American Home Shield 2002 Annual Report Download - page 8

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4 ServiceMaster
But each one also plays a part – somewhere out there on the horizon – in creating
a fully managed service experience, consistently delivered on a national basis,
easily recognized in a national brand.
There is no doubt that this new service experience is needed, that there are
customers who will flock to it, that no one can do it like we can and that we will
get it done. No doubt at all.
2002 performance
We reported revenues of $3.59 billion in 2002, up 1 percent from restated
revenues for 2001. Earnings per share from continuing operations, before
extraordinary items, was $.56 in 2002. We increased our net cash provided
from operations to $381 million, which was more than double our net income,
and reduced our debt to the lowest levels in almost six years.
We delivered particularly strong earnings growth in our American Home
Shield segment, with Terminix also showing improvement over the prior year.
However, this growth was offset by disappointing performance in our plumbing
and HVAC segment, which includes American Residential Services (ARS) and
American Mechanical Services (AMS). Revenues for this segment declined 12
percent for the full year.
During the year, we worked to strengthen ARS, the larger of the two businesses
in this segment, with a new president, a new management team and new
resources. We began a back-to-basics approach with specific turnaround plans
for every underperforming service center. We simplified our marketing focus.
We developed a new brand identity: ARS Service Express. We will fix performance at
ARS, even as we transform it into a national brand that stands for professional,
guaranteed plumbing and HVAC services.
delivering results
Looking across all our operations at the beginning of 2002, we said we would
do three things:
• Concentrate on execution,
• Accelerate market development, and
• Upgrade our approach to support services, including purchasing, fleet
management and systems performance management.
Our people made great strides in each of these three areas. For example, we
started the year with an unmistakable emphasis on customer retention and
customer counts, and it paid off. In TruGreen, our lawn care business turned a
4 percent decline in full program contracts into a 2 percent increase – a six-point
swing. In our home warranty business, we achieved a 15 percent gain in customer
contracts. In each case, customer retention contributed to the improvement.