Late Spring Hurts ServiceMaster

The late snowfall that hit areas of the country in March, along with continued cool weather throughout much of the Northeast, hurt first-quarter sales at TruGreen-ChemLawn. Overall, ServiceMaster reported revenues of $735 million for the first three months of the year, which were consistent with last year.

“We reported disappointing financial results in the face of difficult conditions,” explained Jon Ward, chairman and chief executive officer. “Although lawn care counts increased at TruGreen, late season snowfall delayed our production season.

“In light of these trends, we are moving aggressively to control costs, while keeping service levels high in every one of our brands,” Ward continued. “At the same time, we are using new consumer research to adjust our go-to-market strategies and sharpen our brand value propositions to create a sustainable competitive advantage.”

The TruGreen business, in particular, had first-quarter sales of $226 million, down 1 percent from the same period in 2002. The company reported that it increased its customer count by more than 2 percent while boosting its customer retention to 63.5 percent, but completed applications still declined significantly. “This decline was wholly attributable to adverse weather in March in several key regions that delayed the normal completion of service anticipated to occur during the first quarter,” reported the company. “Most, if not all of this service should be made up in the second and third quarters.”

On the plus side, the TruGreen LandCare business benefited from the weather, especially in markets that offer snow removal.

Overall, however, the combined TruGreen business posted an operating loss of $8.8 million for the quarter, compared with a $6.5 million gain last year.

ServiceMaster’s stock continues to trade around the $10 a share mark.

The author is Editor/Publisher of Lawn & Landscape magazine and can be reached at bwest@lawnandlandscape.com.