Terminix Global Holdings Inc. (TMX) Tops Q1 EPS by 8c, Revenues Beat; Offers FY21 Revenues Outlook

Terminix Global Holdings Inc. (NYSE: TMX) reported Q1 EPS of $0.30, $0.08 better than the analyst estimate of $0.22. Revenue for the quarter came in at $471 million versus the consensus estimate of $467.65 million.

• Delivered net income of $27 million with a margin of 5.7%, up 260 basis points
• Achieved Adjusted EBITDA of $90 million with a margin of 19.0%, up 590 basis points
• Repurchased 3.5 million shares at an average price of $48.12 per share for $169 million
• Raised Full-Year 2021 Adjusted EBITDA outlook to between $380 and $390 million

“Solid revenue growth across our major service lines and continued improvements in profitability highlighted a strong start to 2021,” said Terminix CEO Brett Ponton. “Improvements in customer retention, pricing realization and strong unit growth in our termite business were key to the strong revenue performance. Margin expansion was driven by profitable revenue growth, improved direct cost productivity, as well as benefits from initiatives to simplify our back-office structure as a more focused pest management company.”

“Looking ahead, we are excited about the launch of the Terminix Way initiative and the roll-out of our customer experience platform, or CXP,” Ponton continued. “The Terminix Way initiative will enhance standard operating procedures, develop robust training curriculums, and more clearly define career paths for our teammates, while CXP will improve our marketing capabilities and service delivery through an easy-to-use, best-in-class operating system. We remain focused on driving growth and profitability while launching these platforms that will enhance the teammate experience and improve our customer acquisition and retention capabilities. Our work over the course of this year to develop these platforms will lay the foundation needed to drive greater consistency across the business and position us to become 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, organic revenue growth is expected across all service lines. Residential pest is expected to accelerate due to pricing realization and the lapping of lower summer sales units in 2020 due to COVID-19. Commercial pest is expected to increase the pace of organic growth as the economy continues to reopen. Termite and home services is expected to continue to grow despite an approximately $5 million impact in the second quarter the timing impact of revenue recognized for our monthly subscription-based termite offering.

The Company has increased its outlook for Adjusted EBITDA to between $380 and $390 million up from $365 to $380 million previously provided. This increase incorporates the partial flow-through of first-quarter favorability, expected teammate retention pressure from tighter labor markets, reduced termite damage claims expense, increased travel and investments in key operational capabilities.

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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