First Quarter 2017
- Revenue increased 6% to $643 million with 17% growth at AHS
- Net income of $39 million, or $0.29 per share, versus $39 million, or $0.28 per share, a year ago
- Adjusted EBITDA (1) increased 6% to $134 million from $127 million a year ago
- Adjusted net income (2) of $46 million, or $0.34 per share, versus $47 million, or $0.34 per share, a year ago
Full Year 2017
- Reaffirming Full Year outlook
- Revenue between $2,885 million and $2,915 million, or growth over prior year between 5% and 6%
- Adjusted EBITDA between $700 million and $715 million, or growth between 5% and 7% over prior year
ServiceMaster
Global Holdings, Inc. (NYSE: SERV), a leading provider of
essential residential and commercial services, today announced unaudited
first-quarter 2017 results. The company reported a year-over-year
revenue increase of 6 percent driven primarily by organic growth at
American Home Shield (“AHS”) and the impact of acquiring OneGuard Home
Warranties (“OneGuard”) in June 2016 and Landmark Home Warranty
(“Landmark”) in November 2016.
First-quarter 2017 net income was $39 million, or $0.29 per share,
versus $39 million, or $0.28 per share, in the same period in 2016.
First-quarter 2017 Adjusted EBITDA was $134 million, a year-over-year
increase of $7 million, or 6 percent, primarily driven by an increase in
Adjusted EBITDA of $12 million at AHS.
First-quarter 2017 adjusted net income was $46 million, or $0.34 per
share, versus $47 million, or $0.34 per share, for the same period in
2016.
Rob Gillette, ServiceMaster’s chief executive officer, noted:
“ServiceMaster delivered a good quarter to start 2017. At AHS, organic
growth and the contribution from 2016 acquisitions drove strong revenue
and Adjusted EBITDA growth again this quarter. At Terminix, our
operating performance was in line with our expectation for revenue and
Adjusted EBITDA growth as we continue to invest in improving our service
delivery and customer service experience. We are confident the
operational changes we are making will improve customer retention and
result in solid growth in the future.”
Consolidated Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
$ millions
|
|
2017
|
|
2016
|
|
B/(W)
|
Revenue
|
|
$
|
643
|
|
|
|
$
|
608
|
|
|
|
$
|
35
|
|
|
YoY growth
|
|
|
|
|
|
|
|
|
|
|
5.8
|
|
%
|
Gross Margin
|
|
|
297
|
|
|
|
|
284
|
|
|
|
|
13
|
|
|
% of revenue
|
|
|
46.2
|
|
%
|
|
|
46.7
|
|
%
|
|
|
(0.5
|
)
|
pts
|
SG&A
|
|
|
(186
|
)
|
|
|
|
(173
|
)
|
|
|
|
(13
|
)
|
|
% of revenue
|
|
|
28.9
|
|
%
|
|
|
28.5
|
|
%
|
|
|
(0.4
|
)
|
pts
|
Income from Continuing Operations before Income Taxes
|
|
|
62
|
|
|
|
|
62
|
|
|
|
|
—
|
|
|
% of revenue
|
|
|
9.6
|
|
%
|
|
|
10.2
|
|
%
|
|
|
(0.6
|
)
|
pts
|
Net Income
|
|
|
39
|
|
|
|
|
39
|
|
|
|
|
—
|
|
|
% of revenue
|
|
|
6.1
|
|
%
|
|
|
6.4
|
|
%
|
|
|
(0.3
|
)
|
pts
|
Adjusted Net Income
(2)
|
|
|
46
|
|
|
|
|
47
|
|
|
|
|
(1
|
)
|
|
% of revenue
|
|
|
7.2
|
|
%
|
|
|
7.7
|
|
%
|
|
|
(0.5
|
)
|
pts
|
Adjusted EBITDA
(1)
|
|
|
134
|
|
|
|
|
127
|
|
|
|
|
7
|
|
|
% of revenue
|
|
|
20.8
|
|
%
|
|
|
20.9
|
|
%
|
|
|
(0.1
|
)
|
pts
|
Net Cash Provided from Operating Activities from Continuing
Operations
|
|
|
126
|
|
|
|
|
106
|
|
|
|
|
20
|
|
|
Free Cash Flow
(3)
|
|
|
109
|
|
|
|
|
89
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Performance
Revenue and Adjusted EBITDA for each reportable segment and Corporate
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
Revenue
|
|
|
Adjusted EBITDA
|
$ millions
|
|
2017
|
|
|
B/(W) vs. PY
|
|
|
2017
|
|
|
B/(W) vs. PY
|
Terminix
|
|
$
|
365
|
|
|
$
|
1
|
|
|
|
$
|
81
|
|
|
|
$
|
(13
|
)
|
|
YoY growth / % of revenue
|
|
|
|
|
|
|
0.3
|
%
|
|
|
|
22.2
|
%
|
|
|
|
(3.6
|
)
|
pts
|
American Home Shield
|
|
|
227
|
|
|
|
33
|
|
|
|
|
31
|
|
|
|
|
12
|
|
|
YoY growth / % of revenue
|
|
|
|
|
|
|
17.0
|
%
|
|
|
|
13.7
|
%
|
|
|
|
3.9
|
|
pts
|
Franchise Services Group
|
|
|
50
|
|
|
|
1
|
|
|
|
|
21
|
|
|
|
|
3
|
|
|
YoY growth / % of revenue
|
|
|
|
|
|
|
2.0
|
%
|
|
|
|
42.0
|
%
|
|
|
|
5.3
|
|
pts
|
Corporate
(4)
|
|
|
1
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
4
|
|
|
Total
|
|
$
|
643
|
|
|
$
|
35
|
|
|
|
$
|
134
|
|
|
|
$
|
7
|
|
|
YoY growth / % of revenue
|
|
|
|
|
|
|
5.8
|
%
|
|
|
|
20.8
|
%
|
|
|
|
(0.1
|
)
|
pts
|
Reconciliations of net income to adjusted net income and Adjusted
EBITDA, as well as a reconciliation of net cash provided from operating
activities from continuing operations to free cash flow, are set forth
below in this press release.
Terminix
Terminix reported comparable revenue in the first-quarter of 2017
compared to the first-quarter of 2016, primarily driven by an increase
in core termite, wildlife exclusion and attic insulation sales, offset,
in part, by the expected decline in revenue associated with Alterra Pest
Control, LLC (“Alterra”). Adjusted EBITDA decreased 14 percent, or $13
million, versus prior year, primarily reflecting a $5 million increase
in production labor costs associated with the company’s effort to
improve safety, customer service and retention, a $4 million increase in
damage claims and a $7 million increase in sales and marketing costs,
offset, in part, by $2 million from the conversion of higher revenue and
a $1 million decrease in fuel costs.
American Home Shield
American Home Shield reported a 17 percent year-over-year revenue
increase in the first-quarter of 2017 driven by an increase in new unit
sales, improved price realization and the impact of the OneGuard and
Landmark acquisitions in June and November 2016, respectively. AHS’s
organic revenue growth was 8 percent in the first-quarter versus prior
year. For the quarter, Adjusted EBITDA increased 63 percent, or $12
million, versus prior year, primarily reflecting a $10 million increase
from the conversion of higher organic revenue, $3 million associated
with the OneGuard and Landmark acquisitions and a $1 million decrease in
other costs, offset, in part, by a $2 million increase in contractor
claims costs. The increase in contractor claims costs was driven by
normal inflationary pressure on the underlying costs of repairs.
Franchise Services Group
The Franchise Services Group reported a 2 percent year-over-year revenue
increase in the first-quarter of 2017 primarily driven by higher fee
revenue, offset, in part, by the impact of converting company-owned
Merry Maids branches to franchises. Adjusted EBITDA increased 17
percent, or $3 million, versus prior year, primarily reflecting the
conversion of higher fee revenue.
Cash Flow
For the three months ended March 31, 2017, net cash provided from
operating activities from continuing operations increased to $126
million from $106 million for the three months ended March 31, 2016.
Net cash used for investing activities from continuing operations was
$31 million for the three months ended March 31, 2017 compared to $15
million for the three months ended March 31, 2016.
Net cash used for financing activities from continuing operations was
$60 million for the three months ended March 31, 2017 compared to $17
million for the three months ended March 31, 2016. In the three months
ended March 31, 2017, we used $51 million to purchase 1.3 million shares
of company stock.
Free cash flow(3) was $109 million for the three months ended
March 31, 2017 compared to $89 million for the three months ended March
31, 2016.
Other Matters
Fumigation Related Matters
As previously disclosed, on January 20, 2017, the company entered into a
plea agreement in connection with the investigation initiated by the
United States Department of Justice (DOJ) related to the U.S. Virgin
Islands matter. Under the terms of the plea agreement we have agreed to
pay fines, community service and government costs totaling up to $10
million. On March 23, 2017, we pled guilty to four misdemeanor charges.
A sentencing hearing before the court is scheduled for July 27, 2017.
The plea agreement is non-binding on the court. It is possible that the
court could use its discretion to impose fines or other terms different
than those in the plea agreement. If the plea agreement is approved by
the court, it will resolve the federal criminal consequences associated
with the DOJ investigation.
Share Repurchase Program
On February 23, 2016, the company’s board of directors authorized a
three-year share repurchase program, under which the company may
purchase up to $300 million of outstanding shares of common stock.
During the first-quarter 2017, the company purchased 1,338,426 shares of
common stock at an average price paid per share of $38.04 for a total of
$51 million. As of March 31, 2017, we have repurchased $111 million of
outstanding shares under this program.
Full-Year 2017 Outlook
The company continues to expect full-year 2017 revenue to range from
$2,885 million to $2,915 million, or an increase of between 5 percent
and 6 percent compared to 2016. Full-year 2017 Adjusted EBITDA is
anticipated to range from $700 million to $715 million, or an increase
of 5 percent to 7 percent compared to 2016. Our 2017 outlook excludes
the impact of potential acquisitions.
A reconciliation of the forward-looking 2017 Adjusted EBITDA outlook to
net income is not being provided as the company does not currently have
sufficient data to accurately estimate the variables and individual
adjustments for such reconciliation.
First-Quarter 2017 Earnings Conference Call
The company will discuss its first-quarter 2017 financial and operating
results during a conference call at 8 a.m. central time (9 a.m. eastern
time) today, April 27, 2017. To participate on the conference call,
interested parties should call 800.926.9871 (or international
participants, 212-231-2905). Additionally, the conference call will be
available via webcast. A slide presentation highlighting the company’s
results will also be available. To participate via webcast and view the
slide presentation, visit the company’s investor
relations home page. The call will be available for replay until May
27, 2017. To access the replay of this call, please call 800.633.8284
and enter reservation number 21850245 (international participants:
402.977.9140, reservation number 21850245). You may also review the
webcast on the company’s investor
relations home page.
About ServiceMaster
ServiceMaster Global Holdings, Inc. is a leading provider of essential
residential and commercial services, operating through an extensive
service network of more than 8,000 company-owned locations and franchise
and license agreements. The company’s portfolio of well-recognized
brands includes American Home Shield (home warranties), AmeriSpec (home
inspections), Furniture Medic (furniture and cabinet repair), Merry
Maids (residential cleaning), ServiceMaster Clean (janitorial),
ServiceMaster Restore (disaster restoration) and Terminix (termite and
pest control). The company is headquartered in Memphis, Tenn. Go to www.servicemaster.com
for more information about ServiceMaster or follow the company at twitter.com/ServiceMaster
or Facebook.com/ServiceMaster.
Information Regarding Forward-Looking Statements
This press release contains forward-looking statements and cautionary
statements, including 2017 revenue and Adjusted EBITDA outlook and
approval of the U.S. Virgin Islands new plea agreement. Some of the
forward-looking statements can be identified by the use of
forward-looking terms such as “believes,” “expects,” “may,” “will,”
“shall,” “should,” “would,” “could,” “seeks,” “aims,” “projects,” “is
optimistic,” “intends,” “plans,” “estimates,” “anticipates” or other
comparable terms. Forward-looking statements are subject to known and
unknown risks and uncertainties, many of which may be beyond our
control, including, without limitation, the risks and uncertainties
discussed in the “Risk Factors” and “Information Regarding
Forward-Looking Statements” sections in the company’s reports filed with
the U.S. Securities and Exchange Commission. We caution you that
forward-looking statements are not guarantees of future performance or
outcomes and that actual performance and outcomes, including, without
limitation, our actual results of operations, financial condition and
liquidity, and the development of the market segments in which we
operate, may differ materially from those made in or suggested by the
forward-looking statements contained in this press release.
Additional factors that could cause actual results and outcomes to
differ from those reflected in forward-looking statements include,
without limitation, lawsuits, enforcement actions and other claims by
third parties or governmental authorities; compliance with, or violation
of environmental health and safety laws and regulations; 401(k) Plan
corrective contribution; the effects of our substantial indebtedness;
changes in interest rates, because a significant portion of our
indebtedness bears interest at variable rates; weakening general
economic conditions; weather conditions and seasonality; the success of
our business strategies, and costs associated with restructuring
initiatives. The company assumes no obligation to update the information
contained herein, which speaks only as of the date hereof.
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures.
Non-GAAP measures should not be considered as an alternative to GAAP
financial measures. Non-GAAP measures may not be calculated or
comparable to similarly titled measures of other companies. See non-GAAP
reconciliations below in this press release for a reconciliation of
these measures to the most directly comparable GAAP financial measures.
Adjusted EBITDA, adjusted net income, adjusted earnings per share and
free cash flow are not measurements of the company’s financial
performance under GAAP and should not be considered as an alternative to
net income, net cash provided by operating activities from continuing
operations or any other performance or liquidity measures derived in
accordance with GAAP. Management uses these non-GAAP financial measures
to facilitate operating performance and liquidity comparisons, as
applicable, from period to period. We believe these non-GAAP financial
measures are useful for investors, analysts and other interested parties
as they facilitate company-to-company operating and liquidity
performance comparisons, as applicable, by excluding potential
differences caused by variations in capital structures, taxation, the
age and book depreciation of facilities and equipment, restructuring
initiatives and equity-based, long-term incentive plans.
_________________________________________________
(1) Adjusted EBITDA is defined as net income before: depreciation and
amortization expense; fumigation related matters; non-cash stock-based
compensation expense; restructuring charges; gain on sale of Merry Maids
branches; non-cash impairment of software and other related costs;
income from discontinued operations, net of income taxes; provision for
income taxes; and interest expense. The company’s definition of Adjusted
EBITDA may not be comparable to similarly titled measures of other
companies.
(2) Adjusted net income is defined as net income before: amortization
expense; fumigation related matters; restructuring charges; gain on sale
of Merry Maids branches; impairment of software and other related costs;
income from discontinued operations, net of income taxes; and the tax
impact of the aforementioned adjustments. The company’s definition of
adjusted net income may not be comparable to similarly titled measures
of other companies. Adjusted earnings per share is calculated as
adjusted net income divided by the weighted-average diluted common
shares outstanding.
(3) Free cash flow is defined as net cash provided from operating
activities from continuing operations less property additions.
(4) Corporate includes The ServiceMaster Acceptance Company Limited
Partnership (SMAC) and the unallocated expenses of our headquarters
function.
|
|
|
|
|
|
|
|
SERVICEMASTER GLOBAL HOLDINGS, INC.
Consolidated Statements of Operations and Comprehensive Income
(In millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2017
|
|
|
2016
|
Revenue
|
|
$
|
643
|
|
|
$
|
608
|
Cost of services rendered and products sold
|
|
|
346
|
|
|
|
324
|
Selling and administrative expenses
|
|
|
186
|
|
|
|
173
|
Amortization expense
|
|
|
7
|
|
|
|
8
|
Fumigation related matters
|
|
|
1
|
|
|
|
3
|
Impairment of software and other related costs
|
|
|
2
|
|
|
|
—
|
Restructuring charges
|
|
|
2
|
|
|
|
1
|
Gain on sale of Merry Maids branches
|
|
|
—
|
|
|
|
(1)
|
Interest expense
|
|
|
37
|
|
|
|
38
|
Interest and net investment income
|
|
|
—
|
|
|
|
(1)
|
Income from Continuing Operations before Income Taxes
|
|
|
62
|
|
|
|
62
|
Provision for income taxes
|
|
|
24
|
|
|
|
23
|
Income from Continuing Operations
|
|
|
38
|
|
|
|
39
|
Income from discontinued operations, net of income taxes
|
|
|
1
|
|
|
|
—
|
Net Income
|
|
$
|
39
|
|
|
$
|
39
|
Total Comprehensive Income
|
|
$
|
40
|
|
|
$
|
40
|
Weighted-average common shares outstanding - Basic
|
|
|
134.5
|
|
|
|
135.6
|
Weighted-average common shares outstanding - Diluted
|
|
|
136.0
|
|
|
|
137.8
|
Basic Earnings Per Share:
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$
|
0.28
|
|
|
$
|
0.29
|
Income from discontinued operations, net of income taxes
|
|
|
—
|
|
|
|
—
|
Net Income
|
|
|
0.29
|
|
|
|
0.28
|
Diluted Earnings Per Share:
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$
|
0.28
|
|
|
$
|
0.28
|
Income from discontinued operations, net of income taxes
|
|
|
—
|
|
|
|
—
|
Net Income
|
|
|
0.29
|
|
|
|
0.28
|
|
|
|
|
|
|
|
SERVICEMASTER GLOBAL HOLDINGS, INC.
Consolidated Statements of Financial Position
(In millions, except share data)
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
March 31,
|
|
December 31,
|
|
|
2017
|
|
2016
|
Assets:
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
334
|
|
$
|
291
|
Marketable securities
|
|
|
25
|
|
|
25
|
Receivables, less allowances of $22 and $22, respectively
|
|
|
498
|
|
|
536
|
Inventories
|
|
|
45
|
|
|
43
|
Prepaid expenses and other assets
|
|
|
70
|
|
|
70
|
Deferred customer acquisition costs
|
|
|
31
|
|
|
34
|
Total Current Assets
|
|
|
1,003
|
|
|
998
|
Other Assets:
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
215
|
|
|
210
|
Goodwill
|
|
|
2,258
|
|
|
2,247
|
Intangible assets, primarily trade names, service marks and
trademarks, net
|
|
|
1,704
|
|
|
1,708
|
Restricted cash
|
|
|
89
|
|
|
95
|
Notes receivable
|
|
|
38
|
|
|
37
|
Long-term marketable securities
|
|
|
22
|
|
|
19
|
Other assets
|
|
|
72
|
|
|
71
|
Total Assets
|
|
$
|
5,402
|
|
$
|
5,386
|
Liabilities and Shareholders' Equity:
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
105
|
|
$
|
112
|
Accrued liabilities:
|
|
|
|
|
|
|
Payroll and related expenses
|
|
|
46
|
|
|
54
|
Self-insured claims and related expenses
|
|
|
102
|
|
|
111
|
Accrued interest payable
|
|
|
19
|
|
|
16
|
Other
|
|
|
78
|
|
|
60
|
Deferred revenue
|
|
|
645
|
|
|
629
|
Current portion of long-term debt
|
|
|
139
|
|
|
59
|
Total Current Liabilities
|
|
|
1,134
|
|
|
1,042
|
Long-Term Debt
|
|
|
2,694
|
|
|
2,772
|
Other Long-Term Liabilities:
|
|
|
|
|
|
|
Deferred taxes
|
|
|
717
|
|
|
719
|
Other long-term obligations, primarily self-insured claims
|
|
|
173
|
|
|
167
|
Total Other Long-Term Liabilities
|
|
|
890
|
|
|
886
|
Commitments and Contingencies
|
|
|
|
|
|
|
Shareholders' Equity:
|
|
|
|
|
|
|
Common stock $0.01 par value (authorized 2,000,000,000 shares with
144,854,026 shares issued and 134,206,545 outstanding at March 31,
2017 and 144,339,338 shares issued and 135,030,283 outstanding at
December 31, 2016)
|
|
|
2
|
|
|
2
|
Additional paid-in capital
|
|
|
2,284
|
|
|
2,274
|
Accumulated deficit
|
|
|
(1,366)
|
|
|
(1,405)
|
Accumulated other comprehensive loss
|
|
|
(1)
|
|
|
(3)
|
Less common stock held in treasury, at cost (10,647,481 shares at
March 31, 2017 and 9,309,055 shares at December 31, 2016)
|
|
|
(233)
|
|
|
(182)
|
Total Shareholders' Equity
|
|
|
685
|
|
|
686
|
Total Liabilities and Shareholders' Equity
|
|
$
|
5,402
|
|
$
|
5,386
|
|
|
|
|
|
|
|
SERVICEMASTER GLOBAL HOLDINGS, INC.
Consolidated Statements of Cash Flows
(In millions)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2017
|
|
2016
|
Cash and Cash Equivalents and Restricted Cash at Beginning of
Period
|
|
$
|
386
|
|
$
|
296
|
Cash Flows from Operating Activities from Continuing Operations:
|
|
|
|
|
|
|
Net Income
|
|
|
39
|
|
|
39
|
Adjustments to reconcile net income to net cash provided from
operating activities:
|
|
|
|
|
|
|
Income from discontinued operations, net of income taxes
|
|
|
(1)
|
|
|
—
|
Depreciation expense
|
|
|
18
|
|
|
13
|
Amortization expense
|
|
|
7
|
|
|
8
|
Amortization of debt issuance costs
|
|
|
1
|
|
|
1
|
Fumigation related matters
|
|
|
1
|
|
|
3
|
Payments on fumigation related matters
|
|
|
(1)
|
|
|
—
|
Impairment of software and other related costs
|
|
|
2
|
|
|
—
|
Gain on sale of Merry Maids branches
|
|
|
—
|
|
|
(1)
|
Deferred income tax provision
|
|
|
—
|
|
|
1
|
Stock-based compensation expense
|
|
|
5
|
|
|
3
|
Other
|
|
|
3
|
|
|
—
|
Change in working capital, net of acquisitions:
|
|
|
|
|
|
|
Receivables
|
|
|
36
|
|
|
28
|
Inventories and other current assets
|
|
|
(4)
|
|
|
(7)
|
Accounts payable
|
|
|
(4)
|
|
|
5
|
Deferred revenue
|
|
|
15
|
|
|
16
|
Accrued liabilities
|
|
|
(16)
|
|
|
(16)
|
Accrued interest payable
|
|
|
3
|
|
|
(7)
|
Current income taxes
|
|
|
23
|
|
|
19
|
Net Cash Provided from Operating Activities from Continuing
Operations
|
|
|
126
|
|
|
106
|
Cash Flows from Investing Activities from Continuing Operations:
|
|
|
|
|
|
|
Property additions
|
|
|
(18)
|
|
|
(17)
|
Sale of equipment and other assets
|
|
|
—
|
|
|
3
|
Business acquisitions, net of cash acquired
|
|
|
(11)
|
|
|
(2)
|
Purchases of available-for-sale securities
|
|
|
(3)
|
|
|
(2)
|
Sales and maturities of available-for-sale securities
|
|
|
—
|
|
|
2
|
Origination of notes receivable
|
|
|
(25)
|
|
|
(23)
|
Collections on notes receivable
|
|
|
26
|
|
|
24
|
Net Cash Used for Investing Activities from Continuing Operations
|
|
|
(31)
|
|
|
(15)
|
Cash Flows from Financing Activities from Continuing Operations:
|
|
|
|
|
|
|
Payments of debt
|
|
|
(14)
|
|
|
(19)
|
Repurchase of common stock
|
|
|
(51)
|
|
|
—
|
Issuance of common stock
|
|
|
5
|
|
|
2
|
Net Cash Used for Financing Activities from Continuing Operations
|
|
|
(60)
|
|
|
(17)
|
Cash Flows from Discontinued Operations:
|
|
|
|
|
|
|
Cash provided from operating activities
|
|
|
1
|
|
|
—
|
Net Cash Provided from Discontinued Operations
|
|
|
1
|
|
|
—
|
Effect of Exchange Rate Changes on Cash
|
|
|
—
|
|
|
1
|
Cash Increase During the Period
|
|
|
37
|
|
|
74
|
Cash and Cash Equivalents and Restricted Cash at End of Period
|
|
$
|
423
|
|
$
|
371
|
|
|
|
|
|
|
|
The following table presents reconciliations of net income to adjusted
net income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
(In millions)
|
|
|
2017
|
|
|
2016
|
Net Income
|
|
|
$
|
39
|
|
|
$
|
39
|
Amortization expense
|
|
|
|
7
|
|
|
|
8
|
Fumigation related matters
|
|
|
|
1
|
|
|
|
3
|
Restructuring charges
|
|
|
|
2
|
|
|
|
1
|
Gain on sale of Merry Maids branches
|
|
|
|
—
|
|
|
|
(1)
|
Impairment of software and other related costs
|
|
|
|
2
|
|
|
|
—
|
Income from discontinued operations, net of income taxes
|
|
|
|
(1)
|
|
|
|
—
|
Tax impact of adjustments
|
|
|
|
(5)
|
|
|
|
(3)
|
Adjusted Net Income
|
|
|
$
|
46
|
|
|
$
|
47
|
Weighted-average diluted common shares outstanding
|
|
|
|
136.0
|
|
|
|
137.8
|
Adjusted earnings per share
|
|
|
$
|
0.34
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
The following table presents reconciliations of net cash provided from
operating activities from continuing operations to free cash flow.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
(In millions)
|
|
2017
|
|
|
2016
|
Net Cash Provided from Operating Activities from Continuing
Operations
|
|
$
|
126
|
|
|
$
|
106
|
Property additions
|
|
|
(18)
|
|
|
|
(17)
|
Free Cash Flow
|
|
$
|
109
|
|
|
$
|
89
|
|
|
|
|
|
|
|
|
The following table presents reconciliations of net income to Adjusted
EBITDA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
(In millions)
|
|
2017
|
|
|
2016
|
Net income
|
|
$
|
39
|
|
|
$
|
39
|
Depreciation and amortization expense
|
|
|
25
|
|
|
|
21
|
Fumigation related matters
|
|
|
1
|
|
|
|
3
|
Non-cash stock-based compensation expense
|
|
|
5
|
|
|
|
3
|
Restructuring charges
|
|
|
2
|
|
|
|
1
|
Gain on sale of Merry Maids branches
|
|
|
—
|
|
|
|
(1)
|
Non-cash impairment of software and other related costs
|
|
|
2
|
|
|
|
—
|
Income from discontinued operations, net of income taxes
|
|
|
(1)
|
|
|
|
—
|
Provision for income taxes
|
|
|
24
|
|
|
|
23
|
Interest expense
|
|
|
37
|
|
|
|
38
|
Adjusted EBITDA
|
|
$
|
134
|
|
|
$
|
127
|
|
|
|
|
|
|
|
|
Terminix
|
|
$
|
81
|
|
|
$
|
94
|
American Home Shield
|
|
|
31
|
|
|
|
19
|
Franchise Services Group
|
|
|
21
|
|
|
|
18
|
Corporate
|
|
|
—
|
|
|
|
(4)
|
Adjusted EBITDA
|
|
$
|
134
|
|
|
$
|
127
|
Terminix Segment
Revenue by service line is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
2017
|
|
|
2016
|
|
|
Growth
|
|
|
Acquired
|
|
|
Organic
|
Pest Control(1)
|
|
$
|
202
|
|
|
$
|
206
|
|
|
$
|
(4
|
)
|
|
|
(2
|
)
|
%
|
|
|
$
|
3
|
|
|
1
|
%
|
|
|
$
|
(7
|
)
|
|
|
(3
|
)
|
%
|
Termite and Other Services(2)
|
|
|
149
|
|
|
|
143
|
|
|
|
6
|
|
|
|
4
|
|
%
|
|
|
|
1
|
|
|
1
|
%
|
|
|
|
5
|
|
|
|
3
|
|
%
|
Other
|
|
|
14
|
|
|
|
15
|
|
|
|
(1
|
)
|
|
|
(7
|
)
|
%
|
|
|
|
—
|
|
|
—
|
%
|
|
|
|
(1
|
)
|
|
|
(7
|
)
|
%
|
Total revenue
|
|
$
|
365
|
|
|
$
|
364
|
|
|
$
|
1
|
|
|
|
—
|
|
%
|
|
|
$
|
4
|
|
|
1
|
%
|
|
|
$
|
(3
|
)
|
|
|
(1
|
)
|
%
|
(1)
|
|
For the three months ended March 31, 2017, organic pest control
revenue decreased three percent, which was significantly impacted
by a $6 million organic revenue decline associated with Alterra.
Excluding Alterra, organic pest control revenue decreased $1
million, or less than one percent.
|
|
|
|
(2)
|
|
Termite renewal revenue comprised 53 percent and 57 percent of
total revenue from Termite and Other Services for the
first-quarter of 2017 and 2016, respectively.
|
American Home Shield Segment
The table below presents selected operating metrics related to renewable
customer counts and customer retention.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31,
|
|
|
2017
(1)
|
|
|
2016
|
Growth in Home Warranties
|
|
15
|
%
|
|
|
7
|
%
|
Customer Retention Rate
|
|
76
|
%
|
|
|
75
|
%
|
(1)
|
|
As of March 31, 2017, excluding the OneGuard and Landmark accounts
acquired on June 27, 2016 and November 30, 2016, respectively, the
growth in home warranties was 7 percent, and, excluding all
OneGuard and Landmark accounts, the customer retention rate for
our American Home Shield segment was 75 percent.
|
Franchise Services Group Segment
Revenue by service line is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
% of
|
|
|
March 31,
|
|
|
Revenue
|
(In millions)
|
|
2017
|
|
|
2016
|
|
|
2017
|
Royalty Fees
|
|
$
|
31
|
|
|
$
|
28
|
|
|
64
|
%
|
Company-Owned Merry Maids Branches
|
|
|
—
|
|
|
|
4
|
|
|
—
|
|
Janitorial National Accounts
|
|
|
11
|
|
|
|
10
|
|
|
22
|
|
Sales of Products
|
|
|
3
|
|
|
|
3
|
|
|
6
|
|
Other
|
|
|
4
|
|
|
|
3
|
|
|
8
|
|
Total revenue
|
|
$
|
50
|
|
|
$
|
49
|
|
|
100
|
%
|
ServiceMaster Global Holdings, Inc.
Investor Relations:
Brian Turcotte, 901-597-3282
Brian.Turcotte@servicemaster.com
or
Media:
Peter Tosches, 901-597-8449
Peter.Tosches@servicemaster.com