VOL. 127 | NO. 93 | Friday, May 11, 2012
ServiceMaster Registers ‘Strong Start’ To 2012
By Bill Dries
The ServiceMaster Co. reported first quarter results Thursday, May 10, that showed its operating income more than doubled from the first quarter of 2011.
The $54.7 million in operating income for the Memphis-based commercial and residential service provider compares to $23.8 million for the first three months of last year, a 130 percent increase.
The company’s revenues for the first quarter were up 6.5 percent to $655 million compared to $614 million a year ago.
ServiceMaster CEO Hank Mullany termed it a “strong start” to the calendar year.
“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,” he said in a written statement.
ServiceMaster executives attribute the revenue increase to growth in revenues at its Terminix subsidiary. That was offset by a drop of 8.6 percent in customer counts at its TruGreen subsidiary as the lawn care and maintenance business made changes to its neighborhood sales program.
The Terminix and TruGreen brands are the two largest of a set of seven service businesses and franchises that make up ServiceMaster.
The two brands have also been on the front line of the company’s changes in customer retention practices since Mullany became CEO in April 2011.
As soon as Mullany became CEO, he shifted Terminix president Tom Brackett to head TruGreen and bring some of Terminix’s business practices to TruGreen. Late last year, Brackett became the permanent leader of TruGreen. Chuck Fallon, a former president of Burger King North America, became president of the Terminix division.
Operating income losses at TruGreen were lower in the first quarter at $14.3 million than they were a year ago at $19.7 million.
The company saw growth in retaining customers, which Mullany identified early on as a problem for the company. But that was offset by a drop in sales of the service to new customers.
Terminix saw a jump in its operating income from $51.3 million a year ago to $69 million for the quarter ended March 31. Its operating revenue was $311.4 million, up from $284.1 million a year ago.
Some of the improvement for Terminix was offset by higher fuel prices.