TruGreen will buy Scotts LawnService

Departments - INSIDER

The purchase will create a $1-billion lawn care company.

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January 19, 2016
Chuck Bowen

For more news, visit www.lawnandlandscape.com

Photos courtesy of Trugreen

NEW YORK – During its investor and analyst day last month, Scotts Miracle-Gro announced a definitive agreement to sell off its lawn care division to TruGreen for $200 million in cash and a 30 percent stake.

The acquisition comes on the heels of record sales for both companies. According to data presented by CFO Randy Coleman, Scotts LawnService posted record revenue of $289 million, and TruGreen grossed $1 billion.

With the acquisiton, TruGreen’s local network of branches and franchise locations will serve approximately 2.3 million residential and commercial customers across the U.S. and Canada with lawn, tree and shrub care, representing approximately $1.3 billion in revenue. TruGreen President and CEO David Alexander will lead the new company.

“This opportunity further accelerates the transformation TruGreen has experienced in the last two years achieving significant gains in revenue, customer growth and employee satisfaction,” he said.

Clayton, Dublier and Rice, the private equity company that purchased TruGreen from ServiceMaster in 2011, will own 70 percent of the combined companies, which will operate under the TruGreen brand.

“We believe strongly in the commercial logic and exciting long-term growth prospects of merging these two great brands.” John Compton, TruGreen chairman

As a result of the sale, Scotts will own 30 percent of TruGreen, hold two of the seven board seats and take $200 million. Jim Gimeson, president of Scotts LawnSerivce, will move to TruGreen as chief operating officer. Coleman said he expects the sale to close sometime in March 2016.

Scotts, which had considered acquiring TruGreen in the past, retains options to participate as a seller in a future IPO or sale to a third party, and reserves the option to purchase 100 percent of the new TruGreen.

"I can't tell you what course we’ll take right now,” Coleman said. “The decision we make down the road will be based on what's best for our shareholders.”

John Compton, a CD&R Operating Partner and former PepsiCo President, will continue to serve as TruGreen’s chairman.

“We believe strongly in the commercial logic and exciting long-term growth prospects of merging these two great brands, and we expect our combined capabilities to offer a highly compelling value proposition to customers,” Compton said.

Since Alexander became president and CEO of TruGreen, he’s been very active in mergers and acquisitions, compared to the company’s activity before he was hired. He’s overseen seven mergers or acquisitions, not including this one, since taking over the role in 2012.

In September, the company made its biggest acquisition at the time when it acquired Noon Brothers, an $8-million company based in Boston.

The company announced in November it will offer a lawn sprinkler maintenance service in 15 to 20 markets in 2016. The service will extend throughout the nation next year, Vice President Brent Armstrong said. The service has been active this year in eight cities as a pilot program.

These moves back up what Alexander told Lawn & Landscape when we spoke with him earlier in the year and he described TruGreen’s future approach to acquisitions as “historic.”

“If you go back two or three years, and you look at how TruGreen was acquiring, that’s kind of what we want to do now. We want to invest. It’s not a small number; it’s in the millions," he said. “So, we want to invest in acquisitions and this is the year we’ll start back. We have a half-dozen or so in the pipeline that we’re seriously considering. We’ll put some more in soon that we’re beginning to consider, so it is something we’re getting back into.”

A $1-million permit was also filed in September to renovate the new TruGreen headquarters in East Memphis, Tennessee.

Dow Chemical, DuPont reach deal on merger

DowDuPont will split into three independent, publicly traded companies.

Wilmington, Del., and Midland, Mich. – DuPont and The Dow Chemical Company announced in early December the two companies will merge, becoming DowDuPont.

The parties intend to subsequently pursue a separation of DowDuPont into three independent, publicly traded companies through tax-free spin-offs.

This would occur as soon as feasible, which is expected to be 18-24 months following the closing of the merger, subject to regulatory and board approval.

The companies will include a global pure-play agriculture company, a global pure-play material science company and a specialty products company.

Upon the closing of the transaction, the combined company will have a market capitalization of approximately $130 billion.

The transaction is expected to deliver approximately $3 billion in cost synergies, with 100 percent of the run-rate cost synergies achieved within the first 24 months following the closing of the transaction. Additional upside of approximately $1 billion is expected from growth synergies.

The three businesses the boards intend to separate are:

  • Agriculture: An agriculture company that unites DuPont’s and Dow’s seed and crop protection businesses. Combined pro forma 2014 revenue is approximately $19 billion.
  • Material science: This will consist of DuPont’s Performance Materials segment, as well as Dow’s Performance Plastics, Performance Materials and Chemicals, Infrastructure Solutions, and Consumer Solutions (excluding the Dow Electronic Materials business) operating segments. Combined pro forma 2014 revenue is approximately $51 billion.
  • Specialty products: The businesses will include DuPont’s Nutrition & Health, Industrial Biosciences, Safety & Protection and Electronics & Communications, as well as the Dow Electronic Materials business. Combined pro forma 2014 revenue is approximately $13 billion.

Andrew N. Liveris, president, chairman and CEO of Dow, will become executive chairman of the newly formed DowDuPont Board of Directors and Edward D. Breen, chair and CEO of DuPont, will become CEO of DowDuPont.

DowDuPont will be dual headquartered in Midland, Michigan and Wilmington, Delaware.

ASK THE EXPERTS

Tree care safety

Q: I am trying to look up the OSHA requirements for personal protective equipment for tree care workers online and there is so much information out there, and the OSHA site is confusing. Is this something that you can provide me with for our safety manual?

A: Of all the reasons OSHA will cite a business for failure to provide a safe work environment, you often find improper or non-existent PPE at the top of the list. As a matter of fact, PPE is cited in four out of 10 of the most often recorded violated standards.

In the tree care industry, PPE is very critical in preventing serious injury or illness from the many hazards that workers are exposed to. I would recommend that you follow your instincts and prepare a separate module for your written safety training program (safety manual) dedicated to PPE. As you are probably aware, the purchase of PPE for your employees is the employer's responsibility.

Areas that should be included in the PPE module would include:

1. Hearing protection that reduces the noise exposure from excessive noise producing equipment (chainsaws, blowers, chippers, etc.) to at or below the OSHA eight-hour exposure level of 85 decibels.

Noise monitoring of chain saws for example, show that they can generate over 100 decibels at full throttle and workers shouldn’t be exposed unprotected for more than 15 minutes. Generally, tree care and arborist firms purchase hearing protection that is integrated into the hard hat that all employees should be wearing. You need to have knowledge of the NRR (noise reduction rating) for the hearing protection, which is usually ear muffs with a 25-30 NRR.

At 100 decibels of exposure you are reducing the exposure to 70-75 decibels, or well within the permitted OSHA exposure level. Some workers may also use ear plugs along with the ear muffs and further reduce their exposure.

2. Eye protection that is manufactured to meet the ANSI Z-87.1 (2010) specifications for impact, peripheral and protection from the sun. This specification can be found on the packaging and/or stem of the eyewear and is a must for tree work. Some workers may use goggles that meet the standard, while others don't like the goggles because they tend to sweat and are uncomfortable.

3. Head protection that is manufactured to provide protection from injuries to the head from falling branches and debris. Keep in mind that the strength of hard hats tends to decline with time and they need to be replaced. There is almost always a manufacture date on hard hats.

In the tree care industry, PPE is critical in preventing serious injury or illness from the many hazards workers can encounter.
Photo courtesy of Swingle Lawn, Tree and Landscape Care

4. Hand protection that limits the exposure to flying wood chips and other debris. Leather types are best, but should not be used with chemical applications.

5. Leg protection that protects climbers and arborists when performing tree trimming or removal. Many serious injuries occur when a chain saw "kicks back" and injures the torso and upper leg area. Chaps are used to prevent or lessen the injuries.

6. Your new PPE module should include a full description of the training programs that will be used to familiarize your workers with the PPE, how to properly adjust and fit it to their individual situations and how to maintain and store it between uses.

7. Don't forget to have the proper climbing gear available, including lanyards and safety belts that are free of wear and damage. Falls out of elevated areas are a primary cause of serious and fatal injuries in the industry.

The tree care industry is being targeted by OSHA because of the excessive number of incidents involving workers.

Wood chippers are an emphasis area and if you own or use one, please include special training in the proper methods for inserting material.

Also, make sure your crew managers are dedicated to the new PPE module in your safety program and enforce entire PPE worker requirements at all times.

Sam Steel, Safety Adviser National Association of Landscape Professionals

Ask the Experts is brought to you in partnership with PLANET, the national association for lawn and landscape professionals. Questions are fielded through PLANET’s Trailblazers, the industry’s leading company mentoring program. For more questions visit www.landcarenetwork.org.

Irrigation show addresses employee hiring and retention

LONG BEACH, CALIF. – Gary Godshall, owner of PrideStaff in Long Beach, California, tackled one of the biggest issues in the industry at the “Finding and Retaining Good Employees Point of Connection Contractor Briefing” at the Irrigation Show, held Nov. 9-13.

Finding applicants.

The first step to success is creating a strategic plan and job description, Godshall said. You should know what that person is going to do and their next steps at the company, general duties, wages and requirements.

“Make sure you’re in the right wage range for your community,” he said, otherwise, workers will be looking for higher paying jobs. He recommended careerbuilder.com and onet.com to find average wages.

It’s also important to know what kind of personality the job requires. Do you want someone who’s organized or laid back? What kind of office atmosphere are you trying to cultivate? Also consider what kind of background check you want to do and what offenses are make or break.

Before you bring someone on board, detail your expectations and performance indicators, Godshall said. “Have a timeline for growth and put it in the job description.”

When you’re ready to recruit, there are several options out there. Godshall said Simply Hired is becoming more popular, and Monster and Career Builder are also good websites. He also mentioned Indeed, which will pull job postings from other websites and aggregate them.

If you’re hoping to use Indeed, be sure to be updating the listing on your page so that it keeps moving to the top of the list. Repeating the job title in the description also helps improve your search engine optimization for sites like Indeed, he said.

Interviewing applicants.

Once you have resumes, it’s time to filter them and begin the interview process. “At least of 35 percent of resumes out there contain lies or exaggerations,” he said, which is why the interview process is key. Asking behavioral questions rather than talking about past experience will give you better insight into the kind of person you’re interviewing.

“It’s more about the thought process than the answer,” he said, adding that you should look at soft skills like work ethic along with experience. Group meetings can help make sure your potential new employee will fit into the culture and give your staff the chance to give feedback on a new team member. If you find an applicant who will work well and you bring him or her on board, it’s important to make that person feel valued. To do that, provide a relatable vision or mission and share your passion for your work, Godshall said. – Kate Spirgen

Tree care industry event turns 25

The TCI Expo celebrated a milestone, with attendees learning about topics they never would have considered 25 years ago.

PITTSBURGH – Last year marked the 25th anniversary of the TCI Expo, and the educational topics offered showed that the industry have changed with the times. The show, which took place in mid-november at the David L. Lawrence Convention Center, featured more than 200 exhibitors and more than 2,800 tree care professionals from across the world were in attendance.

Here are a few takeaways from the show:

For 2016, the Tree Care Industry Association (TCIA) expects a lot more classes throughout the country, so if you’re thinking about becoming a member, now would be the time to look into it.

If your company offers both tree care and landscaping services, you need to list them separately for workers’ compensation reasons.

“You can have these things co-mingled, but they shouldn’t be,” said Rick Weden, Corcoran & Havlin Insurance Group.

If you’re audited and it’s discovered you have both crews under the same coverage, you could be penalized.

When it comes to being audited by your insurance company, always be organized and prepared.

“Be on top of it, be prepared and be factual,” Weden said. “If you’re organized, it’s huge.”

Clint Davies of BerryDunn, a CPA and consulting firm, asked how many people in the room had an IT department within their company.

Only a few attendees raised their hands. He then asked if anyone had experienced a cyber security breach.

One attendee said a hacker got into their system and changed the bank account information so customer’s credit card payments went into his account instead.

Another said he received a virus via email and it encrypted all of his company’s Microsoft files so they were inaccessible.

Davies also pointed out that smartphones bring a whole new type of threat, because so many people store their life on the small device, and there’s always a chance it can get stolen or lost, meaning anyone will have access to all that information.

TCI Expo was sponsored in part by CROWN PACT partners Bandit Industries, Morbark, Vermeer, Husqvarna and Altec. Root and Seed partners included Arborjet, George Fern, Mauget, HMI, Weaver Leather, Fanno Saw Works, Liberty Financial Group, Buckingham Manufacturing and Northern Atlantic Financial.

Next year’s TCI Expo will take place in Baltimore from Nov. 10-12. – Katie Tuttle

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