Q4 2024 FirstService Corp Earnings Call

After the speaker's presentation, there will be a question and answer session.

Ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advisory. Your hand is raised to withdraw your question. Please press star one one again.

Speaker: 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 differ materially 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 40F as filed with the U.S. Securities and Exchange Commission.

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.

Our 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 differ materially from those in the forward looking statements is contained in the company's annual information form as filed with the <unk>.

Speaker Change: <unk> 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 February 5th 2025, I would now like to turn the call over to Chief Executive Officer.

Operator: As a reminder, today's call is being recorded.

Operator: Today is February 5, 2025.

Gigi: I would now like to turn the call over to Chief Executive Officer, Mr. Scott Patterson. Please go ahead, sir.

Mr. Scott Patterson. Please go ahead Sir.

Scott Patterson: Thank you, Gigi. Good morning, everyone, and welcome to our fourth quarter and year-end conference call. Thank you for joining us.

Speaker Change: Thank you Gigi.

Speaker Change: Good morning, everyone and welcome to our fourth quarter and year end conference call. Thank you for joining us.

Scott Patterson: Jeremy Rakusin is on the line with me today and will follow my overview comments with a more detailed review of our financial results. And let me start by emphasizing how pleased we are with how the year closed out. We had a very strong Q4 that capped off another stellar year for FirstService Corporation. You all know our long-term goal is to average 10% growth on the top line and to match that growth or do a bit better at the EBITDA line. In 2024, we doubled our long-term goal with 20% growth in revenues and 24% growth in our EBITDA.

Speaker Change: Jeremy recruitment is on the line with me today and will follow my overview comments with a more detailed review of our financial results.

Speaker Change: Let me start by emphasizing how pleased we are with how the year closed out.

Speaker Change: We had a very strong Q4 that capped off another stellar year for first service Corporation.

Speaker Change: You all know our long term goal is to average 10% growth on the top line and to match that growth or do a bit better at the EBITDA line.

Speaker Change: In 2024, we doubled our long term goal with 20% growth in revenues and 24% growth in our EBITDA.

Scott Patterson: Much of the growth was driven by the acquisition of Rupin Corp of America late last year, but the growth was well supported by most of our other brands. And we're particularly pleased with our consolidated margin for the year. kicked out 20 basis points in a tough environment. credit to our teams that continue to create efficiencies and battle as best they could to match price increases with cost inflation. Jeremy will speak more to the annual results in his comments.

Speaker Change: Much of the growth was driven by the acquisition of Roofing Corp of America late last year, but the growth was well supported by most of our other brands.

Speaker Change: And we're particularly pleased with our consolidated margin for the year.

Speaker Change: It ticked up 20 basis points in a tough environment.

Speaker Change: It's a credit to our teams that continue to create efficiencies.

Speaker Change: And battle as best they could to match price increases with cost inflation.

Speaker Change: Jeremy will speak more to the animal results in his comments.

Scott Patterson: Let me move on to the overview of the fourth quarter. Revenues were up 27% with organic growth at 10% driven primarily by strong results at our Brands Division. EBITDA was up 33%, reflecting a 50 basis point improvement in margins, and earnings per share were up 21%. Indeed, a strong finish to the year.

Speaker Change: Let me move on to the overview of the fourth quarter.

Speaker Change: Revenues were up 27% with organic growth of 10% driven primarily by strong results at our brands Division.

Speaker Change: EBITDA was up 33%.

Speaker Change: <unk>, a 50 basis point improvement in margins and earnings per share were up 21%.

Speaker Change: Indeed, a strong finish to the year.

Scott Patterson: Looking now at the separate divisions. Revenues at FirstService Residential for the quarter were up 5%, with the organic growth at 3%, matching our expectations and the results for Q3. We laid out last quarter that our communities have been experiencing budgetary pressures from rising costs, including insurance premiums and legislated increases in reserves and maintenance and repairs. The budgetary pressure has in turn put pressure on our management contracts. including the levels of cited labor. As I said last call, we do see this as temporary as communities work their way through the immediate cash crunch by prioritizing their spend.

Speaker Change: Looking now at the separate divisions.

Speaker Change: Revenues at first service residential for the quarter were up 5% with organic growth at 3% matching our expectations and the results for Q3.

Speaker Change: We laid out last quarter that our communities have been experiencing budgetary pressures from rising costs, including insurance premiums.

Speaker Change: Legislated increases in reserves and maintenance and repairs.

Speaker Change: The budgetary pressure has in turn quick pressure on our management contracts, including the levels of cited labor.

Speaker Change: As I said last call, we do see this as temporary as communities work their way through their immediate cash crunch.

Speaker Change: By prioritizing their spend.

Scott Patterson: increasing monthly resident HOA dues. and in some cases, funding projects through special assessments or securing loans. Looking forward, we see organic growth in the low single-digit range for the first half of 2025. The trough will be most acute in the first quarter. and then organic growth will build from there through the year. FirstService Residential grew organically by 5% for the full year in 2024. and we expect the division to grow at a similar level in 2025.

Speaker Change: Increasing monthly resident HOA dues.

Speaker Change: And in some cases funding projects through special SaaS prints or securing loans.

Speaker Change: Okay.

Speaker Change: Looking forward, we see organic growth in the low single digit range for the first half of 2025.

Speaker Change: The trough will be most acute in the first quarter.

And then organic growth will build from there through the year.

Speaker Change: First service residential grew organically by 5% for the full year in 2024.

Speaker Change: And we expect the division to grow at a similar level in 2025.

Scott Patterson: Moving on to FirstService Brands. Revenues for the quarter were up 45%, driven primarily by the addition of Roofing Corp of America and very strong year-over-year results in our restoration segment. Organic growth was 16% for the division, almost entirely driven by restoration. Looking more closely at restoration, Paul Davis and First Onsite together recorded revenues that were up 40% over the prior year. Both brands benefited during the quarter from Hurricanes Helene and Milton. In the aggregate, we generated about $60 million in revenue from named storms compared to $15 million in the prior year quarter. We're pleased with how the year closed out for us in restoration.

Speaker Change: Moving on to first service brands.

Speaker Change: Revenues for the quarter were up 45%.

Speaker Change: Driven primarily by the addition of roofing Corp of America, and very strong year over year results in our restoration segment.

Speaker Change: Organic growth was 16% for the division almost entirely driven by restoration.

Speaker Change: Looking more closely at restoration, Paul Davis, and first onsite together recorded revenues that were up 40% over the prior year.

Speaker Change: Both brands benefited during the quarter from Hurricanes Helene and Milton.

Speaker Change: In the aggregate, we generated about $60 million in revenue from named storms compared to $15 million in the prior year quarter.

Speaker Change: We're pleased with how the year closed out for us and restoration.

Scott Patterson: After a slow start, we finished strong and showed organic growth for the full year of about 5%. If we adjust for named storms, organic growth was over 10%. We booked approximately $90 million of revenue from named storms in 2024, compared to $160 million in 2023. We continue to grow and make progress year to year in our restoration segment. Since acquiring First On-Site, our two brands together have averaged organic growth of almost 10% over the last six years. We feel like we're right on track with our original thesis in this business when we took the big step into commercial restoration with the acquisition of First Onsite in 2019.

Speaker Change: After a slow start we finished strong and showed organic growth for the full year of about 5%.

Speaker Change: If we adjust for named storms organic growth was over 10%.

Speaker Change: We booked approximately $90 million of revenue from named storms in 2024 compared to $160 million in 2023.

Speaker Change: We continue to grow and make progress year to year and a restoration segment.

Speaker Change: Since acquiring first onsite our two brands together.

Speaker Change: Have averaged organic growth of almost 10% over the last six years.

Speaker Change: We feel like we're right on track with our original thesis in this business. When we took the big step into commercial restoration with the acquisition of first onsite in 2019.

Scott Patterson: Looking forward, we are through the mitigation work from the Q4 hurricane. focus now on securing or preparing for the related reconstruction work. As I've mentioned previously, the process of scoping and approving work with adjusters and insurance carriers can take time. And that is before permitting starts. All that to say that backlog conversion becomes hard to forecast. We enter Q1 with a solid backlog that is up modestly over prior year. In addition, we're seeing an uptick in leads. from the L.A. wildfires and the recent cold weather across North America. Based on current visibility, we expect to show mid-single-digit growth in our restoration segment in the first quarter.

Speaker Change: Looking forward, we are through the mitigation work from the Q4 Hurricanes and.

Speaker Change: And focus now on securing or preparing for the related reconstruction work.

Speaker Change: I've mentioned previously the process of scoping and approving work with adjusters and insurance carriers can take time.

Speaker Change: And that is before permitting starts.

Speaker Change: All that to say that backlog conversion becomes hard to forecast.

Speaker Change: We entered Q1 with a solid backlog that is up modestly over prior year.

Speaker Change: In addition, we're seeing an uptick in leads.

Speaker Change: From the law of wildfires in our recent cold weather across North America.

Speaker Change: Based on current visibility, we expect to show mid single digit growth in our restoration segment in the first quarter.

Scott Patterson: Moving now to Rupin Corp of America, we had another good quarter to end the year, our first full year in partnership with the team at RCA. We accomplished much of what we set out to do in year one. including hitting our due diligence forecast and adding strategic tuck-unders in key markets. The acquisitions of Crowther and Hamilton midway through the year were important additions and we anticipate further expanding our footprint in 2025. Looking forward in our roofing segment, we expect to show a significant revenue increase in Q1 of 50% or more. primarily due to the inclusion of Crowther & Hamilton, two non-seasonal roofing contractors.

Speaker Change: Moving now to roofing Corp of America, we had another good quarter to end the year, our first full year in partnership with the team at RCA.

Speaker Change: We accomplished much of what we set out to do in year one.

Speaker Change: Including hitting our due diligence forecast and adding strategic tuck under and key markets.

Speaker Change: The acquisitions of Crowther in Hamilton Midway through the year were important additions and we anticipate further expanding our footprint in 2025.

Looking forward in our roofing segment, we expect to show a significant revenue increase in Q1 up 50% or more.

Speaker Change: Primarily due to the inclusion of Crowther in Hamilton.

Speaker Change: Two non seasonal roofing contractors.

Scott Patterson: Their impact will be exaggerated in the first quarter for roofing corp when many of the existing branches are slower due to winter weather. will see a lesser impact in Q2.

Speaker Change: Their impact will be exaggerated in the first quarter for roofing Corp.

Speaker Change: When many of the existing branches are slower due to winter weather will.

Speaker Change: We will see a lesser impact in Q2.

Scott Patterson: Now to our Home Service branch, where revenues were slightly down from the prior year, right in line with our expectations. The environment has improved only modestly since our last call at the end of Q3. Lead activity continues to be down year over year. driving higher conversion rates. seen an increase in average job size, which we expect will lead to a revenue level that is flat to slightly down for the first half of 2025. We're cautiously optimistic that we'll start to see market improvement in Q2, leading to revenue growth in the back half of the year.

Speaker Change: Now to our home service brands, where revenues were slightly down from the prior year right in line with our expectation.

Speaker Change: The environment has improved only modestly since our last call at the end of Q3.

Speaker Change: Lead activity continues to be down year over year.

Speaker Change: We're driving higher conversion rates.

Speaker Change: And seen an increase in average job size, which we expect will lead to a revenue level that is flat to slightly down for the first half of 2025.

Speaker Change: We're cautiously optimistic that we'll start to see market improvement in Q2, leading to revenue growth in the back half of the year.

Scott Patterson: Home equity values remain strong and home prices continue to increase. These indicators and others all point to a more buoyant home improvement market in 2025. Although the implementation of tariffs may well temper consumer confidence and further delay market Time will tell.

Speaker Change: Home equity values remained strong and home prices continue to increase.

Speaker Change: These indicators and others all point to a more buoyant home improvement market in 2025.

Speaker Change: Although the implementation of tariffs may well tempur consumer confidence and further delay market improvement time will tell.

Scott Patterson: And I'll finish with Century Fire, where we had another strong quarter that was up nominally versus the prior year due to our very robust comparative quarter that was up 25% organically versus the fourth quarter in 2022. The team at Century did well to exceed the prior year. Activity levels remain buoyant at century and we expect another solid year upcoming with organic growth approaching 10 percent. spread evenly across the quarter.

Speaker Change: Okay.

Speaker Change: And I'll finish with century fire, where we had another strong quarter that was up nominally versus the prior year due to a very robust comparative quarter. There was up 25% organically versus the fourth quarter in 2022, the team at century did well to exceed the prior year.

Speaker Change: <unk>.

Speaker Change: Activity levels remain buoyant at century, and we expect another solid year upcoming with organic growth approaching 10%.

Speaker Change: Evenly across the quarters.

Jeremy Rakusin: Let me now call on Jeremy to review our results in detail and provide a consolidated look forward. Thank you, Scott, and good morning, everyone. As you just heard, we are pleased with the strong fourth quarter and full year results we delivered, particularly when looking back to what we outlined as our annual growth objectives at the beginning of 2024. We saw increasing momentum throughout the year and ultimately met or exceeded our financial targets across the board. The fourth quarter specifically showed strong outperformance in aggregate for our two divisions, which more than offset significant negative non-cash foreign exchange adjustments in corporate costs outside of the operating segment.

Speaker Change: Let me now call on Jeremy to review our results in detail and provide a consolidated look forward.

Jeremy Recruitment: Thank you Scott and good morning, everyone. As you just heard we are pleased with the strong fourth quarter and full year results, we delivered particularly when looking back to what we outlined as our annual growth objectives at the beginning of 2024.

Jeremy Recruitment: We saw increasing momentum throughout the year, and ultimately met or exceeded our financial targets across the board.

Jeremy Recruitment: The fourth quarter, specifically showed strong outperformance in aggregate for our two divisions, which more than offset significant negative non cash foreign exchange adjustments and corporate costs outside of the operating segments.

Jeremy Rakusin: I will elaborate with further details in just a moment. During the fourth quarter, our operating results included consolidated revenues totaling $1.37 billion and adjusted EBITDA of $137.9 million, up 27% and 33% respectively, with our margin at 10.1%, up 50 basis points compared to 9.6% during the prior year. Our Q4 adjusted EPS was $1.34, up 21% over last year's fourth quarter. For the full year, consolidated revenues increased 20% to $5.22 billion, including 4% organic growth. adjusted, EBITDA came in at $513.7 million, up 24% over the prior year, and yielding a 9.8% margin, up 20 basis points compared to 9.6% in 2023.

Jeremy Recruitment: We'll elaborate with further details in just a moment.

Jeremy Recruitment: During the fourth quarter, our operating results included consolidated revenues totaling 137 billion.

Jeremy Recruitment: And adjusted EBITDA of $137 9 million up, 27% and 33% respectively with our margin at 10, 1% up 50 basis points compared to nine 6% during the prior year.

Jeremy Recruitment: Our Q4, adjusted EPS was $1 34 up 21% over last year's fourth quarter.

For the full year consolidated revenues increased 20% to five 2 billion, including 4% organic growth.

Jeremy Recruitment: Adjusted EBITDA came in at $513 7 million up 24% over the prior year and yielding a nine 8% margin up 20 basis points compared to nine 6% in 2023.

Jeremy Rakusin: Adjusted EPS for the 2024 fiscal year was $5 even, up 7% versus 2023. Note that these comments on our Adjusted EBITDA and Adjusted EPS results respectively reflect adjustments to GAAP operating earnings and GAAP EPS, which are disclosed in this morning's release and are consistent with our approach in prior periods.

Jeremy Recruitment: Adjusted EPS for the 2020 for fiscal year was $5, even up 7% versus 2023.

Jeremy Recruitment: Note that these comments on our adjusted EBITDA and adjusted EPS results, respectively reflect adjustments to GAAP operating earnings and GAAP EPS, which are disclosed in this morning's release and are consistent with our approach in prior periods.

Jeremy Rakusin: Now walking through the quarterly and annual results in our two divisions, I will lead off with FirstService Residential. For Q4, revenues were $521 million up 5% versus the prior year period, and the division reported EBITDA of $46 million up 6% quarter over quarter. Our margin for the quarter was 8.8% matching the prior year period. For the full year, revenues were $2.1 billion, increasing by 7% over 2023, including 5% organic growth. annual EBITDA increased 6% with our full year margin at 9.3% and in line with the 9.4% margin for 2023. The division performance matched our expectations both for 2024 as well as the long term.

Jeremy Recruitment: Now I'll walk you through the quarterly and annual results and our two divisions I will lead off with the first service residential for.

Jeremy Recruitment: For Q4 revenues were $521 million up 5% versus the prior year period, and the division reported EBITDA of.

Jeremy Recruitment: $46 million up 6% quarter over quarter.

Jeremy Recruitment: Our margin for the quarter was eight 8% matching the prior year period for the full year revenues were $2 1 billion, increasing by 7% over 2023, including 5% organic growth.

Jeremy Recruitment: Annual EBITDA increased 6% with our full year margin at nine 3% and in line with the nine 4% margin for 2023.

Jeremy Recruitment: The division performance matched our expectations, both for 2024 as well as the long term targets of mid single digit annual organic topline growth with annual margins remaining within our typical 9% to 10% margin band.

Jeremy Rakusin: Targets of mid single digit annual organic top line growth with annual margins remaining within our typical 9 to 10 percent margin band.

Jeremy Rakusin: Looking next at our FirstService Brands Division, the very strong fourth quarter included revenues of $844 million, up 45% compared to Q4 2023. And EBITDA came in at $100.7 million, up 65% year over year. The significantly higher profitability was driven by contribution of our roofing corp acquisition acquired in late 2023, as well as improved margins on an organic basis. The brands division margin during the quarter was 11.9% up 140 basis points over 10.5% in the prior year quarter. Our restoration brand saw higher margins driven by operating leverage from the strong top-line growth that Scott described in his comments.

Jeremy Recruitment: Looking next at our first service brands Division, the very strong fourth quarter included revenues of $844 million up 45% compared to Q4, 2023, and EBITDA came in at $107 million up 65% year over year.

The significantly higher profitability was driven by contribution of our roofing Corp acquisition acquired in late 2023, as well as improved margins on an organic basis.

Jeremy Recruitment: The brands Division margin during the quarter was 11, 9% up 140 basis points over 10, 5% in the prior year quarter.

Jeremy Recruitment: Our restoration brand saw higher margins driven by operating leverage from the strong top line growth that Scott described in his comments.

Jeremy Rakusin: We also had improved margins within home services as our California closets company owned operation. continue to reduce their promotional activities and optimize their labor costs compared to the prior year quarter. A strong finish to the year in the Brands Division produced robust annual growth metrics, revenues eclipsing $3 billion and up 32% while EBITDA grew 40% over the prior year. Our full year 2024 brands margin came in at 11%, up 60 basis points over the prior year of 10.4%.

Jeremy Recruitment: We also had improved margins within home services as our California Closets company owned operations continued to reduce their promotional activities and optimize their labor costs compared to the prior year quarter.

Jeremy Recruitment: The strong finish to the year in the brands Division produced robust annual growth metrics revenues, eclipsing 3 billion and up 32%, while EBITDA grew 40% over the prior year.

Jeremy Recruitment: Our full year 2024 brands margin came in at 11 <unk>.

Jeremy Recruitment: Percent.

Jeremy Recruitment: 60 basis points over the prior year of 10, 4%.

Jeremy Rakusin: Finally, two remaining points to highlight regarding profitability below the operating division. First, we reported significantly higher corporate costs of almost $9 million in the fourth quarter compared to just over $1 million in Q4 of 2023, with almost all of the variance driven by non-cash foreign exchange movements related to the translation of Canadian dollar debt from a prior acquisition. This FX adjustment had a negative impact of $0.08 to our adjusted earnings per share in the fourth quarter. For the full year, our corporate costs were $25 million, compared to a little over $14 million versus the prior year.

Jeremy Recruitment: Finally, two remaining points to highlight regarding profitability below the operating division lines.

Jeremy Recruitment: First we reported significantly higher corporate cost of almost $9 million in the fourth quarter compared to just over $1 million in Q4 of 2023.

Jeremy Recruitment: With almost all of the variance driven by non cash foreign exchange movements related to the translation of Canadian dollar debt from a prior acquisition.

Jeremy Recruitment: This FX adjustment had a negative impact of <unk>.

Jeremy Recruitment: Our adjusted earnings per share in the fourth quarter.

Jeremy Recruitment: For the full year, our corporate costs were $25 million compared to a little over $14 million versus the prior year and once again noncash foreign exchange movements were the principal driver for the significant increase.

Jeremy Rakusin: And once again, non-cash foreign exchange movements were the principal driver for the significant increase. Secondly, our annual interest costs were 75% higher in 2024 than the prior due to the higher rate environment, as well as increased debt levels to finance our roofing platform and subsequent tuck under acquisition. This tempered our annual EPS performance to 7% year over year growth, which was a meaningful gap to our top line and operating earnings growth rate. In the fourth quarter, we started to see our EPS growth approach a strong operating growth performance as interest rates have started to moderate.

Jeremy Recruitment: Secondly, our annual interest costs were 75% higher in 2024 in the prior year due to the higher rate environment as well as increased debt levels to finance, our roofing platform in subsequent tuck under acquisitions.

Jeremy Recruitment: This tempered our annual EPS performance to 7% year over year growth, which was a meaningful gap to our top line and operating earnings growth rates.

Jeremy Recruitment: In the fourth quarter, we started to see our EPS growth approach, our strong operating growth performance as interest rates have started to moderate.

Jeremy Rakusin: I'll now summarize our cash flow and capital deployment. For the year, we delivered cash flow from operations totaling $285 million, which was up modestly versus 2023. normalizing our operating cash flow to exclude working capital movements given prior year pickups, we saw a 19% increase on a year-over-year basis. We fully redeployed our cash flow with over $300 million allocated to support our continued growth. Two-thirds going towards our Tuck Under Acquisition Program, and the remaining third towards capital expenditures for our existing operations. Our acquisition spending during the year totaled $212 million, largely directed towards expanding the geographic footprint of our roofing corp operating platform.

Jeremy Recruitment: I'll now summarize our cash flow and capital deployment for the year, we delivered cash flow from operations totaling $285 million, which was up modestly versus 2023.

Jeremy Recruitment: Normally normalizing our operating cash flow to exclude working capital movements given prior year pickups, we saw a 19% increase on a year over year basis.

Jeremy Recruitment: We fully redeployed our cash flow with over $300 million allocated to support our continued growth.

Jeremy Recruitment: Two thirds going towards our tuck under acquisition program and the remaining third towards capital expenditures for our existing operations.

Jeremy Recruitment: Our acquisition spending during the year totaled $212 million largely directed towards expanding the geographic footprint of our.

Jeremy Recruitment: Roofing Corp operating platform.

Jeremy Rakusin: Our CapEx for 2024 tallied just below our annual target of $115 million. In 2025, we expect total capital expenditures to be approximately $125 million, growing in lockstep with our operations and remaining in line with historical investment trends measured relative to our revenues and EBITDA.

Our capex for 2024 tally just below our annual target of $115 million.

Jeremy Recruitment: Okay.

Jeremy Recruitment: In 2025, we expect total capital expenditures to be approximately $125 million growing in lockstep with our operations and remaining in line with historical investment trends measured relative to our revenues and EBITDA.

Jeremy Rakusin: In addition to these capital allocation priorities, we also announced yesterday a 10% dividend increase to $1.10 per share annually in U.S. dollars, up from the prior $1. Our consistent and robust growth in financial performance over the long term has allowed us to establish a track record of healthy annual dividend hikes of 10% plus over the past decade. We are able to allocate our growth capital and deliver incremental dividend returns because our balance sheet continues to remain strong. 2024 year-end, our leverage sits at two times net debt to adjusted EBITDA, down slightly from the prior year-end, notwithstanding the significant acquisition activity I noted earlier.

Jeremy Recruitment: In addition to these capital allocation priorities, we also announced yesterday, a 10% dividend increase to $1 10.

Jeremy Recruitment: Per share annually in U S dollars up from the prior $1.

Jeremy Recruitment: Our consistent and robust growth and financial performance over the long term has allowed us to establish a track record of healthy annual dividend hikes of 10% plus over the past decade.

Jeremy Recruitment: We are able to allocate our growth capital and deliver incremental dividend returns because our balance sheet continues to remain strong.

Jeremy Recruitment: At 2024 year end, our leverage sits at two times net debt to adjusted EBITDA down slightly from the prior year and notwithstanding the significant acquisition activity I noted earlier.

Jeremy Rakusin: We have approximately $360 million of liquidity through our cash on hand and undrawn portion of our bank credit facility. This level is ample for our foreseeable needs, and with the strong support of our bank, syndicate, and long-term note holders, we have the ability to tap into incremental debt capacity as necessary.

Jeremy Recruitment: We have approximately $360 million of liquidity through our cash on hand, and Undrawn portion of our bank credit facility.

Jeremy Recruitment: This level is ample for our foreseeable needs and with the strong support of our bank Syndicate and long term note holders, we have the ability to tap into incremental debt capacity as necessary.

Jeremy Rakusin: Looking forward, Scott has already provided some color on the top line growth outlook for the individual brand. Aggregating those indicators, the upcoming first quarter consolidated revenue growth will approach 10 percent, and this pacing should continue into Q2 as we benefit through the incremental contribution from roofing acquisitions that closed in mid-2024. In the back half of the year, we will revert back to consolidated, mid-single-digit, top-line growth without accounting for any further tuck under acquisition. Piecing this together for the full year, we expect our businesses to collectively deliver high single-digit top-line growth. In terms of our consolidated margin, we expect Q1 to be modestly higher versus prior year, with the residential division margin roughly flat and our brands division margin up on the continuation of the same themes as recent quarter.

Jeremy Recruitment: Looking forward as Scott has already provided some color on the top line growth outlook for the individual brands.

Jeremy Recruitment: Aggregating those indicators the upcoming first quarter consolidated revenue growth will approach, 10% and this pacing should continue into Q2 as we benefit through the incremental contribution from roofing acquisitions that closed in mid 2024.

Jeremy Recruitment: In the back half of the Euro we will revert back to consolidated mid single digit topline growth without accounting for any further tuck under acquisitions.

Jeremy Recruitment: Piecing this together for the full year, we expect our businesses to collectively deliver high single digit top line growth.

Jeremy Recruitment: In terms of our consolidated margin, we expect Q1 to be modestly higher versus prior year with the residential division margin roughly flat and our brands division margin up on the continuation of the same themes as recent quarters.

Jeremy Rakusin: These positive brands margin dynamics will moderate in Q2 and beyond, assuming no additional significant weather-driven events and large loss claims in restoration. For the full year, we expect Brands Division margins to be modestly up and our FirstService residential margins to be flat to potentially slightly up. This will drive incremental consolidated EBITDA margin expansion during the year compared to 2024.

Jeremy Recruitment: These positive brands margin dynamics will moderate in Q2 and beyond assuming no additional significant weather driven events and large loss claims and restoration.

Jeremy Recruitment: For the full year, we expect brands division margins to be modestly up and our first service residential margins to be flat to potentially slightly up.

Jeremy Recruitment: This will drive incremental consolidated EBITDA margin expansion during the year compared to 2024.

Scott Patterson: This concludes our prepared comments.

Operator: Operator, please open up the call to questions. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Jeremy Recruitment: This concludes our prepared comments operator, please open up the call to questions. Thank you.

Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please standby, while we compile the Q&A roster.

Stephen Macleod: Our first question comes from the line of Stephen MacLeod from William Blair. Oh, morning, guys.

Speaker Change: Our first question comes from the line of Stephen Macleod from William Blair.

Speaker Change: Yes.

Scott Patterson: Stephen MacLeod from BMO, not William Blair, but anyways, yeah, just thanks for the color. A few follow-up calls, follow-up questions here. Just as you think about the pressures you saw in the FirstService residential business from those budgetary constraints and insurance premiums, I'm just wondering what kind of visibility there is into those beginning to ease as you think about the balance of the year. Yeah, Stephen, I mean, we're certainly seeing it normalized. The organic growth that we're seeing in Q4 and we'll see in Q1, it reflects the net of wins, less losses over the last year, and it also bakes in renewals.

Speaker Change: Hello, Good morning, guys.

Speaker Change: Stephen Macleod from BMO, not William Blair, but.

Speaker Change: Anyway.

Speaker Change: Thanks for the color a few few call up follow up calls follow up questions here.

Speaker Change: Just as you think about the pressures you saw in the first service residential business.

Speaker Change: From those budgetary constraints and insurance premiums.

Wondering what kind of visibility there is into those beginning to ease as you think about the balance of the year.

Speaker Change: Yes, Stephen I mean, we're certainly seeing it.

Speaker Change: Normalized.

Speaker Change: The organic growth that we're seeing in Q4, and we will see in Q1 and reflects that the net of wins less losses over the last year and it also bakes in renewals.

Scott Patterson: where we've made accommodations around price or where the level of service and number of sighted staff has changed. And it flows through, does not turn on a dime in this business. So we're riding it out for the next few quarters, as I said. But again, we fully expect it to pick up later in the year. And we expect our full year organic growth to match what we experienced in 2024 mid-single digit.

Speaker Change: Where we've made accommodations around price or where the level of service and number of sited staff has changed and it. It flows through does not turn on a dime in this business. So we are riding it out.

Speaker Change: For the next few quarters as I said.

Speaker Change: But again.

Speaker Change: We fully expect it to pick up later in the year.

Speaker Change: We expect our full year.

Speaker Change: Organic growth to match, what we experienced in 2020 for mid single digit.

Scott Patterson: That's great. Thanks, Scott.

Scott Patterson: And then maybe just turning to the brands division, you know, you talked a little bit about getting through the sort of initial phase of the Helene and Milton hurricane destruction. And just wondering if you can give some color around sort of how that tends to evolve into more kind of remediation and construction work. What's the typical timeline you see when those weather events pass through and how that conversion works? You know, it's taking longer and longer. We saw it with Hurricane Anne. Work from these hurricanes is... It's going to be slow to convert, you know.

Speaker Change: That's great.

Speaker Change: Thanks, Scott and then maybe just turning to the brands Division.

Speaker Change: You talked a little bit about getting through the sort of initial phase of the Helena Milton Hurricane destruction.

Speaker Change: Just I'm just wondering if you can give some color around.

Speaker Change: Sort of how that tends to evolve into more kind of remediation and construction work. What's the typical timeline you see when those weather events pass through and how that conversion works.

Speaker Change: Yeah.

Speaker Change: It's taking longer and longer.

Speaker Change: We saw with hurricane in.

Speaker Change: Work from.

Speaker Change: These hurricanes is.

Speaker Change: Is going to be slow to convert.

Scott Patterson: backlog of reconstruction work, it's taking shape. But as I said in my prepared comment. very slow the adjudication and approval from carriers and then from permitting. is slow. This backlog will convert over the next year, but it will take over a year. That's certainly what we saw with IAN. So it reduces our visibility from quarter to quarter. We do have work. The backlog is building. very difficult to forecast in the near future. Okay, yeah, that makes sense. Thanks, Scott.

Speaker Change: The backlog of reconstruction work it is taking shape.

Speaker Change: But as I said in my prepared comments.

Speaker Change: Very slow the adjudication.

Speaker Change: Approvals.

Speaker Change: From carriers and then from permitting.

Speaker Change: As slow this backlog will convert.

Speaker Change: Over the next year, but it will take over a year Thats certainly what we saw.

Speaker Change: And so it reduces our visibility from quarter to quarter.

Speaker Change: But.

Speaker Change: We do have work the backlog is building.

Speaker Change: Just very difficult to forecast in the near term.

Speaker Change: Okay, Yes that makes sense. Thanks, Scott and then maybe just finally.

Scott Patterson: And then maybe just finally, you know, just putting together kind of those dynamics around the restoration business. I don't know, and I apologize, I missed it, but I know you gave some full year colour around the residential top line. Just curious if you have something similar for the brands top line as we kind of factor in that those storm revenues, you know, potentially being more delayed than previously thought. I think, you know, Jeremy, in his full-year commentary, I think we're looking at... mid-single-digit organic growth and then we add in the year-over-year impact of the roofing tuck under Jeremy.

Speaker Change: Just putting together kind of those those dynamics around the restoration business.

Speaker Change: I don't know and I apologize I missed it but I know you gave some full year color around the residential topline just curious if you have something similar for the brand's topline as we as we kind of factor in that.

Speaker Change: Those.

Speaker Change: The storm revenues potentially being more delayed than previously thought.

Speaker Change: Okay.

Speaker Change: I think Jeremy and his and as full year.

Speaker Change: Commentary I think we're looking at.

Speaker Change: Mid single digit organic growth and then we add in the the year over year impact of the roofing tuck under Jeremy.

Jeremy Rakusin: Do you have any more on that? That's correct, Scott, the direction, the front half stronger with the roofing acquisitions and then the back half flat, sorry, down to mid-single digits. So organically, Stephen, for the brand division in mid-single digits, organic growth for the year would be a good number. That's great color. Thanks, guys. Appreciate it.

Speaker Change: Do you have any more on that Thats correct, Scott Directionally front half stronger with the with the roofing acquisitions and then the back half flat sorry down to mid single digits. So organically.

Stephen for the brands Division and mid single digits organic growth for the year would be a good number.

Speaker Change: That's great color. Thanks, guys appreciate it.

Operator: Thank you. One moment for our next question.

Speaker Change: Thank you one moment for our next question.

Stephen Sheldon: Our next question comes from the line of Stephen Sheldon from William Blair. Hey, thanks guys, and nice work in the year.

Speaker Change: Our next question comes from the line of Stephen Sheldon from William Blair.

Speaker Change: Hey, Thanks, guys and nice work and the end of the year just first on the 2025 revenue guidance can.

Jeremy Rakusin: Just first on the 2025 revenue guidance, can you maybe just parse out how much of the high single digit revenue growth that you expect would be organic versus the impact of tuck under acquisitions you've already completed, if there's a way to roughly frame that? Yes, Stephen, it's Jeremy again. Again, mid-single-digit. We grew 4% this year organically. We see it being mid-single-digits next year, so in that 4-5% range would be a good organic number, with the rest being, again, tuck-under acquisitions largely filtering through the front half, the first two quarters of the year. Got it. That's helpful.

Speaker Change: Can you maybe just parse out how much of the high single digit revenue growth that you expect would be organic versus the impact of tuck under acquisitions, you've already completed if theres a way to roughly frame that.

Speaker Change: Yes, Stephen it's Jeremy again again mid single digit we grew 4%.

Speaker Change: This year organically, we see it being mid single digits next year, so in that 4% to 5% range would be a good organic number with the rest being again tuck under acquisitions largely filtering through the the front half of the first two quarters of the year.

Speaker Change: Got it Thats helpful.

Scott Patterson: And then, you know, kind of thinking about Roofing Corp, now that you've owned that for over a year, and I know you've done some additional capacity kind of investments there, but just if you're thinking about the margin profile of that business over the longer term changed at all, and specifically, are there potentially bigger benefits of scale than maybe what you considered when you'd entered that market, you know, just a little bit over a year ago? Jeremy, why don't I speak to scale and you can add anything as it relates to margin. Yeah, you know, there's a few things I would point out, Stephen.

Speaker Change: And then kind of thinking about roofing Corp, now that you've owned that for over a year.

Speaker Change: No you've done some some additional capacity kind of investments there, but just as you're thinking about the margin profile of that business over the longer term changed at all and specifically are there potentially bigger benefits of scale.

Speaker Change: And maybe what you considered when you entered that market, just a little bit over a year ago.

Jeremy Recruitment: Jeremy why don't I speak to scale and you can add anything as it relates to.

Speaker Change: Margins, yes.

Speaker Change: There's a few things I would point out Steve and one is the scale and as we grow it enables us to.

Scott Patterson: One is that the scale and as we grow, it enables us to. service what we call premier accounts in our roofing business. That is large regional or national owners of commercial real estate. And think of it similar to our National Accounts Program at Century. or a first on-site. And, you know, as a sort of a single operation or even a few branches, it's really not of interest to the larger owners, but at the scale we're at today, we're able to get some traction on that front. The other thing I would say relates to purchasing. As we grow, we move into higher tiers of discounts.

Speaker Change: Service, what we call Premier accounts.

Speaker Change: In our roofing business.

Speaker Change: That is large regional or national owners of commercial real estate and think of it similar to our national accounts program at century.

Speaker Change: Our first on site and.

Speaker Change: Yes.

Speaker Change: As a sort of a single operation or even a few branches, it's really not of interest to the the larger owners, but at the scale we're at today.

Speaker Change: We're able to we're able to get some traction.

Speaker Change: On that front the other thing I would say as relates to purchasing as we grow we move into higher tiers of discounts with the major vendors.

Jeremy Rakusin: The Major Vendors does make a difference to our profitability. So that would be on the materials side, but also enables us to build an insurance program. which, you know, safety and insurance is a big issue and something that we. focus on very closely with the RCA. and having the scale does bring. cost reduction and insurance.

Speaker Change: It does make a difference to our profitability.

Speaker Change: So that would be on the material side, but also in.

Speaker Change: Enables us to build an insurance program, which.

Speaker Change: <unk>.

Speaker Change: Safety and insurance is a is a big.

Speaker Change: Issue.

Speaker Change: And something that we <unk>.

Speaker Change: Focus on very closely with the <unk> team.

Speaker Change: Having the scale does bring.

Speaker Change: Cost reduction.

Speaker Change: In insurance.

Jeremy Rakusin: And Stephen, just to weigh in on the margin, I mean, in the near term, you know, adding additional stock vendors and scaling, you know, we're running these on a very decentralized basis. The individual branches keep their own brand, so we're not integrating significantly in any way to, you know, take out cost reduction. As Scott mentioned, the benefits of scale in the form of procurement on raw materials could have an uptake. You know, other things that could drive margin performance as we increase, you know, servicing, that's typically a higher margin category of revenue, but that will be incremental and over time.

Speaker Change: And Stephen just to weigh in on the margin I mean in the near term.

Speaker Change: Adding additional tuck Anders and scaling.

Speaker Change: We're running needs on very decentralized basis.

Speaker Change: The individual branches keep their own brands, so we're not integrating.

Speaker Change: Significantly in any way too.

Speaker Change: Take out cost reductions as Scott mentioned, the benefits of scale and <unk>.

Speaker Change: Form a procurement on raw materials could have an uptake and other things that could drive margin performance as we increase.

Speaker Change: Servicing.

Speaker Change: It's typically a higher margin.

Speaker Change: Category.

Speaker Change: Our revenue, but that will be incremental over time, and so I would not.

Scott Patterson: So I would not be, you know, modeling any incremental margin improvement beyond what we've indicated previously for the roofing core platform. in the near term. Okay, got it. That's very helpful, Scott and Jeremy.

Speaker Change: The modeling any incremental margin improvement beyond what we've indicated previously for the roofing core platform.

Speaker Change: In the near term.

Scott Patterson: And maybe just one more, if I could, just back on residential. I know you've already gotten asked a little bit about that. But, you know, how are your customers on the residential side thinking about amenities heading into the spring? And I know you have some seasonal amenities there, such as pools. Any signs that the budgetary pressure may weigh on the opening and or staffing levels for amenities as we as we enter, you know, 2Q and 3Q? I think certainly in some cases it's impacted staffing. It wouldn't impact the opening of any amenities. They would perhaps cut back on hours.

Speaker Change: Okay got it that's that's very helpful, Scott and Jeremy and maybe just one more if I could just back on residential and have already gotten asked a little bit about that but.

Speaker Change: How are your customers on the residential side thinking about amenities heading into the spring and I know you have some seasonal amenities there such as pools any signs that the budgetary pressure may weigh on the opening <unk> staffing levels for amenities as we as we enter.

Speaker Change: <unk> and <unk>.

Speaker Change: I think can.

Speaker Change: Certainly in some cases, it's impacted staffing.

Speaker Change: It wouldn't impact the opening of any amenities, they would perhaps cut back on hours.

Scott Patterson: or the level of service. with the amenities. You know, it's part of the overall reduction in sighted staff that we've seen, but it wouldn't be necessarily specific or targeted at the amenities. It's more broad than that and would include all sighted staff, you know, janitorial and food and beverage and so on.

Speaker Change: Or the level of service.

Speaker Change: With the amenities.

Speaker Change: It's.

It's part of the overall.

Speaker Change: The reduction in sited staff that we've seen but it wouldn't be necessarily.

Speaker Change: Specific are targeted at the <unk> it's more.

Speaker Change: Broad and that would include all sited staff janitorial and food and beverage.

Speaker Change: And so on Stephen.

Operator: All right, thanks and nice work again. Thank you.

Speaker Change: Alright, Thanks, and nice work again.

Scott Fletcher: One moment for our next question.

Thanks.

Speaker Change: Thank you one moment for our next question.

Scott Fletcher: Our next question comes from the line of Scott Fletcher from CIBC World Markets, Inc. Hi, good morning. You mentioned it briefly in the prepared remarks just on the on the L.A. fires.

Speaker Change: Our next question comes from the line of Scott <unk> from CIBC World Markets, Inc.

Speaker Change: Yes.

Speaker Change: Hi, good morning.

Speaker Change: Mentioned it briefly in the prepared remarks, just on the on the La fires just curious if that can be something that makes a difference in the first half of the year or if you have enough capacity in the region to sort of get enough business to make a difference there just any commentary there would be helpful.

Scott Patterson: Just curious if that can be something that makes a difference in the first half of the year or if you have enough capacity in the region. have get enough business to make a difference there. Just any commentary. Yeah, sure. I mean, we're definitely seeing an uptick in leads and claims relating to the LA fires. We have built that into our general guidance that we provided on this call. In that area, we're primarily serving our national accounts in relation to smoke damage. We don't have a significant branch footprint in the area, which limits our response to local businesses.

Speaker Change: Yes, sure I mean.

Speaker Change: Definitely seen an uptick in Leeds and claims relating to the la fires.

Speaker Change: We have built that into our general guidance that we provided.

Speaker Change: This call.

Speaker Change: Great.

Speaker Change: In that area were primarily serving our national accounts.

Speaker Change: In relation to smoke damage, we don't have a significant branch footprint in the area, which limits our response to local businesses, but.

Scott Patterson: But we do have a number of claims and work is still coming in. So it it will benefit us. And I wouldn't just say in Q1, I would say it'll benefit us this year. But. still taking shape, I would say.

Speaker Change: But we do have a number of claims and work is still coming in so it it will benefit us.

Speaker Change: And I wouldn't just say in Q1, I would say it will benefit us this year, but.

Scott: Still still taking shape I would say Scott.

Scott Patterson: Okay, thanks.

Scott Patterson: And then just on the M&A and the Tuck Under program going forward, I think you sort of clearly focus has been on roofing in 24, would that still be the case, you know, all of us being equal in 25, that roofing deals would be front of line? Yeah, I think that's fair just because of the activity and in the roofing market. It's consolidating quickly. There are dozens of private equity owned platforms that are being established and That activity is spurring all the independent owners to take advantage of the consolidation. So it's happening, and we'll participate, certainly.

Scott: Okay. Thanks, and then just on the M&A and the tuck under program going forward I think you sort of.

Scott: Clearly the focus has been on roofing in 'twenty four would that still be the case all else being equal in 'twenty five roofing builds would be front of mind.

Scott: Yes, I think Thats fair, just because of the activity in the roofing market. It's consolidating quickly there are dozens of private equity owned platforms that are.

Scott: Being established and.

Scott: That activity is spring all of the independent owners to take advantage of the consolidation. So it's it.

Scott: It is happening.

Scott Patterson: But we do have prospects. across all our segments right now, I would say, but I...

Scott: And we will participate certainly but.

Scott: But we do have prospects.

Scott: Across all our segments right now I would say, but.

Scott Patterson: Twenty-five could well resemble twenty-four, with more of our capital being deployed on roofing than the other segment. Okay, excellent.

Scott: 25 will could well resemble 24 with <unk>.

Scott: More of our capital being deployed on roofing in the other segments.

Operator: Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again.

Speaker Change: Okay excellent. Thank you.

Scott: Thank you Sir.

Speaker Change: Binder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.

Daryl Young: Our next question comes from the line of Daryl Young from Stiefel. Hey, good morning, everyone. First question is around insurance dynamics and, and just the cost of residential and commercial insurance today and some of the signs of cancellation of insurance that we've seen by some of the carriers. How is that impacting how you think about your growth plans for the residential property management business? And I guess as well, restoration, is it impacting where you want your footprint to be in the future or anything there you can speak to? Yeah, I mean, It's interesting and it's real time.

Speaker Change: Our next question comes from the line of Daryl Young from Stifel.

Daryl Young: Hey, good morning, everyone.

Daryl Young: First question is around insurance dynamics and and.

Daryl Young: Just the cost of residential and commercial insurance today and some of the.

Daryl Young: Signs of cancellation of insurance that we've seen by some of the carriers.

Daryl Young: How is that impacting how you think about your growth plans for the residential property management business and I guess as well restoration is it impacting where you want your footprint to be in the future or anything there you can speak to.

Daryl Young: I mean, it's.

Daryl Young: It's interesting and it's real time.

Scott Patterson: because insurance carriers are... in and out of markets as events happen, and certainly increasing premiums. It's very much an evolving market. I think the one thing that is clear is that the cost of property insurance is going up and in high risk areas it's going up significantly. And many insurers are declining to renew. So you have. more uninsured properties and you have more self-insured homes than ever. So that would, you know. impact, perhaps Paul Davis. More than first on site on the restoration side, Paul Davis is a brand that primarily serves the residential market. And.

Daryl Young: Because of <unk>.

Daryl Young: <unk> carriers are.

Daryl Young: In and out of markets and as events happen and certainly increasing premiums.

Daryl Young: Very much an evolving market.

Daryl Young: I think the one thing that is clear is that the cost of property insurance is going up and in high risk areas, it's going up significantly.

Daryl Young: And many insurers are declining to renew.

Daryl Young: So you have more uninsured properties and you have more self insured homes than ever.

Daryl Young: So that would.

Daryl Young: <unk>.

Daryl Young: Impact.

Daryl Young: Perhaps Paul Davis.

Daryl Young:

Daryl Young: More than first onsite and the restoration side.

Speaker Change: Davis as our brand that primarily serve the residential market.

Scott Patterson: You know, in high-risk areas, I think that what Paul Davis will do in this environment is... create more awareness, brand awareness campaigns in high-risk areas to specifically target. self-insured homeowners, and you know, as again, there's just going to be an increasing number. properties that will be self-employed. But the thing that... You know, the thing that we have to keep in mind is that, um... The building stock is ever-increasing, and the damage... and the weather event. are ever-increasing. So...

Daryl Young: And.

Daryl Young: In high risk areas I think that that.

Speaker Change: What Paul Davis, we will do in this environment is.

Speaker Change: Create more awareness brand awareness campaigns in high risk areas to specifically target <unk>.

Speaker Change: Self insured homeowners.

Speaker Change: And.

Speaker Change: Again, that's just going to be an increasing number of.

Speaker Change: Properties that will be self insured, but the thing that.

Speaker Change: The thing that we have to keep in mind is that.

Speaker Change: The building stock is ever increasing and the damage.

Speaker Change: And the <unk>.

Speaker Change: Weather events.

Speaker Change: Our ever increasing.

Scott Patterson: The work's going to be there, it's just a question of who's going to pay for it, whether it's covered by insurance or whether it's self-pay or whether government's stepping in in some way. But the work's going to be there for our restoration brands, we're confident of that. And they're on the. residential side, you know, I think that we're The cost of insurance, again, is going up, but... communities. Thank you. are dealing with it, and it goes to my comments around organic growth and FirstService residential They're having to increase the monthly HOA dues. to deal with rising costs.

Speaker Change: So.

Speaker Change: The work's going to be there. It's just a question of.

Speaker Change: Who's going to pay for it whether it's covered by insurance or whether it's self pay or where the government stepping in in some way, but the work is going to be there for our restoration brands, we're confident of that.

Speaker Change: And then on the.

Speaker Change: First service residential side.

Speaker Change: I think that were.

Speaker Change: The cost of insurance again is going up but.

Speaker Change: Communities.

Speaker Change: Yes.

Speaker Change: We are dealing with it.

Speaker Change: And it goes to my comments around organic growth and first service residential they're having to increase.

Speaker Change: The monthly HOA dues.

Speaker Change: To deal to deal with rising costs and.

Scott Patterson: you know, the homeowners. If it's a single-family home, they'll have increased insurance costs directly. So they're working their way through it. I think that There will be insurance, always, for communities.

Speaker Change: The homeowners.

Speaker Change: No.

Speaker Change: If it's a single family home they will have increased insurance cash directly.

Speaker Change:

Speaker Change: So they are working their way through it I think that.

Speaker Change: There will be insurance always four communities.

Scott Patterson: more of the individual homeowner where we're going to see more of the disruption. Got it.

Speaker Change: It's more of the individual homeowner, where we're going to see more of the disruption I think.

Daryl Young: Okay, thanks. And then maybe one on margins.

Speaker Change: Got it okay. Thanks.

Scott Patterson: Is there an element of conservatism that's in the run rate margin guide that you're giving? And I'm just looking at it from the perspective of roofing seems to be an accretive driver of the mix. And then I would think as the home improvement brands recover in the back half a year, they would be additive to margins as well. And then potentially even in resi, some of the home resale transaction and disclosure recovery as well. Is there an argument for upside to margin? A little bit potentially, Daryl.

Speaker Change: And then maybe one on on margins.

Speaker Change: Is there an element of conservatism that's in the run rate margin guide that you're giving and I'm just looking at it from the perspective of roofing seems to be an accretive.

Speaker Change: Accretive driver of the mix and then I would think as the home improvement brands recover in the back half of year, they would be additive to margins as well and then potentially even in some of the whole retail transaction and disclosure recovery as well is there an argument for upside to margins.

Scott Patterson: I don't want to get ahead of our skis. You know, the home improvement, improving on the backup, that's, you know, a little early to speculate on that. Obviously, that would help, although we've gotten a lot of margin improvement, you know, through, you know, the latter half of 24, and we'll get it into the first half of 25 for sure. We don't want to commit to much more than that in the back half. Again, resi, home resale activity would help that piece of the business, but we haven't seen a turn yet. Home resales did accelerate in Q4, but that's the last two months of that quarter.

Speaker Change:

Speaker Change: A little bit potentially Dara I don't want to get ahead of our skews the home improvement improve.

Speaker Change: Improving in the back half.

Speaker Change: A little early to speculate on that obviously that would help.

Speaker Change: Although we've gotten a lot of margin improvement.

Speaker Change: True.

Speaker Change: The latter half of 'twenty, one we will get it into the first half of <unk> 25 per share.

Speaker Change: Don't want to commit too much more than that in the back half.

Speaker Change: Again, <unk> home home REIT activity would help that that piece of the business, but we haven't seen a turn your at home resales did accelerate in Q4.

Speaker Change: But that's.

Scott Patterson: It was a step up, but let's see if it's sustainable and then what we get out of it.

Speaker Change: The last two months of that quarter was a step up but let's see if it's sustainable and then what we get out of it.

Daryl Young: Yeah, and then I can't remember the other parts to your, you know, upside question, but that yeah, I think we're being, I think we've given you the right kind of indicators from as far as the eye can see right Got it. Okay, that's great. I'll jump back in the queue. Thanks, guys.

Speaker Change: Yeah and then.

Speaker Change: Can't remember there are other parts to your upside.

Speaker Change: Question, but I think we're being.

Speaker Change: I think we've given you the right kind of indicators.

Speaker Change: Far as I can see right now.

Speaker Change: Got it okay, that's great I'll jump back in the queue. Thanks, guys.

Operator: Thank you. One moment for our next question.

Speaker Change: Thank you one moment for our next question.

Tim James: Our next question comes from the line of Tim James from TD Securities.

Moderator: Our next question comes from the line of Tim James from TD Securities.

Scott Patterson: I'm wondering if you could talk or provide some additional details on the residential contract wins that you called out in Texas, Toronto and Chicago, just any kind of insights on the nature of those contracts, any competitive dynamics involved there? Not too much to note, Tim, but High-Rise, I would say, is the theme. It's a particular expertise of ours, has been for years, we're the clear leader in high-rise management across North America, and are better able to differentiate ourselves in the high-rise environment than perhaps a sort of vanilla single-family home community. So that would be the one thing I would call out.

Tim James: Thank you good morning, everyone.

Tim James: I'm wondering if you could talk or provide some additional details on the residential contract wins that you called out in Texas, Toronto and Chicago just any.

Tim James: Any kind of insights on the nature of those contracts.

Tim James: Any competitive dynamics involved there.

Tim James: Not too much to note Tim.

Tim James: But.

Tim James: Hi, Hi, rise I would say is the theme.

Tim James: Particular expertise of ours has been for years, where we're the clear leader in high rise management across North America.

Tim James: And are better able to differentiate ourselves.

Tim James: And the high rise environment than perhaps a sort of vanilla single family home community.

Tim James: So that would be the one thing I would call out.

Scott Patterson: Okay, thank you. Just returning to the discussion around changes in the in the world of insurance and as the environment evolves in terms of insurance and its impact, I guess, on your restoration businesses, can you talk about what it means from a competitive environment perspective. I would assume there's sort of puts and takes for you, maybe some challenges it creates. You talked about maybe creating a bit more brand awareness as people self-insure, but maybe there are actually some benefits to you as well in terms of scale there. I'm just wondering if you could sort of talk about the competitive environment and what that means for the changing insurance landscape.

Tim James: Okay. Thank you.

Tim James: Just returning to.

Tim James: The discussion around changes in the world of insurance.

Tim James: As the environment evolves in terms of insurance.

Tim James: And its impact I guess on your restoration businesses can you talk about.

Tim James: What it means from a competitive environment perspective, I would assume there was sort of puts and takes for you maybe some some challenges. It creates you talked about maybe creating a bit more brand awareness people self insure.

Tim James: But maybe there are actually some benefits to you as well in terms of scale. There I'm. Just wondering if you could sort of talk about the competitive environment and what.

Tim James: What that means for the changing insurance landscape.

Tim James:

Scott Patterson: You know, as I digest your question, it's not clear to me that, um... that there's a competitive advantage in this evolving market. I think that Certainly, we're in a position to be nimble. We have capital. We can invest. We can invest in marketing and brand awareness if we need to. or choose to in high-risk areas. So I think we're in a position to... to get to our customers and serve our customers, which is always our focus. to drive referral and repeat business. But there's nothing else that jumps out at me, Tim.

Tim James: Yeah.

Speaker Change: As I Digest your question, it's not clear to me.

Tim James: Net.

Tim James: That there is a competitive advantage in this evolving market I think that.

Tim James: Certainly we're in a position to be nimble.

Tim James: We've got we have capital we can invest we can invest in marketing and brand awareness, if we need to.

Speaker Change: Our <unk>, two and high risk areas.

Tim James: So I think we're in a position to.

Speaker Change: To.

Speaker Change: Get to our customers and serve our customers, which is always our focus.

Speaker Change: Two.

Speaker Change: Drive referral and repeat business.

Speaker Change: There's nothing else that jumps out at me Tim.

Tim James: Okay, thank you very much. Thank you.

Speaker Change: Okay.

Speaker Change: You very much.

Operator: One moment for our next question.

Speaker Change: Thank you one moment for our next question.

Himanshu Gupta: Our next question comes from the line of Himanshu Gupta from Scotiabank. Thank you and good morning. So my question is on the margins as well, I mean, and thanks for the color on the margins, you know, slightly up for brands and, you know, mostly flat on the residential side.

Speaker Change: Our next question comes from the line of Himanshu Gupta from Scotia Bank.

Himanshu Gupta: Thank you and good morning.

Speaker Change: So my question is on the margins as well.

Speaker Change: And thanks for the color on the margins you know slightly up for brands and mostly flat on the residential side.

Jeremy Rakusin: So, you know, the question is that, do you think, you know, residential or brands will get impacted by these Trump tariffs, which we were talking about this week, and like what input or material costs will get impacted and your ability to pass on to the consumer? Yeah, I'm sure I can jump in there. You know, we're, we have largely exclusively service-based businesses across most of our operations. Three brands have modest raw material inputs as part of their cost structure. You know, California closets. Sentry Fire Protection, and Roofing Corp. Most of the suppliers and vendors for those brands are domestic and therefore wouldn't be impacted by tariffs, but to the extent there is some modest sourcing from foreign markets requiring imports.

Speaker Change: So the question is that do you think residential brands will get impacted by these subtypes, which you were talking about this week.

Speaker Change: Like what in total material cost will get impacted and your ability to pass on to the consumer.

Speaker Change: Yeah.

Speaker Change: Yes sure.

Speaker Change: I can jump in there.

Speaker Change: We have largely <unk>.

Speaker Change: Exclusively service based businesses across most of our operations.

Speaker Change: Three brands have modest raw material inputs as part of their cost structure, California closets.

Speaker Change: Century fire protection and roofing Corp.

Speaker Change: And most of the suppliers and vendors for those brands are domestic and therefore wouldn't be impacted by tariffs, but to the extent there is some modest sourcing from <unk>.

Jeremy Rakusin: We believe, and the operating leaders at those brands are committed to covering off the cost of those tariffs through pass-through cost increases in pricing. We think the impact is going to be modest to our cost in any event because, again, because of the bias and skewing more towards labor costs in these businesses. And so they'll be modest to begin with and the net impact to margin will be relatively insignificant because of our ability to pass through. That's what we think the market will do and our competitors as well. Thank you, Jeremy, for the color. That's helpful.

Speaker Change: Foreign markets requiring imports.

We believe.

Speaker Change: The operating leaders that those brands are committed to covering off the cost of those tariffs.

Speaker Change: Through pass through cost increases in pricing, we think the impact is going to be modest to our costs in any event, because again because of the bias and skewing more towards labour costs in these businesses.

Speaker Change: So there'll be modest to begin with and the net impact to margin will be relatively insignificant because of our ability to pass through that's what we think the market will do and our competitors as well.

Speaker Change: Awesome. Thank you Jami for the color.

Scott Patterson: And then, you know, just turning to Century Fire, which has been a very strong segment for you. And I think you're still calling for like, I think 10% organic growth this year. So just wondering how much is the growth driven by new installations versus like the recurring maintenance kind of business? You know, as commercial development slows down, which we are seeing in a number of asset classes within real estate, you know, will that have any impact in going forward in terms of organic growth on Century Fire? Yeah, we certainly saw a slowdown last year, Himanshu, but bid activity is pretty solid right now.

Speaker Change: That's helpful. And then just turning to century fire, which has been very strong segment for you.

Speaker Change: And I think you're still calling for like 10% organic growth this year.

Speaker Change: So just wondering how much is the growth driven by new installations versus like does that clean.

Speaker Change: That's been maintained and it's kind of a business.

Speaker Change: Commercial development slows down, which we are seeing in a number of asset classes within reality will that have any impact.

Speaker Change: Going forward in terms of organic growth essentially flat.

Speaker Change: Yes, we certainly saw a slowdown last year, having an issue but.

Scott Patterson: And our backlog is up. So we we do expect to see growth. in commercial construction, which drives installation. You know, we feel good about that this year, but... At the same time, our Service Division, our National Account Division will continue to be a growth driver at Century also. So it's a balance between those two for 2025 is what we're seeing right now. Got it.

Speaker Change: Bid activity is pretty solid right now and our backlog is up.

Speaker Change: So we do expect to see growth.

Speaker Change: In commercial construction, which drives installation.

Speaker Change: We feel good about that this year, but.

Speaker Change: At the same time.

Speaker Change: Our service Division.

Speaker Change: National account Division, we will continue to be a growth driver at century also show.

Speaker Change: It's a balance between those two for 2025 is what were what were seeing right now.

Himanshu Gupta: Thank you, Scott.

Scott Patterson: And my final question is on the roofing side. I mean, obviously, you have now completed one year with RCA. I mean, how did that compare to your underwriting? And you know, what's the organic growth in this business in the like the medium to long term on roofing? Right. The first year, you know, I think I said in my prepared comments, we accomplished much of what we set out to, or hope to, and you know, first and foremost... It's hitting our forecast, you know, as you described it, the underwritten amount. And then secondly, it was to...

Speaker Change: Got it thank you Scott.

Speaker Change: And my final question is on the roofing side.

Speaker Change: Obviously, you have now completed one New York the dossier.

Speaker Change: And how did that compare to your underwriting.

Speaker Change: Or what's the organic growth.

Speaker Change: In this business.

Speaker Change: The medium to long term.

Speaker Change: Right.

Speaker Change: The first year.

Speaker Change: I think I said in my prepared comments, we accomplished.

Speaker Change: Much of what we had.

Speaker Change: We had set out to or hope to and first and foremost, it's it's hitting or our forecast.

Speaker Change: As you describe it the underwritten.

Speaker Change: Amount.

Speaker Change: And then secondly, it was too.

Scott Patterson: You know, start to fill out the footprint in key markets and certainly Florida was a high priority for us and we were very pleased. get the Crowther and Hamilton deal done. In terms of organic growth, you know, long-term, you know, going back to our original thesis, This is primarily a commercial roofer as a first priority. But with the increased frequency of weather, the aging building stock, the increased cost of construction, coastal building codes, all of these things. are going to drive opportunity in roofing and restoration. And, and so we have seen Since we stepped into restoration in a bigger way six years ago, we've seen a high single digit to 10% organic growth.

Speaker Change: Start to fill out the footprint in key markets and certainly Florida was a high priority for us and we were very pleased to get the crowd there.

Speaker Change: Hamilton deal done.

Speaker Change: In terms of organic growth.

Speaker Change: Long term.

Speaker Change: Going back to our original thesis.

Speaker Change: This is a primarily a commercial roofer as a first priority.

Speaker Change: But with the increased frequency of weather.

Speaker Change: <unk> building stock the increased cost of construction coastal building codes all of these things.

Speaker Change: Are going to drive opportunity in roofing and restoration.

Speaker Change: And and so we have seen.

Speaker Change: Since we stepped into restoration in a bigger way six years ago, we've seen high single digit to 10% organic growth and longer term, we expect to see the same in roofing.

Scott Patterson: And longer term, we expect to see the same in roofing. Thank you. Thank you Scott for the call and I'll turn it back.

Speaker Change: Thank you. Thank you Scott for the color and I'll turn it back thank you.

Scott Patterson: Thank you.

Scott Patterson: At this time I would now like to turn the conference back over to Scott Patterson for closing remarks. Okay, thank you, Gigi, and thank you, everyone, again, for joining us. Our Q1 is scheduled for end of April, so we look forward to talking to you again and enjoy the rest of your day.

Speaker Change: Thank you.

Scott Patterson: This time I would now like to turn the conference back over to Scott Patterson for closing remarks.

Scott Patterson: Okay. Thank you Gigi.

Speaker Change: And thank you everyone again for joining us.

Scott Patterson: <unk>.

Scott Patterson: Our Q1 is scheduled for end of April So, we'll look forward to talking to you again and enjoy the rest of your day.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].