FirstService Corporation (FSRV)
Q1 2010 Earnings Call
April 28, 2010 11:00 am ET
Jay Hennick – Founder, CEO
D. Scott Patterson – President, COO
John Friedrichsen – Senior Vice President, CFO
Sara O’Brien – RBC Capital Markets
Stephanie Price – CIBC World Markets
David Gold – Sidoti & Company
Will [Marks] – JMP Securities
Brandan Dobell – William Blair & Co.
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Welcome to the FirstService Corporation’s first quarter earnings 2010 conference call. Today’s call is being recorded. Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements that involve risks and uncertainties. Actual results may be materially different from those contained in these forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the form 10-K and in the company’s other filings with Canada and U.S. securities commissions. As a reminder, today’s conference is being recorded, Wednesday, April 28, 2010.
At this time, for opening remarks and introductions I would like to turn the call over to the founder and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, Sir.
Thank you and good morning everyone. As the operator has said I am Jay Hennick, Chief Executive Officer of the company and with me today is Scott Patterson, President and Chief Operating Officer and John Friedrichsen, Senior Vice President and Chief Financial Officer.
This morning FirstService reported better than expected first quarter results with particularly strong improvement from our Colliers International commercial real estate services division. The first quarter is traditionally the weakest quarter in the commercial real estate industry and the fact that Colliers International posted a profit in the quarter for the first time since 2007 is a clear sign that real estate markets are beginning to regain their confidence. With improving market conditions in commercial real estate, the steps taken over the last year to strengthen our ownership of Colliers and the continued strength of our residential property management and property services divisions FirstService is in a better position today than at any time in our history to create value for our shareholders.
For the quarter, revenues were up 11%. EBITDA was up 62% and adjusted earnings per share was up 88%; all versus the prior-year, an excellent performance to say the least. John will provide more details on our financial results in a few minutes. Aside from Colliers, our ever-resilient residential property management business posted solid operating results once again and our property services segment also grew nicely versus the prior year. Scott will provide more details on all of this in his operational report in just a few minutes.
Over the past few months we have been very busy particularly in our commercial real estate services division. In October the global shareholders of Colliers overwhelmingly agreed to transition the company from a decentralized network of affiliate owners to one Colliers; to one centrally owned business under the operation and control of FirstService. Also in October we strengthened our foothold in London, one of the strongest referral markets in the world, with a significant strategic investment in Colliers U.K. which also owns Colliers in Spain and Colliers in Ireland. Then early this quarter we announced that we would be combining our CRE business in the U.S. with the U.S. operations of Colliers under the global Colliers International name. This includes FirstService Williams in New York as well as our property valuations, hotel and hospitality consulting and project management businesses across North America.
At the same time, we entered into license agreements with market leaders in markets that we do not already own. Each new licensee has been chosen because they were leaders in their respective markets and each will be rebranded as Colliers International and integrate into our global operating platform. Once all of these moves are completed, Colliers International in the U.S. will have complete coverage nationally and will operate seamlessly with our other markets on a global basis.
Last week we also announced another significant move, adding Chicago market leader, Colliers, Bennett & Kahnweiler, to our rapidly growing commercial real estate services segment. The investment in Colliers Chicago further strengthens our U.S. platform and allows us to better serve local, national and international clients from the Midwest.
Founded in 1947, Colliers Chicago employs more than 200 real estate services professionals and manages more than 15 million square feet of industrial, commercial and office properties. In 2009, one of the worst in recent history for commercial real estate, the firm completed transactions totaling more than $1.3 billion in value, generating more than $30 million in revenue. We are extremely pleased to welcome our new partners from Colliers, Bennett & Kahnweiler, into the FirstService family of companies.
Today, FirstService through its Colliers International subsidiary is the world’s third largest player in commercial real estate with more than 480 company owned and licensed offices in 61 countries around the world. But we still have lots of work to do. We must ensure we deliver a uniform and differentiated service offering to our clients wherever and whatever their needs. The biggest opportunity in the near-term will be in winning large global mandate for multinational companies whose requirements are more complex in nature and international in scope.
We must also strengthen our ability to attract and retain the best and brightest in the industry. We now have a compelling story to tell about who we are and what we stand for and where we are going. And we must continue to invest in our platform and infrastructure and take advantage of the economies of scale and synergies of a larger and more collaborative organization. The Colliers International brand is well known for quality and integrity on a worldwide basis. It is truly an icon in the global real estate services industry. As owners, FirstService has a tremendous opportunity to liberate the full potential of this brand across our entire organization.