FirstService (FSV) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues rose 16% year-over-year to $1.3 billion, driven by acquisitions, especially Roofing Corp. of America, and strong top-line growth.

• Organic growth was flat, with Residential gains offset by restoration declines.

• Adjusted EBITDA increased 12% to $132.5 million, with a consolidated margin of 10.2%.

• Adjusted EPS declined to $1.36 from $1.46 in Q2 2023, due to higher interest expense.

• CEO expressed optimism for meeting full-year top and bottom line targets based on current business momentum.

Financial highlights

• Q2 revenues reached $1.3 billion, up 16% year-over-year; Adjusted EBITDA was $132.5 million, up 12%.

• Adjusted EPS was $1.36, down from $1.46 in Q2 2023, due to higher interest expense.

• Six-month revenues were $2.5 billion, up 15%; Adjusted EBITDA was $216 million, up 8%.

• Operating cash flow exceeded $130 million in Q2, up 52% year-over-year.

• Net cash from operating activities for six months: $121.9 million; total debt at June 30, 2024: $1.33 billion.

Outlook and guidance

• 2024 consolidated annual revenue and EBITDA are forecasted to achieve mid-teens percentage growth over 2023.

• Management remains optimistic about achieving full-year revenue and earnings targets, citing strong business momentum.

• Residential organic growth expected to continue in the mid-single digit range for the remainder of the year.

• Brands division margin improvement anticipated in Q3 and Q4, with restoration headwinds moderating.

• Home improvement revenues expected to be down modestly in Q3, with hopes for recovery if interest rates decline.