MEMPHIS, Tenn. — The ServiceMaster Company, parent company of Terminix and other brands, today announced preliminary, unaudited first-quarter 2012 results, led by a 6.5 percent increase in operating revenue, to $655 million, and a 130 percent increase in operating income, to $55 million, compared to the same period in 2011. The company’s operating performance increased 32.5% to $101 million compared to the same period in 2011.
“I’m extremely pleased by our first-quarter results, which reflect the hard work and continued support of our teams to grow our business rapidly by transforming our customers’ experiences,” said ServiceMaster CEO Hank Mullany. “Not only did we show improved financial results during the quarter, but we also saw improvements in overall customer satisfaction and, as a result, customer retention.
“Although the first quarter constitutes only a small portion of our total year results, we’re certainly off to a strong start and making great strides in fulfilling our mission to simplify and improve the quality of our customers’ lives.”
Preliminary First-Quarter Segment Information (for Terminix and TruGreen) for Continuing Operations
Terminix reported first-quarter operating revenue of $311 million, an increase of 9.6 percent over first-quarter 2011 results. Pest control revenue increased 8 percent over first quarter 2011 results reflecting a 5.7 percent increase in pest control customer counts, a $2.7 million increase in other revenue (primarily bed bug services) and a 0.3 percent increase in average annual account value. The increase in pest control customer counts was driven by an increase in new unit sales, acquisitions and a 20 basis point increase in the customer retention rate. Termite revenue increased 10 percent over first quarter 2011 results, reflecting an 11 percent increase in new unit sales, the favorable timing of renewal revenue and a 2.6 percent increase in average price of new and renewal units. This was partially offset by a 0.9 percent decline in average renewal customer counts. Product distribution revenue increased $3.1 million in the first-quarter of 2012 over first-quarter 2011 results.
First-quarter operating performance was $90 million, an increase of 25 percent compared to first-quarter 2011 results. The improvement was primarily due to the impact of higher operating revenue, production labor efficiencies, a reduction in sales and marketing expense and termite damage claims, other cost reductions realized through ongoing initiatives and the favorable impact of acquiring assets in connection with exiting certain fleet leases. This improvement was partially offset by higher fuel prices.
TruGreen reported first-quarter operating revenue of $131 million, a decrease of 3.8 percent compared to first-quarter 2011 results. The decline in operating revenue was due to an 8.6 percent reduction in customer counts and the unfavorable timing of production. This was partially offset by a 5.9 percent increase in the average application price. The decline in customer counts was driven by a decrease in new unit sales, partially offset by a 100 basis point increase in the customer retention rate. TruGreen is continuing its efforts to reduce customer cancellations by focusing on a consistent service delivery and customer experience, an improved recovery program for problem lawns, reduced lawn specialist turnover and improved communication with customers.
Operating performance for the first quarter was a loss of $3 million, which represents an improvement of 71 percent, compared to first-quarter 2011 results. The improvement was primarily due to lower sales staffing and production labor efficiencies. This was partially offset by the impact of lower operating revenue, increased branch and corporate overhead expense and higher fuel and fertilizer prices.