Good day, and thank you for standing by. Welcome to the FirstService Corporation Second Quarter 2025 Investor 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 known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance or achievements contemplated in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in forward-looking statements contained in the company's annual information form as filed with the Canadian Securities Administrators and in the company's annual report on Form 40-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded, today is July 24, 2025. I would like to turn the call over to Chief Executive Officer, Mr. Scott Patterson. Please go ahead, sir.

Thank you, Marvin. Good morning, everyone. Thank you for joining our Q2 conference call. As usual, I'm on today with Jeremy Rakusin, I'll kick us off with some high-level comments, and Jeremy will follow with more detail. I'll start by saying we're very pleased with the results we posted this morning, solid performance in an environment with continuing uncertainty and weak consumer sentiment. The results were similar sequentially to our Q1. Total revenues were up 9% over the prior year, driven primarily by tuck-under acquisitions over the last 12 months. Organic growth was 2% this quarter with gains at FirstService Residential, Century Fire and our restoration brands, tempered by flat year-over-year results in our Home Service segment and declines in our Roofing operations. EBITDA for the quarter was up 19% to $157 million, reflecting a consolidated margin of 11.1%, up 90 basis points over the prior year. Across the board, our operating teams continue to grind out margin gains. Jeremy will spend time on the margin detail in a few minutes. Finally, our earnings per share were up an impressive 26% over the prior year. Looking at our divisional results FirstService Residential revenues were up 6% with organic growth of 3%, similar to Q1 and generally right on expectations. Our net contract wins versus losses continues to improve, and we're comfortable that organic growth will sequentially improve towards our historical mid-single-digit average. Moving to FirstService Brands. Revenues for the quarter were up 11%, driven primarily by tuck-unders. Organic growth was low single digit for the division. Revenues for our two restoration brands, Paul Davis and FIRST ONSITE were up by about 6%, 2% organically, modestly better than our expectation. We're pleased with the momentum we have in our day-to-day branch level activity with both our U.S. and Canadian operations. The number of claims are up and the number of jobs are up, which is a reflection on our efforts over the last few years in signing new national accounts and especially increasing our share of existing accounts, both with national insurance carriers and commercial owners and managers. Storm-related revenues during the quarter were modest and at approximately the same level as the prior year. Looking forward to Q3 and restoration, we expect the momentum in day-to-day activity to continue, which, together with a solid quarter end backlog should lead to revenue that is up mid-single digit sequentially from Q2. Relative to prior year, we're up against a strong comparative quarter, particularly in Canada that included revenues from two flood events impacting Toronto and Montreal, significant activity related to the Jasper, Alberta wildfires and a few unusually large claims. At this stage, we expect Q3 revenues to be down 5% to 10% versus prior year. Of course, as we've seen over the last few years, a weather event between now and September 30 can drive the result up materially. Moving to our Roofing segment. Revenues for the quarter were up 25% and driven by acquisitions, principally the acquisition of Crowder in South Florida that closed May 1 of last year. Organically, revenues declined by about 10% and were modestly lower than expectation. We continue to see some deferral of large commercial reroof and new construction projects. Two of our larger branches in particular, were at capacity this time last year with several large industrial reroof projects underway. Activity at those operations slowed in the first half of this year. Our market position and relationships remain strong in those markets and the demand drivers remain compelling. We see the slowdown as timing-related only, and in recent weeks, have seen a pickup. Our backlog at our larger operations and across our roofing platform is solid and building. We expect a stronger Q3 with revenues up over 10% versus the prior year and organic revenues approximately flat with prior year. Moving on to Century Fire. We had a strong quarter with revenues up over 15% versus the prior year including better-than-expected organic growth at hit double digits. Virtually all of the 30-plus branches performed well during the quarter and again, the results were enhanced by particularly strong growth in repair, service and inspection revenues. During the quarter, we announced the acquisition of TST Fire Protection and Alliance Fire & Safety, two related fire protection companies based in Utah. Operationally and culturally, the businesses are very similar to Century and provide us with an attractive growth platform in the Western U.S. The TST and alliance teams will continue to operate the businesses, and we're excited to add them as partners as we focus on driving growth in adjacent markets. Our backlog continues to build at Century, and we expect strong results for the balance of the year with the organic growth tempering back into the high single-digit range. Now on to our home service brands, which is a group that generated revenues that were flat with a year ago, better than our expectation. Consumer sentiment is down significantly since the beginning of the year, which resulted in our lead flow for the quarter being off almost 10% versus prior year. Our teams across the home service brands have successfully increased our close ratio and we've experienced an increase in average job size, which together drove solid revenues that were flat with a year ago. We believe we continue to take share in our markets. Looking forward, we expect a similar result in Q3 with revenues flat, perhaps slightly down, versus the prior year. As I indicated on our last call, we remain optimistic that pent-up demand is building, and we'll see an increase in activity with interest rate reductions if they occur later this year or early next.

Thank you, Scott. Good morning, everyone. We are pleased with our strong Q2 performance, reflecting year-over-year growth in profitability on the back of the same margin expansion drivers we saw in this year's first quarter. I will provide more details in a moment. First, a walk through of our consolidated financial results. Revenues for the second quarter were $1.4 billion, up 9% year-over-year and we reported adjusted EBITDA of $157.1 million, up 19% versus the prior year. Adjusted EPS came in at $1.71, a 26% increase over Q2 2024. Our six months year-to-date consolidated financial performance tracks closely to the strong growth metrics in the second quarter, aggregating to revenues of $2.7 billion, an increase of 9% over the $2.5 billion last year. Adjusted EBITDA of $260 million, representing 21% growth over the $216 million last year, with a margin of 9.8% year-to-date, up 100 basis points year-over-year. And adjusted EPS for the first half of the year sits at $2.63, a 30% increase over the prior year period. Our adjustments to operating earnings and GAAP EPS to calculate our adjusted EBITDA and adjusted EPS, respectively, have been summarized in this morning's release and remain consistent with our disclosure in prior periods. Shifting to our operating financial performance for the second quarter. I'll start with our FirstService Residential division. Quarterly revenues came in at $593 million, up 6% over the prior year. EBITDA for the quarter was $65 million, an 11% year-over-year increase with an 11% margin, up 40 basis points over the 10.6% margin in Q2 of last year. The margin improvement during the second quarter was driven by the same operating efficiencies noted in our first quarter, principally in areas around client accounting and community resident communications. For the six months year-to-date, our division EBITDA margin sits at 9.6%, up 60 basis points compared to the equivalent prior year period. Consistent with what we said on our Q1 call, we expect the margin improvement from these efficiencies to moderate in the remainder of the year. Within our FirstService Brands division, we reported second quarter revenues of $823 million, an 11% increase over the prior year period. EBITDA for the quarter came in at $95 million, up 23% year-over-year. Our margin during the quarter was 11.6%, up 110 basis points versus the 10.5% during last year's Q2. The margin expansion within the division saw contribution from the same themes as the first quarter. Our restoration businesses continue to benefit from the optimization of their resources and operating processes, driving superior year-over-year profitability in the face of modest organic growth. And in our Home Improvement segment, California Closets captured additional margin improvement carry through from labor cost efficiencies and reduced promotional activities. Turning to our cash flow profile. We generated $163 million in operating cash flow during the second quarter, exceeding our consolidated EBITDA for the period with the contribution of positive working capital trends. Our cash flow was up 25% over the prior year quarter and currently sits at over $200 million year-to-date, an increase of 67% over the same period in 2024. Our capital expenditures during the quarter were a little over $30 million and our year-to-date total of $63 million is right on pace with the annual CapEx target of $125 million we provided at the beginning of the year. Acquisition spending during the quarter was approximately $40 million largely tied to the fire protection tuck-unders, which Scott summarized in his commentary. With the free cash flow surge in the second quarter, we were able to pay down almost $70 million of debt during the period. As a result, our leverage, as measured by net debt to EBITDA, declined to 1.8x from the 2x level at the end of Q1. With our cash on hand and undrawn bank credit facility balances, our liquidity exceeds $860 million. We are well positioned with this balance sheet strength to deploy capital when we see the right opportunities. Concluding with our outlook for the year, we remain firmly on track to hit our annual consolidated growth targets we set out at the beginning of the year, which included high single-digit revenue growth and margin expansion driving to double-digit EBITDA growth. For the remainder of 2025, our current line of sight is that the year-over-year growth profiles for Q3 and Q4 will be relatively similar to each other. As Scott noted, our FirstService Residential division will revert back to its mid-single-digit organic revenue growth rate and high single-digit overall growth when accounting for recent tuck-under acquisitions. Our FirstService Brands division revenues are expected to be slightly up versus prior year with restoration facing the headwinds of a strong back half of 2024, without assuming any significant weather activity that could materialize in the remainder of 2025. Consolidated revenue growth will settle in at mid-single digits absent the closing of any meaningful tuck-under acquisitions during the balance of the year. From an operating profitability perspective, I mentioned the tapering of FirstService Residential margin expansion for the remaining quarters down to levels modestly higher than prior year. Margins within the FirstService Brands division will also aggregate to be roughly in line with prior year. As a result, our consolidated EBITDA should increase slightly more than our revenue growth during the balance of the year. That concludes our prepared comments. Marvin, you may now open up the call to questions. Thank you.

Operator Instructions. And our first question comes from the line of Stephen MacLeod of BMO Capital Markets.

Just had a couple of questions with respect to the outlook. Starting with the residential business, can you just talk about your confidence in the return to mid-single-digit organic growth in the back half of the year with respect to some of the community budgetary pressures we've seen? Are you seeing those already beginning to reverse?

I wouldn't say reverse, Stephen, but they're starting to normalize. It was most acute last year. We started to see it normalize, I guess, towards the end of last year and through the first six months. So it's really playing out, as we've described in our last few calls, we expected Q4, Q1 and Q2 to be tougher organic growth quarters. There is still some disruption as many communities in Florida are still underfunded and work towards increasing monthly maintenance fees or implementing a special assessment. We're working closely with our boards. So there will continue to be some disruption, but we don't expect it to significantly impact our organic growth going forward. And as I said in my prepared comments, we expect to sequentially improve and move towards that mid-single-digit number, and we'll start to see that in Q3.

That's great. Moving on to the FirstService Brands business, you provided some insights on the outlook, which is very helpful. The margin for the quarter was quite strong, even though organic sales growth was more modest in that business. Clearly, you are achieving margin improvement due to the efficiencies you've implemented. When we anticipate organic growth beginning to accelerate at some point, do the strategies you have in place lead to a higher margin profile for the business overall in the long term?

Yes, Stephen, I'll take that. It's Jeremy. For sure. I mean, both those businesses would benefit from traditional or natural operating leverage if we get accelerating top line growth. Home improvement, we've been in a sort of flat to slightly down realm and an acceleration there would help. In the case of restoration, which is the other area where we've seen significant margin improvement that, again, is a function of top line performance, and we've spoken it many times around the weather-driven activity levels that can create a more volatile quarterly performance. So it really depends on activity levels there. That's why in the back half of this year with a strong prior year comparable, we're not expecting margin improvement unless we get a matching or better level of weather-driven activity.

Okay. That's great. And then finally, regarding the brands business, especially on the roofing side. Scott, you mentioned in your prepared remarks that there has been some improvement over the last few weeks. I'm curious about what conditions you need to see for further progress. Is it influenced by broader economic factors, or are individuals making these significant investment decisions just becoming more comfortable with the tariff situation? What exactly do you need to observe in order to start moving that backlog and reducing those deferrals?

I think it's all of the above. I mean, the tariff uncertainty, I think the expectation that interest rates would start moving down and that has not happened, and it's pushed out to later this year or next. I think all of that is causing hesitation prospect for perhaps some inflation. So a number of large commercial customers continue to sit on contracts, but even with that slowness, we have started to book work, as I said, and it's picking up for us. The bidding activities remain strong throughout but we're seeing more commitment. But there still is some deferral, but we expect to see some improvement in Q3.

And our next question comes from the line of Stephen Sheldon of William Blair.

Congratulations on the impressive results. In terms of restoration, you mentioned some advancements with national accounts and increasing daily work. As this trend continues, do you expect restoration to rely less on large storm events, which you indicated might swing by around 20% in any given year? This could potentially lead to a business model with reduced volatility from quarter to quarter and year to year compared to historical patterns. Is this change in business profile something you foresee continuing?

I'm not sure that's the case, Stephen, because as we improve our positioning with national accounts and increase our market share, that will also enhance our performance during catastrophic events and lead to taking on more projects. I believe this just strengthens our capability to generate more revenue during moderate weather conditions and prepares us to succeed during catastrophic events as well.

Got it. That makes sense. And then on brands, just following up on the margins there. Just I guess, high level as you think about the individual segments and businesses within brands. Can you just remind us where you still see the biggest room for margin improvement over the coming years? And within restoration, do you think there are multiple years of margin expansion just from the better resource optimization using the tech platform that you guys have built out there?

Yes, Stephen. So home improvement would really be dependent on, again, that reacceleration, remodeling spend, the macro factors that drive the top line because we've been at it in terms of the labor efficiencies and reduced promotional activity for a year now. So we're always tweaking and trying to get more efficient and reducing overtime hours and return visits, optimizing our labor, all that. But I really think it will be a function of improved top line growth when the macro conditions improve. And then restoration, it's a multiyear after the teams have made major strides. We've cemented a lot of the labor-driven efficiencies there. And yes, there will be more opportunities. It's just not going to be in a straight-line game because it is dependent on activity levels and revenue performance in that business as well.

And our next question comes from the line of Scott Fletcher of CIBC.

I wanted to ask about the Fire Protection business. It seems to be performing well for several consecutive quarters. Could you explain the reasons behind this success compared to other brands, considering they are all facing similar macroeconomic conditions? I'm curious if this is related to the mix of commercial business or if there are unique factors influencing the fire sector.

Yes. I think primarily the growth in repair, service and inspection part of their business. It was a big driver in Q1 and particularly in Q2, and it's been a multiyear effort around the service side of the business. We made it a priority when we partnered with the Century team to balance the business and drive out the service work to create more of a 50-50 installation versus service. So it's definitely been a strategic priority. And then the investment has followed that. So investing in sales and service techs. And there's been a particular focus on collaborating with the installation teams to convert new installs into ongoing service work. And then in the last, I'd say, 12 to 18 months, a big push on driving inspection sales and inspection work that drives service work. And so all those factors continue to drive the service side of the business, which has been pulling along the installation side the last few quarters.

That's interesting information. I would like to inquire about mergers and acquisitions. As we approach the end of the year and considering the current leverage levels, are you targeting to reduce leverage back to the levels seen when you made the Roofing Corp acquisition? Given the current economic environment, do you see opportunities for larger platform deals as leverage decreases? Or is the focus more on smaller tuck-under acquisitions due to the uncertainty?

Yes. Our leverage is always at a modest level. We don't know that we've very often been in a position where we haven't been able to be opportunistic around a large deal. So we think about the leverage when we're looking at opportunities, but it doesn't influence us one way or the other. If there's a strategic fit, a larger opportunity, we'll figure out the balance sheet side of it. So I think there's certainly an opportunity for larger acquisitions. The definition of a new platform, it's not something we're seeking out. We have opportunities across the platforms we have. So I would expect that our activity will be focused on the areas that we service areas we have today.

Operator Instructions. Our next question comes from the line of Daryl Young of Stifel.

First question is on home improvement. The environment has obviously been very tepid, but there does seem to be a big divergence between the high income and the low-income consumer. And I'm just curious if you can give us a bit of color on where your market positioning is in terms of your products? And if you're seeing any indication that, that may be true in holding your business in better than maybe some of the broader economic indicators might indicate?

I think there's something there. Our largest brand within our Home Service group is California Closets, which caters to the broad spectrum of consumer, but it does have a big part of their growth history in serving a more affluent customer. And that has been helpful. I mentioned that we've seen our average job size increase. And I think that has been weighted towards the affluent consumer, which has influenced our group. I do believe that's true. No. I think that we're in an environment that has influenced Roofing. We're certainly not alone. I think we're holding our own in Roofing and perhaps doing better than the market. We have operations that have historically relied on large industrial reroof work and some new construction, and that has been slower. As I said, we're starting to see a pickup. So no, I'm not sure we identified any volatility. In fact, the demand drivers in Roofing are very compelling, influenced by weather, but also the aging-built environment. It's going to be a big driver in this market. We think we're very well positioned. We've got a strong team, great partners, and a solid footprint. So I think we're in an environment that's sort of macro-driven, but feel very good about where we're at and where we're going.

I'm showing no further questions at this time. I'll now turn it back to Mr. Scott Patterson for the closing remarks.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.