Mr. Scott Patterson reports

FIRSTSERVICE REPORTS STRONG FOURTH QUARTER AND FULL YEAR RESULTS

FirstService Corp. has released its fourth quarter and full year results for the year ended Dec. 31, 2015. All amounts are in U.S. dollars.

Revenues for the fourth quarter were $316.1-million, a 12-per-cent increase relative to the same quarter in the prior year. Adjusted earnings before interest, taxes, depreciation and amortization were $22.3-million, up 67 per cent, and adjusted earnings per share were 28 cents, up 115 per cent from the prior year quarter. Generally accepted accounting principles diluted EPS was nine cents per share in the quarter, compared with a loss of 10 cents for the same quarter a year ago.

For the year ended Dec. 31, 2015, revenues were $1.26-billion, a 12-per-cent increase relative to the prior year. Adjusted EBITDA was $103.0-million, up 37 per cent. Adjusted EPS was $1.20, up 43 per cent versus the prior year of 84 cents. GAAP diluted EPS for the year was 59 cents, compared with 36 cents in the prior year. The prior year was negatively impacted by higher-than-expected employee medical benefits expenses in the FirstService residential operations.

"We completed our inaugural year-end as an independent public company with very strong fourth quarter and annual financial performance for 2015. Both our FirstService residential and FirstService brands divisions delivered excellent results, each spurred by double-digit top-line growth as well as significant operating margin expansion at FirstService residential," said Scott Patterson, chief executive officer of FirstService. "We expect to continue to deliver mid-to-high-single-digit organic growth across our operations, benefiting from both the attractive macroeconomic fundamentals in our markets, as well as our ability to capture market share by leveraging our strengths and competitive advantages."

Segmented fourth quarter results

FirstService residential revenues totalled $251.0-million for the fourth quarter, up 10 per cent relative to $227.9-million in the prior year quarter. The revenue increase comprised 8-per-cent organic growth (9 per cent on a local-currency basis) and 2-per-cent growth from recent acquisitions. Adjusted EBITDA was $13.7-million, almost double the $6.9-million reported in the prior year period. Fourth quarter performance was driven by broad-based top-line growth across the entire service offering as well as continuing operating efficiencies. Prior period results were impacted by $3.0-million of incremental employee medical benefits costs.

FirstService brands revenues totalled $65.1-million, up 20 per cent versus $54.3-million in the prior year period. The increase comprised 13-per-cent organic growth (14 per cent on a local-currency basis) and 7 per cent from recent acquisitions. Organic growth was driven by very strong results at California Closets and the smaller, faster-growing systems. Adjusted EBITDA for the quarter was $11.3-million, up 25 per cent versus the prior year quarter.

Corporate costs were $2.7-million in the fourth quarter, relative to $2.6-million in the prior year period.

Segmented full year results

FirstService residential revenues were $1.0-billion, up 11 per cent relative to 2014, with the increase comprising 8-per-cent organic growth (9 per cent on a local-currency basis) and 3 per cent from acquisitions. Organic growth was primarily driven by competitive contract wins and strong new development business. Adjusted EBITDA was $68.9-million, up 51 per cent versus the prior year, which reflected significant regional operating improvements. Prior year results were impacted by $9.0-million of incremental employee medical benefits costs and $1.9-million of non-recurring expenses related to the downsizing of the homeowner collection business incurred during the year.

FirstService brands revenues for the year totalled $246.6-million, up 16 per cent versus the prior year, comprising organic growth of 10 per cent (11 per cent on a local-currency basis) and 6 per cent from acquisitions. Adjusted EBITDA for the year was $43.0-million, up 14 per cent relative to the prior year. Most of the brands benefited from operating leverage on royalties relating to increasing system-wide sales, partially offset by weather-related flat performance at Paul Davis Restoration and investments incurred toward executing on the California Closets centralized manufacturing strategy.

Corporate costs were $8.8-million for the full year, relative to $8.4-million in the prior year.

Stock repurchases

During the fourth quarter, the company repurchased 511,594 subordinate voting shares on the open market under its normal course issuer bid at an average price of $38.05 per share. All shares purchased under the NCIB were cancelled. The company is authorized to repurchase up to an additional 2,628,406 subordinate voting shares under its NCIB, which expires on Aug. 23, 2016.

                                                                
                                       OPERATING RESULTS                                                                        
                       (In thousands of U.S. dollars, except per share) 
                                                                                                         
                                           Three months ended Dec. 31,  12 months ended Dec. 31,   
                                                      2015       2014         2015         2014

Revenues                                          $316,112   $282,174   $1,264,077   $1,132,002
Cost of revenues                                   221,466    201,634      883,963      800,046
Selling, general and administrative expenses        72,848     67,494      279,235      258,678
Depreciation                                         4,999      5,878       18,836       17,730
Amortization of intangible assets                    2,873      2,231       10,148        8,744
Acquisition-related items                              (61)        65          408        1,183
Spin-off transaction costs                               -          -          740            -
Operating earnings                                  13,987      4,872       70,747       45,621
Interest expense, net                                2,033      1,733        9,077        6,932
Other expense (income)                                 (49)       352           60          255
Earnings before income tax                          12,003      2,787       61,610       38,434
Income tax                                           4,096      1,523       23,412       12,242
Net earnings                                         7,907      1,264       38,198       26,192
Non-controlling interest share of earnings            (274)    (2,003)       4,560        3,105
Non-controlling interest redemption increment        4,917      6,866       12,243       10,117
Net earnings (loss) attributable to company          3,264     (3,599)      21,395       12,970
Net earnings (loss) per common share
Basic                                                 0.09      (0.10)        0.59         0.36
Diluted                                               0.09      (0.10)        0.59         0.36
Adjusted earnings per share                           0.28       0.13         1.20         0.84

We seek Safe Harbor.