ServiceMaster Reports Second-Quarter Earnings

The ServiceMaster Company, Downers Grove, Ill., recognizes the drop in consumer confidence and volatile economy as factors in lackluster growth, but also alludes to a 2 percent rise in second-quarter revenues over 2001 as a sign that the company remains stable.

“The quarter may not seem terribly exciting, but it’s the first time in five quarters we’ve not seen a decline in our earnings per share,” said Steven Preston, chief financial officer for ServiceMaster, during a conference call (click here for a Webcast of the conference call). Overall, revenues rose to $1.05 billion, a 2 percent jump over second quarter revenues in 2001.

However, on a comparable basis, this figure represents a flat figure across 2001 and 2002, Preston pointed out.

In addition, the TruGreen segment reported $434 million in second quarter revenues, a 1 percent gain over 2001. TruGreen also claimed a 1 percent raise in revenues for the first half of 2002, which came in at $663 million. These increases can be credited to positive customer retention, new marketing strategies and more effective product distribution channels, Preston noted.

“We’ve seen a continuation in the positive trends for our lawn care business,” he said. While revenues for the LandCare unit decreased, Preston said ServiceMaster is encouraged by the stability in this area.

Jonathan Ward, chief executive officer of ServiceMaster, touched briefly on the recent dissolution of the ServiceMaster-Home Depot marketing venture. “We’ve learned what worked and what didn’t work,” he said. “We more than hold our own as one of the most recognized brands, and we’ve reaffirmed our reputation in the service industry, but Home Depot cannot give our model the attention as they’re growing same-store sales.” He added that the company is currently exploring other retail channel possibilities.

Of course, Ward also identified the recent alliance with Yahoo! as a valuable way for additional consumers to learn more about the various ServiceMaster brands. “We’re actively moving forward with other retailers in different channels,” he said.

Although consumer confidence has fallen and the last few weeks have been a “rollercoaster,” the company remains optimistic that consumers will continue to invest in home services, Ward noted. “The home is the financial center of the American family,” he said. “It’s also the emotional center, and consumers will spend money where they care.”

At press time, ServiceMaster (SVM) stock was trading at $11.80 a share on the New York Stock Exchange, but click here for up-to-the-minute stock updates.

The author is Assistant Editor – Internet of Lawn & Landscape magazine and can be reached at kmohn@lawnandlandscape.com.