American Home Shield 2015 Annual Report Download - page 22

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PART I
ITEM 1. BUSINESS
The following discussion of our business contains “forward-looking statements,” as discussed in Part II, Item 7 below. Our
business, operations and financial condition are subject to various risks as set forth in Part I, Item 1A below. The following
information should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of
Operations, the Consolidated Financial Statements and related notes and the Risk Factors included elsewhere in this Annual Report on
Form 10-K.
Overview
ServiceMaster Global Holdings, Inc. and its majority-owned subsidiary partnerships, limited liability companies and
corporations (collectively, “ServiceMaster,” the “Company,” “we,” “us” and “our”) is a leading provider of essential residential and
commercial services, operating through an extensive service network of more than 8,000 company-owned locations and franchise and
license agreements. Our mission is to simplify and improve the quality of our customers’ lives by delivering services that help them
protect and maintain their homes or businesses, typically their most highly valued assets. We have leading market positions across the
majority of the markets we serve, as measured by customer-level revenue. Our portfolio of well-recognized brands includes Terminix
(termite and pest control), American Home Shield (home warranties), ServiceMaster Restore (disaster restoration), ServiceMaster
Clean (janitorial), Merry Maids (residential cleaning), Furniture Medic (furniture repair) and AmeriSpec (home inspections). We serve
our residential and commercial customers through an employee base of approximately 13,000 company associates.
Approximately 98 percent of our 2015 revenue was generated by sales in the United States. A significant portion of our
assets is located in the United States, and the consolidated book value of all assets located outside of the United States is not material.
Organized in Delaware in 2007, ServiceMaster is the successor to various entities dating back to 1947. Financial information for each
reportable segment and Corporate for 2015, 2014 and 2013 is contained in Note 3 to the consolidated financial statements.
We believe that our customers understand the financial and reputational risks associated with inadequate maintenance of their
homes or businesses and that our high-quality, professional services are low-cost expenditures when compared to the alternative of
failing to perform essential maintenance. We strive to be the service provider of choice and believe our customers have recognized our
value proposition, as evidenced by our long-standing customer relationships and the high rate at which our customers renew their
contracts from year to year.
We have significant size and scale, which we believe give us a number of competitive advantages. Terminix is the largest
termite and pest control business in the United States, as measured by customer-level revenue, and serves approximately 2.8 million
customers across 46 states and the District of Columbia through approximately 300 company-owned locations and approximately
25 franchise agreements. Additionally, we estimate American Home Shield to be approximately four times larger than its nearest
competitors, as measured by revenue. American Home Shield serves approximately 1.6 million residential customers across all 50
states and the District of Columbia through a network of more than 11,000 pre-screened independent home service contractor firms.
Our Franchise Services Group serves both residential and commercial customers across all 50 states and the District of Columbia
through approximately 4,400 franchise agreements and approximately 30 company-owned locations. We believe our significant size
and scale provide a competitive advantage in our purchasing power, route density, and marketing and operating efficiencies compared
to smaller local and regional competitors. Our scale also facilitates the standardization of processes, shared learning and talent
development across our entire organization.
We believe our businesses are strategically positioned to benefit from a number of favorable demographic and secular trends.
These trends include growth in population, household formation and new and existing home sales. In addition, we believe there is
increasing demand for outsourced services, fueled by a trend toward “do-it-for-me” as a result of an aging population and shifts in
household structure and behaviors, such as dual-income families and consumers with “on-the-go” lifestyles.
Initial Public Offering
On June 25, 2014, our registration statement on Form S-1 for our initial public offering was declared effective by the U.S.
Securities and Exchange Commission (the “SEC”). On July 1, 2014, we completed the offering of 41,285,000 shares of our common
stock at a price of $17.00 per share.
Secondary Public Offerings
On February 4, 2015, our registration statement on Form S-1 was declared effective by the SEC for a secondary offering of
our common stock. We registered on behalf of certain stockholders the offering and sale of 25,000,000 shares of common stock and an
additional 3,750,000 shares of common stock sold to the underwriters pursuant to an option to purchase additional shares. On
February 10, 2015, the selling stockholders completed the offering of 25,000,000 shares of common stock at a price of $29.50 per
share. On February 13, 2015, the selling stockholders completed the offering of an additional 3,750,000 shares of common stock at a
price of $29.50 per share pursuant to the underwriters’ option to purchase additional shares.
On May 27, 2015, our registration statement on Form S-1 was declared effective by the SEC for a secondary offering of our
common stock. We registered on behalf of certain stockholders the offering and sale of 20,000,000 shares of common stock and an
additional 3,000,000 shares of common stock sold to the underwriters pursuant to an option to purchase additional shares. On June 2,
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