FirstService Corporation (FSV) Q1 2021 Earnings Call Transcript

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FirstService Corporation (FSV 1.28%)
Q1 2021 Earnings Call
Apr 27, 2021, 6:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the First 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 US Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is April 27, 2021.

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

D. Scott Patterson -- President and Chief Executive Officer

Thank you, Tammy. Good afternoon, and welcome everyone to our first quarter conference call. Thank you for joining us and apologies for the hiccup this morning. Our service provider had a technical glitch and the telephone lines were down for a few hours, which coincided with our call unfortunately. But here we are and we're ready to go. And the call will be recorded on our website for anybody that wasn't able to make the new time. As usual, I'm on the line with our CFO, Jeremy Rakusin.

And let me open by saying that we are very pleased with our strong kick start to 2021. We continue to be negatively impacted by the pandemic in certain of our service lines, but the diversification of our business model and the efforts of our teams enable us to continue to show strong growth on a consolidated basis.

Total revenues for the quarter were up 12% over the prior year with organic growth accounting for half of the increase. The balance came from acquisitions over the last year, including tuck-under that FirstOnSite, Century Fire, and FirstService Residential. EBITDA was up 36% reflecting margin expansion of 150 basis points. Both divisions generated strong margin improvement during the quarter and Jeremy will provide a detailed breakdown in his prepared comments. And finally, earnings per share were up 78%.

At FirstService Residential, revenues were up 3% versus the prior year with organic growth at 1%. Year-over-year growth continues to be tempered in this division by the suspension of services relating to community amenities, primarily in the Northeast of the US and Canada. These facilities include pools, fitness areas, spas, restaurants, and various other community services. We've had regions and different amenity facilities open and close over the last six months, but on a net basis, the level of impact hasn't materially changed since the end of the third quarter of 2020. We have these contracts. They've not been canceled. They have been suspended. When the facilities reopen, we will see an increase in revenues, although, the level of service may be reduced in some cases in line with capacity restrictions and distancing protocol. We're starting to see summary opening a fitness facilities, and a portion of our seasonal pools are preparing to reopen, but we do not expect to see pre-COVID levels for the balance of 2021.

Looking forward to the second quarter, we expect FirstService Residential to continue to perform approximately at current levels adjusted per seasonality, which would lead to a year-over-year increase of over 10% relative to the second quarter of last year, which was negatively impacted by extensive North America wide lockdowns.

Moving on now to FirstService Brands, where we reported a very strong quarter with revenues up 23% and organic growth at 13%. Organic growth was driven by strong year-over-year increases at our home improvement brands and FirstOnSite, our newly rebranded commercial restoration platform. FirstOnSite was up 50% year-over-year with about two-thirds of it coming organically. The organic growth was largely driven by extreme weather during the quarter, particularly the deep freeze event in Texas. Freezing temperatures in combination with power outages led to burst pipes and sprinkler systems throughout the state. The water damage was significant and most of our customers in Texas were impacted. Our work in the area generated approximately $30 million of incremental revenues during the quarter. The year-over-year revenue increased outside of this event, resulted from continued progress with new national accounts and the impact of the Rolyn acquisition. We have a solid backlog heading into Q2, including continuing work from the Texas deep freeze. We expect another strong quarter with revenues approaching the level achieved in Q1, which would again translate into a significant increase over the prior year.

A big highlight for all of us during the quarter was the launch of the FirstOnSite brand, we brought our eight commercial restoration brands together under the FirstOnSite name with a single purpose statement and vision. The team has been working on this for two years and we're all very excited about where we ended up with the branding and the logo and the messaging. We are confident that the new brand will enhance our culture building initiatives and help accelerate organic growth. We also know that the launch is just the beginning and that creating a brand and building on the brand is an everyday effort. We have a lot of experience in this area and look forward to the opportunity.

Our home improvement brands, including California Closets, CertaPro Painters, Floor Coverings International and Pillar To Post home inspection are four brands we have been building for over 20 years. During the quarter, this group together was up by over 10%, and that is relative to a tough comp in the prior year that was only marginally impacted by COVID. Activity levels grew throughout the quarter and were particularly strong in March. Rising home prices and home equity levels together with stimulus checks have supported home improvement spending over the last nine months. Through March and into April, leads and bookings have increased further as the vaccine continues to roll-out and residential projects that have been deferred throughout the pandemic are again being scheduled.

Our challenge is building production capacity to meet the front-end needs of our home improvement brands. The labor market is extremely tight right now. We have open positions and are recruiting aggressively, but it will take time to fully build out our capacity. Based on current production levels, we expect our home improvement brands to be up significantly over Q2 in the prior year, which of course was impacted by lockdowns.

Century Fire was up modestly in the quarter due to the tuck-under acquisitions of Aegis Fire Safety and Cornet, which were both completed in the fourth quarter of 2020. On an organic basis, Century was approximately flat year-over-year relative to a strong Q1 last year. The backlog has been building deferred construction projects are steadily being rescheduled. We expect Century to show improved revenues next quarter and show year-over-year growth in the 10% range.

Let me now pass the floor over to Jeremy for a more detailed look at the results.

Jeremy Rakusin -- Chief Financial Officer

Thank you, Scott. Good afternoon to everyone. The 2021 first quarter performance, as you just heard from Scott was strong in several respects versus the prior year.

For our consolidated quarterly results, we reported revenues of $711 million, a 12% increase over the $634 million for Q1 2020. Adjusted EBITDA was $59.8 million, up 36% versus the prior year's $43.9 million. And this yielded an 8.4% margin for the quarter, reflecting 150 basis points of margin expansion year-over-year. And finally, our adjusted EPS was $0.66, representing 78% growth over the $0.37 per share in the prior year quarter. Our adjustments to operating earnings and GAAP EPS in arriving at adjusted EBITDA and adjusted EPS respectively are consistent with our approach and disclosures in prior periods.

Now let me walk through the segmented results for our two divisions. FirstService Residential generated revenues of $350 million, up 3% over last year's first quarter while EBITDA was $29.4 million, a 23% increase over the prior year. The EBITDA margin for the division came in at 8.4%, up a sizable 140 basis points over the 7% margin last year. Consistent with the back half of 2020, we continued to benefit from higher margin transfer and disclosure revenue resulting from strong home resale activity volumes across all markets. This ancillary revenue from unit resales had a more pronounced impact during Q1, which is our seasonally weaker quarter in terms of both revenue and profit contribution during the year. In terms of our second quarter outlook, our FirstService Residential division margin is expected to be flat compared to the prior year. The pickup we expect to get from continued strong home resale activity lapping the prior year, pandemic-driven falloff will be largely offset by the reinvestments we have made since last Q2, when we took aggressive cost cutting measures to counter the acute COVID-19 environment.

Over now to FirstService Brands, where the division reported revenues of $361 million during the first quarter, up 23% over last year's first quarter. EBITDA came in at $33.4 million, a 52% increase versus the prior year quarter. The division margin increased to 9.3% from last year 7.5% level with two factors driving the margin expansion. First, our home improvement brands benefited from some operating leverage on the back of their robust top line year-over-year growth. And second, we had an impact from mix, a theme we've talked about before and we'll continue to see as we've increasingly shifted the Brands division toward more company owned relative to franchised operations.

In the current seasonally weakest first quarter, we had a positive mix impact with greater revenue and profit contribution mix from our restoration operations compared to the prior year, which averaged up the overall margin for the Brands division. Looking out to the second quarter, the impact from increased restoration contribution mix will have the reverse impact, an average down the Brands division margin during the seasonally strong mid-year period. While Q2 revenue growth will be strong as Scott mentioned, we expect this Brands mix dynamic to dilute our year-over-year consolidated margin in the upcoming quarter.

Turning to our consolidated cash flow, we generated $49 million before working capital changes, a 59% increase versus last year's first quarter. Operating cash flow after working capital came in at $27 million, down from the almost $40 million in Q1 2020. The comparatively higher working capital investments this quarter primarily relate to the increased weather driven activity at our restoration operations and to support balance of your growth in our more seasonal businesses.

With our robust growth in earnings and operating cash flow net of capital investments, we reinforced our balance sheet strength. Our net debt of $400 million remained in line with the 2020 year-end level. Leverage as measured by net debt to trailing 12 months EBITDA ticked down a notch to 1.3 times compared to 1.4 times at year-end. Our liquidity, reflecting our cash on hand and our undrawn revolving credit facility balance sits at $575 million. And our debt profile is attractive, both well balanced between fixed and floating rates and with a low funding cost that are roughly 2.5% average annual interest rate.

During the first quarter, our investment spending was modest, maintenance capex was $13 million, down slightly from last year's level and tracking in line with the annual $60 million capex target we provided at the outset of the year. We also completed two small tuck-under acquisitions requiring only $2.5 million of spending during the quarter. As we saw last year as well as from prior years, acquisition capital deployment can be episodic and very quarterly and annually. However, our track record over the years has shown that we can drive at least 5% annual acquisition growth on average to augment our organic growth. And so we are confident in continuing to deliver with our tuck-under program.

That concludes our prepared comments. I would now ask the operator to please open up the call to questions. Thank you.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Your first question comes from the line of George Doumet with Scotiabank.

George Doumet -- Scotiabank -- Analyst

Yeah. Good afternoon guys.

D. Scott Patterson -- President and Chief Executive Officer

Hey, George.

George Doumet -- Scotiabank -- Analyst

Hi. I just want to talk a little bit about the FirstService Brands side, the strength we saw in home improvement, the double digit growth. It looks like, obviously, the contributing forces, there are the strong macro trends. But also, I guess, just folks opening their houses to installers. So as you look to maybe the back half of the year, so it kind of Q3, Q4. Can you talk about that -- maybe that dynamic, I guess, folks opening up their homeless installers. What would you expect to be kind of the growth above and beyond that 5% that you guys always deliver?

D. Scott Patterson -- President and Chief Executive Officer

I think for those four brands I mentioned, we would expect -- well, next quarter is relative to the tough Q2 last year, so it will be up significantly next quarter. But sequentially, I think as well, it will be up and the reason is that we are gradually building capacity, which is our limiter right now. We have leads and bookings that we're trying to catch-up to with labor. Labor is very tight, as I said in my prepared comments, but we -- specifically, as it relates to the second and third quarter, we should be able to increase our capacity to capture more opportunity. We expect the leads and bookings to remain strong over the next few quarters. And as you suggest, I think there's a few things that are happening, the vaccine rollout, creating comfort to invite professional contractors back into the home. And I think there's a feeling that many have sort of reached the end of their DIY capability and are now turning -- continuing to invest in the home, but turning to professional contractors, which is helping also.

George Doumet -- Scotiabank -- Analyst

Okay. Thanks for that. Maybe just moving over to margins. Are you guys still sticking to the expectation that for the year, that you wouldn't expect much margin expansion? And if so, I mean, we had 150 basis points this quarter. Can you maybe walk us through what you're thinking in terms of timing and areas where we could actually see some compression?

Jeremy Rakusin -- Chief Financial Officer

Sure. George, I'll take that. I mean, the short answer is, yes, for the full year. It's been a consistent theme we've said around top line being the primary growth driver and margins kind of flat, efforts around improving margins in each of our businesses. But mix being a big component of why we see flattish margins. The 150 basis points this quarter, I think articulated it, but just to sum it up, it's a seasonally weakest quarter, and you can get anomalies and swings, whether it's high margin revenue at FirstService Residential, the restoration activity at Brands amplifying the margin swings. And with the remaining three quarters, I said second quarter, we expect consolidated margins to be down. And back half of the year and the full year flattish is kind of probably the best way to summarize it.

George Doumet -- Scotiabank -- Analyst

Okay. That's really helpful. Thanks. And last one if I may, maybe for Scott, if you can take us back to the days when you guys rebranded FirstService Residential in 2013. Did you guys see at all a lift in revenues from that activity? I'm just trying to think about what you guys are thinking maybe, in terms of seeing a similar trend for FirstOnSite this year?

D. Scott Patterson -- President and Chief Executive Officer

I mean, we have -- but it's incremental and the work starts -- really starts the day the brand is launched. So it will be incremental, but we believe it will be meaningful over the long-term.

George Doumet -- Scotiabank -- Analyst

Okay. Thank you very much.

Operator

Your next question comes from the line of Stephen MacLeod with BMO Capital Markets.

Stephen MacLeod -- BMO Capital Markets -- Analyst

Thank you. Good afternoon, guys.

D. Scott Patterson -- President and Chief Executive Officer

Hi Steve.

Stephen MacLeod -- BMO Capital Markets -- Analyst

Hi. I just wanted to dig in a little bit on the amenity closures on the Residential side. Scott, you mentioned in your prepared remarks that you might expect services to remain reduced, once things open back up. Is that more a comment around kind of the back half of this year, when the pandemic is sort of still in everyone's fresh memory, or still in front of us. Or do you mean that, maybe going forward, you would expect amenities to be used more differently on more of a sustainable basis?

D. Scott Patterson -- President and Chief Executive Officer

I think it's more in the near-term. I don't know, what period of time it will be impacted. I think over the longer term, we will get back to full resumption of our contracts and services. But there's -- certainly this year, many communities are navigating through risk issues associated with reopening. There's a concern that the existing insurance that is in place does not protect against lawsuits from those that use the facilities and contract COVID, and there's a number of states sort of working through this issue right now, and there are pending Safe Harbor immunity bills that would protect board members and communities. But it's -- there is some uncertainty, and we know many of our communities have already decided not to open their seasonal amenities this year as a result. So, will they reopen in 2022? I have to assume that they will. But for the balance of this year, we know that we won't be back to pre-COVID.

Stephen MacLeod -- BMO Capital Markets -- Analyst

Okay. That makes sense. Can you just remind us how big the amenity business is, in terms of normalized FSR revenues?

Jeremy Rakusin -- Chief Financial Officer

It's about 15%, Steve.

Stephen MacLeod -- BMO Capital Markets -- Analyst

Yeah. Okay, OK. That's helpful. And then I just wanted to make sure I'm sort of understanding the nearer term Q2 outlook, just wanted to understand. It sounds like for FirstService Residential looking for a revenue increase of roughly 10%, but flat margins year-over-year, and in the Brands business, you're looking for more robust revenue growth, but the margin impact that you saw in Q1 will reverse in Q2, because of some of the seasonality of taxes. Is that the way to understand that?

Jeremy Rakusin -- Chief Financial Officer

Correct.

Stephen MacLeod -- BMO Capital Markets -- Analyst

Okay. That's great. And then maybe just finally, Scott, you mentioned an interesting trend you're seeing, where people are -- have reached the end of their DIY abilities. Have you really seen that accelerating the demand for home improvement, and is that something that has just kicked in more recently, or is that something you've seen for a little while now?

D. Scott Patterson -- President and Chief Executive Officer

Well, the DIY phenomena has been very strong throughout the pandemic, much stronger than spending on professional contractors and professional home improvement. And early on, strong results at the Home Depots and the Sherwin Williams, I mean, it was all about residential DIY and in the last three months, and really it's happening now, there's a feeling or a hypothesis that we're moving through that DIY bubble. But it is happening at the same time as the vaccine. So I think that, certainly, March was up over January, February and we see it continuing into April and again, as I mentioned, our limiter is labor, but it's there.

Stephen MacLeod -- BMO Capital Markets -- Analyst

Okay. Okay. That's very helpful guys. Thank you so much.

D. Scott Patterson -- President and Chief Executive Officer

Thanks Steve.

Operator

Your next question comes from the line of Stephen Sheldon with William Blair.

Stephen Sheldon -- William Blair -- Analyst

Hi, thanks. Wanted to follow-up on, I guess that last comment. Can you maybe just talk some about how you're handling the labor challenges and what you're doing on the recruiting side, to maybe pull in more resources and better match your ability to provide solutions of high demand that you're seeing, especially on the home improvement side.

D. Scott Patterson -- President and Chief Executive Officer

We're just ramping up the efforts, and leaning into the existing workforce for referrals, pulling out every tool we have -- recruiting tool we have, to pull people in. But the -- with unemployment benefits and stimulus checks, there are currently a number of people that are choosing to stay on the sidelines. I think also, perhaps as a result of COVID safety. But vaccines and the expiration of the unemployment benefits, I think, are going to result in an easing of this tightness in the labor market and I think we're going to -- as we get into the third quarter, be in better shape around capacity.

Stephen Sheldon -- William Blair -- Analyst

Got it. Makes sense. And then on the residential side, I guess, have you seen any changes in the competitive landscape, if some regions have opened back up this year? I know you have talked about properties being hesitant to switch providers, kind of early on in the pandemic. So I guess, is that still the case and what has that meant, in terms of both retention and your ability to win new clients?

D. Scott Patterson -- President and Chief Executive Officer

Right. It actually has changed, and it's maybe even tilting the other way. We have seen a market increase and board turnover. Board members are resigning or simply choosing not to run again, it's been a very tough time, I think in general, for board members, residents who have been in their units, and on average have become more involved in their communities. And I would say on average, there is more conflict and certainly, more board turnover. And whenever there's board turnover, there tend to be RFPs and more turnover of management companies.

And so we will expect to see our retention drop a little bit this year. But on the flipside, we expect our sales to be strong. So it has changed, and net-net the -- I think we end up in the same position or a similar position in terms of organic growth. But it's not ideal, because turnover always puts pressure on your teams, and it also puts pressure on price. So that's the summarization of the competitive environment today.

Stephen Sheldon -- William Blair -- Analyst

Great. Thank you. Appreciate the commentary.

D. Scott Patterson -- President and Chief Executive Officer

Thanks, Steve.

Operator

You next question comes from the line of Daryl Young. My apologies. The next question comes from the line of Matt Logan with RBC Capital Markets.

Matt Logan -- RBC -- Analyst

Thank you, and good afternoon.

D. Scott Patterson -- President and Chief Executive Officer

Hi Matt.

Matt Logan -- RBC -- Analyst

Jeremy, would you be able to quantify the storm activity in Q1 in dollar terms, for both revenue and EBITDA?

Jeremy Rakusin -- Chief Financial Officer

Yeah, so it's $30 million and Scott said in his prepared comments, and I would describe the same type of margin as we get in Restoration across the board the 10%-ish.

Matt Logan -- RBC -- Analyst

And when we try to think through your commentary for Brands for Q2, how do we roll up all of those various segments? Is there a -- do you have a percentage handy for the blend of home improvement, Century Fire and Restoration?

Jeremy Rakusin -- Chief Financial Officer

Are you talking revenue or...

Matt Logan -- RBC -- Analyst

For your revenue growth -- for your revenue growth for Q2?

Jeremy Rakusin -- Chief Financial Officer

Scott, do you want to leave at that or...

D. Scott Patterson -- President and Chief Executive Officer

Yes, I don't know if I have that number. I mean Brands is -- Brands was -- the home improvement brands were off 30%-ish from 2019 last year and we expect to be better than '19 this year. So we'll be the brand -- home improvement brands will be up over 30%. Restoration may not reach the level that we hit in Q1, but it -- and we were up 50% in Q1 year-over-year. So maybe we're up in the same range as the home improvement brands. Century Fire will be -- show much more modest growth, and we'll certainly temper that.

Matt Logan -- RBC -- Analyst

So I guess what I'm trying to do is, just run through the composition of the brands revenue and try to think through the respective contributions. So I -- would we be looking at something north of 20%, in terms of the brands growth rate in Q2, would that be fair on the aggregate basket?

D. Scott Patterson -- President and Chief Executive Officer

Probably in that range.

Matt Logan -- RBC -- Analyst

And margins, generally kind of flat year-over-year?

D. Scott Patterson -- President and Chief Executive Officer

No, down.

Matt Logan -- RBC -- Analyst

That's down year-over-year.

D. Scott Patterson -- President and Chief Executive Officer

Yes. On mix. Again, remember you're getting what has been traditionally more home improvement skewed businesses. They do better in after Q1, the seasonal trough. They're in the low-double digits margin, and then you're layering on some increased Restoration activity levels, which are more in the 10%-ish range. So it averages down the margins.

Matt Logan -- RBC -- Analyst

Okay, appreciate that. And maybe just changing gears here. If we think about the Residential division and FirstOnSite, could you give us any color on how the organic growth is trending, when we strip out the COVID-related amenity closures, and some of the storm activity in Q1?

D. Scott Patterson -- President and Chief Executive Officer

Let me start with FirstService Residential. If we adjust for the service suspensions, then we'd be right in the middle of that low-to-mid single digit organic growth rate that we estimate from quarter-to-quarter. And then I think Restoration, if you take -- did you say ex-Texas?

Matt Logan -- RBC -- Analyst

Yeah, ex the storm. Yeah, ex-Texas.

D. Scott Patterson -- President and Chief Executive Officer

Yeah. It'd be in the same range -- it'd be in a similar range, sort of mid-single digit.

Matt Logan -- RBC -- Analyst

And when we think through kind of the balance of the year, I guess it would be fair to think about those trends as starting to normalize for some of the amenity closures, but not necessarily reaching 2019 levels and then just good momentum through kind of H2 for the home improvement businesses?

D. Scott Patterson -- President and Chief Executive Officer

Yes, on home improvement. And yes on Residential. Restoration, we had a very big back half of 2020, and it will be tough to hit those same levels. But that is storm season. But obviously uncertainty around that piece.

Matt Logan -- RBC -- Analyst

All right, guys. Well, I appreciate the commentary. That's all for me. I'll turn it back. Thank you.

D. Scott Patterson -- President and Chief Executive Officer

Thanks, Matt.

Operator

Your next question comes from the line of Scott Fromson with CIBC.

Scott Fromson -- CIBC -- Analyst

Hi, and good afternoon, gentlemen.

D. Scott Patterson -- President and Chief Executive Officer

Hey, Scott.

Scott Fromson -- CIBC -- Analyst

Just a couple of questions, please. Just wondering, are you seeing ongoing activity related to the Texas freeze or is that pretty much done in Q1?

D. Scott Patterson -- President and Chief Executive Officer

No, we will continue to work on in that area through Q2. The backlog is, I would say quite strong. We won't hit the same level in Q2, as we hit in Q1 in Texas -- from Texas. But there's -- we'll continue to work certainly on that event.

Scott Fromson -- CIBC -- Analyst

So it may actually bridge into the tornado and hurricane seasons, fair to say?

D. Scott Patterson -- President and Chief Executive Officer

It might, yes.

Scott Fromson -- CIBC -- Analyst

Okay. And second question more related to brands or also related to brands, are you seeing any change in acquisition opportunities to bring franchises back into the company fold? Just wondering if a pandemic fatigue is [Indecipherable]?

D. Scott Patterson -- President and Chief Executive Officer

Not really Scott, that's a resilient group. And I mean we -- those two strategies at Cal Closets and Paul Davis really haven't changed and they will. Over time we would want to own the major markets. But it will take many years and we're not seeing any real change, as a result of the pandemic and timing around that.

Scott Fromson -- CIBC -- Analyst

Well, that actually sounds like a good thing, if it reflects on the robustness of the businesses.

D. Scott Patterson -- President and Chief Executive Officer

That's true. Absolutely.

Scott Fromson -- CIBC -- Analyst

I'll leave it there. Thank you very much.

D. Scott Patterson -- President and Chief Executive Officer

Thanks Scott.

Operator

[Operator Instructions] Your next question comes from the line of Frederic Bastien with Raymond James.

Frederic Bastien -- Raymond James -- Analyst

Good morning guys. I just have one quick question or housekeeping, you completed some California Closets company-owned acquisitions in early March. How much of that will -- how do we need to model with respect to revenue on a go forward basis with respect to this Minneapolis acquisition?

D. Scott Patterson -- President and Chief Executive Officer

It's mid-single digits Frederic, so it's a small tuck-in there, but we were taking it now to 20 locations and so our company owned operations are at a significant level, $200 million plus and we'll continue to attempt to get a couple down a year if we can.

Frederic Bastien -- Raymond James -- Analyst

Are there big ones left out there though?

D. Scott Patterson -- President and Chief Executive Officer

Yeah, there's a couple of bigger franchises, but obviously the 20 that we have done takes care of most of the landscape. But we'll -- there's a few more sizable ones and we can go over 25 or 30, if we continue to -- as the strategy continues to evolve.

Frederic Bastien -- Raymond James -- Analyst

Good. And I do have another one, you were contemplating bringing your ownership of the Paul Davis restoration franchises to same kind of number. But that changed, obviously with the growth of commercial restoration opportunity. So where do you stand on Paul Davis right now?

D. Scott Patterson -- President and Chief Executive Officer

We are at...

Jeremy Rakusin -- Chief Financial Officer

Scott, go ahead? There's 11 today kind of with $100 million plus of revenues. So that strategy continues to -- it's separate from the large loss and commercial acquisition strategy with FirstOnSite, they run parallel. And obviously COVID put a pause on those things just logistically, and our efforts continue on that front as well. Scott, I don't know if there's something else you want to add?

D. Scott Patterson -- President and Chief Executive Officer

No, perfect.

Frederic Bastien -- Raymond James -- Analyst

Awesome. Okay, great quarter. Thanks, guys.

D. Scott Patterson -- President and Chief Executive Officer

Thanks Frederic.

Operator

And I'm showing no further questions at this time. I would like to turn the call back to Mr. Patterson.

D. Scott Patterson -- President and Chief Executive Officer

Thank you, Tammy. As I said earlier, we're very pleased with our strong start and again, it's all a reflection on the commitment and work ethic of our teams. They continue to do an amazing job, delivering on our brand promise and we remain extremely grateful. I'll close with that and look forward to speaking at the end of July. Thank you.

Operator

[Operator Closing Remarks].

Duration: 47 minutes

Call participants:

D. Scott Patterson -- President and Chief Executive Officer

Jeremy Rakusin -- Chief Financial Officer

George Doumet -- Scotiabank -- Analyst

Stephen MacLeod -- BMO Capital Markets -- Analyst

Stephen Sheldon -- William Blair -- Analyst

Matt Logan -- RBC -- Analyst

Scott Fromson -- CIBC -- Analyst

Frederic Bastien -- Raymond James -- Analyst

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