Double-Digit Annual Revenue and Operating Earnings Growth
Operating highlights:
Three months ended | Year ended | ||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||
Revenues (millions) | $ | 1,079.3 | $ | 1,020.1 | $ | 4,334.5 | $ | 3,745.8 | |||||
Adjusted EBITDA (millions) (note 1) | 103.3 | 102.5 | 415.7 | 351.7 | |||||||||
Adjusted EPS (note 2) | 1.11 | 1.22 | 4.66 | 4.24 | |||||||||
GAAP Operating Earnings | 48.1 | 67.5 | 244.9 | 219.0 | |||||||||
GAAP EPS | 0.14 | 0.86 | 2.24 | 2.72 | |||||||||
Consolidated revenues for the fourth quarter were
Operating Earnings for the quarter were
For the year ended
“We are pleased with our fourth quarter performance which lined up with our expectations,” said
About
Segmented Fourth Quarter Results
FirstService Brands recorded revenues of
Corporate costs, as presented in Adjusted EBITDA (note 1), were
Segmented Full Year Results
FirstService Brands revenues were
Corporate costs, as presented in Adjusted EBITDA, were
Conference Call & Presentation
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Forward-looking Statements
This 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.
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.sedarplus.ca.
Notes
1. 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; and (vi) stock-based compensation expense. 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 Company’s 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
Three months ended | Twelve months ended | ||||||||||||||
(in thousands of US$) | |||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net earnings | $ | 23,783 | $ | 44,339 | $ | 147,021 | $ | 145,007 | |||||||
Income tax | 12,051 | 14,806 | 56,317 | 48,974 | |||||||||||
Other income, net | (595 | ) | (712 | ) | (5,810 | ) | (146 | ) | |||||||
Interest expense, net | 12,823 | 9,025 | 47,364 | 25,191 | |||||||||||
Operating earnings | 48,062 | 67,458 | 244,892 | 219,026 | |||||||||||
Depreciation and amortization | 33,872 | 30,417 | 127,934 | 110,140 | |||||||||||
Acquisition-related items | 16,485 | 599 | 21,517 | 4,520 | |||||||||||
Stock-based compensation expense | 4,924 | 4,073 | 21,385 | 18,046 | |||||||||||
Adjusted EBITDA | $ | 103,343 | $ | 102,547 | $ | 415,728 | $ | 351,732 |
A reconciliation of segment operating earnings to segment Adjusted EBITDA appears below. | ||||||||||||||
(in thousands of US$) | ||||||||||||||
Three months ended | ||||||||||||||
Residential | Brands | Corporate(1) | ||||||||||||
Operating earnings (loss) | $ | 34,136 | $ | 20,603 | $ | (6,677 | ) | |||||||
Depreciation and amortization | 8,373 | 25,477 | 22 | |||||||||||
Acquisition-related items | 1,002 | 14,992 | 491 | |||||||||||
Stock-based compensation expense | - | - | 4,924 | |||||||||||
Adjusted EBITDA | $ | 43,511 | $ | 61,072 | $ | (1,240 | ) | |||||||
Three months ended | ||||||||||||||
Residential | Brands | Corporate(1) | ||||||||||||
Operating earnings (loss) | $ | 30,562 | $ | 44,040 | $ | (7,144 | ) | |||||||
Depreciation and amortization | 7,591 | 22,804 | 22 | |||||||||||
Acquisition-related items | (38 | ) | 594 | 43 | ||||||||||
Stock-based compensation expense | - | - | 4,073 | |||||||||||
Adjusted EBITDA | $ | 38,115 | $ | 67,438 | $ | (3,006 | ) | |||||||
Year ended | ||||||||||||||
Residential | Brands | Corporate(1) | ||||||||||||
Operating earnings (loss) | $ | 155,044 | $ | 126,468 | $ | (36,620 | ) | |||||||
Depreciation and amortization | 33,114 | 94,729 | 91 | |||||||||||
Acquisition-related items | (366 | ) | 21,159 | 724 | ||||||||||
Stock-based compensation expense | - | - | 21,385 | |||||||||||
Adjusted EBITDA | $ | 187,792 | $ | 242,356 | $ | (14,420 | ) | |||||||
Year ended | ||||||||||||||
Residential | Brands | Corporate(1) | ||||||||||||
Operating earnings (loss) | $ | 138,873 | $ | 111,638 | $ | (31,485 | ) | |||||||
Depreciation and amortization | 28,611 | 81,439 | 90 | |||||||||||
Acquisition-related items | 1,153 | 3,200 | 167 | |||||||||||
Stock-based compensation expense | - | - | 18,046 | |||||||||||
Adjusted EBITDA | $ | 168,637 | $ | 196,277 | $ | (13,182 | ) | |||||||
Segment Adjusted EBITDA margin is defined as segment Adjusted EBITDA divided by segment revenues. | ||||||||||||||
(1) Corporate costs represent corporate overhead expenses not directly attributable to reportable segments and are therefore unallocated within segment operating earnings (loss) and Adjusted EBITDA. |
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; and (iv) stock-based compensation expense. 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 Company’s 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 US$) | ||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net earnings | $ | 23,783 | $ | 44,339 | $ | 147,021 | $ | 145,007 | ||||||||
Non-controlling interest share of earnings | (3,925 | ) | (3,462 | ) | (14,140 | ) | (9,381 | ) | ||||||||
Acquisition-related items | 16,485 | 599 | 21,517 | 4,520 | ||||||||||||
Amortization of intangible assets | 13,942 | 13,659 | 54,238 | 48,725 | ||||||||||||
Stock-based compensation expense | 4,924 | 4,073 | 21,385 | 18,046 | ||||||||||||
Income tax on adjustments | (4,905 | ) | (4,611 | ) | (19,662 | ) | (17,361 | ) | ||||||||
Non-controlling interest on adjustments | (665 | ) | (254 | ) | (1,517 | ) | (968 | ) | ||||||||
Adjusted net earnings | $ | 49,639 | $ | 54,343 | $ | 208,842 | $ | 188,588 | ||||||||
Three months ended | Twelve months ended | |||||||||||||||
(in US$) | ||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Diluted net earnings per share | $ | 0.14 | $ | 0.86 | $ | 2.24 | $ | 2.72 | ||||||||
Non-controlling interest redemption increment | 0.30 | 0.06 | 0.72 | 0.33 | ||||||||||||
Acquisition-related items | 0.36 | 0.01 | 0.47 | 0.10 | ||||||||||||
Amortization of intangible assets, net of tax | 0.23 | 0.22 | 0.88 | 0.79 | ||||||||||||
Stock-based compensation expense, net of tax | 0.08 | 0.07 | 0.35 | 0.30 | ||||||||||||
Adjusted earnings per share | $ | 1.11 | $ | 1.22 | $ | 4.66 | $ | 4.24 |
Operating Results | ||||||||||||||||||
(in thousands of US$, except per share amounts) | ||||||||||||||||||
Three months | Twelve months | |||||||||||||||||
ended | ended | |||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||
Revenues | $ | 1,079,260 | $ | 1,020,101 | $ | 4,334,548 | $ | 3,745,835 | ||||||||||
Cost of revenues | 735,920 | 690,314 | 2,947,008 | 2,565,720 | ||||||||||||||
Selling, general and administrative expenses | 244,921 | 231,313 | 993,197 | 846,429 | ||||||||||||||
Depreciation | 19,930 | 16,758 | 73,696 | 61,415 | ||||||||||||||
Amortization of intangible assets | 13,942 | 13,659 | 54,238 | 48,725 | ||||||||||||||
Acquisition-related items (1) | 16,485 | 599 | 21,517 | 4,520 | ||||||||||||||
Operating earnings | 48,062 | 67,458 | 244,892 | 219,026 | ||||||||||||||
Interest expense, net | 12,823 | 9,025 | 47,364 | 25,191 | ||||||||||||||
Other income, net | (595 | ) | (712 | ) | (5,810 | ) | (146 | ) | ||||||||||
Earnings before income tax | 35,834 | 59,145 | 203,338 | 193,981 | ||||||||||||||
Income tax | 12,051 | 14,806 | 56,317 | 48,974 | ||||||||||||||
Net earnings | 23,783 | 44,339 | 147,021 | 145,007 | ||||||||||||||
Non-controlling interest share of earnings | 3,925 | 3,462 | 14,140 | 9,381 | ||||||||||||||
Non-controlling interest redemption increment | 13,596 | 2,631 | 32,490 | 14,552 | ||||||||||||||
Net earnings attributable to Company | $ | 6,262 | $ | 38,246 | $ | 100,391 | $ | 121,074 | ||||||||||
Net earnings per common share | ||||||||||||||||||
Basic | $ | 0.14 | $ | 0.86 | $ | 2.25 | $ | 2.74 | ||||||||||
Diluted | 0.14 | 0.86 | 2.24 | 2.72 | ||||||||||||||
Adjusted earnings per share (2) | $ | 1.11 | $ | 1.22 | $ | 4.66 | $ | 4.24 | ||||||||||
Weighted average common shares (thousands) | ||||||||||||||||||
Basic | 44,639 | 44,420 | 44,556 | 44,175 | ||||||||||||||
Diluted | 44,874 | 44,499 | 44,795 | 44,494 |
(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$) | ||||||
Assets | ||||||
Cash and cash equivalents | $ | 187,617 | $ | 136,219 | ||
Restricted cash | 19,260 | 23,129 | ||||
Accounts receivable | 848,230 | 635,942 | ||||
Other current assets | 311,889 | 313,582 | ||||
Current assets | 1,366,996 | 1,108,872 | ||||
Other non-current assets | 34,418 | 38,549 | ||||
Fixed assets | 204,188 | 167,012 | ||||
Operating lease right-of-use assets | 218,299 | 205,544 | ||||
1,807,836 | 1,254,537 | |||||
Total assets | $ | 3,631,737 | $ | 2,774,514 | ||
Liabilities and shareholders' equity | ||||||
Accounts payable and accrued liabilities | $ | 477,077 | $ | 398,313 | ||
Other current liabilities | 211,661 | 153,866 | ||||
Operating lease liabilities - current | 50,898 | 49,145 | ||||
Long-term debt - current | 37,132 | 35,665 | ||||
Current liabilities | 776,768 | 636,989 | ||||
Long-term debt - non-current | 1,144,975 | 698,798 | ||||
Operating lease liabilities - non-current | 183,923 | 168,557 | ||||
Other liabilities | 115,938 | 78,178 | ||||
Deferred income tax | 53,024 | 51,097 | ||||
Redeemable non-controlling interests | 332,963 | 233,429 | ||||
Shareholders' equity | 1,024,146 | 907,466 | ||||
Total liabilities and equity | $ | 3,631,737 | $ | 2,774,514 | ||
Supplemental balance sheet information | ||||||
Total debt | $ | 1,182,107 | $ | 734,463 | ||
Total debt, net of cash | 994,490 | 598,244 |
Condensed Consolidated Statements of Cash Flows | ||||||||||||||||
(in thousands of US$) | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Cash provided by (used in) | ||||||||||||||||
Operating activities | ||||||||||||||||
Net earnings | $ | 23,783 | $ | 44,339 | $ | 147,021 | $ | 145,007 | ||||||||
Items not affecting cash: | ||||||||||||||||
Depreciation and amortization | 33,872 | 30,417 | 127,934 | 110,140 | ||||||||||||
Deferred income tax | (18,413 | ) | 9,249 | (19,049 | ) | 7,436 | ||||||||||
Other | 18,384 | 2,076 | 34,416 | 18,371 | ||||||||||||
57,626 | 86,081 | 290,322 | 280,954 | |||||||||||||
Changes in non-cash working capital | ||||||||||||||||
Accounts receivable | (23,039 | ) | (68,445 | ) | (99,816 | ) | (69,671 | ) | ||||||||
Payables and accruals | 44,153 | 28,729 | 25,656 | (11,118 | ) | |||||||||||
Other | 36,040 | 7,653 | 68,532 | (94,272 | ) | |||||||||||
Contingent acquisition consideration paid | (4,334 | ) | - | (4,334 | ) | - | ||||||||||
Net cash provided by operating activities | 110,446 | 54,018 | 280,360 | 105,893 | ||||||||||||
Investing activities | ||||||||||||||||
Acquisition of businesses, net of cash acquired | (434,366 | ) | (44,464 | ) | (547,182 | ) | (51,994 | ) | ||||||||
Purchases of fixed assets | (25,065 | ) | (22,155 | ) | (92,734 | ) | (77,609 | ) | ||||||||
Other investing activities | (6,173 | ) | (15,196 | ) | (6,413 | ) | (31,197 | ) | ||||||||
Net cash used in investing activities | (465,604 | ) | (81,815 | ) | (646,329 | ) | (160,800 | ) | ||||||||
Financing activities | ||||||||||||||||
Increase in long-term debt, net | 390,998 | 14,338 | 446,847 | 80,156 | ||||||||||||
Purchases of non-controlling interests, net | (111 | ) | (114 | ) | (4,285 | ) | (21,451 | ) | ||||||||
Dividends paid to common shareholders | (10,042 | ) | (8,954 | ) | (39,055 | ) | (34,884 | ) | ||||||||
Distributions paid to non-controlling interests | (454 | ) | - | (7,376 | ) | (8,061 | ) | |||||||||
Other financing activities | 4,178 | (2,960 | ) | 17,814 | 3,022 | |||||||||||
Net cash provided by financing activities | 384,569 | 2,310 | 413,945 | 18,782 | ||||||||||||
Effect of exchange rate changes on cash | (420 | ) | (347 | ) | (447 | ) | 1,202 | |||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | 28,991 | (25,834 | ) | 47,529 | (34,923 | ) | ||||||||||
Cash, cash equivalents and restricted cash, start of period | 177,886 | 185,182 | 159,348 | 194,271 | ||||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 206,877 | $ | 159,348 | $ | 206,877 | $ | 159,348 | ||||||||
Segmented Results | |||||||||||||
(in thousands of US$) | |||||||||||||
Residential | Brands | Corporate | Consolidated | ||||||||||
Three months ended | |||||||||||||
2023 | |||||||||||||
Revenues | $ | 496,281 | $ | 582,979 | $ | - | $ | 1,079,260 | |||||
Adjusted EBITDA (1) | 43,511 | 61,072 | (1,240 | ) | 103,343 | ||||||||
Operating earnings | 34,136 | 20,603 | (6,677 | ) | 48,062 | ||||||||
2022 | |||||||||||||
Revenues | $ | 442,124 | $ | 577,977 | $ | - | $ | 1,020,101 | |||||
Adjusted EBITDA | 38,115 | 67,438 | (3,006 | ) | 102,547 | ||||||||
Operating earnings | 30,562 | 44,040 | (7,144 | ) | 67,458 | ||||||||
Residential | Brands | Corporate | Consolidated | ||||||||||
Year ended | |||||||||||||
2023 | |||||||||||||
Revenues | $ | 1,996,823 | $ | 2,337,725 | $ | - | $ | 4,334,548 | |||||
Adjusted EBITDA | 187,792 | 242,356 | (14,420 | ) | 415,728 | ||||||||
Operating earnings | 155,044 | 126,468 | (36,620 | ) | 244,892 | ||||||||
2022 | |||||||||||||
Revenues | $ | 1,772,258 | $ | 1,973,577 | $ | - | $ | 3,745,835 | |||||
Adjusted EBITDA | 168,637 | 196,277 | (13,182 | ) | 351,732 | ||||||||
Operating earnings | 138,873 | 111,638 | (31,485 | ) | 219,026 | ||||||||
(1) See definition and reconciliation on pages 5 and 6. |
COMPANY CONTACTS:
Chief Executive Officer
Chief Financial Officer
(416) 960-9566
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