Operator: Welcome to the First Quarter Investor Conference Call. Today’s call is being recorded. All participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. We do counsel require us to advise that the discussions scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance, or achievements stated in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially 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 US Securities and Exchange Commission.

As a reminder, today’s call is being recorded. Today’s April 24, 2025. I would now like to turn the call over to the Chief Executive Officer, Mr. Scott Patterson.

Scott Patterson: Thank you, Olivia. Good morning, everyone. Thank you for joining our Q1 conference call. We reported solid results this morning that we are very pleased with in the current environment. I’ll provide a high-level review and touch on some of the highlights, and then pass to Jeremy Rakusin for a more in-depth discussion of the results. Total revenues were up 8% over the prior year, driven primarily by tuck-under acquisitions over the last twelve months. Organic growth was slightly positive with gains at FirstService Residential largely offset by a modest decline across the FirstService Brands division. EBITDA for the quarter was up 24% reflecting a strong 110 basis point improvement in our consolidated margin. A number of our brands showed margin improvement Jeremy will walk through the detail in a few minutes.

Finally, our earnings per share for the quarter were up an impressive 37%. Looking at our divisional results, FirstService Residential revenues were up 6%, half organic and half from a few small tuck-unders over the last twelve months. The results were in line with expectation. We had a solid quarter of contract wins and retention as we continue to work our way back to our historical mid-single-digit organic growth rate. Looking forward at FirstService Residential, we expect similar or slightly better organic growth in Q2 and sequential improvement for Q3 and Q4. Moving on to FirstService Brands, revenues for the quarter were up 10% driven entirely by tuck-under acquisitions. Organic growth for the division was slightly down with gains at Century Fire, offset by organic declines in home services, and our roofing platform.

I’ll give a high-level review of each segment and start with restoration. Revenues were generally in line with the expectation for the quarter. Up mid-single-digit. Flat organically. We had solid growth in the US with support from Hurricane Selene and Milton from which we generated a little over $10 million for the quarter. This was tempered by modest year-over-year declines in our Canadian operations. The Canadian operations of First On-site and Paul Davis account for about 30% of our North American restoration business. Our overall restoration backlogs at quarter-end are solid. And at similar levels to year-end and prior year. Looking forward to Q2, we expect revenues to continue at approximately the same level sequentially which would result in similar year-over-year results to Q1, flat to modestly up.

We’ll now touch on our Roofing segment. Which delivered Q1 revenues that were up almost 50% year-over-year driven by the acquisitions of Crowther Roofing and Hamilton Roofing in Florida. Organically, the revenues were lower than expected and down about 10% from the prior year quarter. There are two principal reasons for the reduction. One was weather in January and February, which reduced our production hours relative to the prior year. And secondly, we’re seeing the expected awarding of some large commercial reroof and new build contracts deferred. Bid activity has been solid, but the awarding of contracts has slowed. We see it as a timing issue only and directly related to the current economic uncertainty with tariffs. Looking to Q2 and roofing, we will again benefit from the year-over-year impact of the Florida acquisitions and expect our revenues to be up between 25% and 30% versus prior year.

Organically, we expect to be down modestly due to the continued impact of contract deferral. The underlying demand dynamics remain strong. And we’re optimistic that contract awards will accelerate as we move into the back half of this year. Moving to Century Fire, we had a strong quarter, generally in line with expectations and organic growth mid-single-digit. The Century results were bolstered by particularly strong growth in repair, service, and inspection revenues. Similar to my comments relating to roofing, we did see some deferral of expected larger commercial installation contracts from Q1 into Q2 or later in the year. Again, we see this as timing only. Our backlog continues to build at Century, and we expect continued strong results for the balance of the year with our organic growth in the high single-digit range.

Now on to homes our home service brands, which has a group generated revenues that were down about 3% year-over-year. Just below expectation. It’s been well documented over the last few months that consumer confidence has due to the persistence of high interest rates and the economic uncertainty. Our lead flow reflected this in Q1 and was down year-over-year. As I indicated on our last call, our tried and true economic indicators, home equity values, and home prices. Point to increases in home improvement spending. We remain optimistic that pent-up demand is building and we will start to see it in increased bookings in the second half of this year. Our lead flow is stabilized, and our teams continue to drive increased lead conversion. Looking to Q2, we expect revenues to be slightly down relative to the prior year.

Before I pass to Jeremy, let me add a few comments. The direct impact of tariffs to FirstService Corporation are immaterial. However, as I have indicated in my comments, we are seeing a moderate indirect impact. The economic uncertainty in the market today that has resulted from the trade war is causing many commercial and residential consumers to pause. It’s undeniable. I opened this call by saying that we were very pleased with the results in the current environment, and I want to reiterate that point. We grew organically in Q1, albeit modestly, while driving enhanced margins. It’s a testament to the diversification of our business model and the resilience of our brands. The demand drivers across our market remain compelling and we are optimistic we will see accelerated activity levels with market stability.

On that note, over to you, Jeremy.

Jeremy Rakusin: Thank you, Scott. Good morning, everyone. We are pleased with today’s first quarter financial performance, which delivered strong year-over-year growth in our key profitability metrics. To summarize the consolidated results for the quarter, we reported revenues of $1.25 billion, an 8% increase over the $1.16 billion for Q1 2024. Adjusted EBITDA was $103.3 million, up 24% year-over-year with an 8.3% margin and resulting in 110 basis points of improvement over the 7.2% margin in the prior year quarter. And our adjusted EPS was $0.92 reflecting 37% growth over the prior year. Adjustments to operating earnings and GAAP EPS and arriving at adjusted EBITDA and adjusted EPS respectively are consistent with our approach in prior periods.

To now walk through the segment results for our divisions, I’ll start with FirstService Residential. The division generated revenues of $525 million, up 6% over last year’s first quarter. While EBITDA was $41.6 million, a 17% growth rate over the prior year. This resulted in an EBITDA margin of 7.9%, a 70 basis points increase over the 7.2% level in Q1 2024. This margin expansion was driven by cost efficiencies that we realized in our property management operations that are dedicated to servicing our community clients. Including in areas around client accounting, and contact centers. Our operating leaders and teams have been working on these initiatives for some time and these efforts became more evident in Q1. As we emerge from the past eighteen months of industry headwinds which we have spoken about at length.

I would note that the magnitude of the margin improvement was also amplified in our seasonally weakest first quarter. In future quarters and particularly the second half of 2025, the year-over-year margin expansion will taper to more modest amounts as our top line ticks higher with the resumption of normalized service levels in our managed communities thus driving a greater mix of cited labor revenue. Now onto our FirstService Brands division where we reported revenues of $726 million for the current quarter, up 10% over last year’s Q1. Our EBITDA for the division was $67.8 million, a 22% increase versus the prior year quarter. The resulting margin was 9.3%, up 90 basis points versus last year’s 8.4% level. And primarily driven by our home services and restoration businesses.

Within home services, our California Closets brand continued to realize the benefits from operating efficiencies and the reduction in promotional activity. Of these initiatives kicked into higher gear in the second quarter of 2024, so as we lap that period, we expect home services margin performance to be roughly flat year-over-year for upcoming Q2 and going forward. Restoration margins were also up over Q1 2024 as we continue our multiyear journey to streamline our operating processes and optimize our cost structure. As we reiterated before, profitability metrics within restoration are dependent on weather, job activity levels, and type of work mix. And therefore, we don’t expect the margin improvement to play out each and every quarter. But rather over time.

Our teams across all the service lines in our brands division have been highly focused and successful in grinding out sales and driving market share during a challenging macro environment while ensuring they get a healthy return on bottom line profitability. With respect to our consolidated operating cash flow, we generated more than $75 million before working capital changes and over $40 million including the impact of working capital. This cash flow conversion was both meaningfully higher than prior year and at a solid level, particularly given the Q1 seasonal trough for some of our businesses. Capital expenditures during the quarter were just shy of $30 million, up modestly over the prior year. And pacing within our full year CapEx guidance of roughly $125 million.

We deployed minimal upfront cash towards tuck-under acquisition spending during the quarter as we remain disciplined and selective in a competitive transaction valuation environment. Finally, looking at our balance sheet, our debt and cash balances were relatively unchanged at the end of the first quarter compared to 2024 year-end, and therefore, our net debt remained at $1.1 billion. Our leverage is conservative sitting at two times net debt to trailing twelve months EBITDA. And in line with year-end. During the quarter, we also bolstered our debt capacity and flexibility by increasing and extending our five-year revolving bank credit facility to $1.75 billion plus an additional $250 million accordion feature. Our liquidity, reflecting cash and undrawn credit facility balances, is sizable at more than $800 million putting us in a very strong financial position.

To deploy capital as opportunities arise in our acquisition pipeline. Looking forward, in the upcoming second quarter, we are forecasting consolidated revenue growth similar to the 8% growth rate in Q1. EBITDA is expected to increase at a low double-digit growth rate with the residential division margin up and brands division margin in line to slightly up compared to last year’s second quarter. Scott commented on the macro uncertainty that is somewhat clouding our visibility on the top line in some of our brands division service line. But we believe that any headwind impact is timing related and will be offset by pent-up demand. At the same time, we are driving margins and profitability as evident with the strong Q1 performance under our belt.

Providing us with confidence in delivering on full-year expectations for 2025. That concludes the prepared comments segment. Operator, you can now open up the call to questions. Thank you very much.

Operator: To withdraw your question, simply press star one one again. Now first question, your line is now open.

Stephen MacLeod: Thank you. Good morning, guys. Thanks for the color. Just a couple of questions just with respect to the macro weakness. Could you just remind us sort of what you would consider to be your consolidated, you know, like, exposure to macro gyrations, like consumer spending and as you mentioned, some of the commercial pushbacks you’re seeing as well or delays.

Jeremy Rakusin: Sure. I can take the first cut, and then I’ll let Scott lay in. I mean, in terms of the business that we’ve always said, whether it’s related to tariffs or other macroeconomic exposure, we said the home improvement business, which is, you know, north of $500 million tied to residential homeowner and consumer sentiment. And then, you know, half of Century Fire and a third of Roofing. Tied to commercial new development would be about another $500 million. So, you know, a billion dollars on five billion plus twenty percent of consolidated FirstService Corporation revenues would be exposed, you know, some to residential and some to commercial. So modest. Scott, anything to add?

Scott Patterson: Yeah. No. I don’t have anything to add to that, Jeremy. Thank you.

Stephen MacLeod: Okay. Great. Thanks, Jeremy. That’s kind of the ballpark I was thinking. I just wanted to confirm that. Then maybe just sticking with the brands business, you talked a lot about sort of delays in projects but your leads are up, but people are just not converting. But you think that’s gonna come back through pent-up demand. Like, are you seeing any change to conversions, or is it just that the leads are building and customers are committing? Is that sort of how to think about it?

Scott Patterson: I think that’s right. I mean, it is different with the home service brands and with the commercial delays we’re seeing at Century Fire and Roofing. We particularly on the commercial side, we see it as timing. Work needs to be done. I think that customers, I mean, uncertainty causes hesitation, and that’s really what we’re seeing. They’re getting bids. They’re seeing what the pricing environment is. They have work to do, but they’re not committing. But we don’t think that these deferrals can go on for a significant length of time. Residentially with home services, it’s a little bit different. I mean, consumer confidence is down. We saw this morning that existing home sales were down 6% in March. It’s another indicator that the consumer is pausing on capital outlays until there’s more certainty in the market.

If we get into a recession or a deeper recession, I think that the consumer confidence could stay at current levels. However, the homeowner on average is wealthy. The average home equity is significant relative to history, and home prices continue to tick up creating more equity. And, certainly, historically, this is pointed to healthy home improvement spending. So we think as soon as the market stabilizes, we’re gonna see it. And we’re optimistic that it will be later this year.

Stephen MacLeod: That’s great. Thanks, Scott. And then maybe just finally, just on the M&A environment, you know, if you do see if we do see a period of more protracted slowdown or delays, you talked about you’re obviously in a strong financial position. Like, what are you seeing in terms of multiples, and are you seeing potential targets beginning to emerge?

Scott Patterson: Well, I would say that we’re actually hearing about some sale processes that have been deferred pushed to the back half of the year until things settle down. But I would say that the market’s still quite active. There’s no indication that multiples have changed for certain, you know, no indication that they’ve come down. But the market’s active. Our pipeline’s active. We expect to transact this year over the balance of the year.

Stephen MacLeod: That’s great. Okay. Thanks, guys. Appreciate the color. Thank you.

Operator: Thank you. Our next question coming from the line of Scott Fletcher with CIBC. Your line is now open.

Scott Fletcher: Hi. Good morning. I’ll stick to the brand side of things. On the organic decline in the roofing piece, you sort of mentioned 10% range. Is there any way you could sort of break out how much of that was weather-related versus sort of commercial delay related? And assume that would be that those weather-related delays would be more likely to come back sooner than the commercial is.

Scott Patterson: I think that’s right, Scott. You know, it’s hard to pinpoint that accurately, but I’ll spitball it sorta half and half. You know, some of the new roofing contracts are significant, well over $10 million up to $20 million. I mean, it can from quarter to quarter, it can make a difference. And then certainly weather can as well because it reduces your time on a roof and we certainly saw that in particular in January and February this year. During our seasonally weakest quarter, because of winter weather, this year, we saw weather in a form of rain and high winds and smoke from wildfires impact our production hours in non-seasonal regions like Texas, Louisiana, and California. So that will come back. It won’t come back in the second quarter entirely. We see over the balance of the year. But we do see the deferral and the commitment around these new roofs and reroofs we do see that continuing until we see more stability in the market.

Scott Fletcher: Okay. That thanks. That’s helpful. And then on the restoration side, last quarter, you sort of mentioned some unclear timelines on the reconstruction work related to the hurricane. Is there anything you can update us on sort of the pipeline on reconstruction work in the restoration business?

Scott Patterson: Generally, I can. I mean, it’s very slow to convert. Scoping, permitting, environmental approvals, insurance approvals, all takes considerable time. We generated a little over $10 million in Q1 from Helene and Milton. We do have remaining backlog in these events. We expect to convert it really over the balance of the year. It won’t be material to the year or to any particular quarter. I think the real relevant metric is our total backlog. Which is as I said in my prepared comments, similar to year-end and to prior year, which points to similar revenue levels in Q2.

Scott Fletcher: Okay. Great. Thank you. I’ll leave it there.

Operator: Thank you. Our next question coming from the line of Daryl Young with Stifel. Your line is now open.

Daryl Young: Hey, good morning, everyone. I think this might be the first quarter since I’ve covered you guys that you’ve missed on the top line and beat on margins. And I’m just wondering if there’s a shift in how you’re thinking about managing the business towards more margin-centric and maybe dialing back top-line growth, or is this really just a function of some of the weather and whatnot issues you’ve already called out in the quarter?

Scott Patterson: Yeah. I mean, well, you know, the margin, Jeremy said in his comments, I mean, the margin efforts are every day and every year. And the teams are doing a great job. Really across all the brands. The top line, I mean, we you know, also, we didn’t point it out in our comments, but there’s about $10 million of FX impact also from our Canadian operations that hit our revenue that we didn’t necessarily foresee. And otherwise, no. It’s really these, you know, home improvement again, a little lower than expected. And the contract commitment commercially at Century and Roofing. I mean, all of it is much of it tied to the trade war and the current environment. And we think it’s all timing related. But underlying demand drivers remain compelling. And we’re very optimistic about really all our brands and the demand environment once we get through this.

Daryl Young: Got it. Okay. And then flipping over to the residential business, I think you know, in recessionary environments in the past, you’ve seen more requests for pricing. I guess, we’ll call it more shopping by HOAs. But you’ve always done well and taken share in that kind of environment. Is that sort of how you would be thinking about this time as well, or has anything changed now that you’re at a much bigger scale?

Scott Patterson: Well, I mean, the pricing pressure’s been very acute. In that business. For the last eighteen months. I mean, we’ve been talking about that particularly in Florida with the pressure on the budgets, the community budgets. We don’t see pricing pressure getting worse or escalating from here. These communities and their need to be managed will continue, and it’s always price competitive. So I don’t really see it changing.

Daryl Young: Got it. Okay. And then do you have handy what your organic growth rate would be x that FX impact that you spoke to?

Jeremy Rakusin: Well, I’ll just jump in that $10 million, Scott said, you know, pretty close to that. That’s about 1% on the consolidated line. You know, we did $1.25 billion over the $1.16 billion last year.

Daryl Young: Got it. Okay. That’s it for me. I’ll jump back in the queue. Thanks, everyone.

Operator: Thank you. Our next question coming from the line of Stephen Sheldon with William Blair. Your line is now open.

Stephen Sheldon: Hey. Thanks for taking my questions. The first one here is really great to see the margin expansion in the residential segment this quarter. So can you just give some more detail on how you’re driving some efficiencies in client accounting and the contact center operations that you mentioned? Has your view changed at all in the potential long-term margin profile there relative to the 9% to 10% range you’ve talked about?

Jeremy Rakusin: Yeah, Steven. So client accounting is really around, you know, headcount reductions and, you know, streamlining our process to get those monthly financial statements out to thousands of communities and the boards that are our clients at those communities. Yeah. And then the contact centers, it relating to dealing with inbound requests from our communities and our residences. We’re using, you know, digital and AI tools technology in a broad way to take the loads off of our frontline portfolio managers and bring it to the back office so they can be more effective in dealing with their boards and can be more productive and increase their load. So it’s a whole bunch of efficiencies. And at the end of the day, this is all about delivering service excellence and enhancing the customer experience at our communities.

As to, you know, the sustainability of it, we’ve talked about, as you alluded to, a 9% to 10% margin band. Last year, we’re around the middle point of that. And, you know, with better margins this year, we’ll be in the upper half of that band. And, you know, that is our belief for our long-term goal. We’ll continue to work on other margin enhancements over time. But being at the upper end of the 9% to 10% margin band is a good target for us the end of this year.

Stephen Sheldon: Got it. That’s helpful. And then just as a follow-up, any updated thoughts about expanding the services portfolio similar to what you guys did when you expanded it into restoration and roofing? You know, are you entirely focused on growing and gaining market share at the current end markets or as we’re sitting here, you know, a few years down the road? Do you think there could be a new business in the end market in the portfolio? How are you guys thinking about it?

Scott Patterson: Always open-minded, Steven. But our focus is on the brands we own today. The one thing I would add is that, you know, we have talked about this broader thesis around repair and maintenance of the built environment which includes restoration. It includes roofing. It includes painting, and there are other adjacencies that are very similar. So we are certainly interested in that broader thesis. Which has, you know, many drivers and tailwinds, you know, we talk frequently about the weather events but the aging building stock the coastal building codes that we’re increasingly seeing that are driving repair and maintenance spend. So there are, I would call them adjacencies that we’re interested in, but they would be part of our current segments and part of our current platforms.

Stephen Sheldon: Great. Thank you, Jeremy and Scott.

Operator: Thank you. Our next question coming from the line of Frederic Bastien with Raymond James. Your line is now open.

Frederic Bastien: Good morning. Guys, I was wondering if you could comment on labor availability and also labor cost. I know this was obviously an issue when we saw inflationary pressures a couple of years back, but presumably, things are getting a lot better, you know, just based on the margins you deliver. Just wanted to see if you could comment on that, please. Thanks.

Scott Patterson: Yes, Frederic. Much better. Certainly than, you know, a few years ago. Our turnover is down. It’s really down to levels that we saw pre-COVID and continuing to improve. And wage inflation has stabilized. And so, we’re able to recruit more effectively, and we’re able to keep our people more effectively. And it’s more stable than it’s been in a few years.

Frederic Bastien: And is that helping facilitate market share gains? I know this is obviously a key part of the FirstService Corporation story is your ability to continue winning market share. Is that helping contribute?

Scott Patterson: Well, culture employee experience for us is critical and delivering on customer experience. So the tenure of our folks, particularly the frontline, always helps us in terms of driving customer experience, which in turn drives repeat business retention and word-of-mouth referrals. So the answer is yes.

Frederic Bastien: Okay. Great to hear. Thanks for your thoughts.

Operator: Thank you. I’m showing no further questions in the Q&A queue at this time. I will now turn the call back over to Mr. Scott Patterson for any closing comments.

Scott Patterson: Thank you, Olivia, and thank you all for joining our Q1 call. Enjoy the rest of the day.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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FIRSTSERVICE CORP

Q1 2025

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