FirstService Corp. Q4 FY2024 earnings call

• 2024 saw 20% revenue growth and 24% EBITDA growth, doubling long-term top-line goal. Consolidated margin ticked up 20 basis points in tough environment.
• Fourth quarter: Revenues up 27% (organic growth 10%), EBITDA up 33% (margin improvement 50 basis points), EPS up 21%.
• FirstService Residential Q4 organic growth 3%, full-year organic growth 5%; facing budgetary pressures but expecting organic growth to pick up later in 2025.
• FirstService Brands Q4 strong due to Roofing Corp acquisition and restoration segment; restoration benefited from hurricanes, with backlog up and leads from wildfires and cold weather increasing.
• Roofing Corp of America had good quarter and year, accomplished due diligence forecast and added tuck-unders, expecting further expansion in 2025.
• Home Service Brands seeing lead activity down but higher conversion rates and average job size; cautiously optimistic for market improvement in Q2 and beyond.
• Century Fire had strong quarter, expected solid year with organic growth approaching 10%.

FirstService Residential

• Q4 revenues: $521 million, up 5% vs prior year; organic growth 3%. Full-year 2024 revenues: $2.1 billion, up 7% over 2023, including 5% organic growth.
• Facing budgetary pressures from rising costs like insurance premiums and legislated increases in reserves, but organic growth expected in low single-digit range for first half of 2025, with trough most acute in Q1.

FirstService Brands

• Q4 revenues: $844 million, up 45% vs Q4 2023; driven by Roofing Corp acquisition and strong restoration segment. Full-year 2024 revenues: over $3 billion, up 32%.
• Restoration: Q4 benefited from hurricanes Helene and Milton, with revenues from named storms up to $60 million vs $15 million prior year quarter; organic growth about 5% full year, expected mid-single-digit growth in Q1 2025.
• Roofing Corp of America: First full year in partnership, accomplished due diligence forecast and added strategic tuck-unders; expected significant revenue increase in Q1 2025 of 50% or more.
• Home Service Brands: Revenues slightly down from prior year, expected flat to slightly down in first half of 2025, with potential growth in back half.
• Century Fire: Strong quarter, up nominally vs prior year, expected organic growth approaching 10% in 2025.

• FirstService Residential: Organic growth in low single-digit range for first half of 2025, full-year growth similar to 2024 level.
• FirstService Brands: Restoration expected mid-single-digit growth in Q1 2025; full-year high single-digit top-line growth; brands division margins modestly up, FirstService Residential margins flat to slightly up, driving incremental consolidated EBITDA margin expansion.
• Roofing Corp of America: Expect significant revenue increase in Q1 2025 of 50% or more.
• Home Service Brands: Expect revenue level flat to slightly down in first half of 2025, with potential growth in back half.

• Insurance budgetary pressures and rising costs impacting FirstService Residential, with insurance premiums and legislated reserve increases creating challenges.
• Weather events like hurricanes and wildfires causing uncertainty in backlog conversion and business forecasting for restoration segment.
• Tariffs potentially tempering consumer confidence and delaying market improvement for Home Service Brands.

Q: Stephen MacLeod asked about restoration work conversion after hurricanes.

A: Scott Patterson said work from hurricanes is slow to convert, adjudication and approval from carriers and permitting is slow, backlog will convert over next year but takes over a year.

Q: Stephen Sheldon asked about margin profile of Roofing Corp over longer term.

A: Scott Patterson said scale enables servicing premier accounts, better purchasing discounts, and building insurance program; Jeremy Rakusin added scale brings benefits in procurement and servicing but no immediate incremental margin improvement modeled beyond previously indicated.