Firstservice Corp · TSX:FSV
Firstservice — Investor Presentation (June 2007)
13 slides from Firstservice's investor presentation, Jun 26, 2007
Slide 1: Investor Presentation: 7% Preferred Share Stock Dividend
Investor Presentation 7% Preferred Share Stock Dividend June 26, 2007 1
Slide 2: Forward-looking statements
Certain statements included herein constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance
Slide 3: Background
FirstService generates strong cash flows – Leverage ratios at historical lows • Despite accelerated pace of acquisitions FirstService now at scale – To finance future growth internally $110 million cash proceeds from sale of business services division in March 2006 – Entire proceeds now reinve
Slide 4: Background
Investigated options to enhance value – Regular dividends – Accelerated share buy-back program – Special cash dividend New innovative approach – Allow shareholders to decide how to participate in future growth Conclusion – Issue a stock dividend of 7% cumulative preferred shares to all shareho
Slide 5: Summary terms
Preferred shares – Face value of US$25.00 per share – Fixed dividend of 7% • US$1.75 per annum – Shares to be listed on TSX About 6 million preferred shares to be issued – Total issue about US$150 million – Total annual cash dividend US$10.5 million Annual cash dividend equivalent to – 1% divi
Slide 6: Meets objectives
Issuance of preferred shares – Allows SVS and MVS to maintain high-growth attributes – Provides attractive, after-tax yield to shareholders wishing dividends Preferred shares – Designed to compare favorably to others – Expected to trade at face value – Expected to attract “new” investors seeking
Slide 7: Meets objectives
Issue allows FirstService to maintain – Low leverage ratios – Ready access to debt capital (i.e. borrowing capacity) Balance sheet and metrics to remain strong – Provides flexibility for growth FirstService has the right to – Redeem shares at modest premium until 2011 • Thereafter at face valu
Slide 8: Pro forma balance sheet
Pro forma balance sheet (US$ millions) March 31, 2007 Pro forma As reported Net debt $ 136.1 $ 136.1 Shareholders’ equity Preferred shares 149.3 - Common shares 80.1 80.1 Retained earnings 35.5 184.8 Total shareholders’ equity $ 264.9 $ 264.9 Leverage (net debt / EBITDA1) 1.11x 1.11x 1 Pro forma EBI
Slide 9: Pro forma net earnings and EPS
Pro forma net earnings and EPS (US$ millions, except per share amounts) Year ended March 31, 2007 Pro forma As reported Adjusted net earnings1 $ 41.6 $ 41.6 Preferred share dividends (annualized) (10.5) - Adjusted net earnings available to common shares $ 31.1 $ 41.6 Diluted common shares outstandin
Slide 10: Updated EPS outlook
Updated EPS outlook (US$ millions, except per share amounts) Year ending March 31, 2008 Updated Previous Change Revenues $1,525 – $1,625 $1,525 – $1,625 None EBITDA 137 – 147 137 - 147 None Diluted EPS 1.25 – 1.37 1.48 – 1.60 (0.23)1 1 Reflects eight month impact of preferred dividends on diluted EP
Slide 11: Tax implications: Canadian investors
No tax upon issuance of preferred shares – Preferred shares have nominal tax basis Dividends taxed at dividend rate – Enhanced dividend tax credit applies Disposition of preferred shares – Capital gains tax on full value • Nominal tax basis Redemption of preferred shares – Results in deemed
Slide 12: Tax implications: US investors
No tax upon issuance of preferred shares – Preferred shares to be allocated partial basis Dividends should be taxed at capital gains rates until 2010 Disposition of preferred shares – Results in dividend, depending on taxpayer facts and circumstances Redemption of preferred shares – Treated
Slide 13: Question and Answer session
Question and Answer session Q&A 13