TruGreen Drags Down ServiceMaster During the Second Quarter; Lawncare Acquisition Activity is Minimal

ServiceMaster reported its earnings for the second quarter of 2013 on August 14, including results for its TruGreen Lawncare brand.  TruGreen’s revenues decreased 12.4% during the quarter compared to the prior year.

The decrease in revenues for TruGreen was attributed by the Company to a 6.3% decline in residential full program customer counts, inefficiencies in service delivery caused , in part, by integration issues with newly implemented technology and a decrease in revenues from commercial customers.  The Company briefly discussed its plans to address its operational challenges.

ServiceMaster also completed an impairment analysis which resulted in an impairment charge of $673.3 million to reduce the carrying value of goodwill on TruGreen’s books.

During the six months ended June 30, 2013, TruGreen had minimal acquisition activity compared to prior years. ServiceMaster’s 10-Q for the quarter did include the following statement:  “The Company expects to continue its tuck-in acquisition program at levels consistent with prior periods.”  Over the past two years, ServiceMaster’s acquisition activity has focused much more on the Terminix brand than TruGreen.

TruGreen’s president David Alexander joined the Company in December 2012.  ServiceMaster’s CEO joined the Company in June 2013.

TruGreen’s acquisition activity has been an important part of the overall lawncare acquisition market in recent years.  Its absence this year is an indication that merger & acquisition activity in this segment of the green industry is much lower than in past years.

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