updated 10/27/2010 7:46:19 AM ET 2010-10-27T11:46:19

Operating highlights:

TORONTO, Oct. 27, 2010 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV) (Nasdaq:FSRV), preferred shares – (TSX:FSV.PR.U) today reported results for its third quarter ended September 30, 2010. All amounts are in U.S. dollars.

Revenues for the third quarter were $530.4 million, an 18% increase relative to the same quarter in the prior year, Adjusted EBITDA (note 1) was $45.7 million, up 5% from $43.5 million and Adjusted EPS (note 2) was $0.61, versus $0.60 reported in the prior year quarter. GAAP EPS from continuing operations was $0.18 per share in the quarter, compared to $0.16 for the same quarter a year ago.

For the nine months ended September 30, 2010, revenues were $1.43 billion, a 16% increase relative to the comparable prior year period, while Adjusted EBITDA was $110.3 million, up 14%, and Adjusted EPS was $1.23, up 7%. GAAP EPS from continuing operations for the nine month period was $0.24, compared to a loss of $1.45 in the prior year period.

"Overall, we are pleased with our third quarter results. Colliers International demonstrated strong revenue growth in the United States, Canada and Australia, while continuing to invest in its global platform. Revenues in Residential Property Management and Property Services also grew relative to the prior year quarter despite difficult market conditions," said Jay S. Hennick, Founder and Chief Executive Officer of FirstService. "With a strong balance sheet, low leverage ratios and significant financing capacity, FirstService is well positioned to continue generating strong growth for the balance of the year and beyond," he added.

About FirstService Corporation

FirstService Corporation is a global diversified leader in the rapidly growing real estate services sector, providing services in commercial real estate, residential property management and property services. Industry-leading service platforms include Colliers International, the third largest global player in commercial real estate services; FirstService Residential Management, the largest manager of residential communities in North America; and TFC, North America's largest provider of property services through franchise and contractor networks.

FirstService generates over US$1.9 billion in annual revenues and has more than 18,000 employees worldwide. More information about FirstService is available at www.firstservice.com .

Segmented Quarterly Results

Commercial Real Estate Services revenues totalled $222.7 million for the third quarter, up 43% relative to the prior year quarter. Revenue growth was comprised of 32% internal growth measured in local currencies, a 4% favourable impact from foreign currency translation and 7% growth from recent acquisitions. Internal growth was primarily driven by sharp year over year revenue increases in the United States, Canada and Australia. Adjusted EBITDA was $8.8 million, up 134% from $3.8 million reported in the prior year quarter. Third quarter results were negatively impacted by $2.0 million in Colliers International global re-branding costs, which are expected to continue being incurred throughout the balance of 2010 and the first half of 2011.

Residential Property Management revenues were $181.6 million for the third quarter, up 4% relative to the prior year quarter. Revenue growth was comprised of 1% internal growth and 3% from recent acquisitions. Adjusted EBITDA for the quarter was $19.4 million, up 10% versus $17.6 million in the prior year period.

Property Services revenues totalled $126.1 million, up 5% from $120.3 million in the prior year period, attributable evenly to franchising and foreclosure services growth. Adjusted EBITDA for the third quarter was $22.2 million, down 8% versus $24.2 million in the prior year quarter, primarily due to the Field Asset Services property preservation and foreclosure services operations. Foreclosure services margins were consistent with margins in each of the past three quarters and, relative to the prior year quarter, were affected by increases in the scope of client engagements.

Corporate costs were $5.4 million in the third quarter, relative to $3.6 million in the prior year period. Consistent with the second quarter, the current quarter's results were primarily impacted by higher performance-based compensation accruals and foreign currency translation of Canadian dollar-denominated expenses.

Deferred Income Tax Valuation Allowance

During the third quarter, the Company recorded an increase in its valuation allowance with respect to deferred income tax assets, which increased income tax expense by $6.8 million and decreased GAAP earnings per share by $0.21. In the prior year quarter, the valuation allowance amounted to $3.6 million, or $0.11 per share. For the nine months ended September 30, 2010, the increase to income tax expense and reduction to GAAP earnings per share were $13.3 million and $0.41, respectively (2009 - $18.5 million and $0.58, respectively). The valuation allowance relates to tax loss carry-forwards in the Company's Commercial Real Estate operations, which remain available to offset income tax over the next 17 to 20 years.

Conference Call

FirstService will be holding a conference call on Wednesday, October 27, 2010 at 11:00 a.m. Eastern Time to discuss results for the first quarter. 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 (loss) from continuing operations to Adjusted EBITDA:

Adjusted EBITDA is defined as net earnings from continuing operations before non-controlling interest share of earnings, income taxes, interest, depreciation, amortization, goodwill impairment charges, acquisition-related items, stock-based compensation expense and cost containment expense. The Company uses this measure to evaluate its own operating performance and as an integral part of its planning and reporting systems. Additionally, the Company uses this measure in conjunction with discounted cash flow models to determine its overall enterprise valuation and to evaluate acquisition targets. The Company believes this measure is 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 the United States, and should not be considered as a substitute for operating earnings, net earnings or cash flow from operating activities, as determined in accordance with GAAP. The Company's 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) and net earnings (loss) per common share from continuing operations to adjusted net earnings and adjusted net earnings per share:

Adjusted diluted net earnings per common share from continuing operations is defined as diluted net earnings per common share from continuing operations plus the effect, after income tax, of: (i) the non-controlling interest redemption increment recognized in connection with the accounting standards on non-controlling interests ("NCI"); (ii) amortization expense related to intangible assets recognized in connection with acquisitions; (iii) goodwill impairment charges; (iv) acquisition-related items; (v) stock-based compensation expense; (vi) cost containment expense and (vii) deferred income tax valuation allowances related to tax loss carry-forwards. The Company believes adjusted earnings per share is a useful measure of operating performance because it enhances the comparability of operating results from period to period. This 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 from continuing operations, as determined in accordance with GAAP. The Company's method of calculating this measure may differ from other issuers and, accordingly, this measure may not be comparable to measures used by other issuers. A reconciliation appears below.

Notes to Condensed Consolidated Statements of Earnings

(1) Acquisition-related items include contingent acquisition consideration fair value adjustments, contingent acquisition consideration-related compensation expense, settlements of contingent liabilities of acquired entities initially recognized at the acquisition date and transaction costs.

(2) Income tax expense for the three months ended September 30, 2010 includes a $6,792 valuation allowance related to deferred income tax assets (2009 - $3,563); income tax expense for the nine months ended September 30, 2010 includes a $13,262 valuation allowance (2009 - $18,521).

(3) Amount shown is before NCI share. For the three months ended September 30, 2010, NCI share of discontinued operations was nil (2009 – nil); for the nine months ended September 30, 2010, NCI share of discontinued operations was nil (2009 – ($275)).

(4) See definition and reconciliation above.

© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
13.79%
Cash Back Cards 17.80%
17.78%
Rewards Cards 17.18%
17.17%
Source: Bankrate.com