- Full-year 2018 Terminix revenue
increased 7 percent year-over-year, the highest growth rate since
2002
- Fourth-quarter 2018 Terminix revenue
of $396 million increased 12 percent year-over-year
- Fourth-quarter 2018 Terminix organic
growth was 5 percent, the highest since 2014
- 2018 consolidated net loss of $41
million, included a $249 million mark-to-market adjustment on
investment in frontdoor, inc.
- Full-year 2018 Revenue and Adjusted
EBITDA(1) met the high-end and mid-point of guidance,
respectively
- Full-year 2019 consolidated revenue
guidance of between $2,020 million and $2,050 million
- Full-year 2019 consolidated Adjusted
EBITDA guidance of between $435 million and $445 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 fourth-quarter and full-year 2018 results. On
October 1, 2018 we completed the previously announced separation of
our American Home Shield business. Concurrent with the effective
date of the spin, the American Home Shield segment is reported in
discontinued operations for all displayed periods, including prior
periods.
For the full year 2018, the company reported a year-over-year
revenue increase of 8 percent to $1,900 million and a net loss of
$41 million, or $0.30 per share. Net loss was negatively impacted
by a $249 million mark-to-market loss on investment in frontdoor,
inc. Our post-spin Adjusted EBITDA of $398 million included $33
million of costs which were historically allocated to American Home
Shield but are not permitted to be classified as discontinued
operations under U.S. GAAP. Our pre-spin Adjusted EBITDA guidance
of between $425 and $435 million excluded these $33 million of
historically allocated costs. Adjusted net income(2) was $130
million, or $0.95 per share versus $101 million, or $0.74 per
share, for the same period in 2017.
For the fourth quarter, the company reported a year-over-year
revenue increase of 12 percent to $457 million and net loss of $248
million, or $1.83 per share. Fourth quarter net loss in 2018 was
negatively impacted by a $249 million mark-to-market loss on
investment in frontdoor, inc. Adjusted EBITDA was $80 million, a
year-over-year increase of $6 million and adjusted net income was
$26 million, or $0.19 per share versus $10 million, or $0.07 per
share, for the same period in 2017.
“Our primary goal in 2018 was to transform our Terminix business
and unlock the potential to drive sustainable revenue growth. We
are pleased to report that our focused efforts throughout 2018 and
strategic initiatives resulted in record revenue at Terminix in the
fourth quarter and full year 2018,” said ServiceMaster Chief
Executive Officer Nik Varty. “Improvements in pest sales, driven by
enhanced marketing initiatives, and stronger start and completion
rates drove organic growth of 5 percent during the quarter,
including over 7 percent in residential pest for a second
consecutive quarter. The strong second half performance in these
areas led to full-year organic growth of 2 percent, meeting the
high end of expectations we set a year ago. ServiceMaster Brands
grew revenue organically 5 percent in the fourth quarter and 9
percent for the full year. We continue to create strong growth by
focusing on high-value segments in the cleaning and restoration
businesses, with revenue in both commercial restoration and
commercial cleaning national accounts up over 20 percent in
2018.”
“While making meaningful strategic investments in the business
to drive long-term sustainable growth and shareholder value, the
company delivered on its guidance for Adjusted EBITDA for the full
year. Our growth strategy is on track for 2019, including major
initiatives in the commercial pest and termite businesses, as well
as a focus on adjacent opportunities in the cleaning and
restoration businesses. We will also remain diligent in our focus
on business productivity as we absorb dis-synergies from the
successful spin of the American Home Shield business, which
increased shareholder value.”
Consolidated Performance
Three Months
Ended December 31, Year Ended December 31,
$
millions
2018 2017 B/(W) 2018 2017
B/(W) Revenue $ 457 $ 409 $ 48 $ 1,900 $ 1,755 $ 145
YoY growth 11.9 % 8.3 %
Gross Margin 192 174 18 860 794 66 %
of revenue 42.0 % 42.5 % (0.5) pts 45.2 % 45.2 % 0.0 pts
SG&A (138) (119) (18) (555) (500) (56) % of revenue 30.1
% 29.2 % (0.9) pts 29.2 % 28.5 % (0.8) pts
(Loss) Income from
Continuing Operations before Income Taxes (233) 8 (241) (126)
99 (225) % of revenue (51.0) % 2.1 % (53.0) pts (6.6) % 5.6 %
(12.3) pts
Net (Loss) Income (248) 306 (554) (41) 510 (551)
% of revenue (54.3) % 74.8 % (129.1) pts (2.2) % 29.0 % (31.2) pts
Adjusted Net Income(2)
26
10
17
130 101 29 % of revenue
5.8
%
2.4
%
3.4
pts 6.8 % 5.7 % 1.1 pts
Adjusted EBITDA(1) 80 75 6
398 374 23 % of revenue 17.6 % 18.2 % (0.7) pts 20.9 % 21.3 % (0.4)
pts
Net Cash Provided from Operating Activities from Continuing
Operations
24
15
9
229 204 25
Free Cash Flow(3)
17
(10)
28
187 138 49
Segment Performance
Revenue and Adjusted EBITDA for each reportable segment and
Corporate were as follows:
Three Months Ended December 31, 2018
Year Ended December 31, 2018 Revenue Adjusted
EBITDA Revenue Adjusted EBITDA
$
millions
2018 B/(W) vs. PY 2018 B/(W) vs. PY
2018 B/(W) vs. PY 2018 B/(W) vs. PY
Terminix $ 396 $ 43 $ 56 $ (6) $ 1,655 $ 113 $ 333 $ 2 YoY
growth / % of revenue 12.2 % 14.0 % (3.4) pts 7.4 % 20.1 % (1.3)
pts
ServiceMaster Brands 61 6 22 — 244 32 89 2 YoY growth /
% of revenue 10.6 % 35.9 % (4.6) pts 15.1 % 36.4 % (4.6) pts
Corporate(4) — — 3 2.0 1 — 9 8
Costs historically
allocated to American Home Shield — —
— — — —
(33) 11
Total $ 457 $ 48 $ 80 $ 6 $
1,900 $ 145 $ 398 $ 23 YoY growth / % of revenue 11.9 % 17.6 %
(0.7) pts 8.3 % 20.9 % (0.4) 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 12 percent year-over-year revenue growth in
the fourth quarter of 2018, including over 7 percent organic growth
in residential pest control services and 33 percent growth from
acquisitions in commercial pest control, primarily from the March
2018 Copesan acquisition. This is the second consecutive quarter of
over 7 percent organic revenue growth in residential pest control.
Organic termite growth in the fourth quarter of 3 percent was aided
by approximately $2 million from a one-time acceleration of revenue
related to an accounting method change for a bundled pest and
termite service offering in order to comply with new revenue
recognition standards. This fourth quarter benefit was more than
offset in the full year by an initiative to upgrade bait stations
for a sub-set of our customers in 2017.
Adjusted EBITDA in the fourth quarter decreased by $6 million
year-over-year, partially the result of absorbing $4 million in
spin related dis-synergies, $3 million increased sales and
marketing expense to drive continued growth, $5 million of selling
and administrative expenses from acquisitions and $3 million in
other investments in growth, including our partnership with
Salesforce to replace legacy operating systems. These costs were
partially offset by $14 million in flow-through from higher
revenue. The company expects full year 2019 dis-synergies will
impact Terminix by $16 million, or $11 million higher than the
impact in 2018.
ServiceMaster Brands
ServiceMaster Brands, previously referred to as Franchise
Services Group, reported a $6 million, or 11 percent,
year-over-year revenue increase in the fourth quarter of 2018.
Organic growth of 5 percent was highlighted by 11 percent growth in
commercial cleaning national accounts. Approximately half of the
growth related to the recognition of national advertising fund
franchisee contributions as revenue pursuant to our adoption of a
new accounting rule regarding revenue recognition that took effect
on January 1, 2018. Prior to 2018, contributions to the national
advertising fund made by our franchisees were treated as an offset
to advertising expense. This accounting standards change increased
revenue by $3 million but had no impact on Adjusted EBITDA.
Adjusted EBITDA in the fourth quarter was relatively flat with
the pass through of higher revenue offset largely by the absorption
of $1 million of dis-synergies in the quarter. The company expects
full year 2019 dis-synergies will impact ServiceMaster Brands by $3
million, or $2 million higher than the impact in 2018.
Corporate
Adjusted EBITDA in the fourth quarter increased $3 million from
the prior year. The increase is primarily related to continued
favorable claims trends related to the company’s workers’
compensation, auto and general liability program as a result of
operational improvements in claims management.
Historically Allocated Services
We have historically incurred the cost of certain
corporate-level activities that we performed on behalf of our
businesses, including American Home Shield, such as executive
functions, communications, public relations, finance and
accounting, tax, treasury, internal audit, human resources
operations and benefits, risk management and insurance, supply
management, real estate management, legal, marketing, facilities,
information technology and other general corporate support
services. The cost of such activities were historically allocated
to our segments, including American Home Shield. Certain corporate
expenses which were historically allocated to the American Home
Shield segment are not permitted to be classified as discontinued
operations under U.S. GAAP (“Historically Allocated Services”).
Such Historically Allocated Services amounted to $33 million and
$44 million for the years ended December 31, 2018, and 2017,
respectively.
The costs of Historically Allocated Services which were not
transferred to American Home Shield will be borne by our remaining
businesses in the future as dis-synergies. We estimate these
dis-synergies to be approximately $5 million in 2018 and expect
total dis-synergies to be approximately $18 million in 2019.
Share Repurchase Plan
On February 19, 2019, the ServiceMaster Board of Directors
approved a three-year extension allowing up to $150 million of
repurchases through February 2022. Under the share repurchase
program, the company may repurchase shares in accordance with all
applicable securities laws and regulations, including Rule 10b-18
of the Securities Exchange Act of 1934, as amended. The extent to
which the company repurchases its shares, and the timing and manner
of such repurchases, will depend upon a variety of factors,
including market conditions, regulatory requirements and other
corporate considerations, as determined by the company. The
repurchase program may be suspended or discontinued at any time.
The company expects to fund the purchases from operating cash
flow.
American Home Shield Spin-Off
On October 1, 2018, we completed the previously announced
separation of our American Home Shield business (the “Separation”).
In connection with the Separation, we distributed 67,781,527 shares
of common stock of Frontdoor to our stockholders and retained
16,734,092 shares, or approximately 19.8% of the common stock of
frontdoor, inc. This investment is accounted for as an available
for sale security and will be marked to market as required by
accounting rules. We currently intend to responsibly dispose of all
the frontdoor, inc. common stock we retained after the Separation
through one or more subsequent exchanges for debt by June 14, 2019,
in accordance with terms set forth in a private letter ruling with
the Internal Revenue Service (“IRS”) governing the tax-free status
of the Separation. The ultimate result of this disposition will be
a debt reduction for the company.
The American Home Shield segment is reported in this press
release in discontinued operations.
Free Cash Flow
Free cash flow was $187 million for the year ended December
31, 2018 compared to $138 million for the year ended December 31,
2017. Post-spin free cash flow excludes any contributions from the
American Home Shield segment, which have been restated as
dis-continued operations. The full year 2018 free cash flow to
Adjusted EBITDA conversion was 47 percent. The conversion was
negatively impacted by Historically Allocated Services and cash
interest not permitted to be allocated to discontinued operations
under U.S. GAAP, as a result of the American Home Shield spin. The
company expects free cash flow to range between 50 to 60 percent of
Adjusted EBITDA in 2019.
Full-Year 2019 Outlook
The company expects full-year 2019 revenue to range from $2,020
million to $2,050 million, or an increase of 6 to 8 percent
compared to 2018. Organic revenue growth at Terminix is expected to
range from 2 to 3 percent. ServiceMaster Brands will continue to
focus on high value business verticals and revenue channels such as
commercial restoration, healthcare and commercial cleaning national
accounts and is expected to drive organic growth in the mid-single
digits.
Full-year 2019 Adjusted EBITDA is anticipated between $435
million and $445 million. Terminix is expected to contribute
approximately 30 percent incremental margins, less incremental spin
dis-synergies of $11 million and $9 million of investments due, in
part to, operating duplicate systems during Salesforce
implementation. At ServiceMaster Brands, continuing growth in
national accounts will increase Adjusted EBITDA but creates slight
margin pressure in 2019. We expect a positive inflection point in
our year-over-year Adjusted EBITDA margins in the second half of
the year as a result of revenue conversion more than offsetting
year-over-year dis-synergies and investments in growth.
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.
Fourth-Quarter and Full-Year 2018 Earnings Conference
Call
The company will provide an update on and discuss the company's
operational performance and financial results for the fourth
quarter and full year ended December 31, 2018 during a conference
call at 8 a.m. central time (9 a.m. eastern time) today, February
26, 2019.
Participants may join this conference call by dialing
800.698.4476 (or international participants, +1.303.223.4363).
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 March 28, 2019. To
access the replay of this call, please call 800.633.8284 and enter
reservation number 21916426 (international participants:
+1.402.977.9140, reservation number 21916426). 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), 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 and Adjusted EBITDA
outlook and organic revenue growth 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; the
effects of our substantial indebtedness; changes in interest rates,
because a significant portion of our indebtedness bears interest at
variable rates; 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 (loss) income before:
depreciation and amortization expense; acquisition-related costs;
401(k) Plan corrective contribution; fumigation related matters;
insurance reserve adjustment; non-cash stock-based compensation
expense; restructuring charges; non-cash impairment of software and
other related costs; mark-to-market loss on investment in
frontdoor, inc.; (gain) loss from discontinued operations, net of
income taxes; provision (benefit) 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.
(2) Adjusted net income is defined as net (loss) income before:
amortization expense; 401(k) Plan corrective contribution;
fumigation related matters; insurance reserve adjustment;
restructuring charges; acquisition-related costs; mark-to-market
loss on investment in frontdoor, inc.; impairment of software and
other related costs; (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 includes the unallocated expenses of our corporate
functions.
SERVICEMASTER GLOBAL
HOLDINGS, INC.
Consolidated Statements of Operations
and Comprehensive Income
(In millions, except per share data)
Three Months Ended Year Ended
December 31, December 31, 2018 2017
2018 2017 Revenue $ 457 $ 409 $ 1,900 $ 1,755 Cost of
services rendered and products sold 265 235 1,041 962 Selling and
administrative expenses 138 119 555 500 Amortization expense 4 4 18
18 Acquisition-related costs 3 — 5 — 401(k) Plan corrective
contribution — — — (3) Fumigation related matters 3 2 3 4
Impairment of software and other related costs — — — 2
Mark-to-market loss on investment in frontdoor, inc. 249 — 249 —
Restructuring charges 4 3 17 21 Interest expense 25 38 133 150
Interest and net investment income (2) (1) (5) (2) Loss on
extinguishment of debt — — 10 6
(Loss) Income from Continuing Operations before Income Taxes
(233) 8 (126) 99 Provision (benefit) for income taxes 4
(267)
37 (242) Equity in losses of joint venture — —
— —
(Loss) Income from Continuing Operations (237)
276
(163) 341 (Loss) gain from discontinued operations, net of income
taxes (11)
30
122 169
Net (Loss) Income $ (248) $ 306 $ (41)
$ 510
Total Comprehensive (Loss) Income $ (266) $ 310 $ (44)
$ 518 Weighted-average common shares outstanding - Basic 135.7
135.1 135.5 134.4 Weighted-average common shares outstanding -
Diluted 135.7 135.4 135.5 135.4 Basic (Loss) Earnings Per Share:
(Loss) Income from Continuing Operations $ (1.75) $
2.04
$ (1.20) $ 2.54 (Loss) gain from discontinued operations, net of
income taxes (0.08)
0.22
0.90 1.26 Net (Loss) Income (1.83) 2.26 (0.30) 3.79 Diluted (Loss)
Earnings Per Share: (Loss) Income from Continuing Operations $
(1.75) $
2.04
$ (1.20) $ 2.52 (Loss) gain from discontinued operations, net of
income taxes (0.08)
0.22
0.90 1.25 Net (Loss) Income (1.83) 2.26 (0.30) 3.76
SERVICEMASTER GLOBAL
HOLDINGS, INC.
Consolidated Statements of Financial
Position
(In millions, except share data)
As of As of
December 31,
December 31, 2018 2017 Assets:
Current Assets: Cash and cash equivalents $ 224 $ 192
Investment in frontdoor, inc. 445 — Receivables, less allowances of
$21 and $22, respectively 186 162 Inventories 45 41 Prepaid
expenses and other assets 61 88 Deferred customer acquisition costs
— 18 Current assets of discontinued operations — 740
Total Current Assets 962 1,242
Other Assets: Property and
equipment, net 201 202 Goodwill 1,956 1,780 Intangible assets,
primarily trade names, service marks and trademarks, net 1,588
1,526 Restricted cash 89 89 Notes receivable 43 41 Long-term
marketable securities 21 21 Deferred customer acquisition costs 77
— Other assets 87 67 Long-term assets of discontinued operations
— 678
Total Assets $ 5,023 $ 5,646
Liabilities and Stockholders' Equity: Current
Liabilities: Accounts payable $ 89 $ 82 Accrued liabilities:
Payroll and related expenses 60 56 Self-insured claims and related
expenses 58 60 Accrued interest payable 14 14 Other 61 43 Deferred
revenue 95 90 Current liabilities of discontinued operations — 693
Current portion of long-term debt 49 136 Total
Current Liabilities 425 1,174
Long-Term Debt
1,727 2,642
Other Long-Term Liabilities: Deferred taxes 484
451 Long-term liabilities of discontinued operations — 44 Other
long-term obligations, primarily self-insured claims 182
168 Total Other Long-Term Liabilities 666 663
Commitments and Contingencies Stockholders’ Equity:
Common stock $0.01 par value (authorized 2,000,000,000 shares with
147,209,928 shares issued and 135,687,558 shares outstanding at
December 31, 2018, and 146,662,232 shares issued and 135,141,048
outstanding at December 31, 2017) 2 2 Additional paid-in capital
2,309 2,321 Retained earnings (accumulated deficit) 156 (895)
Accumulated other comprehensive loss 5 5 Less common stock held in
treasury, at cost (11,522,370 shares at December 31, 2018, and
11,521,184 shares at December 31, 2017) (267) (267)
Total Stockholders' Equity 2,204 1,167
Total
Liabilities and Stockholders' Equity $ 5,023 $ 5,646
SERVICEMASTER GLOBAL
HOLDINGS, INC.
Consolidated Statements of Cash
Flows
(In millions)
Year Ended December 31, 2018
2017 Cash and Cash Equivalents and Restricted Cash at
Beginning of Period $ 563 $ 386
Cash Flows from Operating
Activities from Continuing Operations: Net (Loss) Income
(41) 510 Adjustments to reconcile net loss to net cash provided
from operating activities: (Gain) loss from discontinued
operations, net of income taxes (122) (169) Depreciation expense 73
68 Amortization expense 18 18 Amortization of debt issuance costs 4
5 401(k) Plan corrective contribution — (3) Fumigation related
matters 3 4 Payments on fumigation related matters (2) (12)
Impairment of software and other related costs — 2 Mark-to-market
loss on investment in frontdoor, inc. 249 — Loss on extinguishment
of debt 10 6 Deferred income tax provision 8 (233) Stock-based
compensation expense 14 10 Gain on sales of marketable securities
(1) — Restructuring charges 17 21 Cash payments related to
restructuring charges (15) (6) Other (2) 9 Change in working
capital, net of acquisitions: Receivables (6) (2) Inventories and
other current assets (6) (1) Accounts payable (1) (6) Deferred
revenue (2) (11) Accrued liabilities 12 12 Accrued interest payable
(1) (1) Current income taxes 17 (15)
Net Cash
Provided from Operating Activities from Continuing Operations
229 204
Cash Flows from Investing Activities from
Continuing Operations: Property additions (49) (68) Government
grant fundings for property additions 7 2 Sale of equipment and
other assets 2 4 Business acquisitions, net of cash acquired (191)
(13) Purchases of available-for-sale securities — (2) Origination
of notes receivables (120) (102) Collections on notes receivables
100 100 Other investments 1 (1)
Net Cash Used for
Investing Activities from Continuing Operations (250)
(79)
Cash Flows from Financing Activities from Continuing
Operations: Borrowings of debt 1,000 — Payments of debt (1,114)
(91) Call premium paid on retirement of debt — (1) Contribution to
frontdoor, inc. (242) — Repurchase of common stock — (85) Issuance
of common stock 7 30
Net Cash Used for Financing Activities from
Continuing Operations (350) (147)
SERVICEMASTER GLOBAL
HOLDINGS, INC.
Consolidated Statements of Cash Flows
(Continued)
(In millions)
Year Ended December 31, 2018 2017
Cash Flows from Discontinued Operations: Cash provided from
operating activities 146 210 Cash used for investing activities (1)
(6) Cash used for financing activities (24) (5)
Net Cash Used for Discontinued Operations 121
198
Effect of Exchange Rate Changes on Cash (1)
1
Cash Increase (Decrease) During the Period
(250) 177
Cash and Cash Equivalents and Restricted Cash
at End of Period $ 313 $ 563
The following table presents reconciliations of net income to
adjusted net income.
Three Months Ended
Year Ended December 31, December 31,
(In millions,
except per share data)
2018 2017 2018 2017 Net (Loss) Income $
(248) $ 306 $ (41) $ 510 Amortization expense 4 4 18 18
Acquisition-related costs 3 — 5 — 401(k) Plan corrective
contribution — — — (3) Fumigation related matters 3 2 3 4
Restructuring charges 4 3 17 21 Impairment of software and other
related costs — — — 2 Mark-to-market loss on investment in
frontdoor, inc. 249 — 249 — Loss (gain) from discontinued
operations, net of income taxes 11
(30)
(122) (169) Loss on extinguishment of debt — — 10 6 Tax impact of
adjustments
(3)
(4) (14) (17) Impact of tax law change on deferred taxes 3
(271) 3 (271) Adjusted Net Income $
26
$
10
$ 130 $ 101 Weighted average diluted common shares outstanding
136.2 135.4 136.1 135.4 Adjusted earnings per share $
0.19
$
0.07
$ 0.95 $ 0.74
The following table presents reconciliations of net cash
provided from operating activities from continuing operations to
free cash flow.
Three Months Ended
Year Ended December 31, December 31,
(In
millions)
2018 2017 2018 2017 Net Cash Provided
from Operating Activities from Continuing Operations $
24
$
15
$ 229 $ 204 Property additions and Government grant fundings for
property additions (7) (26) (41) (66)
Free Cash Flow $
17
$
(10)
$ 187 $ 138
The following table presents reconciliations of net income to
Adjusted EBITDA.
Three Months Ended
Year Ended December 31, December 31,
(In
millions)
2018 2017 2018 2017 Net (Loss) Income $
(248) $ 306 $ (41) $ 510 Depreciation and amortization expense 24
22 91 86 Acquisition-related costs 3 — 5 — 401(k) Plan corrective
contribution — — — (3) Fumigation related matters 3 2 3 4 Non-cash
stock-based compensation expense 5 2 14 10 Restructuring charges 4
3 17 21 Non-cash impairment of software and other related costs — —
— 2 Mark-to-market loss on investment in frontdoor, inc. 249 — 249
— Loss (gain) from discontinued operations, net of income taxes 11
(30)
(122) (169) Provision (benefit) for income taxes 4
(267)
37 (242) Loss on extinguishment of debt — — 10 6 Interest expense
25 38 133 150 Adjusted EBITDA $ 80 $ 75
$ 398 $ 374 Terminix $ 56 $ 62 $ 333 $ 330 ServiceMaster
Brands 22 22 89 87 Corporate 3 1 9 1 Costs historically allocated
to American Home Shield — (10) (33)
(44) Adjusted EBITDA $ 80 $ 75 $ 398 $ 374
Terminix Segment
Revenue by service line is as follows:
Three Months
Ended December 31,
(In
millions)
2018 2017 Growth Acquired
Organic Residential Pest Control $ 162 $ 146 $ 16 11 % $ 6 4
% $ 10 7 % Commercial Pest Control 83 63 20 33 % 21 33 % — — %
Termite and Home Services 128 123 5 4 % 1 1 % 4 3 % Other 23
21 2 9 % — — % 2 9 % Total revenue $
396 $ 353 $ 43 12 % $ 27 8 % $ 16 5 %
Year Ended
December 31,
(In
millions)
2018 2017 Growth Acquired
Organic Residential Pest Control $ 655 $ 613 $ 42 7 % $ 15 2
% $ 27 4 % Commercial Pest Control 317 255 62 24 % 66 26 % (4) (2)
% Termite and Home Services 599 593 6 1 % 2 — % 4 1 % Other
84 81 3 3 % — — % 3 3 % Total revenue $
1,655 $ 1,541 $ 113 7 % $ 84 5 % $ 30 2 %
ServiceMaster Brands Segment
Revenue by service line is as follows:
Three Months Ended Year Ended % of
December 31, December 31, Revenue
(In
millions)
2018 2017 2018 2017 2018 Royalty
Fees $ 33 $ 32 $ 132 $ 127 54 % Commercial Cleaning National
Accounts 17 15 65 53 26 % Sales of Products 4 4 16 16 6 % Other
7 4 32 17 13 % Total revenue $ 61 $ 55
$ 244 $ 212 100 %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190226005588/en/
Investor Relations:Jesse
Jenkins901.597.8259Jesse.Jenkins@servicemaster.comMedia:James
Robinson901.597.7521James.Robinson@servicemaster.com
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