Fire & Safety, established in 2014, focuses on fire suppression systems and services for commercial and industrial clients in southern Utah [3]. - The leadership teams of TST and Alliance will continue to manage operations and retain minority equity interests post-acquisition [1]. Strategic Implications - The acquisition provides Century with a new geographic foothold in Utah, allowing for expanded service capabilities and market growth opportunities [4]. - The combined operations aim to enhance client service and explore adjacent market expansions in the coming years [4].

[Interim Consolidated Financial Statements](index=1&type=section&id=Interim%20Consolidated%20Financial%20Statements) [Consolidated Statements of Earnings](index=3&type=section&id=Consolidated%20Statements%20of%20Earnings) In Q1 2025, the company's revenues grew to $1.25 billion, an 8% increase year-over-year, but net earnings attributable to the company significantly decreased to $2.8 million from $6.3 million in Q1 2024, primarily due to increased acquisition-related items and a higher non-controlling interest redemption increment Q1 2025 vs Q1 2024 Earnings Summary | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Revenues | $1,250,826 | $1,158,045 | +8.0% | | Operating Earnings | $39,258 | $38,058 | +3.2% | | Net Earnings | $14,080 | $14,897 | -5.5% | | Net Earnings Attributable to Company | $2,803 | $6,308 | -55.6% | | Diluted EPS | $0.06 | $0.14 | -57.1% | - Acquisition-related items surged to **$12.2 million** in Q1 2025, a significant increase from **$1.6 million** in the prior-year quarter, impacting operating earnings[5](index=5&type=chunk) - The non-controlling interest redemption increment, which reduces earnings attributable to the company, increased to **$10.0 million** from **$7.1 million** year-over-year[5](index=5&type=chunk) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets grew slightly to $4.23 billion from $4.19 billion at year-end 2024, driven by increases in Goodwill and Operating lease right-of-use assets, while total liabilities also rose, mainly due to higher long-term debt, resulting in a modest increase in total shareholders' equity to $1.21 billion Balance Sheet Summary (as of March 31, 2025) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$4,234,749** | **$4,194,852** | | Cash and cash equivalents | $217,200 | $227,598 | | Goodwill | $1,413,596 | $1,395,383 | | **Total Liabilities** | **$2,575,976** | **$2,557,769** | | Long-term debt (current & non-current) | $1,308,647 | $1,298,710 | | **Total Shareholders' Equity** | **$1,205,734** | **$1,187,746** | - Goodwill increased by **$18.2 million** since December 31, 2024, reflecting recent acquisition activity[8](index=8&type=chunk) - Redeemable non-controlling interests, which are presented outside of shareholders' equity, stood at **$453.0 million**[8](index=8&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2025, the company generated $41.3 million in cash from operating activities, a significant improvement from an $8.8 million use of cash in the prior-year period, primarily due to higher profitability and lower payments for contingent acquisition consideration, leading to a small overall decrease of $3.4 million in cash and cash equivalents Cash Flow Summary (Three months ended March 31) | Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $41,250 | $(8,800) | | Net cash used in investing activities | $(45,245) | $(57,340) | | Net cash provided by financing activities | $602 | $43,130 | | **Decrease in cash, cash equivalents and restricted cash** | **$(3,408)** | **$(22,782)** | - Cash used for acquisitions of businesses was **$8.6 million**, significantly lower than the **$31.6 million** spent in Q1 2024[11](index=11&type=chunk) - Financing activities in Q1 2025 were relatively balanced, compared to Q1 2024 which saw a significant net inflow from debt issuance[11](index=11&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's accounting policies and financial figures, including revenue disaggregation by segment, information on recent acquisitions, debt structure, and segment performance, with both FirstService Residential and FirstService Brands contributing to revenue growth in Q1 2025, alongside three tuck-under acquisitions and an amended credit facility [Note 1. Description of the Business](index=9&type=section&id=Note%201.%20Description%20of%20the%20Business) - The company operates through two segments: FirstService Residential (property management) and FirstService Brands (essential property services)[12](index=12&type=chunk) - FirstService Brands includes well-known names like First Onsite Property Restoration, Paul Davis Restoration, California Closets, and CertaPro Painters[14](index=14&type=chunk) [Note 3. Revenue Recognition](index=9&type=section&id=Note%203.%20Revenue%20Recognition) Disaggregated Revenues (Three months ended March 31) | Segment | 2025 (in thousands) | 2024 (in thousands) | YoY Growth | | :--- | :--- | :--- | :--- | | FirstService Residential | $525,087 | $496,124 | +5.8% | | FirstService Brands company-owned | $674,984 | $613,307 | +10.1% | | FirstService Brands franchisor | $48,818 | $46,746 | +4.4% | | **Total (excl. franchise fees)** | **$1,248,889** | **$1,156,177** | **+8.0%** | - The company's backlog of contracted work yet to be performed was **$1.03 billion** as of March 31, 2025, up from **$924.8 million** at the end of 2024[19](index=19&type=chunk) [Note 4. Acquisitions](index=10&type=section&id=Note%204.%20Acquisitions) - In Q1 2025, the company completed three acquisitions for a total consideration of **$11.9 million** (cash of **$8.6 million** and contingent consideration of **$3.3 million**)[21](index=21&type=chunk) - Acquisitions included an amenity management firm (FirstService Residential), an exterior restoration business, and a Paul Davis franchisee (FirstService Brands)[21](index=21&type=chunk) - Acquisition-related items included **$3.1 million** in transaction costs and a **$9.1 million** increase related to contingent acquisition consideration fair value adjustments[23](index=23&type=chunk) [Note 8. Long-Term Debt](index=11&type=section&id=Note%208.%20Long-Term%20Debt) - In February 2025, the company amended its credit agreement, providing for a **$1.75 billion** revolving credit facility maturing in February 2030[30](index=30&type=chunk) - In January 2024, the company issued a total of **$125 million** in senior unsecured notes through private placements with New York Life and Prudential[32](index=32&type=chunk) [Note 14. Segmented Information](index=14&type=section&id=Note%2014.%20Segmented%20Information) Segment Operating Earnings (Three months ended March 31) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | FirstService Residential | $29,267 | $26,658 | +9.8% | | FirstService Brands | $24,486 | $26,799 | -8.6% | | Corporate | $(14,495) | $(15,399) | N/A | | **Consolidated** | **$39,258** | **$38,058** | **+3.2%** | - FirstService Brands' operating earnings declined despite higher revenues, impacted by a significant increase in acquisition-related items (**$9.8 million** in Q1 2025 vs **$0.3 million** in Q1 2024)[47](index=47&type=chunk) - The United States continues to be the primary source of revenue, generating **$1.12 billion** (**89.4%** of total) in Q1 2025[48](index=48&type=chunk) [Management's Discussion and Analysis (MD&A)](index=17&type=section&id=Management's%20Discussion%20and%20Analysis%20(MD%26A)) [Results of Operations](index=17&type=section&id=Results%20of%20Operations) Consolidated revenues for Q1 2025 rose 8% to $1.25 billion, driven by 6% growth in FirstService Residential and 10% in FirstService Brands, with Adjusted EBITDA significantly increasing to $103.3 million and an improved margin of 8.3%, though reported operating earnings remained flat due to a $10.6 million increase in acquisition-related items Q1 2025 Key Performance Indicators (vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $1.25 billion | $1.16 billion | +8% | | Operating Earnings | $39.3 million | $38.1 million | +3.1% | | Adjusted EBITDA | $103.3 million | $83.4 million | +23.9% | | Adjusted EBITDA Margin | 8.3% | 7.2% | +110 bps | - FirstService Residential revenues grew **6%** (**3%** organic), with margin improvement attributed to operating efficiencies in its client service delivery model[56](index=56&type=chunk) - FirstService Brands revenues grew **10%**, but organic revenue declined **2%**, with reported growth driven by tuck-under acquisitions and Adjusted EBITDA margin expansion due to improved processes at restoration and home services brands[58](index=58&type=chunk) [Reconciliation of Non-GAAP Measures](index=19&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section details the calculation of non-GAAP metrics like Adjusted EBITDA and Adjusted EPS, which management uses to evaluate operating performance, with Adjusted EBITDA at $103.3 million for Q1 2025 and Adjusted EPS significantly increasing to $0.92 from $0.67 in Q1 2024 due to higher adjusted net earnings Reconciliation to Adjusted EBITDA (Q1 2025) | Item | Amount (in thousands) | | :--- | :--- | | Net earnings | $14,080 | | Add: Income tax | $6,000 | | Add: Interest expense, net | $19,264 | | Add: Depreciation and amortization | $44,176 | | Add: Acquisition-related items | $12,233 | | Add: Stock-based compensation | $7,599 | | Less: Other income, net | $(86) | | **Adjusted EBITDA** | **$103,266** | Reconciliation to Adjusted EPS (Q1 2025) | Item | Per Share Amount | | :--- | :--- | | Diluted net earnings per share | $0.06 | | Add: Non-controlling interest redemption increment | $0.22 | | Add: Acquisition-related items | $0.21 | | Add: Amortization of intangible assets, net of tax | $0.28 | | Add: Stock-based compensation expense, net of tax | $0.15 | | **Adjusted EPS** | **$0.92** | [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position remains strong, with net cash from operations improving to $41.3 million in Q1 2025, stable net indebtedness at $1.09 billion, and $587.6 million of available credit as of March 31, 2025, ensuring compliance with debt covenants and financial flexibility, with approximately $125 million expected for capital expenditures in 2025 - Net cash provided by operating activities was **$41.3 million** for Q1 2025, a significant improvement from a use of **$8.8 million** in Q1 2024[75](index=75&type=chunk) - Net indebtedness was **$1.09 billion** as of March 31, 2025, with **$587.6 million** of available un-drawn credit[79](index=79&type=chunk) - Total contractual obligations as of March 31, 2025, amount to approximately **$2.0 billion**, with the largest components being long-term debt and operating leases[81](index=81&type=chunk) [Other Disclosures](index=22&type=section&id=Other%20Disclosures) This section covers redeemable non-controlling interests (RNCI), related-party transactions, and outstanding share data, with the total redemption amount for RNCI at $394.3 million as of March 31, 2025, routine office rentals and loans with senior managers of subsidiaries, and 45.4 million common shares outstanding as of the report date - The redemption amount for Redeemable Non-Controlling Interests (RNCI) was **$394.3 million** as of March 31, 2025, with the majority (**$324.2 million**) residing in the FirstService Brands segment[82](index=82&type=chunk)[83](index=83&type=chunk) - The company has related-party transactions for office space rentals with senior managers, amounting to **$2.6 million** in rent expense for Q1 2025[86](index=86&type=chunk) - As of May 2, 2025, the company had **45,444,001** common shares outstanding, with an additional **2,814,675** shares issuable upon exercise of stock options[88](index=88&type=chunk)

Financial Data and Key Metrics Changes - Total revenues increased by 8% year-over-year, reaching $1.25 billion compared to $1.16 billion in Q1 2024 [5][24]. - Adjusted EBITDA rose by 24% year-over-year to $103.3 million, with an EBITDA margin improvement of 110 basis points to 8.3% [24][36]. - Earnings per share (EPS) grew by 37%, reaching $0.92 [7][24]. Business Line Data and Key Metrics Changes - **FirstService Residential**: Revenues increased by 6% to $525 million, with EBITDA growing by 17% to $41.6 million, resulting in a margin of 7.9% [7][25]. - **FirstService Brands**: Revenues rose by 10% to $726 million, with EBITDA increasing by 22% to $67.8 million, leading to a margin of 9.3% [8][28]. Market Data and Key Metrics Changes - The restoration segment saw mid-single-digit revenue growth, while organic growth remained flat [9][10]. - The roofing segment experienced a nearly 50% revenue increase year-over-year due to acquisitions, but organic revenues declined by about 10% [12][14]. - Century Fire reported mid-single-digit organic growth, bolstered by strong repair and inspection revenues [15]. Company Strategy and Development Direction - The company is focused on enhancing margins and profitability while navigating macroeconomic uncertainties [21][36]. - There is an ongoing emphasis on tuck-under acquisitions to drive growth, with a disciplined approach to capital deployment [33][48]. - The management is optimistic about pent-up demand in the home improvement sector as market stability returns [46][76]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of economic uncertainty and consumer confidence on business performance, particularly in home services [20][46]. - The company expects continued revenue growth in Q2 similar to the 8% growth rate in Q1, with low double-digit EBITDA growth anticipated [35][36]. - Management remains confident in achieving full-year expectations for 2025 despite current challenges [36]. Other Important Information - The company generated over $75 million in operating cash flow before working capital changes, indicating strong cash flow performance [32]. - Capital expenditures were just shy of $30 million, aligning with full-year guidance of approximately $125 million [32][33]. - The company maintains a conservative leverage ratio of two times net debt to trailing twelve months EBITDA [34]. Q&A Session Summary Question: Exposure to macroeconomic conditions - Management indicated that approximately $1 billion of revenue is exposed to macroeconomic conditions, with half tied to residential and half to commercial sectors [40][41]. Question: Conversion of leads in the brands business - Management noted that while leads are increasing, consumer hesitation due to uncertainty is affecting conversions, but they expect pent-up demand to drive future activity [44][46]. Question: M&A environment and potential targets - Management reported that while some sale processes have been deferred, the market remains active, and they expect to transact in the latter half of the year [48]. Question: Organic decline in roofing segment - Management estimated that the organic decline in roofing was roughly half due to weather-related issues and half due to commercial delays [52]. Question: Restoration pipeline update - Management stated that the conversion of reconstruction work is slow, but the total backlog remains stable, indicating similar revenue levels in Q2 [56]. Question: Shift towards margin-centric management - Management clarified that margin improvement efforts are ongoing, and the current top-line challenges are primarily due to external factors like weather and economic conditions [60][62]. Question: Labor availability and costs - Management confirmed that labor availability has improved significantly, with turnover down to pre-COVID levels and wage inflation stabilizing [81].

Core Viewpoint - FirstService (FSV) reported quarterly earnings of $0.92 per share, exceeding the Zacks Consensus Estimate of $0.84 per share, and showing an increase from $0.67 per share a year ago, representing an earnings surprise of 9.52% [1] Financial Performance - The company posted revenues of $1.25 billion for the quarter ended March 2025, which was 3.03% below the Zacks Consensus Estimate, compared to $1.16 billion in the same quarter last year [2] - Over the last four quarters, FirstService has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Performance and Outlook - FirstService shares have declined approximately 4.6% since the beginning of the year, while the S&P 500 has decreased by 8.6% [3] - The current consensus EPS estimate for the upcoming quarter is $1.51 on revenues of $1.42 billion, and for the current fiscal year, it is $5.63 on revenues of $5.61 billion [7] Industry Context - The Real Estate - Operations industry, to which FirstService belongs, is currently ranked in the bottom 27% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact FirstService's stock performance [5]