FOR: FIRSTSERVICE CORPORATION

COMPANY CONTACT:
Jay S. Hennick
President & Chief Executive Officer
FirstService Corporation
(416) 960-9500

INVESTOR RELATIONS:
Jeffrey Elliott
Jeffrey Elliott Communications
(416) 250-1078

FOR IMMEDIATE RELEASE

TSE: FSV
Nasdaq: FSRV

 

FIRSTSERVICE REPORTS RECORD THIRD QUARTER RESULTS

 

TORONTO, Ontario (January 26, 1999) -- FirstService Corporation (NASDAQ: FSRV; TSE: FSV) today announced continued year-over-year improvement in quarterly results, generated by sharply higher revenues and a first-ever net profit in the seasonally low third quarter. The Company also confirmed that it expects to achieve its financial growth objectives for the full year.

Revenue for the three months ending December 31, 1998 grew to $102.1 million -- up 47% over the prior year, while EBITDA increased to $7.2 million from $2.5 million. Net income for the quarter was $418,000 compared to a loss of $1.6 million in the prior year, reflecting an increase in the proportion of the Company's business that is non-seasonal. Earnings per share were $0.03 versus a loss per share of $0.15 for the prior year period.

On a diluted basis in US dollars and under US GAAP, quarterly earnings were $0.02 per share, compared with a prior year loss of $0.07.

Revenues for the nine months ended December 31, 1998 were $300.7 million, a 45% increase from the $207.8 million reported in the comparable prior year period. EBITDA was $39.2 million, up 47% over the $26.7 million reported last year, while earnings grew 15% to $13.2 million from $11.5 million. Earnings per share for the nine month period were $1.06 (diluted US $0.62) versus $1.18 (diluted US $0.63) in the prior year.

"The year-to-date decline in earnings per share reflects an additional 2.7 million average shares outstanding - - which will also serve to sharply reduce the seasonal loss per share in the fourth quarter," said Scott Patterson, Chief Financial Officer. "Overall, our operations continue to perform strongly and we are confident that we are on track to achieve our financial objectives again this year," he concluded.

During the most recent quarter, FirstService completed the tuck-under acquisitions of three additional community association management companies, bringing the total number of communities under management to 1,500, representing more than 285,000 individual residential units in nine US states. In addition, the Company acquired an additional 34.9% of Intercon Security, increasing its ownership interest to 85%.

The Property Services division generated revenue of $78.8mm for the third quarter, a 41% or $22.8mm increase over the prior year. Approximately $13.0mm of the revenue increase relates to the acquisitions of Paul Davis Systems, California Closets and several community association management companies, with the balance attributable to internal growth.

Revenue from the Business Services division rose to $23.3mm for the quarter representing a 73% increase over the prior year, reflecting the impact of the acquisitions of Harris Fulfillment and Direct Mail and continued strong internal growth.

FirstService Corporation is a leader in the rapidly growing service sector, providing a variety of specialized Property and Business Services to corporate, government and residential customers throughout North America including community association management, security, lawn care, franchising, business outsourcing and specialized trade material fulfillment.

Certain statements included in this release constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, which will, among other things, impact demand for the Company's services, service industry conditions and capacity; 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; changes in or the failure to comply with government regulations (especially safety and environmental laws and regulations); and other factors which are described in the Company's filings with the Securities and Exchange Commission.

FIRSTSERVICE CORPORATION
Consolidated Statement of Income ($ CDN) (unaudited)

Three month
periods ended
December 31
Six month
periods ended
December 31
19981997
19981997
Revenue$102,110$69,447$300,769$207,773
Cost of services provided71,25449,384198,539132,791
Selling, general and administrative expenses 23,607 17,612 62,994 48,293
EBITDA7,2492,45139,23626,689
Depreciation & amortization 3,2651,9768,8185,096
Interest 2,252 1,155 6,055 3,357
Earnings before the following:1,732(680)24,36318,236
Income taxes 698 305 8,858 4,304
Earnings before minority interest1,034(985)15,50513,932
Minority interest share of earnings 616 617 2,310 2,446
Earnings $418 ($1,602) $13,195 $11,486
Basic earnings per share$0.03($0.15)$1.06$1.18
Weighted average shares outstanding during the period 12,547,28410,431,14312,462,2239,771,958


Condensed Balance Sheet ($Cdn).
(in thousands of dollars)

Assets As at December 31,
19981997
Cash$ 7,410$ 2,331
Accounts receivable (net)65,96144,810
Inventory and other current assets 20,132 12,835
Current assets93,50359,976
Goodwill135,37472,369
Fixed assets39,17028,206
Other assets 12,234 6,450
Total Assets $280,281 $167,001
Liabilities and Equity
Accounts payable and current liabilities$42,768$27,066
Unearned revenue6,5096,459
L.T. debt - current 2,483 6,561
Current liabilities51,76040,086
Long term debt net of current portion127,57751,171
Minority interest8,4318,261
Shareholders' equity 92,513 67,483
Total liabilities and equity $280,281 $167,001


Consolidated Statement of Income ($U.S.)
(unaudited)
(in thousands of dollars)

Three month
periods ended
December 31
Six month
periods ended
December 31
19981997
19981997
Revenue$ 66,211$49,309$200,059$149,123
Cost of services provided46,20335,064132,06095,307
Selling, general and administrative expenses 15,308 12,505 41,901 34,661
EBITDA4,7001,74026,09819,155
Depreciation & amortization2,1171,4035,8653,657
Interest 1,460 820 4,027 2,410
Earnings before the following:1,123(483)16,20613,088
Income taxes 427 (203) 6,451 4,898
Earnings before minority interest696(280)9,7558,190
Minority interest share of earnings 399 438 1,536 1,755
$US Earnings $297 ($718) $8,219 $6,435
Diluted earnings per share$0.02($0.07)$0.62$0.63
Diluted shares outstanding during the period13,362,93310,431,14313,326,25610,192,631
Average foreign exchange rate for the period1.54221.40841.50341.3933



U.S. Dollar Reporting

The unaudited statements of earnings reported in U.S. dollars are prepared under Canadian generally accepted accounting principles. The amounts shown in U.S. dollars have been translated into U.S. dollars at the average exchange rate for the periods, except for income taxes which have also been adjusted as applicable, in accordance with U.S. GAAP.