FirstService Corporation Q2 FY2025 earnings call

• The company is pleased with Q2 results, with total revenues up 9% y-o-y, EBITDA up 19% to $157 million, and EPS up 26% y-o-y.
• FirstService Residential had 6% revenue growth with 3% organic growth, net contract wins improving, and expected to move towards mid-single-digit organic growth.
• FirstService Brands saw 11% revenue growth driven by tuck-unders, restoration brands had 6% revenue increase with 2% organic growth, and momentum in day-to-day branch activity.
• Roofing had 25% revenue growth from acquisitions but organic decline, with slowdown seen as timing-related and expecting stronger Q3.
• Century Fire had over 15% revenue growth, announced acquisition of TST Fire Protection and Alliance Fire & Safety, and backlog building.
• Home Service Brands had flat revenues with improved close ratio and average job size.

FirstService Residential revenues were up 6% with organic growth of 3%. FirstService Brands revenues were up 11%, driven primarily by tuck-under acquisitions with organic growth in the division being low single digit; the 2 restoration brands (Paul Davis and FIRST ONSITE) had revenues up by about 6%, 2% organically. Roofing revenues were up 25% due to acquisitions, but organically declined by about 10%. Century Fire revenues were up over 15% versus the prior year including better-than-expected organic growth hitting double digits. Home Service Brands generated revenues that were flat with the prior year.

• Restoration Q3 revenues expected to be down 5% to 10% versus prior year, but weather events could materially impact.
• Roofing expected to have revenues up over 10% versus prior year and organic revenues approximately flat with prior year.
• FirstService Residential expected to sequentially improve organic growth towards historical mid-single-digit average.
• Consolidated EBITDA expected to increase slightly more than revenue growth during the balance of the year.

• Consumer sentiment down significantly impacting Home Service Brands lead flow.
• Weather volatility can cause significant fluctuations in restoration revenues.
• Macro factors and tariff uncertainty affecting Roofing deferrals of large commercial reroof and new construction projects.
• Budgetary pressures in residential communities still causing disruption to organic growth.

Q: Stephen MacLeod asked about confidence in residential organic growth returning to mid-single-digit.

A: D. Scott Patterson said some disruption in communities but not significant impact on organic growth, expecting sequential improvement in Q3 towards mid-single-digit.

Q: Stephen MacLeod asked about FirstService Brands margin and organic growth.

A: Jeremy Alan Rakusin said margin improvement could occur with accelerating top line growth, but restoration's margin depends on weather-driven activity.

Q: Stephen MacLeod asked about Roofing improvement.

A: D. Scott Patterson said it's macro-driven with some recent improvement seen, and expects Q3 to be stronger.

Q: Stephen Hardy Sheldon asked about restoration becoming less reliant on storm activity.

A: D. Scott Patterson said gaining share in national accounts helps but storm activity still impacts results.

Q: Scott Fletcher asked about M&A and leverage.

A: D. Scott Patterson said they remain opportunistic for strategic acquisitions regardless of leverage levels.

Q: Daryl Young asked about Home Improvement market positioning.

A: D. Scott Patterson said California Closets caters to affluent consumers, influencing average job size in the segment.

Q: Daryl Young asked about Roofing volatility.

A: D. Scott Patterson said it's macro-driven but the company is well-positioned with a strong team and footprint.