FSV

• Strategic Portfolio Adjustments

  • Sold accumulated residential pool maintenance operations early in Q2 to refocus exclusively on commercial pool maintenance and management.
  • Completed tuck-under acquisitions during the quarter: Sheffers Roofing (Kansas City, Midwest market expansion), Titan Fire Protection (Tampa, FL) and GSC Fire and Security (Austin, TX) for Century Fire.

• Operational Progress by Segment

  • FirstService Residential: Core property management performed in line with expectations, with ongoing efficiency initiatives driving margin expansion. Launched the Resilience First cross-selling initiative with restoration and roofing operations, focused on loss prevention, reduced insurance costs for managed communities, and competitive differentiation.
  • Restoration: A mild Q4 2025 weakened the first-half 2026 pipeline, but significant large-loss project wins in late Q2 and early July have restored the pipeline to historical healthy levels, with revenue conversion expected over 12-18 months. Specialty construction opportunities have emerged from existing restoration expertise in sensitive verticals like healthcare, with early momentum on new bids and wins.
  • Roofing: Market conditions remain weak and ultra-competitive, particularly in high-exposure regions Las Vegas (over 50% exposure to slowing new construction, coming off two years of strong large-project growth) and Southwest Florida (overcapacity post-Hurricane Ian, which pulled forward multiple years of re-roof work). The company intentionally exited low-margin work in these regions; expected Q2 large project delays accounted for half the Q2 miss, with all delayed projects remaining in backlog.
  • Century Fire: Sequentially improved backlog in Q2, with consistent strong growth across installation and service segments, driven by a strong local branch network and solid demand from multifamily and data center end markets.
  • Home Services: Demand remains tied to the weak housing market (near 10-year lows for activity and consumer sentiment), but close ratio and average job size improvements delivered slight YoY revenue gains, and the segment continues gaining market share.

• Capital Deployment

  • Q2 operating cash flow (pre-working capital) was $112 million, in line with last year; full Q2 cash flow after working capital was $130 million, H1 2026 cash flow after working capital was nearly $220 million.
  • Q2 CapEx was ~$30 million, H1 2026 CapEx was $60 million; full-year 2026 CapEx is now expected to be ~$130 million, below the initial $140 million target.
  • Q2 acquisition spend for tuck-under deals was just over $40 million.
  • Repurchased 1.8 million shares in Q2 under the normal course issuer bid, for a total cost of ~$250 million at an average price of $135.91 per share. Leverage (net debt to EBITDA) increased modestly to 1.8x from 1.5x at end-Q1, remaining at conservative levels with over $800 million in available liquidity.

• FirstService Residential: Expects mid-single-digit top-line growth and continued modest YoY margin improvement for the remainder of 2026, matching the pacing of year-to-date performance.
• FirstService Brands: Aggregate mid-single-digit revenue growth is expected in the second half of 2026, with performance skewed to Q4 dependent on restoration backlog conversion and potential seasonal weather-related activity spikes. Specific segment guidance:
  • Restoration: Expects ~5% YoY growth in the second half of 2026, with upside if significant storm/hurricane activity adds new backlog.
  • Roofing: Expects Q3 organic revenue to be down mid-single-digits YoY, with no material near-term market improvement expected.
  • Century Fire: Expects 10%+ YoY revenue growth for Q3 and Q4 2026.
  • Home Services: Expects continued slight YoY revenue growth driven by market share gains, with no material improvement in underlying housing market conditions expected in H2 2026.
• Consolidated: Q3 2026 revenue and EBITDA growth are expected to be in the low single-digit range, matching Q2 2026 performance. Full-year 2026 consolidated revenue growth is expected to be similar to or modestly better than H1 2026's 4% growth, with mid-single-digit full-year EBITDA growth over 2025.

Consolidated: Q2 2026 total revenues = $1.45 billion, up 2% year-over-year (YoY); adjusted EBITDA = $161.7 million, up 3% YoY, with a consolidated margin of 11.2% (up 10 bps YoY); adjusted EPS = $1.75, up 2% YoY. Year-to-date (H1 2026) consolidated revenues = $2.77 billion, up 4% YoY; adjusted EBITDA = $267 million, up 3% YoY, margin 9.7% (down 10 bps YoY); adjusted EPS = $2.69, up from $2.63 YoY.

FirstService Residential: Q2 2026 revenues = $617 million, up 4% reported (5% organic) YoY; contributes ~42.6% of total consolidated Q2 revenue. Q2 EBITDA = $69 million, up 6% YoY, margin 11.2% (up 20 bps YoY). H1 2026 division EBITDA margin = 9.9%, up 30 bps YoY.

FirstService Brands: Q2 2026 revenues = $832 million, up 1% YoY; contributes ~57.4% of total consolidated Q2 revenue. Q2 EBITDA = $96 million, up 1% YoY, margin 11.5% (down 10 bps YoY).

• Restoration brands (Hall Davis, First Onsite): Q2 revenues down slightly YoY, impacted by a weakened Q4 2025 pipeline from mild weather. End-of-Q2 pipeline recovered to historically healthy levels, with multiple new large-loss projects secured.
• Roofing: Q2 revenues down ~6% reported (10% organic) YoY, below company expectations.
• Century Fire: Q2 revenues up over 10% YoY, with high single-digit organic growth, in line with expectations.
• Home Service brands (California Closets, CertiPro Painters, Floor Coverings International, Pillar to Post Home Inspection): Q2 revenues up slightly YoY, modestly above expectations.

• The roofing segment faces sustained market headwinds: weak new construction demand outside of data centers, increased competition as new construction-focused roofers shift to the re-roof market, overcapacity in post-Ian Southwest Florida, and heavy new construction exposure in Las Vegas. Delays in large project starts from insurance negotiations and broader construction scheduling push out revenue conversion, and no material near-term market improvement is expected.
• Restoration revenue growth depends on the speed of backlog conversion, which can be delayed by scoping, permitting, and insurance navigation processes. Growth also relies on seasonal storm activity, which is unpredictable.
• Home service brands remain exposed to continued weakness in the housing market and low consumer sentiment, both near 10-year lows, with no improvement expected in H2 2026.
• Forward-looking results are subject to general macroeconomic uncertainty, which can delay customer project decisions and impact market conditions across all segments. Actual results may differ materially from forward-looking statements due to these and other unforeseen factors.

Q: With the weak backdrop for roofing, what factors are driving current backlog delays, and when could conditions improve? What does the current backlog trajectory look like?

A: Backlog is down YoY, but has grown sequentially month-over-month through May and June, moving in the right direction slowly. All Q2 delayed projects remain in the backlog, with most delays tied to insurance negotiations or broader construction scheduling pushes, not project cancellation. The competitive environment will eventually normalize as unsustainably low pricing forces overcapacity out of the market, particularly in Southwest Florida where post-Hurricane Ian expansion created excess supply.

Q: How does management prioritize between share repurchases and tuck-under M&A, given the active buyback in Q2? Will buyback activity continue in H2?

A: The company's leverage remains conservative at 1.8x net debt to EBITDA, and management is comfortable increasing leverage to ~2.5x. M&A for attractive, strategic targets will always take priority, but the balance sheet has enough liquidity (over $800 million) to pursue both M&A and buybacks in tandem. Buybacks will continue at current valuations, which management sees as materially dislocated from fair value and meeting return targets comparable to acquisition opportunities.

Q: What progress has been made on expanding national accounts and specialty restoration services, and what is the growth outlook for restoration heading into 2027?

A: Over the last four to six weeks, the company has secured multiple large-loss projects across North America across verticals including government, healthcare, retail, and multifamily, significantly enhancing the backlog. Specialty contracting opportunities have emerged from existing restoration expertise in sensitive healthcare environments, leading to new bids for retrofits and capital projects with early momentum. Most new backlog will not meaningfully contribute revenue until Q4 2026 and 2027, putting the segment in a strong position heading into next year even without additional storm activity.

Q: Why are fewer quality M&A targets coming to market right now, and are there structural changes impacting the company's acquisition strategy?

A: Most underperforming businesses in weak segments like roofing are owned by private equity, and owners are reluctant to sell at valuations that would crystallize losses after coming off stronger 2023-2024 results, so they are waiting for performance to recover before listing. There are no structural changes to the company's business model or long-term acquisition strategy; weak market conditions are cyclical and should eventually normalize. The company remains disciplined and patient, focusing on strategic cultural and geographic fits, and expects full-year 2026 M&A spend to match 2025 levels.