- Revenue from continuing operations expected between $510 and
$525 million
- Adjusted EBITDA from continuing operations expected between
$105 and $115 million
- $267 million in cash on hand and over $635 million in total
liquidity as of May 31, 2020
ServiceMaster Global Holdings, Inc. (NYSE: SERV), a leading
provider of essential services to residential and commercial
customers in the termite, pest control, cleaning and restoration
markets, today provided an outlook for the second quarter of
2020.
Second-Quarter 2020 Outlook
In order to update the market on recent trends in the business,
second-quarter 2020 Revenue and Adjusted EBITDA guidance is
provided below for Continuing Operations, and the ServiceMaster
Brands Divesture Group.
Continuing Operations
SMB Divestiture Group
(In millions)
Low
High
Low
High
Revenue
$
510
$
525
$
57
$
62
Growth Rate
3%
6%
(12) %
(5) %
Adjusted EBITDA
$
105
$
115
$
20
$
23
Margin
21%
22%
35%
37%
Residential Pest Control
Residential Pest Control organic revenue growth is expected to
be flat to slightly down versus prior year. Continuing improvement
in service levels and customer retention in the second quarter are
expected to be offset by the COVID-19 related suspension of the
door-to-door summer sales program in most markets and lower
one-time sales, primarily related to bedbug services. The impact of
COVID-19 related service postponements have continued to moderate
and improve from late first quarter peaks but remain higher than
prior year.
Commercial Pest Control
Commercial pest control organic revenue growth is expected to be
down approximately 10 percent versus prior year. COVID-19 related
service postponements peaked in April and continue to trend
positively into June but remain above prior year levels. New unit
sales, primarily one-time sales such as bedbug and bird services,
have been negatively impacted by COVID-19. Disinfection services
are not expected to be material in the second quarter. Future
trends in commercial pest control are expected to closely follow
state and city specific reopening plans.
Termite and Home Services
Termite and home services organic revenue growth is expected to
be three to five percent, primarily driven by higher core termite
completion new unit sales due to the strong termite swarm season
and the successful roll-out of our new affordable monthly payment
offering.
ServiceMaster Brands Divestiture Group
ServiceMaster Brands is continuing to see strong momentum in
disinfection services in both the ServiceMaster Clean and
ServiceMaster Restore brands. Growth in royalty fees from
disinfection services are expected to partially offset the impact
of COVID-19 related service postponements in ServiceMaster Clean
and a decrease in area-wide events driven by the mild winter in
ServiceMaster Restore. Residential cleaning services, through the
Merry Maids brand, are expected to remain well below prior year
levels in the second quarter but have increased from lows in April
as our franchisees resume operations and demand for cleaner homes
increases.
Liquidity
As of May 31, 2020, the Company had total liquidity of over $635
million, including $267 million in available cash. Strong cash
generation in the first two months of the second quarter was the
result of the flow-through of Adjusted EBITDA as well as the impact
of payroll and income tax deferrals as a result of the CARES
Act.
Adjusted EBITDA
Adjusted EBITDA guidance reflects the impact of previously
disclosed cost actions as well as additional labor and vehicle
efficiencies and other indirect cost actions targeted in the
quarter. The Company will continue to look for additional permanent
and temporary cost actions to improve Adjusted EBITDA margins
throughout the remainder of 2020.
Costs Historically Allocated to ServiceMaster Brands are
expected to be approximately $3 million in the second quarter.
These costs are reflected in the second quarter guidance and will
impact continuing operations and benefit the SMB Divestiture
Group.
The second quarter outlook reflects an $8 million year-over-year
increase in termite damage claims and mitigation expense and is
largely in line with expectations. The timing and frequency of new
termite damage claim litigated case filings is difficult to
predict. The actual pace and volume of litigated termite damage
claims could differ.
The Company plans to announce second quarter results on August
6, 2020 and will provide details in due course.
About ServiceMaster
ServiceMaster Global Holdings, Inc. is a leading provider of
termite and pest control, cleaning and restoration services in both
the residential and commercial markets, 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 AmeriSpec (home
inspections), Copesan (commercial national accounts pest
management), Furniture Medic (cabinet and furniture repair), Merry
Maids (residential cleaning), Nomor (European pest management),
ServiceMaster Clean (commercial cleaning), ServiceMaster Restore
(restoration and reconstruction), Terminix (termite and pest
control) and Terminix Commercial (commercial 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. 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. Such risks,
uncertainties and changes in circumstances include, but are not
limited to: the possibility that the review of strategic
alternatives for our ServiceMaster Brands businesses will not
result in a transaction or that the anticipated benefits will not
be realized, and the diversion of management time and other
business disruption during the period of the review; the impact of
reserves attributable to pending Litigated and Non-Litigated Claims
for termite damages; the impact of COVID-19 on our operations;
lawsuits, enforcement actions and other claims by third parties or
governmental authorities; compliance with, or violation of
environmental health and safety laws and regulations; weakening
general economic conditions; weather conditions and seasonality;
the success of our business strategies, and costs associated with
restructuring initiatives. 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.
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
like or comparable to similarly titled measures of other companies.
Adjusted EBITDA and ServiceMaster Brands Divestiture Group Adjusted
EBITDA are not measurements of the Company’s financial performance
under GAAP and should not be considered as an alternative to net
income, net earnings from discontinued operations or any other
performance measures derived in accordance with GAAP. A
reconciliation of the forward-looking 2020 Adjusted EBITDA guidance
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.
Management uses these non-GAAP financial measures to facilitate
operating performance 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 performance and liquidity 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; acquisition-related costs;
fumigation related matters; non-cash stock-based compensation
expense; restructuring and other charges; realized (gain) on
investment in frontdoor, inc.; net earnings from discontinued
operations; (benefit) provision for income taxes; loss on
extinguishment of debt; and interest expense. The Company’s
definition of Adjusted EBITDA may not be comparable to similarly
titled measures of other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200611005244/en/
Investor Relations: Jesse Jenkins 901.597.8259
Jesse.Jenkins@servicemaster.com Media: James Robinson
901.597.7521 James.Robinson@servicemaster.com
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