FirstService Corporation (FSRV)

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FirstService Corporation (FSRV)

Q4 2013 Results Earnings Conference Call

February 12, 2014 11:00 AM ET


Jay Hennick - Founder and CEO

Scott Patterson - President and COO

John Friedrichsen - SVP and Chief Financial Officer


Sami Abboud - Scotiabank

Stephen MacLeod - BMO Capital Markets

David Gold - Sidoti & Company, LLC

Stephanie Price - CIBC World Markets

Brandon Dobell - William Blair & Co.



Welcome to Fourth Quarter Year-End Investors’ Conference Call. Today’s call is being recorded. Legal counsel requires us to advice that discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may vary 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 40-F as filed with the U.S. Securities and Exchange Commission.

As a reminder, today’s call is being recorded. Today is Wednesday, February 12, 2014. At this time, for opening remarks and introductions, I would like to turn the call over to the Founder and Chief Executive Officer Mr. Jay Hennick. Please go ahead, sir.

Jay Hennick

Thank you officer and good morning everyone. Thanks for joining our conference call. With me today, is Scott Patterson, our President and Chief Operating Officer, and John Friedrichsen, Senior Vice President and Chief Financial Officer.

This morning, FirstService reported finished the year very strongly posting record quarter and full year results. For the quarter, revenues were $692 million up 16%, EBITDA was $73 million, up 28% and earnings per share were up $0.97 up 26% over the prior year quarter. For the year revenues hit a record $2.34 billion up 12%, EBITDA was a $186 million up 22% and earnings per share came in at $2.15 up total of 31% over the prior year.

Colliers International one of the leading global players in commercial real estate continued to bolster its global platform making excellent progress both operationally and financially with substantial growth in revenues and profits. Revenues for the quarter were up 20%, with EBITDA up a total of 44% a tremendous achievement by any measure. We were especially pleased with our margins. For the year EBITDA margins were up more than 200 basis points to almost 9% following the strong margin performance last year and well on our way to our stated target of 10%. Based on our current mix of business we believe EBITDA margins of 10% are sustainable allowing us to continue to grow our global real estate services platform aggressively while continuing to invest in our future.

Meanwhile First Service residential delivered solidly year-over-year while dedicating considerable time, efforts and resources to its full rebranding initiative establishing a new chapter in the story of North America’s largest manager of resident communities.

FirstService brands also have robust growth in revenues and profits over the past year benefiting from increased consumer spending as the U.S. economy continues to improve. John and Scott will have much more to say about all of this in their prepared remarks shortly.

2013 was the year of many successes and accomplishments. Here are some of the other highlights from the year. We continue to invest in the net promoter system to enhance our ability to measure and improve the customer experience and of course employee satisfaction increasing the net promoter system and team MPS as we call it internally here at FirstService are taking hold right across our entire organization and overtime we continue to believe that MPS will become a key differentiator for all of our service companies.

Early in the year we welcomed Chuck Fallon as the new CEO of FirstService Residential. Chuck’s impressive track record in globally recognized Fortune 500 companies and perhaps as importantly his genuine commitment to delivering exceptional customer service is already paying huge dividends as we continue to expand our market leading presence in residential property management.

During the year we successfully sold Field Asset Services. A business that provided us with very strong cash flows and earnings during the global financial crisis that no longer fit our real estate services strategy. The addition of Colliers, Germany was a major achievement and furthered our growth strategy in Europe in the same way as Colliers, UK did last year.

As you know one of the key elements of the FirstService growth strategy is to balanced internal growth with acquisitions. And during the year, we invested about $55 million to acquire a total of 11 companies expanding our market share and adding services in existing and new markets. We continue to see interesting opportunities virtually across the board and expect 2014 to be another active year on the acquisition front.

Corporately we completed the private placement of $150 million of 3.84% senior notes with the 12 year term. Securing low cost and long term capital is indicative of our investments grade quality and a significant vote of confidence in our financial strength diversification and historical track record of performance.

We also simplified our capital structure eliminating our preferred shares and calling our debentures for early redemption. And our balance sheet at the end of the year was a strong it’s ever been with low leverage and ample liquidity to continue to support our continued growth.

And finally for the first time in our history, we instituted the dividend on our common shares. This important step not only created a new source of income for our shareholders, but also introduced FirstService to a whole new universe of dividend oriented investors.

Read the rest of this transcript for free on seekingalpha.com