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DATE

Thursday, July 23, 2026 at 11:00 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer - D. Scott Patterson
• Chief Financial Officer - Jeremy Alan Rakusin

TAKEAWAYS

• Revenue -- $1.45 billion, representing a 2% increase compared to the prior year.
• Adjusted EBITDA -- $161.7 million, up 3% and reflecting a consolidated margin of 11.2%.
• Adjusted EPS -- $1.75, representing a 2% increase from $1.71 in the prior year period.
• FirstService Residential Revenue -- $617 million, reflecting 4% reported growth and 5% organic growth.
• Residential EBITDA -- $69 million, an increase of 6% driven by new contract wins and labor-related service demand.
• Residential EBITDA Margin -- 11.2%, an expansion of 20 basis points versus the prior year quarter.
• FirstService Brands Revenue -- $832 million, up 1% as fire protection growth was tempered by flat restoration results and roofing declines.
• Brands Adjusted EBITDA -- $96 million, representing a 1% increase over the prior year.
• Roofing Revenue -- Down 6% on a reported basis and 10% organically, driven by market weakness and project delays.
• Century Fire Revenue -- Up 10% versus the prior year, supported by high single-digit organic growth in sprinkler and alarm installation.
• Home Service Revenue -- Increased slightly compared to the prior year, outperforming management expectations despite weak housing market indices.
• Restoration Revenue -- Down slightly due to a weakened pipeline resulting from mild weather conditions in the fourth quarter of 2025.
• Share Repurchases -- 1.8 million shares purchased for a total cost of approximately $250 million during the quarter.
• Average Repurchase Price -- $135.91 per share, executed under the company's normal course issuer bid.
• Net Debt to EBITDA Leverage -- 1.8x, an increase from 1.5x at the end of the first quarter.
• Liquidity -- Over $800 million, comprised of cash on hand and undrawn bank credit facility balances.
• Annual CapEx Guidance -- $130 million, lowered from the initial target of $140 million provided at the start of the year.
• Acquisition Spending -- Just over $40 million deployed for tuck-under deals during the second quarter.
• Restoration Back-Half Growth -- Management expects approximately 5% year-over-year growth in the second half of 2026.
• Fire Protection Backlog -- Management reported sequential growth in the backlog with 10% or higher growth expected for the remainder of the year.
• Data Center Exposure -- Approximately 15% of the Century Fire backlog is currently tied to data center projects.
• Q3 2026 Guidance -- Consolidated revenue and EBITDA growth are expected to be in the low single-digit range.
• Full-Year EBITDA Guidance -- Mid-single-digit annual growth anticipated over 2025 results.
• Residential Pool Divestiture -- The company sold its residential pool maintenance accounts to focus exclusively on commercial pool management.

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RISKS

• Patterson stated, "the market remains stubbornly weak and ultra competitive," specifically noting headwinds in the new construction and reroof markets in Las Vegas and Southwest Florida.
• Patterson noted, "it is difficult to forecast how quickly the recent backlog additions will convert to revenue," citing potential delays from scoping, permitting, and insurance navigation.

SUMMARY

Management at **FirstService Corporation** (FSV +5.88%) reported that second quarter performance was impacted by macroeconomic headwinds, particularly within the roofing and restoration segments. While the residential property management division maintained steady organic growth and margin expansion, the brands division saw revenue gains in fire protection offset by competitive pricing and project delays in roofing. The company utilized its balance sheet to execute significant share repurchases and tuck-under acquisitions while maintaining a conservative leverage profile. Management expressed confidence in a stronger second half of the year, supported by a bolstered restoration pipeline and continued demand for essential fire protection services.

• Patterson noted the company intentionally exited certain roofing projects in Southwest Florida and Las Vegas because the "tight pricing" was "beyond our comfort level."
• The company launched "Resilience First," a cross-selling program between its residential and restoration brands intended to reduce the frequency and severity of water loss events in managed communities.
• Management is currently implementing an enterprise-wide financial system to integrate 14 different operating systems, which Patterson stated will "give us much better information and ability to certainly ability to forecast."
• Rakusin indicated the company would be comfortable increasing leverage to the "mid twos level," or 2.5 times net debt to EBITDA, to support share repurchases when valuation is attractive.
• Patterson reported that the restoration segment signed a number of "large loss projects" across North America in late Q2 that are expected to convert to revenue over the next 12 to 18 months.
• Specialty construction opportunities have emerged in the healthcare sector, where Patterson noted the team has "specific certification and training around the mitigation and construction in a sensitive healthcare environment."

INDUSTRY GLOSSARY

• Reroofing: The essential service of replacing an existing roof on a commercial or residential building, distinct from new construction roofing.
• Restoration: Property services focused on repairing damage caused by fire, water, or weather events.
• NCIB (Normal Course Issuer Bid): A Canadian regulatory term for a share repurchase program where a company buys its own shares through a stock exchange.
• Tuck-under Acquisition: The acquisition of a smaller company that is fully integrated into one of the parent company's existing business platforms.
• Large Loss Projects: Complex restoration claims, typically involving commercial, industrial, or government facilities, that represent significant contract values.

Full Conference Call Transcript

Operator: Good day, and welcome to the Second 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 and 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 statement. 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 07/23/2026. As a reminder, if you would like to ask a question, please press 11 on your telephone. You will then hear an automated message advising that your hand is raised. If you would like to remove yourself from the queue, please press *1 again. I would now like to turn the call over to chief executive officer, mister Scott Patterson. Please go ahead, sir.

D. Scott Patterson: Thank you, Lisa. Good morning, everyone. Thank you for joining our Q2 conference call. I am on today with our CFO, Jeremy Alan Rakusin. I will kick us off with some high level comments. Jeremy will follow with more detail. Let me start by saying that we are generally pleased with our Q2 results in an economic environment that continues to be quite challenging. We are also pleased with the progress we made during the quarter on a few fronts that we believe puts us in position to achieve a stronger second half of the year and gain momentum into 2027. Total revenues for the second quarter were up 2% over the prior year. Half organic growth.

EBITDA for the quarter was up 3% reflecting a consolidated margin of 11.2% up 10 basis points over the prior year and better than expectation primarily within our brands division. Jeremy will walk through the detail in his prepared comments. Finally, our earnings per share were up 2% over the prior year. In line with top line growth. Looking at our divisional results, first service residential revenues were in line with expectation and up 5% organically. The reported revenues were slightly less at 4% reflecting the sale of our residential pool maintenance early in the quarter. We separated and sold residential accounts that have accumulated over the years to focus solely on commercial pool maintenance and management.

Our core property management business continues to perform solidly on expectation, and we expect similar results for the balance of the year. Moving on to FirstService Brands, revenues for the quarter were up 1% with strength at Century Fire. Tempered by approximately flat results at our restoration and home service brands and largely offset by revenue declines within our roofing operation. I will walk through each of the segments. Revenues for our 2 restoration brands Paul Davis and First On-site, were down slightly from the prior year.

As we pointed out at the last 2 quarter ends, we entered the year with a weakened pipeline due to the mild weather experienced in Q4 of last year which has impacted us in the first half of this year. Towards the end of Q2 and July, we made significant progress in signing work and bolstering our pipeline back to historically healthy levels. In particular, we won a number of large loss projects across North America that will convert to revenue over the next 12 to 18 months. In addition, we are seeing opportunities for specialty construction projects that have arisen through our restoration work with certain customers and in certain verticals.

Looking forward, we expect to show approximately 5% year-over-year growth in the back half of the year for our restoration brands. it is a modest outlook relative to the uptick in activity, as it is difficult to forecast how quickly the recent back backlog additions will convert to revenue. Our experience suggests that scoping, permitting, and insurance navigation could create delays in generating revenue. Storm and hurricane activity in the coming months could add to the backlog and improve this growth outlook. Moving to our Roofing segment. Revenues for the quarter were down approximately 6% on a reported basis and 10% organically. Lower than our expectation. There are a few factors that impacted our top line during the quarter.

First and foremost, the market remains stubbornly weak and ultra competitive. Both the new construction market outside of data centers and the reroof market. And the market conditions are particularly acute in 2 of our larger branch regions. Las Vegas and Southwest Florida. In both markets, we have intentionally moved away from certain low-margin work that was in our pipeline. The other factor during the quarter was the delay of a few large reroof projects that we expected to complete during the quarter. The delays accounted for half the miss relative to our expectation. All the projects remain in our backlog.

The roofing market has been a challenge for us in the past year. it is been a difficult environment, and with ongoing macroeconomic uncertainty, it is unlikely to improve materially in the near term. That said, we strongly believe that the long term thesis is unchanged. Roofing is a huge market and an essential service with long term tailwinds. We believe in our team and are focused on continuing to build the platform. As evidence of our ongoing belief in the opportunity, we closed on the acquisition during the quarter of Sheffer's Roofing in Kansas City. Sheffer's is a leader in the market serving customers throughout Missouri and Northern Arkansas, and strengthens our presence in the important Midwest region.

Looking forward to Q3, we expect our roofing operations to be down slightly with organic growth off in the mid single digit range. Moving to Century Fire. We had another strong quarter that was right on expectation. And mirrored our Q1 result. With revenues up over 10% versus the prior year, including high single digit organic growth. During the quarter, we announced the acquisitions of Titan Fire Protection, based in Tampa, Florida. And GSC Fire and Security based in Austin, Texas. Titan is a sprinkler installation company serving commercial customers across Central Florida. GSC is an alarm installation and service company serving the Austin and San Antonio markets.

In both cases, Century will look to partner with the management teams to broaden the service capability and provide both sprinkler and alarm install and service across the respective customer bases. Looking forward for Century, we finished the quarter with an improved backlog sequentially, and expect similar strong 10%+ year over year growth in the third and fourth quarters. Now on to our home service brands, which as a group generated revenues that were up slightly versus year ago. Modestly better than our expectation. As a reminder, our home service brands include California Closets, CertaPro Painters, Floor Coverings International, and Pillar to Post home inspection.

Activity levels at these brands are closely tied to the housing market and consumer sentiment, both of which continue to hover around 10-year lows. The teams continue to do a great job driving increases in close ratio and average job size to eke out revenue gains. We are not getting any help from market improvement and we are not expecting any over the back half of the year. Market indices and economic forecasts all suggest continued weakness in the housing market and consumer confidence. Looking forward for our home services group, we expect the teams continue to take market share to drive similar results for the third and fourth quarters with revenues that are slightly up year over year.

Let me now hand off to Jeremy.

Jeremy Alan Rakusin: Thank you, Scott. Good morning, everyone. As always, I will provide details of our segmented financial performance, summarize our cash flow, capital deployment and balance sheet position, and close out the commentary with a look forward. But first, a recap of our consolidated financial results. Revenues for the second quarter was $1.45 billion, up 2% year over year and we reported adjusted EBITDA of $161.7 million, up 3% versus the prior year. Adjusted EPS came in at $1.75, a 2% increase over Q2 2025. This brings our year to date consolidated financial performance for the first half of the year to revenues of $2.77 billion, an increase of 4% over last year.

Adjusted EBITDA of $267 million, representing 3% growth over the $260 million last year. A margin of 9.7%, down 10 basis points year over year. And adjusted EPS for the first half of the year sits at $2.69 versus $2.63 in the prior year period. Our adjustments to operating earnings and GAAP EPS to calculate our adjusted EBITDA and adjusted EPS, respectively, have been summarized in this morning's press release and remain consistent with our disclosure in prior periods. Reviewing the second quarter segmented financial performance, I will lead off with our FirstService Residential division. Quarterly revenues came in at $617 million, up 4% over the prior year, and as Scott mentioned, up 5% organically.

EBITDA for the quarter was $69 million, a 6% year over year increase with an 11.2% margin, up 20 basis points over the 11% margin in Q2 of last year. For the first half of 2026, our division EBITDA margin sits at 9.9%, up 30 basis points compared to the equivalent prior year period. During the remainder of the year, we expect margin improvement to continue at similar pacing to the year to date performance as our teams continue to extract efficiencies in various areas of the enterprise. Shifting to the FirstService Brands division, our financial metrics for the second quarter were relatively comparable to last year's Q2.

Including revenues of $832 million and EBITDA at $96 million, both up 1%. Our margin during the quarter was 11.5%, down 10 basis points with the quarter over quarter performance better than both Q1 and our expectations heading into the current quarter. In particular, home services margins performed relatively better as we continue to optimize the balance of marketing and promotional investments in support of lead flow. Turning to our cash flow profile, we generated $112 million in operating cash flow during the second quarter prior to working capital movements and in line with the prior year. Cash flow after accounting for working capital changes was $130 million for the quarter, and sits at almost $220 million year to date.

Our capital expenditures during the quarter were a little over $30 million and with our year to date total at $60 million, we expect our annual CapEx to be roughly $130 million, less than our initial target of $140 million we provided at the beginning of the year. Acquisition spending on tuck under deals during the quarter was just over $40 million. The combination of our recent free cash flow performance together with conservative debt levels on our balance sheet supported our decision during the second quarter to also execute share repurchases under our normal course issuer bid.

During the quarter, we purchased more than 1.8 million shares at a total cost of almost $250 million or an average price per share of US dollars $135.91. With these buybacks, our leverage, as measured by net debt to EBITDA, increased modestly to 1.8x from the 1.5x level at the end of Q1. Our leverage remains conservative, and we still have ample liquidity with more than $800 million of cash on hand and undrawn bank credit facility balances. This current financial flexibility allows us to continue opportunistically repurchasing additional FirstService shares under the buyback program. When we see the valuation of our large diversified enterprise trading at a meaningful discount to smaller private market businesses in our respective industries.

At the same time, we are focused on building our tuck deal pipeline to deploy growth capital when we see acceptable acquisition valuations and target return thresholds. Concluding with an outlook, our first service residential division will deliver growth in the balance of the year, largely mirroring recent quarters. Mid single digit top line growth with modest year over year margin improvement. For the brands division, Scott has provided top line growth indicators for each of the operating businesses which aggregates to mid single digit revenue growth in the back half of the year.

This performance will be skewed to the fourth quarter and influenced by the amount of restoration backlog to revenue conversion from the increased pipeline activity levels that Scott referenced as well as capitalizing on any additional potential seasonal spikes in weather activity in the coming months. Putting it all together on a consolidated basis, for the upcoming third quarter, we expect both revenue and EBITDA growth to be similar to the second quarter in the low single digit range. For the full year, consolidated revenue growth is expected to be similar to or modestly better than our year to date top line growth and we are anticipating mid single digit annual EBITDA growth. over 2025. That concludes our prepared comments.

Lisa, you may now open the call to questions.

Operator: Thank you. Please press *11 on your telephone. You would like to remove yourself from the queue, press *11 again. We also ask that you please wait for your name and company to be announced before proceeding with your question. 1 moment while we compile the Q&A roster. Our first question will be coming from the line of Stephen MacLeod of BMO Capital Markets. Please go ahead.

Stephen MacLeod: Thank you. Good morning, guys.

D. Scott Patterson: Morning.

Jeremy Alan Rakusin: Morning.

Stephen MacLeod: I just wanted to just circle around on the on the roofing business. Obviously, the backdrop is quite weak, referenced a continued competitive environment. I am just curious if you see any I mean, I know you gave the outlook for the balance of the year, but just curious kind of what factors you are looking for to potentially see a light at the end of the tunnel with respect to some of the reroofing projects that have been delayed, and how your backlog currently looks.

D. Scott Patterson: Yeah. Let me start with the backlog, Steve. it is down year over year, but it is up in June sequentially over May. And May was up sequentially over April. So we are moving in the right direction, but slowly, And I would say battling headwinds. You know, the misses in Q2 were really as I suggested, from some jobs that delayed. They all still remain in our backlog, but we do not have start dates. They have been there is a you know, there is a number of factors associated with each. The largest is an insurance claim relating to hail damage. And it is caught up in negotiations between the owner and insurance carrier.

It will take place. it is just a matter of when. And then as I suggested, we have intentionally moved away from jobs that were in our pipeline due to the tight pricing, which was beyond our comfort level.

Analyst: Particularly in Southwest Florida.

Stephen MacLeod: Okay. that is that is helpful.

D. Scott Patterson: And I guess, you noted that 1 of the, the largest sort of project in the backlog was related to an insurance claim. How much of the delays you are seeing are attributable to factors such as that versus the macro backdrop and companies just saying, you know, we will we will do this next year when we have better visibility. I think the delays are primarily related to delays in construction and whether that is other contractors, you know, finishing their bid on time and pushing it out or insurance related issues. Because all of these project the projects I am referencing were in our pipeline and we expect it to complete.

But in terms of building the pipeline more quickly, we are seeing there you know, we are seeing softness in the market. Okay.

Stephen MacLeod: that is helpful. Thanks, Scott. And then maybe just 1 for Jeremy. Just on the NCIB, you are obviously very active in the quarter. I know you talked a little bit about the balance between funding M&A as well as being active when the stock price is materially dislocated from fair value. I am just curious how you prioritize those 2 things. And how you how much how active you expect to be on the on the buyback in the back half of the year?

Jeremy Alan Rakusin: Yes. I mean, we have been buying at current levels and you can be sure that we will continue to do so, just given our balance sheet is still quite conservative, under 2x. I mean, we would feel comfortable going at least to the mid twos level. Like, 2.5x would be a strong comfort level for us. We are always going to look at our pipeline. So if we see imminent deals that are of size, and provide attractive returns, that would take priority. But I think we can do both with our current balance sheet and $800 million-plus of liquidity you know, we can do them in tandem.

So a lot of flexibility to use the buyback program as well as not compromise our, tuck-under acquisition prospect.

Stephen MacLeod: that is great. Thanks, Jeremy.

Operator: Thank you. 1 moment for the next question, please. And the next question is coming from the line of Steve Sheldon of William Blair. Please go ahead.

Stephen Sheldon: Hey, good morning. Thanks. Scott, I wanted to dig in a little more on restoration and some of your comments in the prepared remarks. It sounds like sales activity pipeline has picked up there in the quarter. And not tied to big storm activity. So can you just refresh us on the progress building out relationships with larger, more national accounts? Is that becoming more impactful to the trajectory of the business? And then would also love more detail on where the team is finding success with more specialized and complex restoration services like you kind of alluded to in the prepared remarks?

D. Scott Patterson: Right. Well, certainly, you know, I we have been talking about it for a few years how hard the team's been working in terms of developing and enhancing the national account roster, but also at the same time, really developing expertise in a number of different verticals. Health care and government. And, generally, developing a reputation for large loss claims. And you know, just really the last 4 to 6 weeks, I would say, we signed, as I said in my prepared comments, a number of large loss projects that will benefit us you know, over the next 18 months or so. Projects, they are not related in any way.

They are all tied to various regional weather events or specific fire or water damage claims. They you know, factories, large warehouses, government buildings, big box retail, multifamily, across North America. So it is it is a significant sort of rally for us. That certainly is enhanced our backlog and as I said, you know, Not likely to help us materially in Q3. These projects are still being scoped. The sizes are not clear. We will see some in Q4, but it is certainly gonna help us in 2027. And you had a question at right at the tail end, Steve. Can you repeat that?

Stephen Sheldon: Oh, yeah. It was just I think you answered it.

D. Scott Patterson: Just with, like, health care and government, but just, yeah, where you are seeing, I guess, importance on You asked about the I made a comment about specialty contracting and that really has evolved from our expertise and depth of experience in the health care sector. We have a number of team members that have specific certification and training around the mitigation and construction in a sensitive health care environment. And this expertise and reputation has led to other construction opportunities. In health care. And then beyond that, other contracting opportunities in general.

Stephen Sheldon: I am talking about retrofits and capital improvements and some new construction opportunities.

D. Scott Patterson: So we have been asked to submit bids on unique situations based on our experience, and we have a few wins. With some pending and, I would say, momentum building.

Stephen Sheldon: Got it. Very helpful.

D. Scott Patterson: Maybe just following up on restoration then, you know, I you talked about 5% growth in the back half of the year. So I wanna make sure I heard that right.

And then I know you do not wanna talk about next year, but you know, I guess if some of these things are starting to pick up, I mean, I know a lot can happen to flow with big storm activity, but, you know, excluding that, I guess, are we as we think about heading into next year especially the first half, some of the stuff picked up, would we be in line to have even better growth, I guess, and potentially even more than if storm activity gives you opportunities as well.

Stephen Sheldon: I guess, yeah, just how are you thinking about it in the next year?

D. Scott Patterson: Yeah. I mean, we should. it is, we are feeling good about our restoration because, you know, the pipeline where it is today. And we are just heading into storm season and who knows. Right? But we do feel good about the position we are in heading into the back half and into 2027 for sure. Great.

Analyst: Thank you.

Operator: Thank you. 1 moment for the next question.

Daryl Young: And the next question is coming from the line of Daryl Young of Stifel. Please go ahead. Hey, good morning, everyone. I wanted to touch on residential and your new cross selling initiative that you announced I think it is called Resilience First, that looks to be a concerted effort to cross sell restoration with, with residential. Could you maybe expand on what that is and the opportunity and whether there is any other cross sell opportunities you are pursuing? Expressly.

D. Scott Patterson: Yes. You know, that effort and program is between FirstService Residential and our restoration brands and roofing operations. You know, it is cross selling. But what I really think about it as a focus on bringing value to our managed communities. And differentiating FirstService Residential from its competitors. And the goal is to reduce the frequency of loss events and then so prevention and then minimizing the severity of losses. So we are talking about complementary inspections, training, education, storm preparation. You know, most of the losses we see in our communities are water losses.

And simply educating residents and property managers around water shutoff Certainly, when they leave on vacation or, you know, you get water into 1 unit, it seeps into neighboring units, and that is the typical loss scenario in our communities. And they can be prevented. And that is what we are focused on. Access to a proprietary leak detection program for our communities. If we are successful, it will reduce the number of claims, reduce the severity of loss, and drive down insurance costs for our communities.

Analyst: Again, the focus is on differentiating FirstService Residential.

Daryl Young: Got it. Okay. And then just moving to margins, performances, I would say, continue to be quite strong despite maybe a softer organic growth environment. So I am wondering if when organic growth recovers, can you can you hold the existing benefits, or will there be some costs that maybe come back as activity levels pick up? Guess, said differently, is there operating leverage still to come from here?

Jeremy Alan Rakusin: Yeah, Daryl. You gotta look at it business by business and property management. it is a lot of variable costs as we grow. And that business is performing right down the fairway. You know, we have got a little bit of margin expansion built in, as I said in my prepared comments. On the brand side, pretty well every business, and we, you know, we obviously speak about the optimistic outlook for growth in restoration. Those businesses do generate good operating leverage when you get the top line growth. Even if there are some investments that come in support of that growth, it is a net positive to the margin.

Daryl Young: Okay. that is it for me. I will get back in the queue. Thanks.

Operator: Thank you. 1 moment for the next question. Our next question is coming from the line of Erin Kyle of CIBC. Please go ahead.

Erin Kyle: Himanshu. Good morning. Thanks for taking the questions. I just wanted to go back to the roofing segment and maybe follow-up on an earlier But maybe in your view in terms of what is impacting the segment from a macro perspective, what would you say is most meaningful or substantial to customer decisions there? Is it rates, inflation? Is it is it the Middle East conflict and oil prices? All of the above. Like, what would you say really needs to change for award activity to really start converting there?

D. Scott Patterson: Well, remember, Erin, that first of all, the new construction outside of data centers is down. Year over year, and that is a big that is a big chunk of the market. So that is a driver. And a lot of new construction focused roofers have turned their attention to the reroof market. So the reroof market is probably flat nationally. But the level of competition around reroof has increased significantly. I think that everything you mentioned you know, interest rates, Mideast war, inflation, all of that is impacting both of those markets. And but you know, reroofs could be deferred, but longer term they are nondiscretionary. So it is it is a matter of time.

And I think that the competitive environment will normalize because some of the pricing is not sustainable. And particularly in a few of our markets that I have referenced, You know, Southwest Florida, is a unique situation right now. I mean, we know from our major suppliers that the market's particularly weak relative to the rest of The US. And in fact, the data we have we are off less than the market in general. And a lot of that, you know, there is a couple things going on. Hurricane Ian effectively pulled forward. A few years of reroof work, and our businesses benefited at the time.

But the last 2 years, we have seen declines off those off those peaks. And post hurricane, there were a number of roofers that expanded to Florida to capitalize on the surge. And so right now, there is overcapacity in that market, and every job is over competitive. We have a very strong position And we will we will be fine. We just need to let the market settle out The capacity will normalize. We know we know operations are pulling out and closing their doors. So it is it will just take some time. But we will be fine in Florida.

Erin Kyle: Okay. that is helpful there. And then maybe just on the M&A side, just looking at the spend year to date, last quarter, I think you flagged that there is been fewer bidders as some funds have pulled back in this environment, but know, first service m and a spend remains modest compared to historical. it is in line with 2025, which is looking back here. You know, as you think about your capital deployment here, are you taking a more conservative approach as you are evaluating targets, or how should we think about M&A spend on a go forward basis?

D. Scott Patterson: We are not necessarily taking a more conservative or approach. We are sticking to our discipline. Being patient, Frankly, we are not seeing many quality companies come to market, and certainly we are seeing fewer companies come to market I think there are fewer opportunities We are being very patient, focusing on the right partnerships and ensuring that it is a fit both in terms of service line geography and culture. So I would I would sort of confirm that we expect this year to be similar to last year. At this point based on the opportunities in our pipeline. But nothing's really changed for us. it is just the it is the number of opportunities that we are seeing.

Erin Kyle: Got it. Thank you. I will pass the line.

Operator: Thank you. 1 moment for the next question, please. Next question is coming from the line of Himanshu Gupta of Scotiabank. Please, ma'am. Please go ahead.

Himanshu Gupta: Thank you, and good morning. So first on Century Fire, which has been strong for a few years now. I mean, are we going to face tough comps at some point of time? I mean, just wondering how long these you know, tailwinds can last in this business. What makes it so special?

D. Scott Patterson: Not it is not in our sight line, Himanshu. We continue to experience growth in both the sprinkler and alarm installation side. So half the business. And on the repair service and inspection side. You know, we are we are seeing strength in multifamily. We have talked about some exposure to data center work, but it is it is you know, approximately 15% of our backlog is data center. So it is not the key driver. We are really throughout our branch system, We just have we just have a strong local branch network that are winning And, you know, we grew the backlog sequentially in the second quarter. And it is it is well up over prior year.

So we expect continued growth as I said in my prepared comments.

Himanshu Gupta: that is great color. Thank you. And then moving to, obviously, roofing, a lot of questions have been asked. I think you mentioned already elaborated on the Florida branch. I am just wondering on Las Vegas. We saw a fair bit of the weakness last year as well. In that branch. And again, I think you mentioned in Q2. Is there anything particular anything peculiar about this market, Las Vegas? Leading to the softness?

D. Scott Patterson: Well, again, there is a couple things there. The market the market is weak, and we see that in our other businesses. So we know there is weakness in Vegas that is more significant than anything we might see nationally. The other issue for us in this market is that we are more weighted towards new construction. it is well over 50%. Versus 30% on average across our portfolio. So it is really that folk that historical reliance on new construction that and we were strong in that business in 2023-2024.

So we are coming off 2 years in a row from that from some real strength new construction strength in Vegas, including some very large projects in 2024 Got it.

Himanshu Gupta: That was very helpful. And then if I look at overall roofing, you know, organic growth was down, like 10% in Q2. Is it like new roofing is down, like 20% or 30%? Is that the lion's share of all this kind of performance happening? For the entire segment I am talking now?

D. Scott Patterson: Yeah. I mean, new construction. I you know what? I actually have not looked at it that way. Maybe Jeremy has, but it is yeah. I would definitely wait towards new construction. Yeah.

Himanshu Gupta: And industrial warehouse deliveries you know, if that does not improve next year rather down double digits so then that will further push in that regard.

D. Scott Patterson: Yeah.

Himanshu Gupta: I am not sure I understand the question, Himanshu. So I am saying that if new roofing is tied to industrial warehouse construction new construction, Right.

D. Scott Patterson: And then and if industrial warehouse construction is likely to be down double digits next year.

Himanshu Gupta: In The US. That will not help the roofing recovery in the near term.

D. Scott Patterson: Yeah. It will not it will not necessarily help our recovery, but we are our backlog heavily weighted right now towards reroof. And so that is really our focus go forward. Our recovery is gonna be driven by reroof. Construction will certainly help. A great when it happens. Got it.

Himanshu Gupta: Just 1 last question on capital allocation. Obviously, is a big focus now. Have you reached a point when M&A is less accretive than buyback? Or are there where you will still prefer M&A over buyback?

Jeremy Alan Rakusin: Hey, Max. it is it is really I mean, we target a mid teens or return on any of our capital deployment initiatives. And, again, growing through tuck under acquisitions and adding you know, strategic assets to our to our brands is really the primary focus. But again, we and I said it earlier, we are able to do both at this juncture And given the you know, the discount in the valuation of our business versus some other assets, We just think it makes it is compelling or highly compelling. That we buy back our stock at this juncture.

So we are we are not at the point at know, with our with our conservative leverage to you know, We are able to do both at this point, and we are not gonna compromise a normal bread and butter tuck under program. it is just balancing that versus the opportunities. And as Scott said, some of the opportunities are a little lesser today. And so we are pursuing both paths. Equally.

Himanshu Gupta: Fantastic. Thank you so much, and I will turn back.

Operator: Thank you. 1 moment, please. Next question is coming from the line of Frederic Bastien of Raymond James. Please go ahead.

Frederic Bastien: Thank you. Scott, I believe you are in the midst of a brand optimizing exercise at our sort of investing in the platform. Can you can you offer an update on that?

D. Scott Patterson: Yeah. We are continuing and committed to it. it is it is really implementation of enterprise wide financial system that pulls together 14 different operating systems. It will give us much better information. And ability to certainly ability to forecast and manage the businesses. So that continues. it is on track. And then there is you know, we continue to invest in people and generally in the platform. Frederic.

Frederic Bastien: We, as I said in my prepared comments, we are committed to the long term opportunity in this business and continued committed to continuing to invest. Will that exercise yield in your view, better growth opportunities or enhance margins or both?

D. Scott Patterson: Or I think it will enhance margins, not materially. it is not something we are sort of modeling out. But it just is what we need to do to pull the business together and move forward strategically. We need better information. And it is very similar to what we did at First Service Residential years ago and FirstOn Site more recently and Century Fire. it is a similar exercise. Just puts us in a better long term position to grow this business.

Frederic Bastien: Understood. that is that is helpful. Jeremy, I have 1 for you. Can you clarify if the 1.8 million shares bought back include purchases in July? Or does that just pertain to the first 6 months of the year?

Jeremy Alan Rakusin: First 6 months of the year.

Frederic Bastien: Can you indicate or tell us whether you have been active since?

Jeremy Alan Rakusin: No. We were in blackout. We had an automatic share purchase program, and the trigger points were not activated. We had to do it before we went into blackout, so the parameters were not But we will be out of blackout on Monday. And then we, you know, we can we can be active, you know, with without our hands tied due to the backups.

Frederic Bastien: Okay. Got it. Alright. Thanks. that is all I have.

Operator: Thank you. 1 moment for the next question. And our next question is coming from the line of Tim James of TD Securities. Please go ahead.

Tim James: Thank you. Scott, I am wondering, you have talked about fewer M&A opportunities coming to the market. I am just wondering if you could talk about, like, in your view, why that is? It seems there are some challenging conditions in roofing and to some extent in restoration. Part of me would have thought that maybe would have kind of churned out a couple more opportunities, and so either it would be a greater set. But I am I am just curious on your thoughts as to why you think there are fewer businesses coming to market.

D. Scott Patterson: Well, I think in those 2 areas, Tim, it is because they are not performing And so the owners are they are coming off numbers that were better in 23, 24. And, they wanna get back there before they before they put the company on the market. And many of these businesses are owned by private equity, and so if the if the companies are not performing would mean that they would need to crystallize a loss.

Tim James: And I think that they are they are reluctant to do that at this point. Okay. that is helpful.

D. Scott Patterson: My second question really looking big picture here, do you think there are any structural changes in any of your businesses?

Tim James: Or you know, structural changes in, I guess, your the ability to roll out capital? And, I guess, what I am thinking there is about PE and multiples being higher. Or would you say the challenge is that you know, the business across the business, you are seeing today are just purely related to market forces that should normalize and kinda get you back on the path with kinda the same structural reasons for your strategy as has been the case for many years?

D. Scott Patterson: Well, I do not think that there are structural changes in the in the business models. As it relates to acquisitions, certainly, the level of private equity capital that we are competing with you know, increases every year. So that has changed. Over the years. And I guess could be defined as a structural change in how we operate. But in terms of our businesses, and the fundamentals, I do not see any change. Does that get at what you were asking?

Tim James: Yeah. Yeah. I am just, you know, okay. Thinking as if we wanna kinda look forward and pick our time when we think market conditions normalize there is no reason to think for service is any different than it was, you know, prior to this challenging period.

D. Scott Patterson: No. I-- yeah. Right. Okay.

Analyst: Thank you.

Operator: Thank you. And that does conclude today's programming. Thank you all for participating. You may now disconnect.