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FirstService Corporation

Q3 2013 Earnings Conference Call

October 23, 2013 11.00 AM ET


Jay Hennick – Founder and CEO

John Friedrichsen – SVP and CFO

Scott Patterson – President and COO


Frederic Bastien – Raymond James

Sami Abboud – Scotiabank

Tal Woolley - RBC Capital Markets

Whitney Stevenson - JMP Securities

David Gold - Sidoti

Brandon Dobell – William Blair

Stephen MacLeod – BMO Capital Markets

FirstService Corporation (FSRV) Q3 2013 Earnings Call October 23, 2013 11:00 AM ET



Good day, ladies and gentlemen, and welcome to Third Quarter Investors’ Conference Call. Today’s call is being recorded. Legal counsel requires us to advice that the discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance or achievements contemplated in the forward-looking statements.

Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company’s annual information form as filed with the Canadian Securities Administrators and in the company’s annual report on Form 40F as filed with the US Securities and Exchange Commission.

As a reminder, today’s call is being recorded. Today is Wednesday, October 23, 2013. At this time, for opening remarks and introductions, I’d like to turn the call over to the Founder and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

Jay Hennick

Thank you and good morning everyone. As the operator said, I’m Jay Hennick, Founder of the company. With me today, is Scott Patterson, President and Chief Operating Officer, and John Friedrichsen, Senior Vice President and Chief Financial Officer.

This morning, FirstService reported strong year-over-year results with revenue up 9%, EBITDA up 11% and earnings per share up 8%, all in what was another very busy quarter for our company on many levels. Each of our service lines reported strong revenue growth. Both Colliers International and FirstService Brand grew EBITDA by more 30%. We completed the re-branding at FirstService Residential, and we redeemed all of our outstanding convertible debentures. And also we successfully completed the sale of Field Asset Services. With so much accomplished FirstService is better positioned today than in any other time in its history to deliver strong growth in revenue and profits in the years ahead.

In terms of Field Asset Services, we sold the business to insurance company Assurant, Inc at the quarter end. While Field Asset was successfully repositioned for future growth to changing environment in the U.S. residential mortgage market currently favors service providers like Assurant who can offer clients a more comprehensive suite of services. I would like to take this opportunity to thank our former management for all of their efforts during our years of ownership and wish them well as part of the Assurant. Needless to say from FirstService's perspective investing in Field Asset back in back in 2007 was very fortuitous indeed. The strong cash flow generated during the U.S. housing and financial crisis proved to be counter cyclical to some of our other service lines and the substantial earnings that we generated provided us with the fire power we needed to capitalize on opportunities at the right time in the economic cycle.

As you know, Colliers International is one of the top three global players in commercial real estate and it continues to show momentum as we strengthen our platform one step at a time. During the quarter, EBITDA grew by 31% with margins up almost 130 basis points versus the prior year. Growth came both internally and from recent acquisition and higher margins from our concentrated efforts to refine and strengthened our global platform. During the quarter, Colliers was also named best overall real estate advisory firm in Asia, China, Singapore and several other market in the Far East by the Euromoney annual survey which demonstrate once again the strength of our market presence and the experience we have in the region. And Colliers continuous to make progress winning new mandate in large corporate client. So far this year Colliers was selected by British Telecom to be its exclusive global service solutions provider and has won major mandate from large clients such as Aon, NBC Universal, Dolby, Siemens, Sonopy [ph] just a name few. We continue to receive outstanding feedback on our Colliers' 360 portfolio, analytic and business intelligence tools which is turning into real big differentiator for Colliers as one of the few commercial real estate firms who can truly offer services to client on a global basis.

Revenues at FirstService Residential were also up by 8% during the quarter all from internal growth. We are pleased to have completed the re-branding of all our property management operations across North America to the FirstService Residential brand name. Bringing the FirstService Brand to the forefront was a natural step for us. It allowed us to deliver a consistent brand message and service delivery model across the board and it positioned us well to continue leveraging the more than 1.6 million units we managed across North America.

In terms of acquisitions, we completed the small but important acquisition adding Curry Association Management just after quarter end. Curry is that city's largest residential management company and it will be re-branded as FirstService Residential Kansas City over the coming months. Having such a large presence in the [show me] state will allow us to bring our unique business model to this growing market and show our new clients there, some of the many differentiators we offer as the largest residential management firm in North America.

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