FirstService Q1 Earnings Call Highlights

23 Apr 2026, 13:38 by Renee Jackson · The Cerbat Gem

FirstService (NASDAQ:FSV) reported first-quarter results that executives described as “solid” and generally in line with expectations, driven by organic revenue growth and margin improvement at its Residential division, partially offset by margin pressure in the Brands segment tied to roofing and home services.

Quarterly results: revenue up 5%, margins pressured at Brands

CEO Scott Patterson said total revenue increased 5% year over year, with “organic growth accounting for over half of the increase.” He added that EBITDA rose 2% as the company experienced a “modest and expected decline in our consolidated margin,” while earnings per share were $0.95, up 3%.

CFO Jeremy Rakusin provided additional detail, reporting consolidated revenue of $1.32 billion compared with $1.25 billion in the prior-year quarter. Adjusted EBITDA was $106 million, up 2%, and adjusted EBITDA margin was 8.0%, down 30 basis points from 8.3% in Q1 2025. Rakusin said the company’s adjustments to arrive at adjusted EBITDA and adjusted EPS were consistent with prior periods.

Residential: organic growth and margin expansion

At FirstService Residential, Patterson said revenue increased 4% in what he called the seasonally weak first quarter, and that “all of the growth was organic.” He noted a “solid quarter of contract wins and renewals” in the core management business, though overall growth was tempered by “modest declines in ancillary services,” including pool construction and renovation and contracted labor for commercial maintenance.

Rakusin reported Residential revenue of $546 million and EBITDA of $46 million, up 10% year over year. The division’s EBITDA margin expanded to 8.4% from 7.9%, which he attributed to “broad-based labor cost efficiencies,” including continued initiatives in client accounting and portfolio management functions along with other productivity gains.

In response to questions, management elaborated on factors influencing Residential performance. Patterson said weakness in pool renovation and construction reflected broader hesitation to allocate capital expenditures to major projects, while contracted labor services (janitorial and front desk staffing in the Northeast) saw some contract losses and purposeful pricing-driven exits. Rakusin added that margin expansion also reflected a mix shift from exiting “low-margin accounts” tied to ancillary services.

Looking ahead, Patterson said Residential should see “similar or slightly better organic growth in Q2,” with “some sequential improvement for Q3 and Q4.” Rakusin said Residential margin expansion is expected to continue in Q2, but he expects year-over-year margin improvement to “flatten out” in the second half.

Brands: mixed revenue trends, margin compression in roofing and home services

FirstService Brands revenue rose 6% in the quarter, Patterson said, split between organic growth and tuck-in acquisitions. Organic growth was “again this quarter driven by increases at Century Fire,” while organic revenue in restoration, roofing, and home services was “approximately flat with the prior year.”

Rakusin reported Brands revenue of $771 million, with division EBITDA of $64 million, down 5.5% from the prior year. Brands EBITDA margin declined to 8.3% from 9.3%, which Rakusin said was “primarily driven by our roofing and home services businesses.”

Restoration: Patterson said restoration brands First Onsite and Paul Davis together were up mid-single digits year over year, but flat organically. He said the quarter benefited from increased winter storm activity, primarily “quick-turn water mitigation” with little carryover to Q2. He said restoration backlogs ended the quarter similar to year-end levels and “down modestly from the prior year,” leading management to expect Q2 restoration revenue “flat to slightly down.” In Q&A, Patterson said the outlook was not driven by market share losses, describing the business as weather-influenced and difficult to forecast quarter to quarter. Rakusin added that organic growth has averaged about 8% historically, but the business “can have greater fluctuations” and entered 2026 with low backlogs following mild weather in 2025. He said the company expects improvement in the back half of the year as weather activity normalizes.

Roofing: Patterson said Q1 roofing revenue increased 7% primarily due to tuck-in acquisitions, including Springer-Peterson acquired in Q3 of last year, while organic revenue was flat. He said the new construction market remains depressed outside of data center work, and the commercial re-roof market is “flat to slightly up while becoming increasingly competitive.” Rakusin said margin pressure in roofing was expected and tied to job margin pressures amid heightened competition and weak new development activity. In Q&A, Patterson said the re-roof market rebound has been delayed by uncertainty, though the company expects sequential improvement in Q3 and Q4, with opportunities previously delayed now being scheduled and bid. Management said roofing backlog was “down modestly” from a year ago due to less new construction work, but stable and “starting to build.” Patterson also said the company is seeing signs of distress in some roofing platforms, including instances where banks are becoming involved.

Century Fire: Patterson said Century Fire delivered a strong quarter with total revenue up over 10% and high single-digit organic growth, supported by growth in “repair, service, and inspection” as well as installation and contract revenue. He said backlog is “robust,” and management expects a similar result in Q2 and the rest of the year. In response to an analyst question, Patterson said the growth was not tied to regulatory changes, but rather a sustained focus on service across branches and expanding service capabilities in installation-focused locations.

Home services: Patterson said home services revenue was up slightly year over year but “modestly lower than our expectation.” He said lead flow improved early in the quarter but weakened into February and “reversed with the onset of the Middle East conflict,” with leads down double digits in Q1 and a steeper decline in March. Patterson said the company increased promotional and marketing spending to maintain revenue and capacity utilization, holding revenue through “higher conversion rates and larger job size,” but at the cost of lower margin. Rakusin said the company expects to continue these marketing investments at least through Q2, while monitoring indicators and pulling back if conditions improve. He also cited reduced capacity utilization, noting job volumes fell even as revenue held, and the company was reluctant to reduce labor costs quickly without greater clarity on demand.

Cash flow, leverage, and capital allocation

Rakusin said operating cash flow was $88 million in Q1, which he called sizable for the company’s seasonal trough quarter and “up more than double compared to Q1 2025.” Capital expenditures were $28 million, and Rakusin said full-year CapEx is now expected to come “modestly lower” than the company’s initial $140 million guidance.

Rakusin also highlighted balance sheet strength, with net debt to EBITDA declining to 1.5x from 1.6x at year-end and 2.0x in Q1 last year. He said liquidity, including cash and undrawn credit facilities, exceeds $1 billion, “the highest level in the history of the company,” providing flexibility for acquisitions.

On capital allocation, Rakusin said the company views buybacks as an option under its normal course issuer bid (NCIB), but emphasized a continued “growth mindset” and a focus on deploying capital toward brand and acquisition opportunities, given uncertainty affecting market valuations.

Acquisitions and Q2 outlook

Patterson said the company acquired two larger franchises during the quarter: a Paul Davis franchise covering Cleveland and Akron, and a California Closets operation encompassing franchise territories for Indianapolis, Louisville, Lexington, and Cincinnati. He described these as selective acquisitions made when the company believes it can drive incremental growth in partnership with local operators. In Q&A, Patterson said these franchise conversions would remain “very episodic,” while broader M&A would continue to focus on tuck-in deals across other verticals.

Discussing the M&A environment, Patterson said acquisition multiples “remain high” and deal activity is slower than in prior years, with some sellers waiting for more stability. He said the company allocated about $100 million for acquisitions last year and expects the current year to “play out similar,” with incremental tuck-in deals possible over the next three quarters.

For the second quarter, Rakusin said the company expects “similar year-over-year trends” to Q1, with continued EBITDA margin expansion at Residential offset by ongoing pressure in Brands. On a consolidated basis, he forecast “mid-single digit top line growth and EBITDA performance flat to slightly up compared with the prior year.”

About FirstService (NASDAQ:FSV)

FirstService Corporation, founded in 1989 and headquartered in Toronto, Ontario, is a leading provider of property services in North America. The company operates through two principal segments—FirstService Residential and FirstService Brands—offering a broad range of services to residential, commercial and homeowner association clients.

FirstService Residential delivers community management, financial oversight and consulting services to thousands of residential communities across the United States and Canada.