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
Jeffrey Elliott Communications
(416) 250-1078

FOR IMMEDIATE RELEASE

TSE: FSV
Nasdaq: FSRV

 

FIRSTSERVICE POSTS RECORD RESULTS WITH NET INCOME UP 63%

 

TORONTO, Ontario (May 18, 1999) -- FirstService Corporation (NASDAQ: FSRV; TSE: FSV) today announced record results for the fiscal year ended March 31, 1999.

For the year, revenue grew to $396.5 million, up 44% from the $275.8 million reported a year ago -- leading to earnings before interest, taxes, depreciation and amortization (EBITDA) of $43.3 million, an increase of 66% over $26.1 million in the previous year. EBITDA margin for the year increased by 140 basis points to 10.9% of revenue.

Net Income was $11.7 million, up 63% over the prior year, while earnings per share grew by 35% to $0.93 from $0.69 -- on an additional 2.2 million average shares outstanding.

Earnings per share on a diluted basis in US dollars and under US GAAP, were $0.54, an increase of 32% over the prior year.

Revenue for the final quarter was $95.7 million, a 41% gain over the prior year, while EBITDA was $4.1 million compared to a loss of $577,000 a year earlier. Net loss for the seasonally low quarter was $1.5 million, compared to a $4.3 million loss in the prior year period -- or $0.11 versus $0.35 on a per share basis. The quarterly loss per share in U.S. dollars and under U.S. GAAP was $0.07, compared to $0.15 in the prior year.

"We are pleased with our financial performance this year -- a year in which we maintained a strong growth rate, increased margins and completed and integrated several new acquisitions," said Jay Hennick, President and Chief Executive Officer. "By continuing to follow the FirstService growth strategy, balancing internal growth with acquisitions, I am confident we will meet or exceed our growth objectives again this year," he concluded.

Revenue from the Property Services division was $308.9 million, an increase of $84.5 million or 38% over the prior year. Approximately $43.0 million of the increase resulted from the acquisitions of Rossmar Management, California Closets and several tuck-under acquisitions, with the balance from internal growth and the impact of a weaker Canadian dollar. The community association management operations achieved internal growth in excess of 20%, while the security, lawn care and franchise operations averaged high single-digit internal growth.

Revenue from the Business Services division was $87.6 million, an increase of 70% or $36.2 million over 1998--reflecting internal growth of greater than 25% and the full-year impact of the acquisitions of Harris Fulfillment and Harris Direct Mail on April 1, 1998.

Starting with the first quarter ending June 30, 1999, FirstService will begin reporting in US dollars under US GAAP and filing on EDGAR, the electronic database of the Securities and Exchange Commission.

"We decided to change to US dollar reporting primarily because we generate the majority of our revenues in the US," said Scott Patterson, Senior Vice President and Chief Financial Officer.

FirstService Corporation is a leader in the rapidly growing service sector, providing a variety of specialized residential, commercial and business outsourcing services--including residential property management, security, lawn care, franchising and data processing and specialized trade material fulfillment--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 Income ($Cdn.)

(unaudited)

  Three month periods ended March 31 Years ended March 31
 

1999

1998

1999

1998

Revenue

$95,686

$67,982

$396,455

$ 275,755

Cost of services provided

66,540

50,603

265,079

183,394

Selling, general and administrative expenses

25,072

17,956

88,065

66,250

EBITDA

4,074

(577)

43,311

26,111

Depreciation

2,267

1,579

8,121

4,990

Amortization

1,145

712

4,109

2,396

Interest

2,359

1,182

8,414

4,540

Earnings (loss) before the following:

(1,697)

(4,050)

22,667

14,185

Income taxes

(132)

54

8,726

4,358

Earnings (loss) before minority interest

(1,565)

(4,104)

13,941

9,827

Minority interest share of earnings

(89)

192

2,221

2,637

Earnings (loss)

($1,476)

($4,296)

$11,720

$7,190

Basic earnings per share

($0.11)

($0.35)

$0.93

$0.69

Weighted average shares outstanding during the period

12,876,134

12,199,126

12,564,283

10,370,439

Condensed Balance Sheet ($Cdn).

(in thousands of dollars)

As at March 31

Assets

1999

1998

Cash

$ 6,980

$ 3,729

Accounts receivable (net)

62,399

43,793

Inventory and other current assets

22,222

15,128

Current assets

91,601

62,650

Goodwill

131,549

76,518

Fixed assets

39,093

30,345

Other assets

17,065

10,151

Total Assets

$279,308

$179,664

Liabilities and equity

Accounts payable and current liabilities

$41,038

$30,605

Unearned revenue

9,202

10,790

L.T. debt - current

2,604

10,215

Current liabilities

52,844

51,610

Long term debt net of current portion

127,513

54,186

Minority interest

7,088

8,116

Shareholders' equity

91,863

65,752

Total liabilities and equity

$279,308

$179,664

FirstService Corporation

Consolidated Statement of Income ($U.S.)

(unaudited)

(in thousands of dollars)

  Three month periods ended March 31 Years ended March 31
 

1999

1998

1999

1998

Revenue

$63,313

$47,527

$263,355

$196,603

Cost of services provided

44,028

35,377

176,085

130,753

Selling, general and administrative expenses

16,590

12,553

58,500

47,234

EBITDA

2,695

(403)

28,770

18,616

Depreciation

1,500

1,104

5,395

3,558

Amortization

758

497

2,729

1,708

Interest

1,561

827

5,589

3,237

Earnings (loss) before the following:

(1,124)

(2,831)

15,057

10,113

Income taxes (recovery)

(154)

(1,136)

6,288

3,820

Earnings (loss) before minority interest

(970)

(1,695)

8,769

6,293

Minority interest share of earnings

(59)

134

1,475

1,880

$US Earnings (loss)

($911)

($1,829)

$7,294

$4,413

Diluted earnings per share

($0.07)

($0.15)

$0.54

$0.41

Diluted shares outstanding during the period

12,876,134

12,199,126

13,474,644

10,896,000

Average foreign exchange rate for the period

1.5113

1.4304

1.5054

1.4026

U.S. Dollar Reporting

The unaudited statements of earnings reporting 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.