FirstService Corp
TSX:FSV
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
193.9067
268.86
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
FirstService Corp
You don't have any saved screeners yet
Welcome to the third 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 differ 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 on the company's Annual Report on Form 40-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded, October 23, 2019.I would now like to turn the call over to Chief Executive Officer, Mr. Scott Patterson. Please go ahead, sir.
Thank you, Denise, and welcome, ladies and gentlemen to our third quarter conference call. Thank you for joining today. I'm pleased to be here with our CFO, Jeremy Rakusin, to walk you through a very strong growth quarter for us, which reflected high single-digit organic growth balanced across both divisions and the inclusion of Global Restoration. I will start with a high-level review and some quarterly highlights, and then Jeremy will provide a more detailed review of our financial results.Revenues were up 33% over the prior year with organic growth at a robust 8% and the balance from acquisitions, primarily the acquisition of Global Restoration, which closed on June 21 and is included in our results on a full quarter basis for the first time. EBITDA was up 30% year-over-year and reflects 20 basis points of margin dilution, primarily as a result of the mix change from the inclusion of Global. And finally, earnings per share were $0.92, up 3% in the face of higher interest cost, a higher share count and a higher catch rate. Jeremy will flush this out in more detail in a few minutes.At FirstService Residential revenues grew 13% in total, 8% organically. The 8% organic growth represents the strongest level we have reported in over 3 years and reflects robust sales activity late in 2018 and for the first 6 months of 2019. The sales success has been weighted towards larger communities with significant staffing requirements and higher-than-average revenue. These have included many large high-rise and master-planned communities, which have been areas of focus for us over the last several years. Growth was broad based across all regions, but with particular strength in Florida and California, our 2 largest markets. We also generated strong growth in our Arizona, Nevada and British Columbia markets. Looking forward to Q4, at FirstService Residential, we expect to finish the year strong and start to see the organic growth trend back to the levels we have experienced over the last few years, which reflects a more sustainable long-term balance between sales and retention.Now turning to FirstService Brands. Revenues for the quarter were up 70%, 7-0, with organic growth at 8% and the balance from several acquisitions over the last year, including, of course, Global Restoration. The organic growth at FirstService Brands was driven, again, this quarter by double-digit increases at our home improvement brands, California Closets, CertaPro Painters and Floor Coverings International. The home improvement market has continued to be relatively strong through 2019, driven primarily by further increases in home prices and home equity. Growth of these brands, particularly CertaPro benefited from solid recruiting and favorable weather during the quarter, which enabled us to increase production and work through some backlogs. Century Fire also had a strong quarter with low double-digit organic growth, the commercial construction market continues to trend up, which helped drive the contracting in tenant finished side of Century's business, and we continue to show very strong growth in the repair, service and inspection division.The strength at these brands more than offset 10% revenue declines at our company owned Paul Davis operations during the quarter. Paul Davis benefited at the tail end of the prior year quarter from claims relating to hurricanes Florence and Michael. This level of activity was not replicated in the current year. Absent storm activity, Paul Davis had a solid quarter with year-over-year growth in many markets and improved positioning and penetration with national insurance carriers. We're pleased with our progress and confident in our direction with the Paul Davis brand, which focuses on residential and light commercial restoration work.Global Restoration is our new commercial and large loss platform, and Q3 represented our first full quarter since acquisition. Global generated solid results during the quarter, which met our forecast. Similar to Paul Davis, the reduced storm activity relative to the prior year led to a 10% reduction in Global revenues when compared to Q3 of 2018 when we did not own the company. Global has national contracts with many Fortune 1000 companies that were impacted by Florence and Michael, which drove higher revenues in the prior year. Q3 of this year was unusually quiet in terms of storm activity and estimated to be significantly lower than the long-term historical average. The fact that Global is only 10% down is a testament to the strong progress we are making in securing additional national accounts and increasing our share of existing accounts. Apart from the strong sales and marketing activity, we are also very pleased with the onboarding of Global and the strategic investments we are making to enhance the platform. During the quarter, we made investments in IT infrastructure, HR, marketing and sales, both in terms of new personnel and platform technology, all towards enabling us to scale with pace. This is similar to the path we have followed successfully at FirstService Residential, it is familiar to us, including a rebranding initiative, which was kicked off during the quarter and will lead to a new North American brand later in 2020. We have huge aspirations in this business and are committed to building the leading restoration brand in the market. And these investments are all reflective of that ambition.Looking forward at our FirstService Brands division, we expect our home improvement brands and Century Fire to have another strong quarter to finish the year. But this growth will be largely offset by year-over-year declines at Paul Davis, which had a very strong Q4 in 2018, driven by work related to hurricanes and the California wildfires. Global has a strong backlog, which has grown steadily through the year and is on track for a solid Q4. We expect to hit our internal forecast for Global that do not include any area-wide storm activity. Significant regional weather events over the next 2 months would add to our Q4 results.Just before I pass off to Jeremy, I want to summarize our operating results by saying outside of restoration, which was impacted by mild weather patterns, we had a great quarter across the board and we expect a similar story in Q4.Jeremy?
Thank you, Scott. Good morning, everyone. As you've just heard, we reported solid third quarter financial results, the consolidated performance included revenues at $672 million, adjusted EBITDA at $77.1 million and adjusted EPS at $0.92, up 33%, 30% and 3% respectively. I will walk through the drivers for each of these Q3 figures in a moment.In terms of our 9 months year-to-date performance, our consolidated results line up as follows: revenues of $1.73 billion, up from $1.43 billion in the prior year period, an increase of 21%, including 7% organic growth. Adjusted EBITDA at $171.3 million, a 21% increase over the $142 million last year, driven by top line growth with the consolidated margin matching last year's 9.9%, and adjusted EPS of $2.38, up 20% versus $1.99 per share reported for the same period last year. As always, our adjustments to operating earnings and GAAP EPS arriving at adjusted EBITDA and adjusted EPS respectively are summarized in this morning's press release and are consistent with our disclosures in prior periods.I'll now walk through our segmented highlights for the third quarter. At FirstService Residential, we generated revenues of $375.2 million, an increase of 13% year-over-year. Our EBITDA for the division increased 11% to $39.8 million with our margin declining modestly by 20 basis points to 10.6%. We have called out in recent earnings calls that our quarterly margin trend would bounce around from here on in as the business morphs into a top line growth-driven story, and so profitability for the division was in line with expectations.Shifting over to our FirstService Brands division, we reported revenues of $297.1 million for the third quarter, an increase of 70% versus the prior year period. EBITDA during the quarter increased to $40.8 million, up 53% over the prior year. Our third quarter margin came in at 13.7%, down compared to 15.2% in last year's Q3. The margin decline was attributable to our restoration platform, a couple of factors in particular. First, the addition of our large Global Restoration business contributes significantly to the division but lower margins than the rest of the division. So acquisition makes this a meaningful contributor to the margin dilution. Second, as Scott mentioned earlier, the lack of weather-related activity reducing the top line at both our Global and Paul Davis Restoration businesses had a more pronounced impact at the EBITDA line. This negative operating leverage is a combination of the fixed cost structure associated with these operations and the recent additional investments that Scott cited to drive longer-term sustainable growth across this platform. These dynamics will continue to play out in the upcoming fourth quarter as well and so we expect that absent elevated weather-driven activity levels, our margin in the Brand segment is likely to be down year-over-year.Looking now at the third quarter P&L below the EBITDA line, driving our more modest earnings growth, our depreciation, amortization and interest expenses were at higher levels, reflecting a full quarter impact to the large Global acquisition, which we closed near the end of June. 2 other items diluted our adjusted earnings per share for the quarter. First, our tax rate was modestly higher at 29% versus our annual mid-20% run rate. While a similar elevated tax rate level will apply in Q4, the annual tax rate for our full year 2019 will still compute to 25% or a little lower, in line with our guidance at the beginning of the year. And separately, we now have a high of 39.5 million share count after completing the determination of the long-term incentive arrangement with FirstService's founding Chairman a few months ago.Shifting over to our cash flow in the third quarter. Cash flow from operations before working capital changes was $52.6 million, a 16% increase over the prior year quarter. Operating cash flow after working capital was $20 million. However, when adjusted for a little over $40 million paid during the Q3 period as part of the original transaction terms for the long-term incentive arrangement termination, normalized cash flow after working capital would tally more than $60 million, up 80% over last year's third quarter cash flow. In terms of capital deployment, we incurred $12 million of capital expenditures during the third quarter, and have now allocated $34 million year-to-date towards our ongoing operations. Our CapEx for the full year should come in a little lower than our annual target of $50 million. On the acquisition front in Q3, we deployed a little under $10 million towards our typical tuck-under acquisition program. Volume of closed transactions during the quarter was modest, but our deal pipeline remains quite robust across our service lines.Finally, to close up with our balance sheet. At quarter end, our net debt was $843 million, resulting in leverage of 3.2x net debt to trailing 12-months EBITDA. Our liquidity and debt capacity remained strong with $200 million of the total undrawn availability under our credit facility and cash on hand. Both leverage and liquidity are in line with the levels at the end of Q2, reflecting the impact of the large Global Restoration acquisition. We remain committed, as always, to maintaining a strong balance sheet that continues to support the growth of all of our businesses.That now wraps up my prepared comments. During our next scheduled earnings call in early February summarizing our 2019 year-end results, we will be in a position to provide some commentary around our outlook for 2020.I would now ask the operator to please open up the call to questions.
[Operator Instructions] Your first question comes from George Doumet with Scotiabank.
Can you talk to the EBITDA margin performance?
The EBITDA margin performance for overall?
Yes. Just the GRH and company-owned, just to get a sense of the margin performance, just trying to get a sense of the delta last year versus this year.
Yes. So we've been focusing on the brands division, a big chunk of the margin dilution going down from 15-plus percent to high 13% would have been layering in Global Restoration. Last year they would've had margins above 10%; this quarter, more in and around 10-ish percent. That's a function of declines in activity levels and also the investments that Scott cited in terms of growing this out for long-term growth, but also just mathematically, bringing that business in to a division that did 15% last year coming in at lower margins would account for the biggest chunk of the brand's dilution.
No, I was referring maybe not at the segment level but just at the operations, like, just GRH itself and maybe Paul Davis company on itself, how they -- this year's -- this quarter's performance versus last quarter's performance, just on a margin level.
Revenue is down 10% on -- due to low activity levels. EBITDA down more than 10%, margin's down due to the fixed cost structure.
Okay. That makes sense. And just -- I know it's early days, but can you maybe give us an update on the plans for filling out the vender network at all at GRH? And would you guys expect that effort at all to impact margins?
Well, the vendor network is filled out, George, but I think maybe you're referring to layering in the Paul Davis network as part of the global vendor network. And that certainly started during the quarter, and we expect that to continue. The net impact of that would be to increase revenues at Paul Davis, the margin to -- at the global level will not change and really it won't impact the margins at Paul Davis, it's more of a top line revenue driver. But very positive, and we made some -- definitely made some progress on that during the third quarter.
I agree for that. And on the -- on some of the profitability headwinds that you guys called out at the residential, some strong organic growth. But can you maybe call them out, is it labor, is it mix? Where do you expect those to be kind of in the next couple of quarters?
Yes. It's labor, unless we have operating efficiency initiatives, which we've had for many years, unless we have that in addition to the typical pricing we're getting on our contracts, it's very hard for us to get big margin increases. So we're obviously dealing in a tight labor market, tough to get good people, wage inflation perpetuated through. And we're getting price that matches that, but the operating efficiencies that we're layering on top to generate the margin improvements have been largely had. the team's always looking for future opportunities and it will continue to do so. But we said the margins would bounce around, could be up or down on any given quarter. I would say for the balance of the year, probably much of the same as Q3, but for the full year, we're going to hold margins from last year's 9%, pretty flattish. We'll go through budgeting with the team to -- as an outlook for next year, but probably more of the same.
Okay, that's great. So one last one, if I may. On -- Jeremy, maybe on the working capital. It seems like a sizable drag in the quarter. I think we're running closer to 2% of revenues, I think typically we were closer to 1%. I guess how should we think of that number going forward maybe after we kind of layer on GRH?
Yes. Before GRH, our working capital usage was 1 -- on a normalized basis, in some quarters we've had some anomalies, but would typically be 1-ish percent of revenues as a use and we see that ticking up a little bit. Look there's going to be seasonality at Global, particularly in the back half of the year as -- if you get a year-over-year storm activity levels, insurance claims, longer days outstanding on receivables, all of that is going to move the trends around working capital intra year. But on the full year basis, it will take up our working capital usage a little bit, a rough sense is maybe 1.5% of revenues versus 1%, but not materially so. This quarter, as I mentioned, there was some other things, AR was actually down and we had some other money going out the door, as I spoke about in my prepared comments.
Your next question comes from Stephen Sheldon with William Blair.
So you'd communicated this pretty clearly that it's the first quarter in a long time where residential adjusted EBITDA margins were down year-over-year. So you've given some color on that, but just wanted to ask, one, the appropriate expectations at this point for margins in residential over the next few years.And two, if there's any potential impact from a revenue mix shift and specifically, do you see stronger margins in high-rise contracts versus maybe other property types?
Yes. Just on the latter part of your question, Stephen, the mix of property types and contracts is not a real driver at all on the margin front. Some of those property types that we're targeting, high-rise, master-planned, lifestyle, it afford us more revenue associated with those properties and ones where we can differentiate better, but the margin profile is pretty comparable to the rest of our roster of properties.And in terms of where we see margins, our best visibility for the next couple of years is pretty well in line with where we finish '18, and where we think we'll finish '19, kind of flattish. And we'll look to work with the team and see if there's others optimizations, but it's not going to be a lot of margin improvement from here on in, as I said in my prepared comments, this is primarily, if not all, top line driven.
Okay. Got it. And then I guess second, how has now owning both Global Restoration and Paul Davis impacted your broader restoration pipeline? Have you become an even more attractive potential acquirer now than you were before the Global Restoration deal? And have you seen any change in inbound interest since the deal was announced in May?
I think that's true, Stephen, I mean, clearly, we are a leading player in the restoration market in North America. The whole market has taken notice and if -- there certainly has been some inbound and we've been very active in trying to bolster the pipeline. And I can assure you that everybody is taking our call and wanting to know more about our strategy and our path forward. So I certainly think that, that's true and the pipeline is quite active. We've been very busy this quarter, wanting to get off to a strong start in commercial restoration.
Your next question comes from Stephen MacLeod with BMO Capital Markets.
Just a couple of questions here. With respect to the FirstService Brands business, you called out sort of the shortfall on a year-over-year basis from PDR and Global Restoration. Was all of that attributable to -- like, would that shortfall number all be attributable to increased hurricane activity last year? Or is there anything else, any other areas that were weaker on a year-over-year basis?
No. It's all tied into the 2 hurricanes and the California wildfires in both cases. We did -- at both platforms, probably over 20% of our revenue in Q3 last year was related to those events, and it was -- similar area-wide event activity this year would have been less than 5%. So the fact that they were only down 10% really speaks to the sort of day-to-day organic growth that they achieved during the quarter.
Right. Okay. That's helpful. And then switching to the FSR business. You talked about the sales initiative that was driving pretty significant organic growth through the first 3 quarters of the year. And peeking in Q3, just curious why would you take your -- why are you taking the foot off the gas pedal with respect to that specific sales initiative? Or is it just finding a better balance between new contracts and attrition rates?
Yes. It wasn't a specific initiative. I would say that we continue to refine our approach. We become much more focused and specific in targeting certain properties and certain verticals and we talk about those, the high-rise and the master-planned and the active adult. I think, generally, our sales teams are more experienced in finding their rhythm. So we're not taking our foot off the pedal. I think what's happened is, the competition has responded and primarily with price, it's the same old story. It's a very price-competitive market, and many to most of our competition the -- really the only practical way that they can compete with this is on price. So our sales did slow in Q3, and we expect them to be slower in Q4, and so we do see that balance between sales and retention sort of settling back in. And we will have, we continue to work on it and we will see surges in the future. It's very fluid. But long term, I would suggest that we believe the organic growth rate in this business is mid-single digit. It'll pop up or pop down from that level, but long term, we still believe it's mid-single digit.
Okay. Okay. And then just on the tax rate. You were up in Q3, and Jeremy, you talked about the full year still coming in, in that mid-teens range. But as we roll into 2020, is Global Restoration having an upward impact to the tax rate? Is that the way to think -- is that why it's higher in Q3 and Q4?
No. It's a good question, Stephen. No. I mean 2020 would sure be in line with 2019. We think we'll be at 25%, perhaps a bit better in 2020. The quarterly differentials this quarter were really a function of some stock-based incentive comp that gets deductions. They were pre-spin-off options, they're rolling off completely now. We're done with that middle of 2019, and typically they get exercised in the first half of the year and that's been a pattern each year, but we're not getting any of that in the back half of this year. Doesn't change our full year your tax rate, though.
Your next question comes from Matt Logan with RBC Capital Markets.
Scott, on your huge aspirations for the restoration business, can you talk a little bit about the potential growth and maybe how we should think about the evolution of the character of the earnings over the next 3 to 5 years?
Ask that a different way, Matt. What do you mean?
I guess, one, how should we think about the absolute growth? And as you execute some of your initiatives, do you see less earnings volatility going forward?
Well, listen, I think area-wide events will always be an aspect of this business. Our goal is to rely on that less than the market in general does. And on average, Global over the last 6 or 7 years, about 15% to 20% of their revenue has been from storm activity. We're not necessarily targeting to reduce that, but we are very, very focused on adding new national accounts and increasing our share of every national account, and thereby, driving organic growth and ensuring that we're getting the day-to-day restoration work from these accounts.So organic growth, like all of our businesses, will be #1. We have to be winning day-to-day, and then we look to enhance that with tuck-under acquisition and we're very focused on expanding our geography and increasing our service capability in some areas to meet the needs of our national customers. I don't know if that answers your question, but it should resemble to rest of our business in terms of the revenue growth going forward.
That's good color. And maybe just thinking about the quarter, how do you think the restoration business performed relative to, say, the broader industry?
We think a lot about that, and it's not crystal clear, the metrics out there to measure it, so it's more of a field thing. But certainly if we hadn't grown our platforms, we would be down by more than 10%, our revenue, and so that gives us some comfort. We did, at Global, we added a number of national contracts, and we believe that we improved our positioning with a number of contracts. That didn't translate during the quarter into revenue. We will know over time with more clarity, but I will tell you that we're very pleased with the progress at both Paul Davis and at Global. Still very early days, obviously, with the Global team.
And maybe thinking about your business outside of the restoration segments. Are you seeing any signs of the slowdown in renovation spending or perhaps conversely some incremental support from lower interest rates?
Well, the sales of existing homes were up in Q3, which was in response to the lower interest rates and does help home improvement spending. It was down the previous 2, 3, 4 quarters. Home prices continue to increase, which is perhaps the biggest driver. So there's still support and tailwinds in the home improvement market, and we've seen that, particularly, at Cal Closets and CertaPro Painters, but we did -- leads are slowing, I would say, but still robust.
I suppose they're still robust, you've been able to generate north of 10% organic growth, so that seems to be positive.
Right.
Are you seeing the same labor pressures in your brands division as you are in the residential division?
Yes. Absolutely. We feel like we had a strong quarter on the labor fronts just because the production was so strong, which means that we were able to define the cruise, find the frontline labor to install or produce the work and as I mentioned in my prepared comments, weather was a big factor. It had held us back in the spring, particularly in the southeast of the U.S., it was very, very wet. But we had a dry third quarter and that certainly helped drive the organic growth at Cal Closets, CertaPro and Century Fire in particular.
And maybe just last question for me on FirstService Brands. Thinking about the organic growth for Q4, should we think about that come in the low single-digit range or flattish for Q4, some of the lower cat activities offset -- offsetting the growth in the rest of the business?
Yes. Flattish to slightly down perhaps, and it's simply a result of the strong Q4 that Paul Davis had last year, over 30% of our company-owned revenue of Paul Davis in Q4 last year is from the hurricanes and California wildfires and we don't expect to see that revenue this year.
Your next question comes from Daryl Young with TD Securities.
A couple of high-level questions for me. First off, it seems like Century Fire is doing very well, and I wanted to get a sense of if there was any plans to potentially cross sell services between Century Fire and maybe some of the commercial restoration operations? And maybe if there is a longer-term strategy there?
Longer-term strategy, for sure. I mean there is an interesting tie between Century and Global and Paul Davis when sprinklers burst and water is put on the ground. A fire company and a restoration company are the first calls. So there's an interesting crossover, but it will be long-term opportunity, Daryl. Century, they had another very strong quarter, 10% plus organic growth and they have -- their backlog's never been higher and so they are very, very focused on producing the work that they have in their backlog, taking care of their current customers, it's -- we're not really in a position to push more in their direction.
Got it, okay. And then secondly, just in August, there was an acquisition by an insurance company of a restoration company here in Canada. And I was just wondering if there is -- that's a trend you're seeing across the U.S. as well? Or if there's an appetite for more in-sourcing of restoration services by the insurers?
Yes. That was interesting, I guess, for the benefit of others, Intact insurance bought On Side Restoration. On Side is a mid-tier Canadian restoration company, not to be confused with our brand in Canada, FirstOnSite. And it's -- we're not sure what the strategy is, I guess, they want to cap their restoration company. The risk is that other insurance companies will drop On Side, which would impact the value of their investment. So watching closely. That's the only instance of that we've seen and we haven't heard of any other situations like that. Net-net for us, it's not material just because of the size of On Side, they can't do all of Intact's work, so we -- Intact is a customer of ours. And we expect they will continue to be a customer, but, yes, watching closely, I would say.
Okay. Great. And then final question. Valuations in the Restoration and the Fire space, has there been any change in terms of what the tuck-unders are trading at and transacting at in the market today?
I would say that they are trending up in both cases because of the private equity interest in both of those markets, whether it's direct from a private equity firm or from a platform that's backed by private equity. We, particularly at Fire, we're focused on smaller tuck-unders, but we still see it there. So trending up.
Okay. Great. But still reasonable valuations and so lots of targets on the horizon.
Yes. Yes.
Your next question comes from Marc Riddick with Sidoti.
I wanted to touch specifically, on comments that you made regarding some of the investments and brand work that you have in front of you. I was wondering if you could put a little more detail around that, what your plans are and the time frame that you have in mind. And also if you could sort of quantify what we should be thinking about as far as those investment expenses going forward.
Right. Well, I mentioned our aspiration in my prepared comments, and we are committed to building the #1 commercial restoration brand in the market. Global, today, is not a platform that can scale to $1 billion, $2 billion without investment, and so we -- that's what we started on in the quarter. And that is enterprise-wide technology platforms, CRM, HR, we operate under 3 or 4 different platforms today, and we made some significant hires, a Chief Risk Officer, Chief Marketing Officer. So we -- this is a path that we're familiar with. This is a path we went down with FirstService Residential. We will be measured in, I guess, how quickly or aggressively move down this path, but it's one we -- that's clear to us. And I mentioned also the brand journey, that's a part of it. We have 4 different brands today, as we do acquisitions that will increase, so we're moving to one brand. We expect that to launch in -- later in 2020. It's -- I mean it's very exciting. We're very excited about the alignment that we have with the Global team and the direction we're taking together. It will be a number of years as it has been at FirstService Residential. In terms of the quantum, that's something that is -- we don't have mapped out. We spent a few million dollars this year and it will -- we're just getting into our budget season and we'll sort of lay that out for the next several years between now and year-end.
Okay. But the concept of sort of -- the idea of, I guess, ultimately consolidating to one brand is what we're shooting for at some point in 2020 as far as that being client-facing, that folks will end up seeing, that your customers will end up seeing, that's something that we should view as a 2020 event?
Yes. And just for -- just to be clear, that does not include Paul Davis. This -- I'm speaking only about the commercial and large loss restoration space where we operate under -- program today. Paul Davis will continue to be our brand in the residential and light commercial space, and we have huge aspirations for that brand as well.
Okay. So as the -- and forgive me, I don't know if you're planning on going over this at the moment, but is the idea to have one brand for both the states -- that covers the States and Canada?
Yes.
Okay. And then -- now is this something that -- is there anybody that you're working with to undertake that particular journey, like the advertising phase or what have you. Is that something that you guys are mapping out yourself?
No. We've -- we're in stride. We have some advisers and we're well underway.
[Operator Instructions] Your next question comes from Stephen MacLeod with BMO Capital Markets.
I just had a quick follow-up question. I just wanted to clarify some of -- Scott, your commentary. I think it was around the FSV organic growth. And up against a tough comp from last year, I think it was 14%, looks like. Did you say you expect organic growth to be flattish to slightly down on the year-over-year basis?
Yes. In brands, Q4.
Yes. Okay. That's great. I just wanted to clarify that.
And there are no further questions queued up at this time, I'll turn the call back over to Mr. Scott Patterson.
Thank you, Denise, and thank you, everyone for dialing in today. And we look forward to early February year-end call.
This concludes today's conference call. You may now disconnect.