Terminix Announces Fourth-Quarter 2020 Revenue Growth of 4%

Terminix Announces Fourth-Quarter 2020 Revenue Growth of 4%

For the fourth quarter of 2020, the company reported a revenue increase of 4% to $460 million.

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February 25, 2021

MEMPHIS, Tenn.- Terminix announced unaudited fourth-quarter and full-year 2020 results. For the fourth quarter of 2020, the company reported a revenue increase of four percent to $460 million. Net income was $490 million, or $3.71 per share, driven by the gain from the sale of ServiceMaster Brands. Adjusted EBITDA for the quarter increased $13 million, or 24 percent, to $68 million, and Adjusted Net Income increased $18 million to $28 million, or $0.21 per share.

For the year ended 2020, the company reported a revenue increase of eight percent to $1,961 million. Net income increased $423 million to $551 million, primarily driven by the gain from the sale of ServiceMaster Brands. Adjusted EBITDA for the full year increased $32 million, or 10 percent, to $345 million and Adjusted Net Income increased $18 million, or 16 percent, to $126 million.

“Successful execution of our strategic initiatives enabled us to deliver a strong year at Terminix,” said Terminix CEO Brett Ponton. “Organic revenue growth was highlighted by strong performance in termite services and residential pest, while the commercial pest business continued to improve sequentially in the fourth quarter. Profit margin expansion was driven by productivity improvements including gains in teammate and customer retention.”

“As we look to 2021, we are excited about the opportunities ahead as a singularly focused pest management company,” Mr. Ponton continued. “We remain focused on driving growth and profitability by capitalizing on our industry-leading brand and improving operational capabilities in the core fundamentals of service delivery. Key investments to improve procedures, training and technology will increase consistency from branch-to-branch and teammate-to-teammate and further enhance both the teammate and customer experience.”

FOURTH QUARTER PERFORMANCE. Terminix reported four percent year-over-year revenue growth and three percent organic revenue growth in the fourth quarter of 2020. Termite and home services organic revenue growth was five percent, including 14 percent growth in renewable core termite completions driven by sales of our monthly pay tiered termite product. Residential pest organic revenue growth of four percent reflected retention gains, new sales growth and pricing realization that were partially offset by lower summer sales units and one-time bed bug services. European pest revenue was up 24 percent organically, including 10 percent from foreign currency translation, driven by strong growth in Norway, Sweden and the United Kingdom. Commercial pest organic revenue declined one percent year-over-year and improved approximately 200 basis points sequentially from the third quarter. The commercial pest organic revenue decline was driven by impacts from the ongoing pandemic including lower sales of non-recurring services and service postponements due to both temporary and permanent business closures.

2021 OUTLOOK. For the full year 2021, the company expects commercial pest will continue the gradual positive trends seen over the last several months as the economy continues to reopen, with the back half of the year improving as COVID-19 impacts are lapped. Organic growth in residential pest will be partially offset by lower year-over-year summer sales revenue in the first quarter due to fewer unit sales in 2020 and the continued lower trends in bed bug services due to reduced travel during the pandemic. Continued demand is expected in termite completions due to the new monthly pay product and strong growth in home services. Termite renewal revenue will be reduced by between $8 and $10 million in 2021 due to a change in the timing of revenue recognition from our move to a monthly subscription-based model.

Anticipated Adjusted EBITDA for 2021 reflects the impact of revenue growth and reduced termite damage claims expense as completion of the $10 million termite mitigation plan in the Mobile Bay area is lapped. Cost headwinds during the year related to increased training and lost productivity from the roll out of our new technology platform are expected, as well as increased travel expense and the lapping of strong employee retention gains. The cost of 2021 initiatives and investments in operational capabilities are expected to be funded through cost structure simplification as the company evolves to a leaner focused pest management company.

The timing and frequency of new termite damage claims litigated case filings are difficult to predict. This guidance represents the company’s best estimate of litigated case filings, but actual pace and volume could differ.

A reconciliation of the forward looking full-year 2021 Adjusted EBITDA outlook to net income is not being provided, as the company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliation.