FirstService Corporation (NASDAQ:FSV) Q3 2023 Earnings Call Transcript

Stephen Sheldon: Got it. And has that – I guess is that – you typically talked about 3% to 5% organic growth in that business? Given your – some of the way the changes that you have been able to kind of push through with the improvement on the execution side and maybe some units [ph]. Has your thought process there changed on what the organic – the right organic growth profile to think about that we should be thinking about for the…?

Scott Patterson: Yes. I mean it’s been much stronger this year. Definitely, we are getting a little more price. We continue to carry some momentum from strong sales late last year and early this year. That’s starting to normalize. So, it’s easing its way back down. Mid to high, I would say, I am comfortable with right now, so tick higher. Yes.

Stephen Sheldon: Got it. That’s helpful. And then just on Century Fire, given that half of that business seems tied to new construction activity for installations. Just curious about the subsector exposure there. Is Century Fire is more exposed to certain subsectors for construction, thinking about office versus industrial versus multifamily, more exposed to certain of those versus others? And how are you thinking about the growth outlook there given any visibility you have into new construction over the next few years.

Scott Patterson: Right. I mean certainly in terms of our backlog, we feel very good about Q4, and I think it will carry into Q1. But as you suggest, the commercial real estate market is less than robust right now. So, we are keeping a very close eye on backlog. We do have strong presence in multifamily and distribution warehouses, office retail across the board. But I think generally, if commercial real estate, new construction slows dramatically, we would – at some point, we are going to see that. The 50% of that business would be a new install, and 50% is recurring service inspection repair.

Stephen Sheldon: Got it. Thank you.

Operator: Please standby for the next question. The next question comes from Michael Doumet with Scotiabank. Your line is open.

Michael Doumet: Hey. Good morning guys. Scott, you started off with, I think some comments on market share. So, I just wanted to kind of get a little bit more detail on this. But for the home improvement, and the Century Fire business, is it possible at all to break down what you think is market share growth versus industry growth? And then in your view, do you still think you have the levers to continue to push maybe a similar market share gain for those two segments into the 2024?

Scott Patterson: It’s easier to create clarity in the home improvement business because there are a number of research groups that follow it pretty closely. And so we feel very confident that we are taking share in closet organization space, painting, the significant brands we have, floor coverings. Tougher at Century Fire, but the organic growth we are seeing is quite strong. And I think that we are driving a lot of it as we have made acquisitions, we are adding services, we are necessary to ensure all our branches are full service. And adding alarm to sprinkler businesses and vice versa, adding service to primarily installation businesses. And it’s been a significant growth driver for us to add services to the existing customer base.

And so we are taking wallet share in that instance, but it’s definitely a higher number of organic growth than the market. But it’s not crystal clear. And in terms of driving this into ‘24, I think we will continue to take share. The question is the market, what kind of support we get from the market.

Michael Doumet: That’s helpful. Thanks. And then maybe for a bit over restoration, I think previously, you talked about making investments in that business, if that once completed, would drive eventual margin expansion, I think over several years. So, just curious on how those investments are progressing timelines on potential margin expansion for that business. Obviously, recognizing that storm impact aside as it relates to these investments.