FirstService(FSV) - 2024 Q1 - Quarterly Report

First Quarter 2024 Financial Highlights Overall Performance FirstService Corporation reported a 14% increase in Q1 2024 consolidated revenues to $1.16 billion, while Adjusted EBITDA rose 2% to $83.4 million, and Adjusted EPS declined to $0.67 | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues (millions) | $1,158.0 | $1,018.4 | +14% | | Adjusted EBITDA (millions) | $83.4 | $82.1 | +2% | | Adjusted EPS | $0.67 | $0.85 | -21% | | GAAP Operating Earnings (millions) | $38.1 | $41.0 | -7% | | GAAP EPS | $0.14 | $0.36 | -61% | - Management expressed satisfaction with the first quarter results, stating they were in line with expectations and reaffirming confidence in achieving full-year performance targets[4] Segment Performance Both FirstService Residential and FirstService Brands achieved double-digit revenue growth, driven by new contracts and acquisitions, despite organic decline in restoration services due to milder weather FirstService Residential FirstService Residential's revenue increased 11% to $496.1 million, driven by 8% organic growth from new contracts, with Adjusted EBITDA rising to $35.6 million | Metric (in millions) | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues | $496.1 | $445.6 | +11% | | Adjusted EBITDA | $35.6 | $32.0 | +11% | | Operating Earnings | $26.7 | $22.7 | +18% | - The top-line growth was primarily driven by 8% organic growth, stemming from new property management contract wins[7] FirstService Brands FirstService Brands' revenue grew 16% to $661.9 million, boosted by acquisitions, but organic revenue declined 6% due to milder weather and increased marketing costs impacting margins | Metric (in millions) | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues | $661.9 | $572.9 | +16% | | Adjusted EBITDA | $55.5 | $54.8 | +1% | | Operating Earnings | $26.8 | $30.2 | -11% | - Organic revenue for the division was down 6% YoY, as the prior year period saw significant activity from weather-related claims at restoration operations[8][9] - Operating margins declined due to lower profitability at restoration brands from milder weather and increased promotional and marketing activity at home services brands[9] Corporate Costs Corporate costs, on an Adjusted EBITDA basis, increased to $7.7 million from $4.7 million, with total corporate costs rising to $15.4 million primarily due to foreign exchange movements | Metric (in millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Corporate Costs (Adjusted EBITDA basis) | $7.7 | $4.7 | | Total Corporate Costs | $15.4 | $11.9 | Consolidated Financial Statements Consolidated financial statements show revenue growth offset by increased costs, with total assets and debt rising, and cash primarily used in operating and investing activities Operating Results (Income Statement) Q1 2024 revenues increased to $1.16 billion, but higher costs led to a decrease in operating earnings to $38.1 million and net earnings attributable to the company falling to $6.3 million | (in thousands of US dollars) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenues | $1,158,045 | $1,018,445 | | Operating earnings | $38,058 | $40,950 | | Net earnings | $14,897 | $22,667 | | Net earnings attributable to Company | $6,308 | $16,118 | | Diluted EPS | $0.14 | $0.36 | Condensed Consolidated Balance Sheets As of March 31, 2024, total assets increased slightly to $3.64 billion, while total debt rose to $1.24 billion, resulting in net debt of $1.08 billion | (in thousands of US dollars) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total assets | $3,644,160 | $3,625,743 | | Total liabilities and equity | $3,644,160 | $3,625,743 | | Total debt | $1,240,265 | $1,182,107 | | Total debt, net of cash | $1,075,419 | $994,490 | Condensed Consolidated Statements of Cash Flows Q1 2024 saw $8.8 million cash used in operating activities and $57.3 million in investing activities, partially offset by $43.1 million from financing, leading to an overall cash decrease | (in thousands of US dollars) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($8,800) | ($303) | | Net cash used in investing activities | ($57,340) | ($109,136) | | Net cash provided by financing activities | $43,130 | $107,347 | | Decrease in cash | ($22,782) | ($2,105) | Non-GAAP Financial Measures Reconciliations for non-GAAP measures show Adjusted EBITDA increased slightly to $83.4 million, while Adjusted EPS decreased to $0.67 due to lower net earnings and various adjustments Reconciliation of Net Earnings to Adjusted EBITDA Adjusted EBITDA, derived from net earnings by adjusting for non-cash and non-recurring items, increased slightly to $83.4 million in Q1 2024 from $82.1 million | (in thousands of US dollars) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net earnings | $14,897 | $22,667 | | Operating earnings | $38,058 | $40,950 | | Depreciation and amortization | $36,807 | $31,882 | | Stock-based compensation expense | $6,908 | $7,157 | | Adjusted EBITDA | $83,373 | $82,096 | Reconciliation of Net Earnings to Adjusted EPS Adjusted EPS, which accounts for non-controlling interest, acquisition items, and stock-based compensation, decreased to $0.67 in Q1 2024 from $0.85 | (in US dollars) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Diluted net earnings per share | $0.14 | $0.36 | | Adjustments (net) | $0.53 | $0.49 | | Adjusted EPS | $0.67 | $0.85 | Reconciliation of Net Earnings to Adjusted Net Earnings | (in thousands of US dollars) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net earnings | $14,897 | $22,667 | | Adjusted net earnings | $30,418 | $37,927 |