ServiceMaster Third-Quarter Earnings Increase Slightly

ServiceMaster announced this week that its third quarter earnings increased by 1 percent over last year, representing $1.13 billion in revenues.

Despite this increase in overall revenues, earnings pressure in the residential lawn care and commercial landscape construction businesses led ServiceMaster to sell the TruGreen LandCare Construction portion of its business to Environmental Industries in early October. 

The TruGreen segment reported revenues of $416 million for the third quarter of 2001, up slightly from $415 million reported in 2000. The segment reported operating income in the third quarter of $52 million compared with $60 million in the prior year. Although lawn care revenues were up modestly for the nine months over last year, higher labor costs and overhead took its toll on these operations. In addition, the landscape maintenance segment experienced a dip in operating profits because of increased sales and marketing expenditures. The segment results for both 2001 and 2000 have been adjusted to reflect the exclusion of the company's TruGreen LandCare Construction business, which is now reported in the Other Operations segment.

As a result of the restructuring, ServiceMaster has chosen to focus on its home maintenance and improvement business.

"We've recently taken action to secure our position as America's Home Services Company," declared President and CEO Jonathan Ward. "Although there were unexpected dynamics affecting the economy after the events of Sept. 11, the home services market has been resilient. The single biggest factor in achieving profitable growth and value creation will be executing the initiatives put in place."

According to the earnings statement, revenue growth on the businesses the company intends to retain increased 4 percent and 6 percent in the quarter and nine-month period, respectively.

ServiceMaster provides outsourcing services to more than 12 million customers in the United States and in 45 countries. These services are provided through a network of 5,500 company-owned and franchised service centers and business units. TruGreen includes the lawn care operations performed under the TruGreen ChemLawn brand name and landscaping services provided under the TruGreen LandCare brand name.