TruGreen Sales, Income Slide

"Our primary operating challenges are the TruGreen and Management Services segments," related Jon Ward, chief executive officer and president. "TruGreen's performance was affected by unfavorable weather conditions in lawn care, as well as ongoing integration challenges.

"We anticipate increasing momentum in the second half of 2001 building on some of the fundamentals we have put in place," the new CEO continued. "We expect to see improving relative performance in our TruGreen-ChemLawn unit and continue to make progress in putting the challenges in the landscaping business behind us. Our perspective is supported by a number of branches which are meeting profitability standards and the progress we have made in a number of under-performing locations."

The overall TruGreen segment reported revenue of $258 million for the first quarter of 2001, down 2 percent from the same period of 2000. In addition, the combined operating income for TruGreen-ChemLawn and TruGreen LandCare fell 47 percent, from $32 million in the first quarter of 2000 to $17 million this year.

ServiceMaster attributed much of the sales problem to a longer winter this year than last year. Revenue from landscape work was consistent with last year's first quarter, the company reported, "reflecting management's decision to enforce stricter profitability standards on contract sales and renewals. In addition, management is actively repositioning the business portfolio to increase its concentration on more predictable maintenance services and less on construction services."

The company's stock is trading at approximately $10 a share, still well off its price of approximately $21 a share at the time it acquired LandCare USA in early 1999.