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, while organic growth was flat overall.

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

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

• Operating earnings for the quarter were $83.9 million, up from $82.3 million a year ago; diluted EPS was $0.78, down from $1.01.

• 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%.

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

• Adjusted EPS for the first half was $2.03, down from $2.31 year-over-year.

• Operating cash flow in Q2 exceeded $130 million, 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 now forecast to achieve mid-teens percentage growth over 2023.

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

• Brands division margin improvement is expected in Q3 and Q4, with restoration headwinds moderating and roofing contributions increasing.

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

• Home improvement revenues are expected to be down modestly in Q3, with potential improvement if interest rates decline.