FirstService Corp · TSX:FSV

FirstService — Investor Presentation (July 2018)

22 slides from FirstService's investor presentation, July 2018

  1. Slide 1: FirstService Corporation Investor Presentation

    FirstService Corporation Investor Presentation July 2018

  2. Slide 2: Forward Looking Statements

    Forward Looking Statements Certain statements included herein constitute “forward‐looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward‐looking statements involve known and unknown risks, uncertainties and other factors which may cause the

  3. Slide 3: FirstService Corporation Overview

    FirstService Corporation Overview  Leader in essential outsourced property services in Revenue by Division (TTM)(1) U.S. and Canada  FirstService Residential: Largest manager of 33% residential communities  FirstService Brands: One of the largest providers of essential property services 67%  TTM

  4. Slide 4: Proven Business Model

    Proven Business Model Organic growth; enhanced through tuck-under Strategic Focus acquisitions Service Excellence Culture Strong client retention; repeat business; referrals High Proportion of Contractual Revenue Highly predictable and recurring cash flow Modest yet leading market shares; significan

  5. Slide 5: Two Decades of Consistent Growth

    Two Decades of Consistent Growth >20 Years Revenue Compounded Annual Growth: 19% $1,705MM Organic Growth: 2/3 $37MM 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 5

  6. Slide 6: FirstService Residential – What We Do

    FirstService Residential – What We Do Management Contracts – Property Types Broad Range of Services  Condominiums / Co- Traditional On-Site Staff Transaction operatives  Property  Facility  Transfers & Management Maintenance & Disclosures;  Homeowner Associations Engineering Collections  Devel

  7. Slide 7: FirstService Residential – Profile

    FirstService Residential – Profile Scale enhances competitive 2017 Revenues: $1.2BN (> 2x nearest competitor) position Diversified clients & No. of Communities: 8,000 total (2,800 high-rise condos) properties with specialized operating expertise Significant market Market Position: 1.6MM+ total units

  8. Slide 8: FirstService Residential – Diversified Operations

    FirstService Residential – Diversified Operations Breakdown by Property Type (8,000 Total) 2017 Revenue By Region ($1.2BN Total) Life-style Other 4% 3% North Mid-Low 11% Rise Condo High-Rise South 23% Condo West 32% 36% 21% Master Planned East Single Family 36% HOA 34% 2017 Revenue By Service ($1.2B

  9. Slide 9: FirstService Residential – Condo/HOA Market Opportunity

    FirstService Residential – Condo/HOA Market Opportunity Total # of community associations: 365,000 We Have ~6% Share(1) Total # of housing units: 28MM in a Sizeable Market(2) Assessments collected from homeowners: $90+ BN(3) Community association management companies: 7,000 – 8,000 Fragmented Indust

  10. Slide 10: FirstService Brands – What We Do

    FirstService Brands – What We Do  Leading provider of eight branded essential property services to residential and commercial customers through franchised systems and self-perform operations Franchised Systems  Residential / commercial  Residential / commercial  Closets and home storage insuranc

  11. Slide 11: FirstService Brands – Profile

    FirstService Brands – Profile 2017 SWS By Brand ($2.0BN) Economies of Scale as 1,935 Franchisees (2) Leading Franchisor: $2.0BN System-Wide Sales (SWS) Other 4% Century Fire 7% 2017 Revenue:(1) $555MM Floor Coverings 3% Pillar Paul Davis to Post Cal Closets 42% 4% 19% 3,000 employees Certa Pro Natio

  12. Slide 12: FirstService Brands – Leaders in Huge Markets

    FirstService Brands – Leaders in Huge Markets Brand U.S. Market Our Position Market Share $60 Bn Top 3 1.5% share $40 Bn #1 1% share $6 Bn #1 7% share $1.6 Bn #1 3-4% share #1 $65 Bn <1% share (Franchised) #1 $8 Bn 1% share (Southeast U.S.) #1 -- -- (Student-Led) #1 -- -- (Florida) 12

  13. Slide 13: Growth Strategy

    Growth Strategy Organic Growth 1 2 3 Leverage Differentiators to Focus on Customer Continue to Expand our Drive New Business Retention & Referral Ancillary Services  Scale  Capital Acquisition Growth 1 2 3 4 New Geographies; Ancillary Service Expand Company- Complementary In-Market Tuck-Unders Com

  14. Slide 14: Growth Strategy (cont’d): California Closets Company-Owned Operations

    Growth Strategy (cont’d) California Closets Company-Owned Operations  Control Brand; Centralized Manufacturing Opportunity  16 Company-Owned locations = $150MM+ annual revenue  Target 25 major markets = ~50% of System-Wide Sales (~$400MM SWS today) Western Manufacturing Facility (Phoenix, AZ) Eas

  15. Slide 15: Growth Strategy (cont’d): Paul Davis Restoration

    Growth Strategy (cont’d) Paul Davis Restoration (PDR) Company-Owned Operations  Establish national platform to better serve insurance clients  7 PDR Company-Owned locations and 1 non-PDR operation = $100MM annual revenue  Target 25 major markets = ~25% of System-Wide Sales (~$900MM SWS today) 15

  16. Slide 16: Strong Historical Performance

    Strong Historical Performance Revenues ($ in millions) $1,705 $1,483 $1,264 Recurring revenue $1,132 $940 $1,038 model provides consistency and predictability 2012 2013 2014 2015 2016 2017 Adjusted EBITDA(1) ($ in millions) $162 $130 Continue operational $103 improvements to $78 $79 $74 $85 incremen

  17. Slide 17: YTD Performance – Q2/18 and 6 Mos. Vs. Prior Year

    YTD Performance – Q2/18 and 6 Mos. Vs. Prior Year (1) Revenue – Q2 vs. Prior Year Adjusted EBITDA(2) – Q2 vs. Prior Year ($ in millions) ($ in millions) $495 $57.1 $47.1 $442 10.7% 11.5% Q2/17 Q2/18 Q2/17 Q2/18 Revenue – 6 Months YTD vs. Prior Year Adjusted EBITDA(2) – 6 Months YTD vs. Prior Year ($

  18. Slide 18: Capital Structure Summary

    Capital Structure Summary Attractive Lending Arrangements  $250MM Bank Credit Facility  $150MM Senior Notes – 3.84% coupon long-term maturity (2025) Leverage and Liquidity 31-Dec-16 31-Dec-17 30-Jun-18 Net Debt / EBITDA (1) 1.5x 1.3x 1.4x Total Liquidity ($ MM) (2) $140 $188 $147 (1) Expressed as

  19. Slide 19: 2018 Full-Year Expectations

    2018 Full-Year Expectations Metric 2018 Full-Year Consolidated Expectations Mid Single-Digit Organic Percentage Increase Year-Over-Year Revenue Growth + Tuck-Under Acquisition Growth Modest Year-Over-Year Improvement Adjusted EBITDA Margin (9.2% in 2017)(1) Effective Tax Rate ~25% Capital Expenditur

  20. Slide 20: FirstService – A Compelling Investment Opportunity

    FirstService – A Compelling Investment Opportunity  Leader in large and highly fragmented essential, outsourced property services markets Market Leadership Position  Scale advantage, proprietary products / services and national coverage are competitive differentiators which are difficult to replic

  21. Slide 21: Appendix: Reconciliation of GAAP Earnings to Adjusted EBITDA

    Appendix Reconciliation of GAAP Earnings to Adjusted EBITDA Three months ended Six months ended (in thousands of US dollars) June 30 June 30 2018 2017 2018 2017 Net earnings $ 29,894 $ 21,934 $ 38,829 $ 30,202 Income tax 9,285 10,888 8,613 9,361 Other income (39) (110) (103) (205) Interest expense,

  22. Slide 22: Appendix: Reconciliation to Adjusted Net Earnings and Adjusted EPS

    Appendix Reconciliation of GAAP Earnings to Adjusted Net Earnings and Adjusted Earnings Per Share Three months ended Six months ended (in thousands of US dollars) June 30 June 30 2018 2017 2018 2017 Net earnings $ 29,894 $ 21,934 $ 38,829 $ 30,202 Non-controlling interest share of earnings (2,915) (

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