FOR: FIRSTSERVICE CORPORATION
COMPANY CONTACTS:

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

D. Scott Patterson
Senior Vice President & CFO
FirstService Corporation

(416) 960-9500
 

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

FOR IMMEDIATE RELEASE

 

FIRSTSERVICE POSTS RECORD ANNUAL RESULTS;
ACHIEVES 54% EARNINGS GROWTH

TORONTO, Ontario May 14, 1998 -- FirstService Corporation (Nasdaq: FSRV; TSE: FSV) today announced record results for the fiscal year ended March 31, 1998 -- the sixth full year in a row in which the Company has exceeded its objective of not less than 20% top and bottom line growth.

For the year, revenue grew to $275.8 million, up 55% from the $178.4 million reported a year ago -- leading to earnings before interest, taxes, depreciation and amortization of $26.1 million, an increase of 58% over $16.5 million in the previous year. EBITDA margin for the year increased 30 basis points to 9.5% of revenue.

Net Income was $7.2 million, a 54% increase over the prior year, while earnings per share increased 33% to $0.69 from $0.52 -- on an additional 1.3 million average shares outstanding. Earnings per share on a diluted basis in US dollars and under US GAAP, were $0.41, an increase of 32% over the prior year.

Revenue for the final quarter was $68.0 million, a 68% gain over the prior year, while the loss before interest, taxes, depreciation and amortization was reduced to $577,000 from $4.1 million a year earlier. Net loss for the quarter (one of two in which the company has historically incurred a loss as a result of the seasonal nature of two of its service lines) was $4.3 million, compared to $5.9 million in the prior year period -- or $0.35 versus $0.63 on a per share basis. The quarterly loss per share in U.S. dollars and under U.S. GAAP was $0.15, compared to $0.32 in the prior year.

"Our excellent financial performance is the result of all our service lines meeting or exceeding expectation" said Jay S. Hennick, President and Chief Executive Officer. "We enter a new fiscal year with strong internal growth and acquisition opportunities and are confident that we will meet our annual growth target of at least 20% again this year."

Revenue from the Property Services division was $224.4 million, an increase of $84 million or 60% over the prior year. Approximately $65 million of the revenue increase resulted from the acquisitions of Continental, Wentworth, Paul Davis Systems and several tuck-under acquisitions, with the balance resulting from internal growth. Security and Community Association Management operations achieved double-digit internal growth rates while the Lawn Care and Franchise operations generated high single-digit internal growth.

Revenue from the Business Services division was $51.4 million, an increase of 37% over 1997 reflecting double-digit internal growth and the full year impact of DDS Dyment Distribution Services, Ltd., acquired in August, 1996. This division was further strengthened by the acquisitions of Harris Fulfillment and Harris Direct Mail on April 1, 1998, the operating results of which were not reflected in FirstService`s results for the 1998 fiscal year.

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.
 

Consolidated Statements of Earnings ($Cdn).
 
 
 

 
For the three month periods ended March 31
 
For the years ended 
March 31
 

 
1998
  
1997
 
1998
  
1997
Revenue
$67,982,554
$ 40,554,369
$275,755,412
$178,362,684
 

Cost of services provided

 
50,602,958
  
31,256,021
 
183,394,217
  
114,536,564
Selling, general and administrative expenses
17,956,343
13,423,966
66,249,760
47,329,311
  

EBITDA

 
(576,747)
  
(4,125,618)
 
26,111,435
  
16,496,809
 

Depreciation & amortization 

 
2,290,657
  
1,239,555
 
7,386,200
  
5,114,278
Interest
1,182,381
924,278
4,539,849
3,599,121
  

Earnings (loss) before the following:

 
(4,049,785)
  
(6,289,451)
 
14,185,386
  
7,783,410
Income taxes
54,313
(720,385)
4,358,181
2,338,512
  

Earnings (loss) before minority interest

 
(4,104,098)
  
(5,569,066)
 
9,827,205
  
5,444,898
Minority interest share of earnings
191,831
295,315
2,637,528
769,209
  

Earnings (loss) 

 
($4,295,929)
  
($5,864,381)
  
$ 7,189,677
  
$ 4,675,689
  

Basic earnings per share

 
($0.35)
  
($0.63)
 
$0.69
  
$0.52
 

Weighted average shares outstanding during the period

 
12,199,126
  
9,256,281
 
10,370,439
  
9,069,509
 
 

US GAAP diluted earnings (loss) per share

 
US ($0.15)
  
US ($0.32)
 
US $0.41
  
US $0.31
 

Condensed Balance Sheet ($Cdn).
 
 
 

 
As at March 31,
 

Assets

 
1998
  
1997
 

Cash

 
$ 3,728,800
  
$ 5,304,209
Accounts receivable (net)
43,792,889
28,387,961
Inventory and other current assets
15,128,726
11,614,336
Current assets
62,650,415
45,306,506
 

Goodwill

 
76,517,534
  
33,488,481
Capital and other assets
40,496,427
27,438,839
Total assets
$179,664,376
$106,233,826
 

Liabilities and equity 

   
Accounts payable and other current liabilities
30,604,647
21,313,803
Unearned revenue
10,789,894
9,461,046
L.T. debt - current
10,215,407
4,888,369
Current liabilities
51,609,948
35,663,218
 

Long term debt net of current portion

 
54,185,991
  
39,785,362
Minority interest
8,116,588
2,361,735
Shareholders` equity
65,751,849
28,423,511
Total liabilities and equity
$179,664,376
$106,233,826