ServiceMaster Announces 2019 Second Quarter Results

ServiceMaster Announces 2019 Second Quarter Results

Terminix reported 10 percent year-over-year revenue growth in the second quarter of 2019, including more than 4 percent organic growth.

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MEMPHIS, Tenn.— ServiceMaster today announced unaudited second-quarter 2019 results. For the quarter ended June 30, 2019, the company reported a year-over-year revenue increase of 8 percent to $560 million with net income of $59 million, or $0.43 per share. Adjusted EBITDA(1) for the quarter was $131 million, versus $125 million for the same period in 2018. Adjusted net income(2) was $68 million, or $0.50 per share, versus $45 million, or $0.33 per share, for the same period in 2018. Both adjusted EBITDA and adjusted net income, in the second quarter of 2018, include $11 million of costs historically allocated to American Home Shield.
 
“We continue to drive strong revenue growth in all of our businesses as we execute on our value creation strategy,” said ServiceMaster Chief Executive Officer Nik Varty. “Our relentless efforts on improving customer service and focus on employee performance capabilities enabled us to deliver strong organic revenue growth at Terminix, including the best organic growth we have seen in more than three years in our commercial pest service line. Improvements in customer retention and price realization drove growth across revenue channels, which more than offset the impact of unseasonable weather conditions. ServiceMaster Brands grew revenue 2 percent in the quarter, including strong, targeted growth in commercial cleaning national accounts. We continue to build the ServiceMaster of the future by adding capabilities through our disciplined, strategic M&A program. In line with our commitment to innovation, we recently acquired a pest focused technology company, which is currently driving pilot programs with national accounts to develop electronically controlled pest solutions. We also purchased a healthcare-focused ServiceMaster Clean franchisee, providing key operational talent to drive our strategy to provide sophisticated services to the faster growth healthcare segment.”
 
“We continue to make meaningful progress on transforming our business in ways that will drive sustainable strong growth and long-term profitability. Our commitment to growing our commercial pest management business is starting to pay dividends and we are well positioned for continued future growth. Our transformation team is making significant progress on the previously announced clean sheet end-to-end reimagining of our customer experiences from prospect to renewal. Expected benefits will include process productivity, automated capabilities, improved employee retention, and ultimately, improved customer retention. These essential upgrades will create the workflow foundation of our new ServiceMaster digital platform built with Salesforce technology that will provide a highly differentiated customer experience and service model.”
 
TERMINIX RESULTS. Terminix reported 10 percent year-over-year revenue growth in the second quarter of 2019, including more than 4 percent organic growth. Pricing and customer retention gains in all revenue channels more than offset lower recurring and one-time unit sales in the period, partially due to unseasonal weather conditions. Acquisition revenue growth of 5 percent included strong year-over-year growth from the January 2019 acquisition of Assured Environments. Revenue growth for the three months ended June 30, 2019 was negatively impacted by approximately $3 million due to wet weather conditions and flooding that affected low-margin product sales and lead flow, primarily for termite completion revenue.
 
Adjusted EBITDA in the second quarter decreased by $4 million year-over-year, led by $6 million of investments in growth and productivity initiatives as well as, $4 million in spin related dis-synergies. These costs were partially offset by flow-through from higher acquisition and organic revenue.