Welcome to the FirstService Corporation Third Quarter Investors' 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 the forward-looking statements is 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 October 23, 2025. I would like to turn the call over to Chief Executive Officer, Mr. Scott Patterson. Please go ahead, sir.

Thank you, Didi. Good morning, everyone, and welcome to our third quarter conference call. Thank you for joining us. I'm on with our CFO, Jeremy Rakusin. And together, we will walk you through the results we reported this morning. I'll begin with an overview and some segment-by-segment comments. Jeremy will follow with additional detail. Total revenues were up 4% versus the prior year, driven by tuck-under acquisitions completed over the last 12 months. Organic growth was flat overall, as gains at FirstService Residential and Century Fire were offset by organic declines in our restoration and roofing platforms. EBITDA for the quarter was up 3% to $165 million, reflecting a consolidated margin of 11.4%, generally in line with the prior year on a consolidated basis. Finally, our earnings per share were up 8% to $1.76. Looking at divisional results. FirstService Residential revenues were up 8% with organic growth at 5%, in line with expectation. Solid net contract wins versus losses have led to an improvement in organic growth sequentially. We expect similar growth for Q4 in the mid-single-digit range. Moving on to FirstService Brands. Revenues for the quarter were up 1% in aggregate, with growth from tuck-under acquisitions largely offset by organic declines of 4%. Revenues for our two restoration brands, Paul Davis and First Onsite, were up sequentially relative to Q2, but down versus the prior year by 7%. I mentioned last quarter that we were pleased with the level of activity, both day-to-day at the branch level and in terms of our wallet share gains with national accounts. That continued into Q3. Industry-wide claim activity and weather-related damage was very modest across North America and generally down in every region, but we still generated higher revenue sequentially than the first 2 quarters of this year. We believe we're capturing market share gains during this prolonged period of mild weather. We were down from the prior year, as we were up against a very strong quarter, particularly in Canada, that benefited from significant flood and wildfire restoration work. As well, storm-related revenues in the U.S. were minimal this quarter compared to Q3 of 2024, when we generated about $10 million of revenue from named storms, primarily Hurricane Ian. Looking to Q4, absent widespread inclement weather or named storms over the next few months, we expect to be down from the prior year quarter by about 20%. We generated $60 million of revenue from Hurricanes Helene and Milton in Q4 of last year. On average, since 2019, our revenues from named storms has exceeded 10% of total restoration revenues. Based on our visibility today, we anticipate this year's revenues from named storms to land at less than 2%, a big drop that impacts Q4 in particular. Apart from cat storm events, which we all believe will, on average, increase in frequency, we continue to grow and improve our platform and believe we're in an excellent position to capitalize on the long-term opportunity in restoration. Moving to our Roofing segment. Revenues for the quarter were up mid-single digit, driven by acquisitions. Organically, revenues declined 8%, an improvement over Q2, but below expectations. We simply did not convert backlog into revenue at the rate that we anticipated. We continue to see the deferral of large commercial projects and a general reduction in new construction. Our 3 largest operations all benefited last year from several large industrial roof projects that have not been replaced this year. Most of our year-over-year decline relates to these specific operations. Bid activity remains solid, but award activity has been delayed. We're confident that our market position and relationships remain strong. The uncertainty in the macro environment is definitely impacting new commercial construction and causing delays in reroof and maintenance decisions. We continue to believe that the demand drivers in roofing and generally in commercial building maintenance are compelling, and we remain focused on investing in this segment. As evidence of that, we were pleased during the quarter to announce the acquisitions of Springer-Peterson Roofing in Lakeland, Florida and A-1 All American Roofing in San Diego, California. These operations extend our presence and capability in two key markets. The Springer-Peterson and A-1 teams will continue to operate the businesses, and we're excited to have them on board with us. They jumped right in, collaborating and creating value with our existing operations in the regions. Looking ahead to Q4, we expect total roofing revenues to be up modestly from prior year, again due to acquisitions. Organically, we expect continued weakness, with revenues down 10% or more in the seasonally weaker quarter. Moving on to Century Fire. We had another strong quarter, with revenues up over 10% versus the prior year. Growth continues to be broad-based across the branch network and again, is supported by robust repair, service and inspection revenues. Our backlog remains strong at Century, and we expect similar double-digit year-over-year growth for Q4. Now on to our home service brands, which as a group generated revenues that were flat with year ago, right on expectation, and a result we're proud of in the current environment with weak existing home sales and broad economic uncertainty. Consumer sentiment remains depressed and is down from Q2. Our lead flow reflects this trend. Our teams have held revenue steady by driving a higher close ratio this year, combined with a higher average job size. They are executing extremely well in a challenging environment. Looking forward, we expect a similar result in Q4, with revenues roughly matching the prior year quarter.

Thank you, Scott. Good morning, everyone. Leading off with a recap of our consolidated third quarter financial results, we recorded revenues of $1.45 billion, up 4%, and adjusted EBITDA of $165 million, a 3% increase relative to the prior year period. Our consolidated EBITDA margin for the quarter was 11.4%, down slightly from last year's 11.5% level. Adjusted EPS during Q3 was $1.76, resulting in growth of 8% quarter-over-quarter. The growth on the bottom line exceeded our EBITDA performance as we saw the benefit of reduced interest rates on lower outstanding debt compared to prior year. I'll provide more details on our balance sheet in a few moments. For the 9 months year-to-date, our consolidated financial performance includes revenues of $4.1 billion, up 7% over the $3.85 billion in the prior year; adjusted EBITDA at $425 million, a 13% increase year-over-year, with our overall EBITDA margin at 10.3%, up 50 basis points versus a 9.8% margin for the prior year period. And lastly, our adjusted EPS year-to-date is $4.39, reflecting 20% growth over the $3.66 reported for the same period last year. Our adjustments to operating earnings and GAAP EPS in providing adjusted EBITDA and adjusted EPS, respectively, are disclosed in this morning's press release and are consistent with our approach in prior periods. I'll now walk through the third quarter performance within our two divisions. At FirstService Residential, we generated revenues of $605 million, resulting in 8% growth over the prior year period. EBITDA was $66.4 million, a 13% increase over the third quarter of last year. Our current quarter EBITDA margin came in at 11%, up 50 basis points over the 10.5% in Q3 '24, extending the year-to-date margin improvement we have realized through ongoing operating efficiencies and streamlining efforts across our property management platform. Our teams have done a terrific job of execution, driving to a year-to-date margin expansion of 60 basis points. For the upcoming fourth quarter, we expect some tapering of these favorable impacts, leading to margins roughly in line to slightly up versus prior year. Shifting over to our FirstService Brands division. We generated revenues of $842 million during the current third quarter, up 1% versus the prior year period. EBITDA for the division was $102.1 million, down from the $105.8 million last Q3. Our margin of 12.1% compressed 50 basis points compared to the 12.6% margin in last year's third quarter. The lower margin was attributable to negative operating leverage resulting from tempered activity levels and declines in organic top line growth at our restoration brands and roofing operations. Our Home Improvement and Century Fire Protection brands continue to deliver healthy margins, roughly in line with prior year. Reviewing our cash flow profile, we generated more than $125 million in cash flow from operations during the third quarter, driving to a total of $330 million year-to-date, a significant year-over-year increase of roughly 65% compared to prior year period's. Capital expenditures during the quarter totaled $34 million, and spending year-to-date sits at a little under $100 million. We expect to be in line with our annual target of $125 million in CapEx for 2025. Acquisition investment during the quarter was approximately $45 million, largely encompassing the roofing tuck-under acquisitions that Scott noted. Our balance sheet at quarter end included net debt of $985 million, resulting in leverage at 1.7x net debt to trailing 12 months EBITDA. Maintaining a strong balance sheet has always been a cornerstone of FirstService's operating philosophy and has been aided by the ability of our businesses to collectively generate strong and relatively consistent free cash flows in any type of environment. This has played out once again over the past almost 2 years since our Roofing Corp of America platform investment at the end of 2023, with the steady quarterly deleveraging bringing us now back in line with our long-term historical trend. We also have more than $900 million of total cash and credit facility capacity, providing us with ample financial flexibility and liquidity. In terms of outlook, to close out 2025, Scott has provided top line indicators by brand, which will aggregate to revenues roughly in line with prior year for our upcoming fourth quarter. This will culminate in mid-single-digit growth in consolidated annual revenues for the full year. We expect that our 2025 consolidated annual EBITDA growth will be in the high single digits, approaching 10% compared to prior year. During our February year-end earnings call, we will provide indicators on our outlook for 2026. And that now concludes our prepared comments. Didi, can you please open up the call to questions?

And our first question comes from Daryl Young with Stifel.

I just wanted to touch on the divergence in the performance between Century Fire and the roofing business. And I would have expected that both of those would have had similar end markets, and so it's just a bit interesting to see the performance delta between the two. Is there a specific end market versus industrial versus data center or something like that, that is maybe driving the difference between the two divisions?

Daryl, there are a few points to mention. First, about 50% of Century's business comes from service repair and inspection, which tends to be more recurring. Over the past few years, Century has successfully driven consistent growth in this area. Half of its business is also linked to new construction, which has proven to be more resilient compared to our Roofing Corp of America platform, partly due to the specific verticals it focuses on, as you pointed out. Century has gained from the growth of data centers and maintains a strong multifamily business that has remained solid throughout the year. However, their impressive results disguise the reality that several jobs at Century are still being delayed or deferred, similar to our roofing platform. Work is not being released as frequently as it was last year, even though bid activity continues to be robust. I hope this clarifies your question.

Yes. That's good color. One more for me, just on margins. The margins in the Brands division were actually, I would say, fairly healthy in the context of the weak restoration and roofing results. So just wondering if you can give me a little bit of color on where the strength is coming from in margins in that platform?

Yes. Thanks, Daryl. I'll take that. I touched on it, home improvement, a lot of initiatives over the last year or 2, 1.5 years and in a tough environment for the top line have really produced superlative profitability. Century Fire, we have top and bottom line, a terrific performance throughout. We've made great strides in restoration over the last couple of years. And even in periods of mild weather patterns like we're experiencing, just the focus on the brand, the platform, the client relationships, the national accounts that Scott touched on, a lot of efforts around that. And then there has been some streamlining and headcount reductions in appropriate places as we've centralized a lot of functions. So just terrific execution there, and notwithstanding the mild weather patterns that we've seen year-to-date.

And our next question comes from Stephen MacLeod of BMO Capital Markets.

I have a couple of follow-up questions. The first one relates to what you were just discussing, Jeremy, about the restoration side. You mentioned gaining market share despite a challenging environment, and I would like to know where that growth is originating from.

I think it's a lot of the things that Jeremy just referred to. It's the hard work our teams are doing in positioning with national accounts, solidifying the account base. We have evidence that we are gaining wallet share with a number of our larger accounts, and we're signing new national accounts. It feels healthier across the board. We just have more activity across the branch network. We're not relying on any one event or one region to drive results. And I think it sets us up well to continue gaining momentum in mild weather conditions, but also to really benefit during more significant weather conditions.

Right. Okay. That's helpful, Scott. And then maybe just on the margins and looking at the FirstService Residential business, you guided to sort of flattish margins year-over-year for Q4. And I'm just wondering if some of the streamlining that you've seen that's led to the improvements in recent quarters, is that kind of coming to an end? Or is that more reflective of the seasonal Q4 weakness? And I guess, would you expect those kind of benefits to continue into 2026?

Stephen, I'll take that one. 2026, we'll go through budgets with the businesses, so I'll defer on that point. But in terms of the outlook for Q4, I think we've known all along that the performance should taper. We've been working on these initiatives or the teams have at FirstService Residential for the better part of a year or more. And we saw it carry through. We've had significant margin improvement. There's also some moving parts in the quarterly fluctuations. And so what we're seeing in Q4 between the mix of higher-margin ancillaries, the timing in terms of hiring teams in face of contract wins, when we're going for contract renewals and getting pricing, there's a whole bunch of moving parts in this large enterprise. So it's just what we're seeing, but we're always working on initiatives. And again, I think we'll have more to speak about in terms of margin outlook for '26 on the February call.

Thank you, Jeremy, that’s helpful. I have one more question. When considering restoration and roofing, where we are experiencing some near-term macro challenges, do you believe the slowdown in roofing is simply a temporary postponement of work from your customers? I would like to confirm if you expect this delay to be recovered over time.

We certainly expect to recover, but we need some stability in the macroeconomic environment to see improvement in commercial construction and to give buyers more comfort and confidence to proceed with projects. We are currently in an uncertain environment, which is definitely affecting roofing. Additionally, in restoration, we need some favorable weather. As I mentioned in my prepared comments, this is the slowest year we have experienced since our significant acquisition of First Onsite in 2019. Therefore, we anticipate improvements in both areas. When we made our initial decisions, our focus was, and still is, on the long-term opportunities in both sectors. There will be fluctuations from quarter to quarter and year to year, but on the positive side, there are also greater opportunities and support available. We remain committed to the long-term growth of these businesses, as we believe there are substantial opportunities in both. We have the right teams and platforms to take advantage of these prospects.

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

Maybe just starting on the M&A front. Can you talk some about the level of competition you're seeing for tuck-under deals? And is it generally getting tougher to deploy capital towards M&A at attractive valuations in this environment? So yes, just be helpful to get any color on what you're seeing there in terms of competition across the different segments, if you could.

Yes, Stephen, I believe the competition is quite intense. Valuations remain elevated, especially in fire protection and residential property management, and they have been high for several years. The roofing sector is also seeing increasing valuations. I previously mentioned that there are numerous private equity-owned roofing companies vying for acquisitions, making that area very competitive as well. However, I should note that activity in roofing has significantly slowed down over the past few quarters due to market uncertainties, with many roofing firms experiencing declines year-over-year, similar to us. Consequently, several acquisition processes have been pulled or delayed until conditions improve. Most of these firms are private equity-owned, and they will return to the market. To address your initial question, it is indeed very competitive. I can’t say it’s becoming increasingly competitive, but we must continue to make informed decisions and choose our opportunities wisely. We have been doing this over the past few years and have opportunities in the pipeline, so we will invest our capital each year and find ways to move forward.

That's helpful. I'd like to delve a bit deeper into the slowdown in roofing awards. You previously mentioned that it seems to be related to macro factors. Can you provide more detail on some of the significant factors impacting roofing projects moving forward, even with robust bid activity? This might be a difficult question, but how long do you anticipate it will take for decisions to be finalized and progress to resume, particularly regarding reroofing? I understand that new construction permitting starts are down, but regarding reroofing, how long could this pause in activity last?

I don't know the exact answer to that, but it will certainly extend into Q4. I believe we need macroeconomic stability. Some reroof projects can be delayed for a while. As it stands, the situation is uncertain. The positive aspect for us is that we have 24 branches, most of which are performing at levels similar to last year or even better. However, we have three large branches that benefited from significant new construction and reroof work last year, with some projects ranging from $10 million to $15 million. If these aren't replaced, it could affect our quarterly results. On the whole, our backlogs in roofing remain stable, with a heavier focus on reroofing. Typically, our work is split about one-third new construction and two-thirds reroof and repair. Currently, the backlogs lean even more toward reroofing, and we expect this to take some time to resolve. The long-term demand prospects remain strong, and our outlook has not changed due to factors like aging building stock, more frequent weather events, and new legislation related to building codes. Additionally, last year's fourth quarter saw our Florida operations benefiting from favorable weather conditions, which we aren't experiencing this year. This has contributed to the decline in those operations, as they are missing some large roofing projects and are also affected by weather. Weather improvements would certainly benefit us in several areas.

And our next question comes from Himanshu Gupta of Scotiabank.

So just a follow-up on the roofing weakness here. Is there any commercial asset class, specific commercial asset class or geography which is where you're seeing most of the contract deferrals and weakness? I think you did mention Florida, but any other region or within...

One of our larger branches is in Las Vegas, and the market there is currently very weak. We’re noticing this across all our other brands as well. Our performance in Vegas is struggling across every business we operate. Each branch has a unique situation. Regarding asset classes, I can only speak about new construction, which is down everywhere except for data centers, a sector we haven’t traditionally been involved with in our roofing services.

Got it. And I mean, assuming that the new construction cycle is further delayed, like without the help of new construction cycle, how much organic growth can you deliver, assuming the strength in reroofing business comes back?

Organic growth in roofing has been declining each quarter this year, partly because we experienced significant growth in some areas last year. However, we are hopeful that we will reset and begin to grow again. Our branches and their leadership are strong, and the market conditions suggest we are well positioned to see growth return. Unfortunately, I can't provide specific timelines as we need more clarity in the marketplace.

Got it. And is Roofing still a segment where you want to grow from an M&A point of view? Or would you wait for this weakness to pass and then get more active on the M&A side?

We're definitely interested. Our thesis hasn't changed at all. We're very pleased with the transactions we completed last quarter. We have priorities and are focused on white space areas to build out the platform. We're concentrating on the fit with our culture and the people at any business we're interested in. If we find the right opportunity, we will definitely participate.

Got it. And then turning attention to restoration business. Can you comment on the backlog? I mean, in terms of the magnitude or directionally speaking, like, how is the backlog today versus last year or versus last quarter? And also, if I exclude the strong activity, how is the backlog looking?

The backlog is similar to the previous quarter but slightly lower than last year. This decline compared to last year can be attributed to factors I mentioned in my prepared comments, particularly the strong performance in Canada and some residual work from named storms. By the end of September, we started to see some impact from Helene and Milton in the backlog. Although we are a bit off from last year, the situation remains solid and healthy given the current environment, and I feel optimistic about it.

Got it. And my last question is on FSR, FirstService Residential. I mean, good to see organic growth back to 5% level this quarter. Question is, is Florida also at mid-single-digit level? Or is it a bit slower than the rest of the portfolio? And I remember, you've been talking about budgetary pressures in Florida a bit more than some of the other regions, so just to check how Florida is doing.

Yes. Florida is, I'd say, in line. And the budgetary pressures have been relieved a bit because the insurance market stabilized. It's still a difficult one because there are many communities that are underfunded. So it's our largest region, and it can influence results for the division, and we've seen that. But it's holding its own right now and is up low- to mid-single digit in the prior quarter, Q3.

And our next question comes from Tim James of TD Cowen.

Could you discuss the connection between pricing and costs across the various segments? I understand this involves different brands within the business. As we look ahead to next year and beyond, do you feel confident that your pricing power is adequate to counter any cost pressures? Alternatively, is there an opportunity to increase pricing and leverage that to improve margins slightly?

Jeremy, over to you.

Yes, Scott, I can take that. Currently, we believe we are in a favorable position with FirstService Residential. This business has always been highly competitive in terms of pricing, and it continues to align with historical trends. We consistently seek efficiencies to maintain our margins, and the teams have been successful in achieving this over time. Regarding the Brands division, particularly Century Fire, we have been experiencing strong pricing power quarter after quarter and year after year, with no current pressures. In home improvement, we are monitoring the situation closely. As Scott mentioned, while we are seeing a decrease in lead flow, our conversion rates are higher and our revenue is stable. We will adjust our pricing as necessary to ensure that we maintain growth in revenue and profitability. At this time, we aren't heavily relying on promotional activities, aside from some local marketing efforts. In roofing, we may see some cost increases due to labor availability and competition for reroof jobs, which might slightly affect pricing and margins. However, we plan to review our budgets across all businesses in November and through the end of the year, which will provide us with better visibility for 2026, and we will share that information during our February call.

That's very helpful. For my second question, which is somewhat related, I believe the margins are quite impressive given the challenges the business has faced. Are there any specific initiatives we should consider regarding cost management or efficiency improvement? I'm particularly interested in the Brands business moving forward, focusing not necessarily on enhancing net margins but rather on maintaining efficiency and ensuring we remain as cost-competitive as possible.

That's exactly what we've been doing every year. The businesses are focused on healthy profitability. Last year, we highlighted the progress made in home improvement. In the longer term, I mentioned earlier the performance of the restoration brands over the past couple of years, concentrating on the brand and accounts while also streamlining costs. Every brand, including FirstService Residential, has made strides this year, constantly looking for ways to be more efficient. I wouldn't identify any major opportunities for significant margin improvement in the Brands division as we approach 2026. If any such opportunities arise during the budget discussions, we'll incorporate them into our plans and communicate our thoughts in February.

And our next question comes from Sean Jack of Raymond James.

Just quickly switching back to roofing. If the short-term macro has been softening for a while, do you expect this to make acquisitions easier in the space coming up, especially and like specifically with mom-and-pops?

I don't see that. The number of private equity-owned roofing platforms in the market is significant. Private equity firms are investing in this space and are focused on expanding their platforms. Therefore, we need to set ourselves apart and concentrate on our long-term brand-building strategy. I believe we will evaluate opportunities appropriately based on our business results, but I don't see an advantage or an easier path to acquiring companies.

Fair, fair. Looking at that brand-building strategy you mentioned, is there any new offensive strategies you guys are employing to position or gain share while the broader macro is weak?

Nothing of note. The strategy and focus we have on building iconic brands over time centers on people and customer service, cultivating culture, and gradually enhancing the platform, which does require time. However, we pursue these investments with a long-term perspective and timeline.

Thank you. I'm showing no further questions at this time. This concludes the question-and-answer session and today's conference call. Thank you for participating, and you may now disconnect.