FOR: FIRSTSERVICE CORPORATION

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

D. Scott Patterson
Senior Vice President & CFO
FirstService Corporation
(416) 960-9500

INVESTOR RELATIONS:
Jeffrey Elliott
(919) 968-4085

FOR IMMEDIATE RELEASE

TSE: FSV
Nasdaq: FSRV

 

FIRSTSERVICE POSTS RECORD FOURTH QUARTER, YEAR-END RESULTS EPS UP 28% FOR THE YEAR

TORONTO, May 16 /CNW/ - FirstService Corporation (Nasdaq: FSRV; TSE: FSV) today announced record results for the quarter and fiscal year ended March 31, 2001.

For the quarter, revenue grew to US$103.7 million, up 32% from the US$78.8 million reported a year ago. Internal growth accounted for approximately one-third of the total year-over-year revenue increase. Earnings before interest, taxes, depreciation and amortization (EBITDA) were US$6.2 million in the fourth quarter, an increase of 60% over US$3.9 million in the previous year. EBITDA margin increased by over 100 basis points to 6.0% of revenue.

Net earnings for the seasonally low fourth quarter were US$44,000 compared to a loss of US$453,000 in the prior year period -- or US$0.00 versus US($0.03) on a per share basis.

Revenue for the full year grew to US$424.2 million, a 25% increase from the US$340.0 million reported in the prior year -- generating EBITDA of US$47.9 million, up 26% over US$38.0 million reported in the previous year. EBITDA margin increased by approximately 10 basis points to 11.3% of revenue.

Net earnings for the year were US$12.7 million, up 29%, while diluted earnings per share grew by 28% to US$0.92 from US$0.72.

"Fiscal 2001 was another very successful year", said Jay S. Hennick, President and Chief Executive Officer. "Internal growth remained strong at 12%, cash flow from operations for the year was the highest ever and we increased our EBITDA margin for the fifth consecutive year. We also exceeded our 20% annual growth target for the ninth year in a row," he concluded.

Revenue from the Property Services division was US$80.2 million for the quarter, up 33% over the prior year reflecting the impact of acquisitions together with strong internal growth. Revenue from the Business Services division was US$23.5 million for the quarter, an increase of 25% primarily as a result of the impact of the March 2001 acquisition of Herbert A. Watts Limited.

During the quarter, FirstService completed the acquisition of Watts, one of Canada's largest customer support and fulfillment outsourcing companies which generated revenues of US$39 million and EBITDA of US$4.6 million for its most recent year ended prior to acquisition.

FirstService will be holding a conference call on Wednesday, May 16, 2001 at 2:00pm Eastern Time to discuss results for the fourth quarter and the year. The call is being webcast and can be accessed at www.firstservice.com in the "News Release" section.

FirstService Corporation is a leader in the rapidly growing service sector, providing a variety of property and business outsourcing services -- including residential property management, integrated security services, consumer services, customer support and fulfillment and business process outsourcing -- to a variety of customers throughout North America.

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 Statements of Earnings

(in thousands of U.S. dollars)

Three month
Periods ended March 31
Years ended
March 31
2001 2000 2001 2000

Revenue

$103,660 $78,788 $424,174 $340,035

Cost of revenue

72,929 55,365

284,474 226,154

Selling, general and administrative expenses

24,522 19,534

91,845 75,904

EBITDA

6,209 3,889

47,855 37,977

Depreciation

2,228 1,760 7,708 6,486

Amortization

1,102 800 4,221 3,621

Interest

2,567 2,080 9,767 7,849

Earnings (loss) before the following:

312 (751) 26,159 20,021

Income taxes

132 (296) 10,464 7,989

Earnings (loss) before minority interest

180 (455) 15,695 12,032

Minority interest share of earnings

136 (2) 2,988 2,164

Net earnings (loss)

$44 $(453)

$12,707 $9,868

Earnings per share:Basic

$0.00 ($0.03)

$0.97 $0.76

Diluted

$0.00 ($0.03) $0.92 $0.72

Weighted average shares outstanding: Basic

13,165 13,000 13,074 12,948

Diluted

14,032 13,000

13,841 13,708

Condensed Consolidated Balance Sheets

(in thousands of U.S. dollars)


As at
March 31

As at
March 31

Assets

2001 2000

Cash and cash equivalents

$5,115 $3,297

Accounts receivable (net)

79,473 53,170

Inventory and other current assets

21,520 18,483

Current assets

106,108 74,950

Fixed assets

40,741 29,693

Other assets

11,498 8,749

Goodwill

155,313 117,495

Total assets

$313,660 $230,887

Liabilities and shareholders' equity

Accounts payable and other current liabilities

$59,215 $38,103

Unearned revenue

9,505 10,725

Long term debt - current

3,050 2,733

Current liabilities

71,770 51,561

Long term debt less current portion

149,374 102,177

Deferred income taxes

4,236 1,836

Minority interest

8,824 6,975

Shareholders' equity

79,456 68,338

Total liabilities and equity

$313,660 $230,887

Consolidated Consolidated Statements of Cash Flows

(in thousands of U.S. dollars)

Three month
Periods ended March 31
Years ended
March 31
2001 2000 2001 2000

Operating activities
Net Earnings

$44 $(453) $12,707 $9,868

Items Not affecting Cash:
Depreciation and amortization

3,330 2,560

11,929 10,107

Deferred income taxes

1,072 733

1,056 1,087

Minority interest share of earnings

136 (2)

2,988 2,164

Other

116 115 451 446
TOTAL 4,698 2,953 29,131 23,672

Changes in operating assets and liabilities, excluding assets acquired and liabilities assumed in acquisitions

5,222 (4,239) (6,841) (3,999)

Net cash provided by operating activities

9,920 (1,286) 22,290 19,673

Investing activities
Acquisition of businesses, net of cash acquired

(22,388) (3,028) (44,653) (22,069)

Purchases of fixed assets

(3,456) (2,299) (10,502) (8,824)

Other investing activities

886 (104) (698) (1,913)

Net cash used in investing

(24,958) (5,431) (55,853) (32,806)
Financing activities
Net increases (decreases) in long-term debt
15,232 (3,475) 36,368 12,350

Other financing activities

(635) (266) (459) (962)

Net cash provided by financing

14,597 (3,741) 35,909 11,388

Effect of exchange rate changes on cash

338 1,385 (528) 415

Increase (decrease) in cash and cash equivalents during the period

(103) (9,073)

1,818 (1,330)

Cash and cash equivalents, beginning of period

5,218 12,370

3,297 4,627

Cash and cash equivalents, end of period

$5,115 $3,297 $5,115 $3,297

The Consolidated Statements of Earnings and Cash Flows and Balance Sheets have been prepared in accordance with U.S. GAAP.