FOR: FIRSTSERVICE CORPORATION

COMPANY CONTACT:
D. Scott Patterson
Senior Vice President & Chief Financial Officer
FirstService Corporation
(416) 960-9500

PRESS CONTACT:
Jeffrey Elliott
Jeffrey Elliott Communications
(416) 250-1078

FOR IMMEDIATE RELEASE

TSE: FSV
Nasdaq: FSRV

 

FIRSTSERVICE REPORTS 56% REVENUE GROWTH
IN FIRST QUARTER

 

TORONTO, Ontario (July 23, 1998) -- FirstService Corporation today announced financial results for the first quarter of the 1999 fiscal year.

Revenues for the three months ending June 30, 1998 were $93.5 million, an increase of 56% from the $59.9 million generated a year earlier while EBITDA increased 39% to $13.2 million from $9.5 million. Net earnings before income taxes and minority interest increased 22% to $8.7 million. Net earnings after income taxes and minority interest were $5.5 million compared to $6.0 million in the prior year, primarily as a result of a higher effective tax rate for the quarter. Loss carryforwards utilized in the prior year period resulted in a tax provision of 8% compared to a provision of 30% in the current year period. Earnings per share were $0.45 compared to $0.63 in the prior year, impacted by the higher tax rate and an additional 2.9 million shares outstanding.

Diluted earnings per share expressed in U.S. dollars and under U.S. GAAP were $0.24 compared to $0.28 in the prior year primarily as a result of the 31% increase in the average number of shares. The U.S. dollar EPS figure was also negatively impacted by a weaker Canadian dollar relative to the prior year.

"The higher tax rate and increase in the average share count effectively flattens the seasonality of our quarterly earnings per share.combining to reduce both earnings per share in the first six months and the loss per share in the final six months", said D. Scott Patterson, Senior Vice President and Chief Financial Officer.

"All of our operations are performing strongly and we are firmly on track to achieving our financial growth targets for the fiscal year", he concluded.

During the quarter, FirstService completed the acquisitions of (i) Harris Fulfillment and Direct Mail through the DDS division of the Company's Business Services Group and (ii) Rossmar Management (Phoenix) and Armstrong Management (Fairfax, Virginia), two community association management companies, bringing the total number of residential units under management to approximately 240,000. The Company also expanded its senior credit facilities by $100 million to $200 million-providing additional financing for potential acquisitions.

Revenue from the Property Services division was $74.0 million, an increase of $26.0 million or 54% over the prior year. Approximately $20.0 million of the revenue increase resulted from the acquisitions of Continental, Paul Davis Systems and several tuck-under acquisitions, with the balance resulting from internal growth.

Revenue for the Business Services division was $19.7 million, an increase of 65% over the prior year, reflecting 22% internal growth and the impact of the acquisitions of Harris Fulfillment and Direct Mail on April 1, 1998.

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
($ CDN./CDN GAAP)

Consolidated Statement of Income

For the three month periods ended June 30

 

Revenue

Cost of services provided

Selling, general and administrative expenses

EBITDA

Depreciation & Amortization

Interest

Earnings before the following:

Income taxes

Earnings before minority interest

Minority interest share of earnings

Earnings

Basic earnings per share

Weighted average shares outstanding during the period

1998

$93,535,680

61,939,922

18,416,410

13,179,348

2,633,119

1,883,364

8,662,865

2,598,431

6,064,434

552,244

$5,512,190

$0.45

12,345,515

1997

$59,930,079

35,482,713

14,989,727

9,457,639

1,415,821

941,483

7,100,335

544,157

6,556,178

603,772

$5,952,406

$0.63

9,436,195


Condensed Balance Sheet

As at June 30

Assets

1998

1997

Cash

Accounts receivable (net)

Inventory and other current assets

Current assets

Goodwill

Capital and other assets

Total assets

Liabilities and equity

Accounts payable and other current liabilities

Unearned revenue

L.T. debt - current

Current liabilities

Long term debt

Minority interest

Shareholders equity

Total liabilities and equity

$ 401,263

60,677,145

15,128,418

76,206,826

92,025,536

64,978,596

233,210,958

 


31,803,273

9,549,836

3,734,822

45,087,931

100,401,836

8,565,698

79,155,493

$233,210,958

$ 3,636,743

37,739,018

14,065,280

55,441,041

56,599,857

31,284,101

$143,324,999

 


26,087,547

9,164,679

4,759,666

40,011,892

62,725,904

6,612,355

33,974,848

$143,324,999

FIRSTSERVICE CORPORATION

($ US/US GAAP)

Consolidated Statement of Income

For the three month periods ended June 30

 

Revenue

Cost of services provided

Selling, general and administrative expenses

EBITDA

Depreciation & Amortization

Interest

Earnings before the following:

Income taxes

Earnings before minority interest

Minority interest share of earnings

$US/US GAAP Earnings

Basic earnings per share

Weighted average shares outstanding during the period

Diluted earnings per share

Diluted shares outstanding

Average $US - Canadian Exchange Rate

$US - Canadian Exchange Rate at June 30, 1998

1998

$64,685,809

42,835,354

12,736,107

9,114,348

1,820,967

1,302,465

5,990,916

2,405,553

3,585,363

381,911

$3,203,452

$0.26

12,345,515

0.24

13,263,174

1.446

1.4678

1997

$43,233,357

25,597,109

10,813,538

6,822,710

1,021,368

679,183

5,122,159

1,929,128

3,193,031

435,559

$2,757,472

$0.29

9,436,195

0.28

9,930,426

1.3862

1.3805

Foreign Exchange Translation

More than half of the companys revenues are denominated in U.S. dollars. To provide investors with information regarding the results of our operations for the period in U.S. dollars, we have translated the Consolidated Statement of Income into U.S. dollars at the weighted average exchange rate for the three month period.

US GAAP Adjustment

The Consolidated Statement of Income has been adjusted for material differences between Canadian GAAP and US GAAP to reflect US dollar US GAAP disclosure.