ServiceMaster Global Holdings (NYSE: SERV) reported Q1 EPS of $0.33, $0.02 better than the analyst estimate of $0.31. Revenue for the quarter came in at $482 million versus the consensus estimate of $473.14 million.

• Terminix revenue increased 14 percent year-over-year, including 3 percent organically
• ServiceMaster Brands revenue increased 5 percent year-over-year
• ServiceMaster net income of $70 million included a $40 million tax-free realized gain on investment in frontdoor, inc.
• Successful monetization of remaining frontdoor, inc. shares drove $484 million in net debt reduction
• Guidance affirmed for full-year 2019 revenue, Adjusted EBITDA, and organic growth

“Our solid performance in the quarter reflects the consistent progress we are making on executing our strategic initiatives,” said ServiceMaster Chief Executive Officer Nik Varty. “In our pest control core, organic growth of 3 percent in the quarter included 4 percent growth in residential pest and 2 percent in termite and home services, despite the impact of unseasonably cold weather and flooding on our operations and lead flow. We see positive trends in commercial pest with customer retention reaching three-year highs, driven by continued improvement in customer service as we leverage the best practices of Copesan and enhance the customer experience we deliver. ServiceMaster Brands grew revenue organically 5 percent in the first quarter. Our focus on high-growth market verticals is paying dividends with healthcare cleaning and disinfection up 7 percent and commercial restoration up 35 percent in the quarter. Strategic M&A also continues to be a growth driver, with 11 pest control acquisitions in the quarter.”

“We recently launched the Terminix Tick Defend System, in response to increasing tick borne illnesses. This is a reflection of our improved ability to leverage our product knowledge and application expertise to rapidly assess market needs and respond with innovative solutions for our customers. We also delivered on a major shareholder commitment as we successfully monetized our holdings in Frontdoor. With the proceeds, we further reduced our net debt levels by $484 million giving us additional flexibility to execute on our strategic initiatives. We remain diligently focused on profitability while investing in growth with a new operating system and a dedicated commercial pest team. Overall, solid first-quarter performance keeps us on track with our 2019 guidance expectations.”

GUIDANCE:

ServiceMaster Global Holdings sees FY2019 revenue of $2.02-2.05 billion, versus the consensus of $2.03 billion.

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