Tim James

Tim James asked about FirstService's M&A strategy if valuations remain high through 2026 and 2027, specifically whether they would change their risk profile or pay higher valuations, and if the competitive pressure in the roofing business is creating opportunities for acquisitions of struggling businesses.

Answer

CEO D. Scott Patterson stated that the company will not change its risk profile unless returns change to meet hurdle rates, continuing to focus on solid tuck-under acquisitions at comfortable valuations. He noted that FirstService differentiates itself from private equity by being a 'forever owner,' attracting families and owners seeking long-term partnerships. Patterson also confirmed that competitive pressures in roofing are indeed creating opportunities, as some sellers are coming to terms with lower valuations based on recent performance.

Tim James asked if persistently high M&A valuations through 2026 and 2027 would alter FirstService's acquisition approach, specifically if they would change their risk profile or pay higher valuations. He also asked if the competitive pressure and margin compression in the roofing business were creating opportunities for businesses to seek a sale.

Answer

CEO D. Scott Patterson stated that the M&A approach would remain consistent with 2025, focusing on solid tuck-unders at comfortable valuations. He highlighted the ability to differentiate from private equity by offering a 'forever owner' model. He affirmed they would not change their risk profile unless returns met hurdle rates and anticipated 2026 capital allocation to be similar to 2025. Mr. Patterson agreed that competitive pressures in roofing are leading to sale opportunities, as sellers come to terms with lower valuations based on recent results.

Tim James asked about the relationship between pricing and costs across different segments, specifically if pricing power is sufficient to offset cost pressures and if there's an opportunity to push pricing for higher margins. He also inquired about any particular cost or efficiency initiatives planned for the FirstService Brands business to drive net margin improvement or maintain competitiveness.

Answer

Jeremy Rakusin (CFO) stated that FirstService Residential is in good pricing equilibrium, Century Fire has good pricing power, and Home Improvement flexes pricing without extensive promotions. He noted that roofing could see increased costs (labor, subcontractors) and competition impacting pricing/margins, with 2026 budgets pending. Scott Patterson (CEO) emphasized that efficiency is an ongoing focus across all businesses, highlighting past strides in home improvement and cost streamlining in restoration. He did not call out any major initiatives for significant margin improvement in the Brands division for 2026 but would communicate if any arise during budget discussions.

Tim James asked about the relationship between pricing and costs across different segments, inquiring about the company's pricing power to offset cost pressures and potential opportunities to leverage pricing for margin expansion in the future. He also inquired about specific cost-side or efficiency initiatives within the Brands business, aiming to understand how the company plans to maintain or improve cost-competitiveness and efficiency going forward, beyond driving net margin improvement.

Answer

Jeremy Rakusin (CFO) stated that FirstService Residential is in a good equilibrium, being a price-competitive industry requiring efficiency to maintain margins. He noted Century Fire has consistent pricing power, Home Improvement flexes pricing to maintain growth and profitability without extensive promotions, and roofing might see an uptick in costs due to labor/subcontractor availability and competition, potentially impacting pricing and margins. He deferred 2026 outlook to the February call. Scott Patterson (CEO) confirmed that the company continuously focuses on efficiency and healthy profitability across all brands, citing past strides in home improvement and restoration, and ongoing efforts in FirstService Residential. He did not call out any major initiatives for significant margin improvement in the Brands division for 2026, deferring further details to the budget discussions and February call.

Tim James from TD Securities requested details on recent residential contract wins in Texas, Toronto, and Chicago, and asked about the competitive implications of the changing insurance landscape for the restoration business.

Answer

D. Patterson (executive) noted that the recent significant contract wins were predominantly in the high-rise category, a key area of expertise for the company. Regarding the insurance landscape, he stated it's not clear if there's a specific competitive advantage, but the company's scale and capital allow it to be nimble and invest in marketing to target customers in high-risk areas as needed.

Tim James from TD Cowen asked about the trend towards fleet and fractional operators in business aviation and what CAE is doing strategically to capitalize on it.

Answer

CEO Marc Parent highlighted the full acquisition of SimCom as a key strategic move, which secured training exclusivity with major fractional operator Flexjet. He explained that CAE's airline-style training capabilities are precisely what large fractional operators require, positioning the company very well to serve this growing market segment and the demand for large-cabin jet training.

Tim James asked about the potential opportunities for CAE resulting from the Canadian government's plan to nearly double its annual defense spending by 2032, given CAE's already strong position in the country.

Answer

President and CEO Marc Parent expressed high confidence that the increased spending will drive significant growth for CAE. He emphasized that as a designated 'strategic partner' to the Canadian government, CAE expects to receive a 'disproportionate share' of the new opportunities, as all new military platforms—from aircraft to ships—require extensive training, which is CAE's core competency.