ServiceMaster first quarter revenue dips

May 16, 2013 -  By

The ServiceMaster Co. has released its preliminary unaudited first-quarter 2013 results. Unlike last year, this spring’s cool, wet weather did not bode well for the company’s TruGreen and Terminix brands.

ServiceMaster reported operating revenue of $608 million, a decrease of 7.1 percent compared with the same period in 2012. It had first-quarter 2013 operating income of $20 million, down 63.2 percent compared with the same period for 2012. First-quarter 2013 operating performance decreased 35 percent to $65 million compared with the same period for 2012.

“Our first-quarter 2013 results were disappointing,” said John Krenicki Jr., ServiceMaster’s interim chief executive officer. “The path forward for us starts with putting our customers first, executing well and implementing the turnaround agenda at TruGreen.”

Specifically, the company said TruGreen had a 28.3 percent decrease in operating revenue, a $35.1 million decrease in operating income and a $34.1 million decrease in operating performance for the first quarter of 2013 compared with the first quarter of 2012.

The company attributed TruGreen’s declining performance to lower operating revenue, lower labor efficiency, higher sales staffing levels, higher information technology system costs, and an increase in ice melt sales, which has lower margins than core lawn services.

Krenicki, who was named interim CEO when Hank Mullany resigned from the position April 12, said excluding TruGreen, the other ServiceMaster businesses performed about as expected.

“We’re confident about the future of ServiceMaster,” said Krenicki. “We have leading brands, talented and passionate associates committed to serving customers and a lot of untapped opportunity to improve results. But we need to make progress at TruGreen while continuing to run the rest of our businesses well.”

The company said it is taking steps to address the three key challenges TruGreen faced at the end of 2012: a product offering that was too narrow, operational inefficiency due to changes in key technology and lower customer counts. It redesigned its core product offerings and introduced a tiered product structure, made investments in all sales and marketing channels, improved training programs and offered new sales tools. The company said it has continued to invest in, and improve, the operating systems it recently implemented.

 

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