American Home Shield 2003 Annual Report Download - page 5

Download and view the complete annual report

Please find page 5 of the 2003 American Home Shield annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 66

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66

ServiceMaster    3
 
We reported revenues of $3.6 billion in 2003, up 2 percent over 2002. All of our businesses, except HVAC and
plumbing, experienced revenue growth in 2003 with TruGreen ChemLawn and American Home Shield being
the primary contributors. Our improved performance and growth in the second half of 2003 were the result of
hard-working service people staying focused on serving the customer, combined with strong cost reductions
and controls across the enterprise.
TruGreen ChemLawn increased its revenues 6 percent over 2002, driven by growth in customer
counts, increased production and more revenue from ancillary services. Terminix increased its revenues by
2 percent, on higher termite and pest renewals, overcoming unfavorable weather in the first half of the year.
American Home Shield increased its revenues by 6 percent, reflecting strong growth in renewal contracts and
continuing sales improvement in the real estate and consumer channels.
In 2003, our positive momentum was offset by underperformance in the ARS/AMS segment and at
TruGreen LandCare. Clearly, this result is unacceptable for us. We expect improvements in margins at
LandCare in 2004. We believe the improvement will come from better performance in the lower tier branches,
better labor efficiencies and stronger contract profitability. At ARS, the decrease in revenue was experienced
in plumbing, HVAC and construction service lines, although we were encouraged in the second half by
our progress with our third party channel add-on replacement initiative as well as our brand differentiating
two-hour window program that we expanded in the fourth quarter.

In January, we realigned our current management team’s responsibilities to maximize our team’s talent and
energize both our focus on execution and on our continuing transformation.
Our President, Ernie Mrozek moved into the new position of President and Chief Financial Officer
of the firm. Ernie’s financial acumen, leadership skills, and detailed knowledge of our service lines, answered
our need for a chief financial officer with strong skills and perspective on both fiscal and operational
performance. At the same time we brought together strategy, process improvement and technology under
Executive Vice President Steve Preston, our former Chief Financial Officer. We created the presidency of
TruGreen LandCare in September and named a seasoned executive, Robert Fates, to serve in that capacity.
We chose Bob for his background in pulling together independent companies and getting them to function
successfully as one.
Message from the Chairman