The industry’s biggest company, TruGreen, had operating revenue of $1.37 billion and income of $171 million in 2002, respectively, for the combined business of TruGreen-ChemLawn and TruGreen LandCare. Both numbers were essentially on par with the company’s 2001 performance, but that’s not stopping Jonathan Ward, chairman and CEO of TruGreen’s parent company, ServiceMaster, from expressing his optimism.
“It’s very tough to earn customers right now, but we’re still very optimistic about our ability to grow,” he asserted. “Our focus now is on revenue growth and maximizing our use of scale to gain a competitive advantage and gain market share.”
ServiceMaster didn’t disclose revenue and earnings for the two components of the TruGreen business, but the company did share some addition information about its 2002 performance:
Ward was particularly confident that the company’s landscape business would soon become a bigger part of the organization’s growth.
“The end of last year marks the end of a difficult two-year period for TruGreen LandCare,” acknowledged Ward, referring to challenging integration of the construction portion of the LandCare USA acquisition. “But now we’re positioned for strong top- and bottom-line growth in this business. We’re seeing clear improvement in purchasing through more effective sourcing of materials, and we’ve seen a significant increase in sales of 23 percent from this time last year. In addition, our customer retention is forecast to be up 2 percent.
“This sales momentum and increased pricing discipline will lead this business to be a strong contributor to ServiceMaster in the coming 18 months,” Ward predicted.
Ward credits much of the company’s success in growing its customer count to the new marketing team put in place nearly two years ago.
“In 2001, we generated about 50,000 clients via nontelemarketing,” he related. “Last year, that number went over 100,000, and this year we’re budgeting for it to go over 200,000.”
Still, the company is largely dependent on telemarketing, which means it feels the impact of new do-not-call legislation. “We strive to be in full compliance with the do-not-call lists,” Ward noted, adding that the company has eliminated up to 15 percent of the names it has on file in some states.
And while the company didn’t get back into the acquisitions arena as aggressively as it had hoped to in the fourth quarter of 2002, it continues looking for such candidates.
“Acquisitions were less than $20 million in 2002, and we’ll have a greater focus on tuck-ins in 2003,” noted Steven Preston, ServiceMaster’s executive vice president and chief financial officer. “Our acquisitions focus this year will be almost entirely on TruGreen and Terminix, and we expect [to spend] in the $40- to $50-million range.”
ServiceMaster’s stock closed March 17 at $9.32 a share, down roughly 40 percent from its 52-week high of $15.50, reached last May.
The author is Editor/Publisher for Lawn & Landscape magazine and can be reached at bwest@lawnandlandscape.com.