ServiceMaster’s Q3 Revenues Up 1.3 Pct.

By Andy Meek

Hank Mullany has a pretty basic mission statement and set of guiding principles for The ServiceMaster Co., the Memphis-based home- and commercial-services company he took the helm of earlier this year as CEO.

On the one hand, he has myriad plans for pushing the company into new areas related to digital technology such as incorporating handheld digital devices and smartphone apps. But during the company’s third-quarter earnings conference call Thursday, Nov. 17, he made it clear the company has a business model that’s resilient and which delivered a 1.3 increase in revenue in Q3 compared to Q3 2010.

ServiceMaster, a company that boasts seven brands including Terminix and American Home Shield, reported Q3 revenue of $930.9 million, up from $919 million in Q3 2010.

“We’re focusing on three strategies,” said Mullany, who came to ServiceMaster from the world of retail, where he was executive vice president at Wal-Mart Stores Inc. “No. 1, growth. We want to be a rapidly growing, best-in-class service provider. Our second strategy involves talent evaluation and development. Third, we’re developing what I like to call a culture of executional excellence. As I’ve said before, underlying all of our efforts is our mission – to simplify and improve our customers’ lives.”

ServiceMaster certainly appears to have the scale to bring that philosophy to a large group of people. The company serves 8.2 million customers a year in 22 countries, via 6,900 facilities and 24,000 associates, plus another 31,000 employed by ServiceMaster franchises.

Among its other Q3 results, the company reported its cost of services rendered and products sold at $517.8 million for Q3, compared to $505.3 million for the same period in 2010. Those costs increased as a percentage of revenue partly because of increased contract claims costs at American Home Shield, the impact of higher fertilizer prices at TruGreen and the $3 million impact of increased fuel prices.

Selling and administrative expenses were $245.9 million for Q3, down from $260.5 million for Q3 2010. That drop is partly the result of reduced sales and marketing spending at TruGreen, a $3.5 million drop in legal-related expenses at American Home Shield, reduced spending in the company’s headquarters functions, a $3.3 million drop in certain executive transition charges, a $2.1 million drop in provisions for incentive compensation and a $2.3 million drop in other compensation charges.

“Even with the challenges, we’ve delivered bottom-line growth and strong and steady cash flow over the past few years,” Mullany said. “Our clear and compelling vision is taking root and giving our team confidence in our company’s future.”