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VOL. 128 | NO. 94 | Tuesday, May 14, 2013

ServiceMaster Reports "Disappointing" First Quarter

By Bill Dries

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The ServiceMaster Co. saw operating revenue and operating income decline during the first three months of 2013.

The Memphis-based commercial and residential service provider and franchiser reported a 7.1 percent drop in operating revenue compared to the first quarter of 2012 and an 83.2 percent operating income decrease from a year ago.

The earnings call with analysts from the company’s Memphis headquarters Tuesday, May 14, was the first for interim CEO John Krenicki Jr.

Krenicki termed the first quarter results “disappointing” and attributed much of the performance to the Tru Green lawn care division of ServiceMaster.

Krenicki assumed the interim position April 13 following the resignation of CEO Hank Mullany.

He is the chairman of ServiceMaster Global Holdings Inc., the parent company of ServiceMaster and a senior partner of the private equity firm that bought ServiceMaster in 2007.

Mullany struggled for two years with ServiceMaster’s TruGreen lawn care business.

He began his tenure as CEO in March 2011 with a new head for the TruGreen division in an attempt to transfer practices from the Terminix division to TruGreen and an overhaul of sales strategies.

Nevertheless, at the end of 2012, ServiceMaster as a whole reported an unaudited operating loss of $532.8 million on operating revenue of $3.1 billion.

For the last quarter of 2012, operating revenue for ServiceMaster grew 5.2 percent when TruGreen’s results were separated out.

“The path forward for us starts with putting our customers first, executing and implementing the turnaround agenda at TruGreen,” Krenicki said in a written statement before the earnings calls.

ServiceMaster reported operating revenue of $608 million for the first quarter of 2013 and operating income of $20 million for the same period.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 70 134 16,547
MORTGAGES 72 144 21,576
FORECLOSURE NOTICES 9 35 4,301
BUILDING PERMITS 209 209 39,587
BANKRUPTCIES 80 149 15,691
BUSINESS LICENSES 15 28 5,519
UTILITY CONNECTIONS 117 201 23,774
MARRIAGE LICENSES 14 51 5,086

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