- Terminix revenue increased 7 percent year-over-year,
including 2 percent organically
- Terminix Commercial achieves strong retention gains of over
300bps
- Refinanced $600 million Term Loan on November 5, 2019, 75bps
rate improvement
- Full-year 2019 guidance adjusted for recent acquisitions and
third-quarter performance
- Terminix organic revenue growth expected between 2.5 and 3
percent
- Revenue is expected to increase to between $2,070 and $2,085
million
- Adjusted EBITDA expected between $415 and $425
million
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 announced unaudited third-quarter 2019 results.
For the quarter ended September 30, 2019, the Company reported a
year-over-year revenue increase of seven percent to $528 million
with net income of $25 million, or $0.19 per share. Adjusted
EBITDA(1) for the quarter was $97 million, versus $95 million for
the same period in 2018. Adjusted net income(2) was $42 million, or
$0.31 per share, versus $32 million, or $0.24 per share, for the
same period in 2018. Both Adjusted EBITDA and Adjusted net income,
in the third quarter of 2018, include $11 million of costs
historically allocated to American Home Shield.
“Although we had a challenging quarter, we continue to make
progress on the execution of our long-term value creation strategy
and remain confident in our ability to deliver sustainable
profitable growth,” said ServiceMaster CEO Nik Varty. “We are
improving our service levels across all of our businesses, which
has resulted in continued stronger retention rates, net promoter
scores, customer satisfaction and ultimately organic growth.
Terminix Commercial showed strong retention gains in the quarter
and added significant additional capabilities and talent with the
recent acquisitions of Gregory Pest Solutions and McCloud Services.
ServiceMaster Brands had a strong quarter and continues to create
value for our franchise network through development of centers of
excellence in healthcare cleaning and disinfections as well as
commercial national accounts. While I am pleased with the progress
we are making in all of these areas, our third quarter EBITDA
performance is a reminder of how much more work we have to do.”
The Company’s ongoing focus in Terminix Residential is
continuing the customer-first culture change that is underway with
its front-line associates, paying them for their performance,
increasing focus on recurring high-margin product lines and
enhancing productivity through a disciplined operational cadence.
Terminix Residential is improving consistency in its efforts
towards operational excellence and ensuring that it delivers an
unparalleled customer experience at every customer interaction.
The Company has taken strong actions in addressing two legacy
risks, termite damage claims and fumigation services. Meaningful
progress has been made to address the previously announced increase
in termite damage claims, emerging from a specific species of
termite. Those actions were initiated in early 2018 and include
better technician training, better documentation, an improved
pricing structure, a systematic retreatment process in the
high-risk region and working more closely with our customers to
proactively resolve problems.
Similar to most industry peers, the Company announced earlier
this year that it would outsource its fumigation business to reduce
its risk, while ensuring it could continue to provide this service
for customers who need it. The initial execution of this transition
was challenging, and the results did not meet expectations. The
Company is implementing a plan to improve performance issues
through better subcontractor management and renegotiating better
pricing with its service providers to ensure that the business has
attractive economics.
Consolidated Performance
Three Months Ended September
30,
Nine Months Ended September
30,
$ millions
2019
2018
B/(W)
2019
2018
B/(W)
Revenue
$
528
$
496
$
32
$
1,570
$
1,443
$
127
YoY growth
7
%
9
%
Gross Margin
223
218
5
701
668
33
% of revenue
42.3
%
44.0
%
(1.7)
pts
44.6
%
46.3
%
(1.6)
pts
SG&A
149
146
(4)
436
417
(19)
% of revenue
(28.3)
%
(29.4)
%
1.1
pts
(27.8)
%
(28.9)
%
1.1
pts
Income from Continuing Operations
before Income Taxes
35
25
10
193
107
87
% of revenue
6.6
%
5.0
%
1.6
pts
12.3
%
7.4
%
4.9
pts
Net Income
25
71
(45)
154
207
(53)
% of revenue
4.8
%
14.2
%
(9.4)
pts
9.8
%
14.3
%
(4.5)
pts
Adjusted Net Income(2)
42
32
10
154
105
49
% of revenue
7.9
%
6.5
%
1.4
pts
9.8
%
7.3
%
2.5
pts
Adjusted EBITDA(1)
97
95
2
337
317
20
% of revenue
18.4
%
19.2
%
(0.8)
pts
21.5
%
22.0
%
(0.5)
pts
Net Cash Provided from Operating
Activities from Continuing Operations
55
66
(11)
213
204
9
Free Cash Flow(3)
49
60
(11)
191
170
22
Segment Performance
Revenue and Adjusted EBITDA for each reportable segment and
Corporate and Other Operations were as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
Revenue
Adjusted EBITDA
Revenue
Adjusted EBITDA
$ millions
2019
B/(W) vs. PY
2019
B/(W) vs. PY
2019
B/(W) vs. PY
2019
B/(W) vs. PY
Terminix
$
461
$
26
$
72
$
(9)
$
1,375
$
116
$
261
$
(16)
YoY growth / % of revenue
6
%
15.7
%
(2.9)
pts
9
%
19.0
%
(3.1)
pts
ServiceMaster Brands
63
3
22
2
191
7
70
2
YoY growth / % of revenue
5
%
35.4
%
0.7
pts
4
%
36.5
%
(0.1)
pts
Corporate and Other
Operations(3)
4
4
3
(2)
4
3
7
1
Costs historically allocated to
American Home Shield
—
—
—
11
—
—
—
33
Total
$
528
$
32
$
97
$
2
$
1,570
$
127
$
337
$
20
YoY growth / % of revenue
7
%
18.4
%
(0.8
)pts
9
%
21.5
%
(0.5)
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 seven percent year-over-year revenue growth in
the third quarter of 2019, including two percent organic growth.
Organic revenue growth of two percent in residential pest control
was driven by pricing. Organic revenue growth of one percent in
commercial pest control was driven by strong year-over-year gains
in retention offsetting slower one-time and new unit sales. Organic
revenue growth of two percent in termite and home services was
driven by pricing realization in termite completions and new units
in home services, more than offsetting a reduction in high-margin
termite renewals driven partially by price increases in the market
of Mobile, Ala., where activity of the Formosan termite, an
aggressive invasive species, is concentrated. Acquisition revenue
growth of five percent, primarily in the commercial pest service
line, was principally driven by the January 2019 Assured
Environments acquisition.
Terminix Adjusted EBITDA was $72 million for the third quarter,
or a year-over-year decrease of 11 percent. Terminix invested $6
million in growth and had additional costs of $4 million in
spin-related dis-synergies, $4 million from outsourcing fumigation
services, and $2 million in termite damage claims. These costs were
partially offset by $2 million from organic revenue conversion, as
well as $4 million in Adjusted EBITDA contribution from
acquisitions. The $2 million organic revenue conversion was
impacted by lower termite renewal revenue and growth in product
sales.
The $6 million increase in investments in growth contains $2
million from increased sales and marketing, $2 million from
investments related to the Salesforce operating system
implementation, as well as $2 million from investments to optimize
our commercial pest business and to transform our operating model.
The Company was also impacted by $4 million in spin-related
dis-synergies. We also had a reduction of $4 million due to subpar
execution during the outsourcing of fumigation completions.
ServiceMaster Brands
ServiceMaster Brands reported a $3 million, or five percent,
year-over-year revenue increase in the third quarter of 2019.
Growth in the quarter included seven percent growth in commercial
cleaning national accounts as well as three percent growth in
high-margin royalty revenue.
Adjusted EBITDA in the third quarter was up $2 million, or seven
percent, year-over-year, primarily due to conversion of high-margin
royalty revenue growth.
Corporate and Other Operations
Corporate and Other Operations includes our pest control
operations in Europe, our financing subsidiary and our headquarters
functions. Corporate and Other Operations contributed $3 million in
Adjusted EBITDA in the three months ended September 30, 2019.
Approximately $1 million was related to European pest control
operations with the remaining primarily driven by continued
favorability in claims results related to the Company’s workers’
compensation, auto and general liability program.
Other Matters
Termite Damage Claims
Our termite damage warranty is a differentiator that has enabled
us to become the market leader of this product line. The Formosan
termite activity driving higher claims expense remains largely
concentrated in the Mobile, Alabama region, which represents less
than two percent of termite revenue. We are taking decisive actions
to mitigate increasing claims costs in this high-risk region.
Actions include improving technician training, documentation and
pricing, while implementing a systematic retreatment process in the
high-risk region. These actions are expected to enable us to manage
termite damage claims within our long-term margin profile.
Fumigation Services
In order to resolve potential legacy risks related to fumigation
operations, the Company outsourced completion services to a
third-party provider. This common industry arrangement allowed the
Company to maintain its position with the customer as a
full-service pest control provider.
In our attempt to rapidly address these risks, we experienced
execution missteps which led to increased outsourcing costs
limiting our ability to grow completions which impacted our bottom
line. The Company implemented a corrective plan to improve
performance through better subcontractor management and negotiation
of better pricing with its service providers to ensure that the
business has attractive economics.
Recent Acquisitions
On September 6, 2019, the Company closed on Nomor Holding AB
based in Stockholm, Sweden. Nomor represents the Company’s entrance
into the fast growing and second largest pest control market in the
world. Nomor will continue to operate under the Nomor and Pelias
brand names in Sweden and Norway, respectively, and will focus on
organic growth opportunities in the Scandinavian region as well as
acquisition opportunities throughout the remaining European
markets. The operations of Nomor will be reported in Corporate and
Other Operations and Nomor management will report directly to Dion
Persson, SVP, Strategy and International Operations.
On October 7, 2019, the Company closed on McCloud Services based
in Elgin, Illinois. This fourth-generation pest control company
founded in 1904, and one of the largest Copesan partners, is an
industry leader in the growing food service vertical of commercial
pest control and provides additional capabilities to its commercial
pest management business.
On October 10, 2019, the Company closed on another Copesan
partner, Gregory Pest Solutions, based in Greenville, South
Carolina. Founded in 1972 by Phil and Sara Gregory, and growing to
span 11 states across the Southeast, the Company adds additional
capabilities in multi-family housing. Both of these acquisitions
will report to Greg Rutherford, President of Terminix
Commercial.
Refinancing
On November 5, 2019, the Company will close on an amended $600
million Term Loan B due 2026, as well as a $400 million revolving
credit agreement due 2024. The proceeds of the transaction will be
used to repay approximately $171 million of debt outstanding under
its previous Term Loan B due 2023, $120 million outstanding under
its previous revolving credit agreement due 2021, as well as $150
million from a recent short-term borrowing entered on October 4,
2019. Net of transaction costs, the Company expects to add
approximately $146 million in cash to its balance sheet for general
corporate uses.
The amended term loan facility maturing 2026 priced at 99.875%
of the principal amount and bears interest at a fluctuating rate of
LIBOR plus 1.75% per annum with a 0% LIBOR floor. Concurrently with
the refinancing, the Company intends to enter into a $550 million
seven-year interest rate swap locking in a fixed rate.
Giving effect to these transactions, the Company will have a net
debt to Adjusted EBITDA ratio of approximately 3.5x.
Free Cash Flow
Free cash flow was $191 million for the nine months ended
September 30, 2019, compared to $170 million for the nine months
ended September 30, 2018. The $22 million improvement was driven
primarily by lower property additions compared to prior year and a
decrease in cash interest as a result of debt reductions in 2019.
For the nine months ended September 30, 2019, free cash flow to
Adjusted EBITDA conversion remained strong at 57 percent.
Full-Year 2019 Outlook
The Company has increased full-year 2019 revenue guidance to
range from $2,070 million to $2,085 million, or an increase of
approximately 10 percent compared to 2018. Organic revenue growth
at Terminix is expected to range from 2.5 to 3 percent. The
increase to revenue guidance is driven primarily by the recently
announced acquisitions. Acquisition revenue for the full year 2019
is expected to be approximately $130 million. ServiceMaster Brands
will continue to focus on driving growth in commercial cleaning
national accounts and is expected to increase revenue in the
mid-single digits.
Full-year 2019 Adjusted EBITDA guidance is now expected between
$415 million and $425 million. The movement in Adjusted EBITDA
guidance includes an approximately $5 million increase from
acquisitions, $10 million reduction from the impact of termite
damage claims which can be difficult to forecast due to timing
unpredictability, $5 million reduction from additional investments
in growth and $10 million from lower revenue in termite renewals,
principally in the Mobile, Alabama region, and the impact of
outsourcing our fumigation services.
Going forward, we are confident we can improve our fumigation
operations. Although the timing of termite damage claims expense is
difficult to forecast in the short-term, we believe our strong
actions will allow us to manage termite damage claims within our
long-term margin profile.
A reconciliation of the forward-looking 2019 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.
Third-Quarter 2019 Earnings Conference Call
The Company will hold a conference call to discuss its
third-quarter 2019 financial and operating results at 8 a.m.
central time (9 a.m. Eastern time) on Tuesday, November 5,
2019.
Participants may join this conference call by dialing
888.225.8168 (or international participants, +1.303.223.4362).
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 presentation,
visit the Company’s investor relations home page.
The call will be available for replay until December 5, 2019. To
access the replay of this call, please call 800.633.8284 and enter
reservation number 21931830 (international participants:
+1.402.977.9140, reservation number 21931830). Or you can review
the webcast on the Company’s investor relations home page.
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 control),
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, including 2019 revenue, organic revenue
growth, Adjusted EBITDA and incremental margin outlook and
projections. 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: 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.
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 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: (gain) loss
from discontinued operations, net of income taxes; provision for
income taxes; interest expense; depreciation and amortization
expense; acquisition-related costs; fumigation related matters;
non-cash stock-based compensation expense; restructuring and other
charges; loss on extinguishment of debt; and realized (gain) on
investment in frontdoor, inc. 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 and
other charges; acquisition-related costs; realized (gain) on
investment in frontdoor, inc.; (gain) loss from discontinued
operations, net of income taxes; loss on extinguishment of debt;
and the tax impact of the aforementioned adjustments and the impact
of tax law change on deferred taxes. 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, net of government grant fundings for property
additions.
(4) Corporate and Other Operations includes our pest control
operations in Europe, our financing subsidiary and the unallocated
expenses of our headquarters functions.
SERVICEMASTER GLOBAL HOLDINGS,
INC.
Consolidated Statements of
Operations and Comprehensive Income
(In millions, except per share
data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
Revenue
$
528
$
496
$
1,570
$
1,443
Cost of services rendered and products
sold
305
278
869
776
Selling and administrative expenses
149
146
436
417
Amortization expense
7
6
19
14
Acquisition-related costs
8
1
12
2
Fumigation related matters
—
1
—
1
Restructuring and other charges
5
1
15
13
Realized (gain) on investment in
frontdoor, inc.
—
—
(40
)
—
Interest expense
19
33
64
107
Interest and net investment income
(1
)
(3
)
(5
)
(4
)
Loss on extinguishment of debt
—
10
6
10
Income from Continuing Operations
before Income Taxes
35
25
193
107
Provision for income taxes
9
7
39
32
Income from Continuing
Operations
26
18
155
74
Gain (loss) from discontinued operations,
net of income taxes
—
53
(1
)
133
Net Income
$
25
$
71
$
154
$
207
Total Comprehensive Income
$
18
$
74
$
141
$
224
Weighted-average common shares outstanding
- Basic
135.8
135.6
135.9
135.4
Weighted-average common shares outstanding
- Diluted
136.5
136.0
136.5
135.8
Basic Earnings Per Share:
Income from Continuing Operations
$
0.19
$
0.13
$
1.14
$
0.55
Gain (loss) from discontinued operations,
net of income taxes
—
0.39
—
0.98
Net Income
0.19
0.52
1.13
1.53
Diluted Earnings Per Share:
Income from Continuing Operations
$
0.19
$
0.13
$
1.13
$
0.55
Gain (loss) from discontinued operations,
net of income taxes
—
0.39
—
0.98
Net Income
0.19
0.52
1.13
1.52
SERVICEMASTER GLOBAL HOLDINGS,
INC.
Consolidated Statements of
Financial Position
(In millions, except share
data)
As of
As of
September 30,
December 31,
2019
2018
Assets:
Current Assets:
Cash and cash equivalents
$
140
$
224
Investment in frontdoor, inc.
—
445
Receivables, less allowances of $24 and
$21, respectively
214
186
Inventories
45
45
Prepaid expenses and other assets
72
61
Total Current Assets
470
962
Other Assets:
Property and equipment, net
208
201
Operating lease right-of-use assets
98
—
Goodwill
2,206
1,956
Intangible assets, primarily trade names,
service marks and trademarks, net
1,718
1,588
Restricted cash
89
89
Notes receivable
47
43
Long-term marketable securities
19
21
Deferred customer acquisition costs
103
77
Other assets
60
87
Total Assets
$
5,017
$
5,023
Liabilities and Stockholders'
Equity:
Current Liabilities:
Accounts payable
$
129
$
89
Accrued liabilities:
Payroll and related expenses
61
60
Self-insured claims and related
expenses
48
58
Accrued interest payable
21
14
Other
72
61
Deferred revenue
99
95
Current portion of lease liability
18
—
Current portion of long-term debt
56
49
Total Current Liabilities
505
425
Long-Term Debt
1,398
1,727
Other Long-Term Liabilities:
Deferred taxes
507
484
Other long-term obligations, primarily
self-insured claims
158
182
Long-term lease liability
113
—
Total Other Long-Term Liabilities
778
666
Commitments and Contingencies
Stockholders' Equity:
Common stock $0.01 par value (authorized
2,000,000,000 shares with 147,841,177 shares issued and 135,705,232
outstanding at September 30, 2019 and 147,209,928 shares issued and
135,687,558 outstanding at December 31, 2018)
2
2
Additional paid-in capital
2,330
2,309
Retained Earnings
313
156
Accumulated other comprehensive (loss)
income
(8)
5
Less common stock held in treasury, at
cost (12,135,945 shares at September 30, 2019 and 11,552,370 shares
at December 31, 2018)
(300)
(267)
Total Stockholders' Equity
2,337
2,204
Total Liabilities and Stockholders'
Equity
$
5,017
$
5,023
SERVICEMASTER GLOBAL HOLDINGS,
INC.
Consolidated Statements of
Cash Flows
(In millions)
Nine Months Ended
September 30,
2019
2018
Cash and Cash Equivalents and
Restricted Cash at Beginning of Period
$
313
$
563
Cash Flows from Operating Activities
from Continuing Operations:
Net Income
154
207
Adjustments to reconcile net income to net
cash provided from operating activities:
Loss (gain) from discontinued operations,
net of income taxes
1
(133
)
Depreciation expense
56
54
Amortization expense
19
14
Amortization of debt issuance costs
2
4
Amortization of lease right-of-use
assets
14
—
Fumigation related matters
—
1
Payments on fumigation related matters
(2
)
(1
)
Realized (gain) on investment in
frontdoor, inc.
(40
)
—
Loss on extinguishment of debt
6
10
Deferred income tax provision
12
21
Stock-based compensation expense
12
10
Gain on sale of marketable securities
(1
)
(1
)
Restructuring and other charges
15
13
Payments for restructuring and other
charges
(15
)
(11
)
Other
(25
)
(9
)
Change in working capital, net of
acquisitions:
Receivables
(14
)
(6
)
Inventories and other current assets
(11
)
(6
)
Accounts payable
21
13
Deferred revenue
1
2
Accrued liabilities
(3
)
3
Accrued interest payable
7
4
Current income taxes
3
16
Net Cash Provided from Operating
Activities from Continuing Operations
213
204
Cash Flows from Investing Activities
from Continuing Operations:
Property additions
(22
)
(42
)
Government grant fundings for property
additions
—
7
Sale of equipment and other assets
1
1
Business acquisitions, net of cash
acquired
(345
)
(160
)
Sales and maturities of available-for-sale
securities
3
—
Origination of notes receivable
(84
)
(79
)
Collections on notes receivable
95
74
Other investments
—
1
Net Cash Used for Investing Activities
from Continuing Operations
(352
)
(197
)
Cash Flows from Financing Activities
from Continuing Operations:
Borrowings of debt
720
1,000
Payments of debt
(640
)
(1,102
)
Repurchase of common stock
(33
)
—
Issuance of common stock
10
6
Net Cash Provided from (Used for)
Financing Activities from Continuing Operations
56
(96
)
Cash Flows from Discontinued
Operations:
Cash (used for) provided from operating
activities
(2
)
160
Cash used for investing activities
—
(1
)
Cash used for financing activities
—
(24
)
Net Cash (Used for) Provided from
Discontinued Operations
(2
)
136
Cash (Decrease) Increase During the
Period
(85
)
47
Cash and Cash Equivalents and
Restricted Cash at End of Period
$
228
$
610
The following table presents reconciliations of net income to
Adjusted net income.
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2019
2018
2019
2018
Net Income
$
25
$
71
$
154
$
207
Amortization expense
7
6
19
14
Acquisition-related costs
8
1
12
2
Fumigation related matters
—
1
—
1
Restructuring and other charges
5
1
15
13
Realized (gain) on investment in
frontdoor, inc.
—
—
(40
)
—
(Gain) loss from discontinued operations,
net of income taxes
—
(53
)
1
(133
)
Loss on extinguishment of debt
—
10
6
10
Tax impact of adjustments
(5
)
(3
)
(12
)
(9
)
Adjusted Net Income
$
42
$
32
$
154
$
105
Weighted-average diluted common shares
outstanding
136.5
136.0
136.5
135.8
Adjusted earnings per share
$
0.31
$
0.24
$
1.13
$
0.77
The following table presents reconciliations of net cash
provided from operating activities from continuing operations to
free cash flow.
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2019
2018
2019
2018
Net Cash Provided from Operating
Activities from Continuing Operations
$
55
$
66
$
213
$
204
Property additions and Government grant
fundings for property additions
(7
)
(7
)
(22
)
(35
)
Free Cash Flow
$
49
$
60
$
191
$
170
The following table presents reconciliations of net income to
Adjusted EBITDA.
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2019
2018
2019
2018
Net income
$
25
$
71
$
154
$
207
Depreciation and amortization expense
26
24
74
68
Acquisition-related costs
8
1
12
2
Fumigation related matters
—
1
—
1
Non-cash stock-based compensation
expense
3
2
12
10
Restructuring and other charges
5
1
15
13
Realized (gain) on investment in
frontdoor, inc.
—
—
(40
)
—
(Gain) loss from discontinued operations,
net of income taxes
—
(53
)
1
(133
)
Provision for income taxes
9
7
39
32
Loss on extinguishment of debt
—
10
6
10
Interest expense
19
33
64
107
Adjusted EBITDA
$
97
$
95
$
337
$
317
Terminix
$
72
$
81
$
261
$
277
ServiceMaster Brands
22
21
70
67
Corporate and Other Operations
3
4
7
6
Costs historically allocated to American
Home Shield
—
(11
)
—
(33
)
Adjusted EBITDA
$
97
$
95
$
337
$
317
Terminix Segment
Revenue by service line is as follows:
Three Months Ended
September 30,
(In millions)
2019
2018
Growth
Acquired
Organic
Residential Pest Control
$
189
$
178
$
11
6
%
$
7
4
%
$
4
2
%
Commercial Pest Control
105
93
12
13
%
11
12
%
1
1
%
Termite and Home Services
133
129
4
3
%
2
1
%
2
2
%
Other
24
22
2
8
%
—
—
%
2
8
%
$
450
$
421
$
29
7
%
$
20
5
%
$
9
2
%
Fumigation
11
14
(3
)
(22
)%
—
—
%
(3
)
(22
)%
Total revenue
$
461
$
436
$
26
6
%
$
20
5
%
$
6
1
%
ServiceMaster Brands Segment
Revenue by service line is as follows:
Three Months Ended
% of
% of
September 30,
Revenue
Revenue
(In millions)
2019
2018
2019
2018
Royalty Fees
$
32
$
31
51
%
52
%
Commercial Cleaning and other National
Accounts
18
17
28
28
Sales of Products
3
4
5
7
Other
10
8
16
14
Total revenue
$
63
$
60
100
%
100
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191105005422/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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