MEMPHIS, Tenn. — ServiceMaster Global Holdings, Inc., parent company of Terminix, announced unaudited third-quarter 2018 results.
For the third quarter, the company, as a whole, reported a year-over-year revenue increase of 10 percent to $873 million. Third-quarter 2018 net income was $71 million, or $0.52 per share, versus $80 million, or $0.60 per share, in the same period in 2017. Third-quarter 2018 Adjusted EBITDA(1) was $191 million, a year-over-year decrease of $9 million and adjusted net income(2) was $91 million, or $0.67 per share versus $99 million, or $0.73 per share, for the same period in 2017.
Excluding the American Home Shield segment, revenue in the third quarter increased 10 percent to $496 million and Adjusted EBITDA(1) increased $1 million to $105 million year-over-year.
“We are pleased to see our transformation efforts begin to show up in Terminix growth, with 7.8 percent organic growth in residential pest and 2.6 percent overall organic Terminix revenue growth,” said ServiceMaster Chief Executive Officer Nik Varty. “The residential pest transformation began last October with a focus on enhancing the customer experience and driving operational improvements in start rates, completion rates and customer engagement. We still have significantly more to do in terms of improving the 50,000 customer experiences we deliver every day, which will ultimately drive improvements in our customer retention rates. As promised, we continue to invest with discipline in technology, talent, training, marketing and the ability of our field operations to better serve our customers. We have also now expanded the focus of our transformation efforts on our termite and commercial pest service lines. We have successfully integrated our Terminix Commercial national accounts with Copesan, and we continue to leverage their service and delivery capabilities as we expand our presence in this important market segment to enable future growth. Our restoration and cleaning businesses continue to drive growth, with strong gains in commercial disaster and fire restoration programs at ServiceMaster Restore and 15 percent growth in janitorial national accounts at ServiceMaster Clean. We continue to explore opportunities to expand our brands in markets that are showing high growth profiles such as healthcare cleaning and national accounts.”
Terminix reported a 10.3 percent year-over-year revenue increase in the third quarter of 2018, reflecting an increase in residential pest control services and the acquisition of Copesan on March 30, 2018. Terminix achieved organic revenue growth of 2.6 percent in the third quarter, including 7.8 percent organic growth in residential pest control. When normalized for the prior year hurricane and the one-time bait monitoring station conversion impact, organic revenue would have been 2.3 percent. Strong organic residential pest revenue growth was driven by operational improvements in completion rate, start rate, and new unit sales as a result of continued progress in the Terminix transformation. Organic revenue growth remains on track to range between 1 and 2 percent for the full year.
Although Terminix posted over 10 percent revenue growth, adjusted EBITDA decreased by $2 million, or 3 percent, largely the result of our continuing efforts to drive consistently strong long-term growth. We increased selling and marketing expenses, which drove higher new sales in the quarter. Additionally, we continue to invest heavily in upgrading our service model that will ultimately drive higher customer retention and consistently strong growth. The Company continues to see opportunities to invest in the business to drive future growth, and adjusted EBITDA margins remain on pace to be relatively flat for the full year, excluding acquisition impact and the spin related dis-synergies.