Terminix Global Holdings Inc. (TMX) Tops Q4 EPS by 11c, Revenues Beat; Offers FY21 Revenues Guidance

Terminix Global Holdings Inc. (NYSE: TMX) reported Q4 EPS of $0.21, $0.11 better than the analyst estimate of $0.10. Revenue for the quarter came in at $460 million versus the consensus estimate of $453.92 million.

• Six percent revenue growth in termite and home services included five percent organic growth
• Five percent revenue growth in residential pest included four percent organic growth
• Net income of $490 million includes gain on sale of ServiceMaster Brands
• Adjusted EBITDA of $68 million, a year-over-year increase of 24 percent
• Full-Year 2021 guidance of revenue between $2,025 and $2,050 million and Adjusted EBITDA between $365 and $380 million

“Successful execution of our strategic initiatives enabled us to deliver a strong year at Terminix,” said Terminix CEO Brett Ponton. “Organic revenue growth was highlighted by strong performance in termite services and residential pest, while the commercial pest business continued to improve sequentially in the fourth quarter. Profit margin expansion was driven by productivity improvements including gains in teammate and customer retention.”

“As we look to 2021, we are excited about the opportunities ahead as a singularly focused pest management company,” Mr. Ponton continued. “We remain focused on driving growth and profitability by capitalizing on our industry-leading brand and improving operational capabilities in the core fundamentals of service delivery. Key investments to improve procedures, training and technology will increase consistency from branch-to-branch and teammate-to-teammate and further enhance both the teammate and customer experience. Ultimately, our work this year will strengthen the foundation needed to further advance our vision of being the preferred pest management provider in the eyes of our customers, our teammates and the communities we serve.”

GUIDANCE:

Terminix Global Holdings Inc. sees FY2021 revenue of $2.025-2.05 billion, versus the consensus of $2.04 billion.

For the full year 2021, the Company expects commercial pest will continue the gradual positive trends seen over the last several months as the economy continues to reopen, with the back half of the year improving as COVID-19 impacts are lapped. Organic growth in residential pest will be partially offset by lower year-over-year summer sales revenue in the first quarter due to fewer unit sales in 2020 and the continued lower trends in bed bug services due to reduced travel during the pandemic. Continued demand is expected in termite completions due to the new monthly pay product and strong growth in home services. Termite renewal revenue will be reduced by between $8 and $10 million in 2021 due to a change in the timing of revenue recognition from our move to a monthly subscription-based model.

Anticipated Adjusted EBITDA for 2021 reflects the impact of revenue growth and reduced termite damage claims expense as completion of the $10 million termite mitigation plan in the Mobile Bay area is lapped. Cost headwinds during the year related to increased training and lost productivity from the roll out of our new technology platform are expected, as well as increased travel expense and the lapping of strong employee retention gains. The cost of 2021 initiatives and investments in operational capabilities are expected to be funded through cost structure simplification as the Company evolves to a leaner focused pest management company.

The timing and frequency of new termite damage claims litigated case filings are difficult to predict. This guidance represents the Company’s best estimate of litigated case filings, but actual pace and volume could differ.

A reconciliation of the forward looking full-year 2021 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.

For earnings history and earnings-related data on Terminix Global Holdings Inc. (TMX) click here.

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