VOL. 129 | NO. 40 | Thursday, February 27, 2014
ServiceMaster Revenue Flat, Income Drops for 2013
By Bill Dries
The ServiceMaster Co. LLC took a net income loss of $506 million for the year 2013 and an $18 million loss for the last three months of the year.
The fourth-quarter and 2013 annual results announced Thursday, Feb. 27, reflect a year in which the Memphis-based commercial and residential services provider underwent its second change in top leadership in three years and continued restructuring.
The losses compare to a $713 million annual loss and $2 million fourth-quarter loss for 2012.
In January, a spinoff of ServiceMaster’s troubled TruGreen brand became official. But the lawn-care company’s financial results were still reflected in the fourth quarter and annual results. And TruGreen took much of the blame for the continued losses and annual revenue figures company-wide that remained flat compared to 2012.
ServiceMaster CEO Rob Gillette, who took the helm of the company in June, told analysts that without TruGreen, ServiceMaster will “realize our full potential faster.”
To make the point, company leaders again presented financial results both with and without TruGreen factored in.
With TruGreen included, an 8 percent revenue decline in the lawn-care business offset revenue growth from the company’s other brands and kept the overall revenues flat at $3.2 billion for the year. Without TruGreen, annual revenues company-wide would have increased by $79 million, or 4 percent, over 2012.
For the fourth quarter, revenue increased 6 percent, or $38 million, to $713 million compared to the last quarter of 2012. But Gillette said it would have been an 8 percent increase without TruGreen.
The company also elaborated on its decision this month to end a move in American Home Shield to a new operating system designed to “improve customer relationship management capabilities and enhance operations.”
Gillette and his team decided the ongoing costs of the system were too high and that the goal of using the system in the other divisions of ServiceMaster “lost momentum” with the TruGreen spinoff, said chief financial officer Alan Haughie.
“The system that we were in the process of deploying was actually going to continue to be expensive,” Haughie told analysts, adding the decision to scrap the system will not have a negative cash impact.
ServiceMaster expects to take an impairment charge of $50 million for the first quarter of 2014 as a result.
The company also expects to take an impairment charge of $150 million because of a required interim impairment analysis of the TruGreen trade name, another result of the spinoff.
And the company announced that with first-quarter results, it will create a new reporting segment called the “franchise services” group that will combine the results of its Merry Maid and ServiceMaster Clean segments.