FirstService Corporation (NASDAQ:FSV) Q2 2023 Earnings Conference Call July 27, 2023 11:00 AM ET

Company Participants

Scott Patterson - Chief Executive Officer

Jeremy Rakusin - Chief Financial Officer

Conference Call Participants

Stephen MacLeod - BMO Capital Markets

Michael Doumet - Scotiabank

Tom Callaghan - RBC

Matthew Filek - William Blair

Operator

Good day and thank you for standing by. Welcome to the Second Quarter Investors Conference Call. Today’s call is being recorded. Legal counsel requires us to advise that discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results maybe materially different from those – any other future results, performance or achievements contemplated in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company’s annual information form as filed with the Canadian Securities Administrators and in the company’s annual report on Form 40-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today’s call is being recorded. Today is July 27, 2023.

I would now like to turn the call over to Chief Executive Officer, Mr. Patterson. Your line is open.

Scott Patterson

Thank you, Lisa. Good morning, everyone. We appreciate you joining our 2023 second quarter conference call. I am on the line today with Jeremy Rakusin, our CFO. I’ll kick us off with some high level comments and Jeremy will follow with more detail.

As you saw this morning, we reported very strong results that reflect continuing trends and momentum that drove our Q4 of last year and the first quarter of this year. Total revenues for the quarter were up 20% over the prior year, with organic growth at 15%. EBITDA was up 30%, reflecting a margin of 10.6%, which is an 80 basis point improvement over the prior year. Similar to our previous two quarters, outsized organic growth in our Brands division boosted our top line and led to enhanced margins from operating leverage. Earnings per share for the quarter were also up 30%, in line with the increase in EBITDA.

Let me move to highlights for each division, starting with FirstService Residential, where revenues were up 13% in total, with the organic growth again hitting double-digits at 10%. As I stated in my Q1 comments, we entered this year with momentum from strong sales in the fourth quarter of ‘22, combined with solid client retention. This favorable momentum continued through our Q2. The other trend that is helping us in terms of a year-over-year comparison is an increase in labor and services, with many of our larger cost plus contracts. We have reduced the number of contracted, but unfilled positions compared to a year ago, which increases revenue in a cost plus environment. Looking forward to the last half of the year, we expect to show similar low double-digit top line growth for FirstService Residential, with organic growth at a high single-digit level.