servicemaster 2016 investor...

Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

Confidential

Jim Shields

Vice President, Investor Relations

and Treasurer

Confidential

Safe Harbor Statement

This presentation contains “forward-looking statements” that are based on management’s beliefs and assumptions and on information currently available to management. Most forward-

looking statements contain words that identify them as forward-looking, such as “anticipates,” “believes,” “continues,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,”

“potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms that relate to future events. Forward-looking statements involve known

and unknown risks, uncertainties and other factors that may cause ServiceMaster’s actual results, performance or achievements to be materially different from any projected results,

performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent the beliefs and assumptions of ServiceMaster only as of

the date of this presentation and ServiceMaster undertakes no obligation to update or revise publicly any such forward-looking statements, whether as a result of new information,

future events or otherwise. As such, ServiceMaster’s future results may vary from any expectations or goals expressed in, or implied by, the forward-looking statements included in this

presentation, possibly to a material degree. ServiceMaster cannot assure you that the assumptions made in preparing any of the forward-looking statements will prove accurate or that

any long-term financial or operational goals and targets will be realized. For a discussion of some of the important factors that could cause ServiceMaster’s results to differ materially

from those expressed in, or implied by, the forward-looking statements included in this presentation, investors should refer to the disclosure contained under the heading “Risk Factors”

in our Annual Report on Form 10-K for the year ended December 31, 2015 and our other filings with the SEC.

Note to Non-GAAP Financial Measures

This presentation contains certain non-GAAP financial measures. Non-GAAP measures should not be considered as an alternative to GAAP financial measures. Non-GAAP measures

may not be calculated or comparable to similarly titled measures used by other companies. See Non-GAAP reconciliations in our SEC filings for a reconciliation of these measures to

the most directly comparable GAAP financial measures. Adjusted EBITDA, Adjusted Net Income, Adjusted earnings per share and Free Cash Flow are not measurements of the

company’s financial performance under GAAP and should not be considered as an alternative to net income, earnings per share or any other performance measures derived in

accordance with GAAP or as an alternative to net cash provided by operating activities or any other measures of the company’s cash flow or liquidity. We believe these non-GAAP

financial measures are useful for investors, analysts and other interested parties as they facilitate company-to-company operating and financial condition performance comparisons by

excluding potential differences caused by variations in capital structures, taxation, the age and book depreciation of facilities and equipment, restructuring initiatives, consulting

agreements and equity-based, long-term incentive plans.

Adjusted EBITDA is defined as net income before: loss from discontinued operations, net of income taxes; provision for income taxes; loss on extinguishment of debt; interest

expense; depreciation and amortization expense; 401(k) Plan corrective contribution; non-cash stock-based compensation expense; restructuring charges; gain on sale of Merry Maids

branches; and other non-operating expenses. Adjusted net income is defined by the company as income from continuing operations before: amortization expense; 401(k) Plan

corrective contribution; restructuring charges; gain on sale of Merry Maids branches; loss on extinguishment of debt; other expense; and the tax impact of all of the aforementioned

adjustments. Adjusted earnings per share is calculated as adjusted net income divided by the weighted-average number of dilutive shares outstanding. Free Cash Flow is defined as

net cash provided from operating activities from continuing operations before: call premium paid on retirement of debt; less property additions.

Cautionary Statement

Confidential

Agenda

8:00 a.m. Welcome and Opening Remarks

8:30 a.m. Part I –

10:00 a.m. Break

10:15 a.m. Part II – Business Units

11:15 a.m. Part III – Finance

11:45 a.m. Closing Remarks

smServSmart

Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

Confidential

Rob Gillette

Chief Executive Officer

Confidential

1929 2014200719521947 1971 1986 1989 1996198819621929 1952 1962 1988 19961947 1986 1989 201420071971

Our Story: 87 Years Dedicated to Growing Essential Services

ServiceMaster is

taken private, led

by CD&R

ServiceMaster

acquires:

ServiceMaster

incorporates ServiceMaster

acquires

ServiceMaster

goes public

ServiceMaster

is founded by

Marion Wade

in Chicago

ServiceMaster

establishes one

of the first

franchise

businesses in

the U.S.

ServiceMaster

spins off

TruGreen &

completes

Initial Public

Offering

ServiceMaster

acquires

American

Home Shield

pioneers the

home

warranty

concept

ServiceMaster

acquires ServiceMaster

acquires

2015

ServSmart

is launched

Long history of competing and winning in new markets

2016

ServiceMaster

acquires

A new brand

is unveiled

sm

Confidential

Terminix 56%

Other<1%

Reported Revenue1: $917 million

EBITDA1 %: 22.4%

Service Requests4: >3 million

Coverage: 50 states

Reported Revenue1: $1.4 billion

Customer-Level Revenue1,2: $1.7 billion

EBITDA1 %: 24%

U.S. Locations: ~300 company-owned

+~25 Licenses

Coverage: 46 states / 22 countries

FSG

10%

American

Home Shield

35%

Reported Revenue1: $232 million

Customer-Level Revenue1,2: $2.4 billion

EBITDA1 %: 33.2%

U.S Licenses ~5,500 total

Coverage: 50 states /15 countries

Business Segments

FSG

9%

1 Represents results for full year 20152Customer-level represents (i) reported revenue and (ii) revenue earned by our franchisees,

less (iii) royalty fees (reported by us, based on revenue earned by our franchisees)3 U.S. locations include franchises and company-owned Merry Maid branches4 Full-year 2015 service activity

Confidential

Terminix22%1

Rollins19%1

Others

(~20,000)

59%

U.S. Market: $8B

AHS42%

First American11%

Old Republic9%

Others38%

U.S. Market: $2B

#1 in Attractive Markets

Sources: Specialty Products Consultants, LLC, SEC filings and management estimates based on industry data1As measured on a customer-level revenue basis. Rollins customer-level revenue derived from company filings and management estimates2Compared to franchise networks on a customer-level revenue basis; management estimates based on industry data

2

Confidential

Multiple Delivery Platforms

5,000 service technicians 11,000 contractors

45,000 service technicians

5,500 franchise licenses

33,000 individuals

2.8 million customers 1.6 million customers

3 million service requests

$2.4 billion CLR

200k homes served/month

Market share leader

1.5x brand awareness

of competitors

75% retention rate

“2015 Top Rated” by

Home Warranty Review

#1 market position in

respective categories

National network

Customer-Facing

Professionals

Customers

Customer

Awareness

Customer

Satisfaction

80%-85% retention rate

Strong net promoter scores

42% market share

#1 market position

Strong net promoter scores

Associates Contractors Franchisees

Trusted professionals… 75,000+ service calls each dayTrusted professionals… 75,000 visits a day

Confidential

$475$557

$622

21%

23%24%

2013 2014 2015

Consistent Financial Performance

$2,293$2,457 $2,594

2013 2014 2015

$ millions

’12-’15 CAGR = 6.4%RevenueA

dj. E

BIT

DA

Ma

rgin

1

Adj. EBITDA1

$ millions

’12-’15 CAGR = 14.4%

1Adjusted EBITDA and Adjusted EBITDA Margin reflects the annualized benefit of transferring $25m of

corporate costs to TruGreen

$50

$100

$150

$200

$250

5/31/14 5/31/15

SERV SP500

SERV Performance

Return: 120%

Return: 10%

Confidential

Market Trends Are In Our Favor

But, the world has changed

Do It For Me (DIFM)

Emerging Consumer Segment

Decreasing Labor Pool

Increasing Complexity

and Requirements

Fragmented Markets

Few Quality Competitors

of Scale

Confidential

The Opportunity

Combining physical delivery with digital convenience

On-Demand economy raises expectations

Essential services require expertise and

know-how

Physical repairs, service cannot be

delivered digitally

Limited competition of scale

The way consumers want to shop, buy and schedule is changing

Confidential

Enhance the customer experience and service

delivery – on-time, quality service with simplicity

Combine digital-first, self-service capability with

our unmatched network

Continue to drive customer-first mindset and

cultural change throughout our company

Create customer awareness, insights

and advocacy

Drive growth and productivity simultaneously

Our Approach: ServSmart

Leverage our legacy … differentiate with convenience

sm

Confidential

ServSmart Benefits

Improve customer experience and our efficiency

Makes it easy to find us, buy from

us and stay with us

Growth

Awareness

Reduced acquisition cost

Emphasizes self-service/

scheduling

Customer satisfaction

Reduces cost to serve

Promotes sales and

service mobility

Improves customer experience

Reduces technician/sales workload

Go to market with Minimally Viable

Product (MVP)

Start with the basics

Build momentum

Drive change

sm

Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

Confidential

Raj MidhaVice President, Strategy & Marketing

Confidential

The Homeowner’s Dilemma

• Who can I trust to help me with my problem?

• What are the options to solve my problem?

• Which service solution is right for me?

• When can someone come fix my problem?

• How do I receive ongoing protection?

Confidential

Convenient access to essential home services

Homeowner’s

Dilemma

• Websites

• Mobile

• SEO/SEM

• Content

• Social Media

• Email

• Buy Online

• Live Chat

• Sales

Mobility

• Schedule

Online

• Where’s My

Tech

• Instant

Feedback

• My Account

• eNewsletters

• Monthly

Billing

Easy to

Find

Easy to

Self Educate

Easy to

Buy

Easy to

Get Service

Easy to

Pay & Stay

Instill Trust

dependable – accountable – expert

Drive Empowerment

responsive – respectful – accessible

ServiceMaster

Brand

• Who can I

trust to help

me with my

problem?

• What are the

options to

solve my

problem?

• Which

service

solution is

right for me?

• When can

someone

come fix my

problem?

• How do I

receive

ongoing

protection?

ServSmart

Vision

sm

Confidential

Investments in targeted, measurable advertising

• 89% of spend on paid

search advertising

• Keyword targeting

• Cost per lead / cost per

sale analysis

• 61% of spend on direct

response radio and TV

• Demographic and

geographic targeting

• Cost per call / cost per

sale analysis

• 62% of spend on modeled

direct mail to pure prospects

• Targeting to individual

households based on

predictive models

% of 2015 Spend Overview

Digital45%

Direct Mail37%

Broadcast14%

CRM, Social & Other

14%

Confidential

Revenue Growth (%) Gross Margin (%)

1st Year Direct-to-Consumer Home Warranty

5%

18%20%

0

0

0

0

0

0

2013 2014 2015

32%

37% 37%

30%

31%

32%

33%

34%

35%

36%

37%

38%

2013 2014 2015

Confidential

BroadcastDigital

Marketing

Direct

MarketingSocial Media Brand

Customer

Relationship

Management

Pricing

Analytics

• Paid search

advertising

• Mobile

advertising

• Search

engine

optimization

• Buy online

• Social media

• Content

marketing

• Online

reputation

management

• Brand TV

advertising

• Direct

response TV

advertising

• Radio

• Direct mail

advertising

• Email

marketing

• Database

marketing

• Cross-selling

• Customer

research

• Brand

strategy

• Creative

development

• Customer

onboarding

• Customer

engagement

• Customer

experience

• Renewal and

payment

• Rate card

prices

• Discounting

strategy

• Price

increases

Centralized marketing team to leverage talent, best

practices and solutionssmServSmart

Confidential

Pricing

AnalyticsBroadcast

Digital

Marketing

Direct


Customer

Relationship

Management

• Paid search

advertising

• Mobile

advertising

• Search

engine

optimization

• Buy online

• Social media

• Content

marketing

• Online

reputation

management

• Brand TV

advertising

• Direct

response TV

advertising

• Radio

• Direct mail

advertising

• Email

marketing

• Database

marketing

• Cross-selling

• Customer

research

• Brand

strategy

• Creative

development

• Customer

onboarding

• Customer

engagement

• Customer

experience

• Renewal and

payment

• Rate card

prices

• Discounting

strategy

• Price

increases



Confidential

BroadcastDigital

Marketing

Direct


Customer

Relationship

Management

Pricing

• Paid search

advertising

• Mobile

advertising

• Search

engine

optimization

• Buy online

• Social media

• Content

marketing

• Online

reputation

management

• Brand TV

advertising

• Direct

response TV

advertising

• Radio

• Direct mail

advertising

• Email

marketing

• Database

marketing

• Cross-selling

• Customer

research

• Brand

strategy

• Creative

development

• Customer

onboarding

• Customer

engagement

• Customer

experience

• Renewal and

payment

• Rate card

prices

• Discounting

strategy

• Price

increases



Confidential

BroadcastDigital

Marketing

Direct


Customer

Relationship

Management

Pricing

Analytics

• Paid search

advertising

• Mobile

advertising

• Search

engine

optimization

• Buy online

• Social media

• Content

marketing

• Online

reputation

management

• Brand TV

advertising

• Direct

response TV

advertising

• Radio

• Direct mail

advertising

• Email

marketing

• Database

marketing

• Cross-selling

• Customer

research

• Brand

strategy

• Creative

development

• Customer

onboarding

• Customer

engagement

• Customer

experience

• Renewal and

payment

• Rate card

prices

• Discounting

strategy

• Price

increases



Confidential

Pricing

AnalyticsBroadcast

Digital

Marketing

Direct


Customer

Relationship

Management

• Paid search

advertising

• Mobile

advertising

• Search

engine

optimization

• Buy online

• Social media

• Content

marketing

• Online

reputation

management

• Brand TV

advertising

• Direct

response TV

advertising

• Radio

• Direct mail

advertising

• Email

marketing

• Database

marketing

• Cross-selling

• Customer

research

• Brand

strategy

• Creative

development

• Customer

onboarding

• Customer

engagement

• Customer

experience

• Renewal and

payment

• Rate card

prices

• Discounting

strategy

• Price

increases



Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

Confidential

Chelsea SumrowDirector, Marketing Strategy and Planning

American Home Shield

Confidential

ServSmartsm is a Shift in Mindset and Culture

Confidential

Confidential

45% Increase in Online Transactions YoY at AHS for 2015

4X More Sales YoY 2X More Sales YoY

Confidential

Confidential

Doubled Mobile SalesYoY for Q1 2016

4X more sales from this channel in 2015

Confidential

Confidential

Doubled Online Salesfrom the email

remarketing

channel at AHS

for 2015

15% Growth for

Q1 this year

eCommerce Sales from email

Confidential

70% Lift in

Conversion Rate

Old Creative New CreativeEmail Optimization

Confidential

Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

Confidential

Jamie SmithSenior Vice President

and Chief Information Officer

Confidential

Enabling the

ServSmart

Experience

Open, API-First

Platform

World-Class

Delivery

Capabilities

ServiceMasterIT Strategy

sm

Confidential

A Modern Platform for Home Services

• API first, microservices architecture allows open

consumption across brands and externally

• “Leapfrog” of technical generations from previous legacy

platforms

• Allows rapid value capture never before possible

• Enables true cross-brand experiences

Confidential

ConsumerMobile Apps

ConsumerWebsites

InternalApplications

ContactCenter

EmployeeApps

Machine toMachine

PartnerIntegration

ExternalIntegrations

SmartServePlatform

APIs

Existing Appsand Data

New AppsAnd Services

PlatformIntegrations

Open, API-First Platform

Confidential

Delivering at the Speed of Digital Business

• Completely transformed from traditional

big-bang waterfall to scaled agile delivery

• Multiple release trains allow rapid innovation and

time to market

• DevOps delivers multiple releases per day into

product for real-time value

• Speed allows opportunity capture

Confidential

Agile Teams

Self-organizing Agile Teams

Integrated and Committed Product Owners

Primarily On Site Development Teams

DevOps and Agile Infrastructure

Product

OwnerDevelopers

QAScrum

Master

DevOps

Architect

Delivering at the Speed of Digital Business

Confidential

The ServSmart Experience

• Data driven approach to winning the

“critical moments” in the customer and service

provider experience

• Overarching goal is to reduce friction at all

points of interaction

• Contemplates both the digital and the “last mile”

of the analog experience

• Shared ServiceMaster experience creates customer

value proposition

sm

Confidential

Customer Experience

Service Provider Experience

ServiceMaster Experience

Enabling the ServSmart Experiencesm

Confidential

The Future of ServSmart

Consumer

Mobile Apps

Consumer

WebsitesInternal

ApplicationsContact

CenterEmployee

AppsMachine to

MachinePartner

IntegrationExternal

Integrations

ServSmart

Platform

APIs

Existing Apps

and Data

New Apps

And Services

Platform

Integrations

sm

sm

Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

Confidential

Mary Kay WegnerSenior Vice President, Service

and Operations

Confidential

ServSmart Experience: Redesigning the Experience

ServiceMaster is this guy ...

... being amazing for these folks.

sm

Confidential

• Mapping customer experience journey

• Measure importance and performance

of each activity

• Prioritize investment

ServSmart Experience: Winning the critical moments

One critical moment we must win:

On-time delivery

20%

30%

40%

50%

60%

70%

80%

90%

On-Time Delivery

sm

Confidential

Hire for attitude and train for skills

• Leveraging ServiceMaster recruiting and hiring capabilities

• Expanded service and technical training

• Leadership development program

ServSmart Experience: Hire and Train Wellsm

Confidential

Increase self-service options Invest in helpful content

ServSmart Experience: Empower the Customersm

Confidential

Service Coalition Sales and Service Mobility

• Service technicians

• Identify the highest friction points

• Feedback

• Guide change management

ServSmart Experience: Empower our Employeessm

Confidential

ServSmart Experience: Service Mobility for Customers

• Notification when technician is

en route via text and e-mail

• Photo of technician

• Link to see an ETA and location of

technician

• Rate service experience

sm

Confidential

ServSmart Experience: Service Mobility for Technicians

• Smart device enabled

• New service order notification

• Schedule visibility

• Customer notified when technician

is en route

• Turn-by-turn directions

sm

Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

Confidential

ServSmart Panel Discussionsm

Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

Confidential

Tim HaynesPresident, American Home Shield

Confidential

• Serves 1.6m customers in 50 states; >3m service

requests1

• Significant market leadership: ~4 times larger than

largest competitors

• High and stable customer retention rates

• National network of ~11,000 pre-qualified

contractors

• Significant direct-to-consumer marketing and lead

generation capabilities

1Represents results for LTM 3/31/16; 2Sources include SEC filings and company estimates

Leading provider of home warranties in the U.S.

American Home Shield Snapshot

Renewals65%

Home resales20%

Direct-to-consumer

15%

AHS42%

Old Republic

9%

Others38%

Drives stability of financial results

First American

11%

Revenue1: $935m

2010 – LTM 3/31/16

CAGR: 7.0%

Adjusted EBITDA1: $195m

Adjusted EBITDA margin1: 20.8%

Market Share2

Revenue By Channel1

Confidential

Who we are

• The nation’s #1 home warranty provider

• Over 42% market share

• Culture of innovation

• 45 years of experience

• Experts in contractor management

What we do

• Offer reliable repairs from the nation’s largest

network of independent, pre-screened home

service professionals.

• Real Estate Sales – “Peace of mind”

• Coverage for sellers during listing period

• Coverage for buyers after transaction

• Consumer Sales – “Financial Protection”

• Buy independent of real estate sale

• “Convenience” a growing selling point

• Plans cover the repair and replacement of up

to 21 major home appliances and system

components that wear down over time.

AHS Overview

Confidential

Focused on Our Customers Available however/wherever our customers choose

• 7 service channels (Phone, IVR, Web, Chat, E-mail, Mobile, Social Media)

• 10+ Million annual contacts

• 37% of DTC sold through eCommerce

• Over 70,000 sales chats online with $8MM in revenue

• Over 115,000 service chats with 90% resolution

• 268,000+ likes on Facebook

• 30,000 sales/$16.5 million in revenue through email last year

• 275,000 operational emails

• 55% request service without talking to a service agent

Delivering Omni-channel Customer Experience

Confidential

Continuously Improving Service Delivery

Keep More Customers

Respond quickly

when customer needs us

Schedule appointment

fast (immediate is desired)

Fix/replace in a reasonable

time

Provide transparency

throughout the repair

Improving the Customer Experience YOY

• 173K dispatches using interactive scheduling/messaging

• 11% decrease in customer escalations

• 6% improvement in after call survey results

Investing in the Future

• Real-time scheduling

• Next-gen dispatch capability

• Advanced demand/capacity management

• Online appliance ordering

• Integrated parts ordering

• Automated warranty check

ServSmart is Improving Service Delivery Efficiency, Effectiveness and Customer Experience sm

Confidential

• Contractors want to work for us

- Consistent/predictable quantity of work

- Fast payment

- Lead source for retail work

- Consultative assistance to grow their

business

Unrivaled Contractor Management Expertise

• Contractor obligation

- Appointments scheduled within 24 hours

- Timely status updates

- Service customer within 48 hours Mon.-Fri.

- Allow time slots for emergency service

• Acceptance Criteria

- Reputation review

- Insurance verification

- Licensing verification

- Background check

• Performance Measurement

- Scored regularly, equally weighting cost and

quality performance

- Customer surveys sent after every repair

- Contractors regularly visited to review

performance

83% of surveyed contractors say “AHS is the best warranty company to work with”

Confidential

Unmatched Scale and Cost Management

Cost

Number of Dispatches

Preferred

Direct Dispatch

Network

Confidential

Owner-occupied households(less home resales)

Households with homewarranty

66.1m

without

home

warranty2.6m with

home warranty 52%

AHS / HSA

48%

Competitors

68.7m 2.6m

Home resales Home resales with homewarranty

3.9m sold

without

home

warranty

1.4m sold

with home

warranty

27%

AHS / HSA

73%

Competitors

5.3m 1.4m

Category Dynamics

Real Estate Direct to Consumer

Confidential

Home Warranty Market Penetration Survey

Own a Home

74M

Claimed Home Warranty Owners

19M

Verified Warranty

Owners

5M

Only 3% - 7% Category Penetration

Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

Confidential

Marty WickPresident, Franchise Services Group

Confidential

Franchise Services Group Snapshot

• Operate in 50 U.S. states and 15 countries

• ~5,500 franchise licenses2

• Strong and trusted brands

• Leading market positions in all brands

• Attractive value proposition to franchisees

• Scale to service national accounts

1 Represents results for LTM 3/31/162 Active licenses related to franchise agreements managed by FSG as of December 31, 2015

Market-leading residential and commercial services

~96% of royalty fees are generated by

SM Restore, SM Clean and Merry Maids

Revenue By Channel1Revenue1: $222m

2010 – LTM 3/31/16 CAGR: 1.0%

Customer-Level Revenue1: $2.4b


Adjusted EBITDA margin1: 35%

Royalties53%

Owned Branches

15%

National Accounts

18%

Products8%

Other6%

Confidential

Leading Market Positions

Established

# of States

Home CleaningJanitorial

CleaningHome Inspection

Cabinet & Furniture

Repair

North

American

Licenses1

North

American

CLR2

% of total

1988 1992

42 45

~280 licenses ~280 licenses

$35 million

2%

$33 million

2%

50

$553 million3

28%

1929: started business

1952: began franchising

50

$1,041 million

53%

1980

48

~1,000 licenses

14 owned branches

$320 million

16%

1 Licenses held as of April 26, 20162 Represents customer level revenue results for full year 2015 3 Includes $74 million of commercial and residential floor care.

Disaster

Restoration

~1,300 licenses

2 owned branches

~2,000 licenses

Confidential

Growth Focus

Increase Franchisee Network Capacity

‒ Target under-penetrated markets

‒ Transition low performers out

Drive Sales Growth

‒ Increase National Accounts

‒ Strengthen franchisees’ local sales capabilities

Innovation

‒ Develop complementary services for customers

‒ Improve quality of service and customer interactions

‒ Leverage ServiceMaster’s capabilities and purchasing power

Confidential

18-Apr

20-Apr

22-Apr

25-Apr

27-Apr

29-Apr

2-May

4-May

6-May

9-May

11-May

0% -15% -23% -25% -36% -41% -39% -45% -49% -49% -52%

-60%

-50%

-40%

-30%

-20%

-10%

0%

Growing National Insurance Partnerships

Gaining Share of Insurance Claims Reconstruction

Leveraging Technology Cabinet Repair

• High percent of home disasters impact cabinets

• Emerging trend

• Reduces total repair time for the homeowner

• Most water mitigation claims

require reconstruction

• Increase revenue per job claim

• Core competency of network

2014 2015

SM Restore

Other

Key Insurance Partner Total Water Claims Share

49%56%

% Decrease in Pending DR Claims Over 30 Days

Confidential

Leveraging the ServiceMaster Organization

ServiceMaster Answers!

Digital Journeys

• Dispatch: Improving service journey

• Sales Mobility: Real-time sales process

• Respond 365: End-to-end insurance

claims process

• Provide fee-based call center

services to franchisees

• Call center agents understand home

services

• Screen sales leads, schedule service

Franchise AHS Trades

• AHS and insurance carrier claim

volume

• ServiceMaster purchasing power

• ServiceMaster franchising expertise

Merry Maids eCommerce

Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

Confidential

Bill DerwinPresident, Terminix

Confidential

Operate in 22 countries and 46 U.S. states

U.S. locations include ~300 company-owned

branches and ~25 franchise agreements

Large and attractive U.S. market (~$8b)

Competitive strength: brand, scale, expertise, etc.

Positioning for growth: core and new services1Represents results for LTM 3/31/162Sources: Specialty Products Consultants, LLC, SEC filings and management estimates based on industry data as measured on a customer-level revenue basis

Residential Termite

35%

Residential Pest40%

Commercial Pest17%

Commercial Termite

3%

Other5%

Terminix22%

Rollins19%

Others

59%

Revenue1: $1.5b

2010 – LTM 3/31/16 CAGR: 4.7%

Customer-Level Revenue1: $1.8b


Adjusted EBITDA margin1: 24.0%

Market Share2

Revenue By Service Type1

Terminix Snapshot

Confidential

Market Dynamics

Essential service: “Darwin” at work; real health and

nuisance problems

Recession-Resistant Demand: High cost of inaction or

ineffective treatment

Price Inelastic: Protects most valuable asset

Fragmented Industry: ~20,000 termite and pest control

companies in U.S.

Scale Advantages: Large providers offer standardized and

scalable service

Terminix

42%

Arrow

4% Rollins

17%

Others

33%

Total market: $1.4 billion

TMX

#1

Termite Market

Rollins

18%

Ecolab

7%

Terminix

15%

Others

53%

Total market: $6.4 billion

TMX

#2

Pest Control Market

Rentokil

6%

1Sources: Specialty Products Consultants, LLC: PCT Top 100

Confidential

Competitive Advantages

Industry-Leading Brand: Unaided awareness >60%;

~1.5x greater than nearest competitor

ServSmartsm: Technology powering customer

experience, productivity and growth

Technical Expertise: Industry leading experts

including industry-renowned mosquito expert

Experienced Leadership: Branch managers and

technicians with significant tenure

National Footprint: Ability to serve national and

regional customers

Size: Sourcing leverage in marketing, chemicals

and vehicles

Leadership Tenure

Well-trained and empowered to exceed

customers’ expectations

Average technician tenure

Average branch

manager tenure

7 years

11 years

Industry Leadership

Confidential

Terminix Historical Financial Growth

Revenue and Growth Adjusted EBITDA and Margin

$1,157 $1,193$1,265 $1,309

$1,370$1,444

2010 2011 2012 2013 2014 2015

$223$249

$266 $266

$309

$347

2010 2011 2012 2013 2014 2015

2010 – 2015 CAGR: 4.5%2010 – 2015 CAGR: 9.2%

($ in millions) ($ in millions)

% growth 6.3% 3.1% 6.1% 3.5% 4.6% 5.4% Margin 19.3% 20.9% 21.0% 20.4% 24.0%22.6%

Resilient, consistent revenue growth Accelerating margin expansion

Confidential

Growth StrategiesQ4/2015 & Q1/2016 Results

Key Acquisitions

Accelerating sales growth

rates in all four segments:

• Termite Bait

• Residential Pest Control

• Commercial Pest Control

• Innovation

Lifetime Value Priority: Alignment of incentives and

tactics toward renewable services

ServSmart Powered Organic Growth: Investing for

sales, retention and customer service improvements

Multiple product segments:Termite, residential pest

control, commercial pest control, innovation

Pricing: Capability developed to optimize; software

assisted A/B testing and predictive modelling

Acquisitions: High-quality targets, attractive

economics, consolidation continuing

sm

Confidential

ServSmart Success

Sales & Service Mobility

eCommerce & Website

Website Visitors: +120%

Organic Visitors: +200%

eCommerce: >1,500 units

Pilot Q2

Customer satisfaction

Sales productivity

sm

Confidential

Termite – Repositioning for Growth

Last few years:

• Bait product to enhance preventive market

• Terminix innovation success

Our response:

• Lifetime value priority

• New product DAPP, bait with pest control

• Innovation sales with targeted bait tag-along

• Marketing promotions

• Sales Mobility and Vehicles

The results: Q4 2015 and Q1 2016 unit sales

growth accelerating

Confidential

Maintain brand leadership – Optimizing broadcast spend

(TV, radio)

Improve organic search – Redesigned website for SEO

and adding relevant content

Make it easy to buy – Launched eCommerce capabilities

and website chat

Augment product line – Added new 6x-per-year contract

Leverage third-party sales agents – Reinvigorate program

Residential Pest

Confidential

Commercial

Operating Alignment: Dedicated

commercial business unit

Targeted Sales: Five key verticals in

national and mid-sized accounts

Sales Effectiveness: Investments in

sales leadership and professionals

Innovative Services

Customer-Facing Technology

Hospitality

Health

services

Warehouse/

distribution

Real estate/

multi -family

Retail

5.4% average revenue growth last 9 quarters

Confidential

New Services Insulation Encapsulation)

Exclusion Mosquito

($ millions)

Total New Services

($ millions)

Leading the market:

• Insulation in 2009

• Exclusion launch in 2014, very successful

Innovation enabling capabilities:

• New product processes with technical protocols

• Home inspections by outside sales professionals

• Entrepreneurial “can-do” branch attitude

Well positioned for continued growth:

• Cross-selling into current base; low penetration

• Additional new services

>100

500

0

500

1000

2015 MarketPotential

1 Based on cross sell penetration to 13% of existing customers

1

Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

Confidential

Business Unit Panel Discussion

Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

Confidential

Alan HaughieChief Financial Officer

Confidential

$1,929 $2,031 $2,105

$2,214 $2,293

$2,457 $2,594

2009 2010 2011 2012 2013 2014 2015

• Consistent financial performance

through business cycles

• Grew Adjusted EBITDA at greater than

1.5 times the rate of revenue

• History of Adjusted EBITDA

margin expansion

• Capital light business model

• High conversion of Adjusted EBITDA to

Free Cash Flow

Consistent Financial PerformanceRevenue

Adj. EBITDA1

1 Adjusted EBITDA includes the pro forma effect of $25m of corporate expenses transferred to TruGreen in 2013 and prior

($millions)

$376 $379 $422 $438

$475

$557

$622

19% 19%20% 20% 21%

23%24%

0%

10%

20%

30%

40%

$-

$200

$400

$600

2009 2010 2011 2012 2013 2014 2015

Confidential

Terminix – Gross Margin

Revenue Growth 2009 to Q1 2016 (TTM) = 35%

0%

20%

40%

60%

80%

100%

-

200

400

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

($s

in

mil

lio

ns

)

2010 2011 2012 2013 2014 2015 2016

44% 45%

Gross Margin

Revenue

Confidential

Revenue Growth 2009 to Q1 2016 (TTM) = 49%

American Home Shield – Gross Margin

10%

30%

50%

70%

90%

-

100

200

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

($s

in

mil

lio

ns

)

2010 2011 2012 2013 2014 2015 2016

46% 48%

Revenue

Gross Margin

Confidential

Historical Revenue & EBITDA Trends

2015 Cost to Deliver Summary (% of Rev)

Financial Overview – Terminix

Incremental Contribution (% of Rev)

1 SG&A Infrastructure includes allocated Corporate G&A of ~4% of revenue

($millions)

CAGR: 5%

CAGR: 9%

1,089 1,157 1,193

1,265 1,309

1,370 1,444

212 223 249

266 266

309

347

-

100

200

300

400

500

-

200

400

600

800

1,000

1,200

1,400

1,600

2009 2010 2011 2012 2013 2014 2015

19%

24%

Revenue Growth 355$

EBITDA Growth 135

Conversion % 38%

2009 - 2015 Growth

Labor 20%

Chemical & Materials 5%

Vehicle 5%

Retail Product Costs 5%

All Other 5%

Total Cost to Deliver 40%

100%

35%

(40%)(5%)

(10%)(5%)

(5%)

Revenue Cost toDeliver

BranchAdmin

Selling Marketing Other EBITDAConv.

Confidential


2015 Cost Structure (% of Rev)

Financial Overview – American Home Shield

Incremental Contribution (% of Rev)

1Includes allocated Corporate G&A of ~3% of revenue

($millions)

CAGR: 6%

CAGR: 14%

630 657

687 721 740

828

917

92 90 107

117

145

179

205

-

50

100

150

200

250

300

-

100

200

300

400

500

600

700

800

900

1,000

2009 2010 2011 2012 2013 2014 2015

15%

22%

Revenue Growth 287$

EBITDA Growth 113

Conversion % 39%

2009 - 2015 Growth

Costs % of Revenue

Claims 50%

Selling 9%

Marketing 6%

Service (Call Center) 8%

G&A16%

Other 2%

Total 79%

Depr/Amort/Interest -2%

EBITDA 22%

100%

35%(50%) (5%)

(5%) (5%)

Revenue Claims Selling Marketing Service(Call Cntr)

EBITDA Conv.

Confidential

American Home Shield – By Channel

630

917

49% 49%

15%22%

2009 2015

Revenue Gross Margin EBITDA Margin

36%50%

15%

5%

49% 45%

2009 2015

Direct to Consumer Third Party Real Estate

Renewals65%

RE20%

DTC15%

-$50 $0 $50 $100 $150 $200 $250

Renewals

RE - 1st Year

DTC - 1st Year

EBITDA by Sales Channel

Revenue by Sales Channel($millions)

Confidential

77 75

( 8 )

2 4

2015EBITDA

(As Rept.)

Br Rev FeesPost Conv.

Br. Sales/Mkt

2015EBITDA

(Pro Forma)

39%33%

MM refranchising impact

Revenue: $232 (42) 2 0 $192


2015 Pro Forma Revenue Structure

Financial Overview – Franchise Services Group

Pro Forma 2015 Revenue & EBITDA

Note: Impact of selling MM branches is ~$16m in 2015 and an additional ~$30m in 2016

Note: 2015 restated to reflect impact of fully refranchising the Company owned MM branches

• High variable margin business

• Infrastructure to support franchisee

network largely fixed

• Very limited capital requirements

Restore royalty rate 10%

All others 5 – 7%

($millions)

204 211 220 221

236 253

232

70 76 75

70 78 78 77

-

20

40

60

80

100

120

140

160

-

50

100

150

200

250

300

2009 2010 2011 2012 2013 2014 2015

35%33%

Royalty Fees 119

Janitorial National Accounts 41

Sale of Products 18

Other 14

Pro Forma 2015 Revenue 192

Confidential

Technology Investments($millions)

40% 43% 40% 40%

60%

57% 60% 60%$83

$120 $120 $120

2015A 2016E 2017E 2018E

Capital Expense (EBITDA) Revenue

%Rev: 3.2% 4.3% 4.1% 3.9%

Representative Initiatives G R E

• TMX Sales and Service mobility

• Enterprise-wide eCommerce

• Cross--channel marketing platform

• Service dispatch platform

• Terminix IVR

• HSA integration

• Hyper-converged infrastructure

• Next Gen firewalls, security monitoring

and detection tools

G = New Customer Growth, R = Retention, E = Efficiency

Minimum target of 75bps incremental growth at 35% conversion is >20% IRR

ConfidentialConfidential

2016 Outlook

2016 Revenue and EBITDA outlook

Strong top line with AHS growth ~10%

Terminix growth middle-to-high single digits

Approximately 80% revenue from recurring

customer base

Continued operating leverage

High customer retention; pricing 1% - 2%

Strong pipeline of tuck-in acquisition

targets

Free cash flow > $300 million

Investing in growth (marketing/ServSmart )

2016 Full Year Outlook

Revenue $2,750 - $2,780 Growth 6% - 7%

EBITDA $675 - $690Growth 9% - 11%

EBITDA margin 24% - 25%+ 50 - 100 bps

($millions)

sm

Confidential

EBITDA increases net of tax largely

flow through to FCF

PP&E long term spending levels

expected to be ~ 2% of Revenue

Net Debt / EBITDA ratio of 2.0x – 2.5x

by the end of 2019

Long-Range Free Cash Flow Outlook($millions)

Expected EBITDA growth of ~ 10% per year

Expected FCF growth of 10% to 15% per year

2015 2016E

EBITDA 622 675

PP&E (40) (60)

Cash interest (178) (140)

Cash taxes (44) (145)

Working Capital & Other (1) (20)

Free Cash Flow 358 310

EBITDA % 58% 46%

Net Debt / EBITDA 4.2x 3.9x

1,000 300

150

275

275

Cumulative FCF(3 yrs)

Share repurchaseprogram

Tuck-in Acquisitions Scheduled Debt paydown

Acquisitions /Other

Confidential

ServiceMaster

2016 Investor Day

May 17, 2016

Waldorf Astoria

New York City

servicemaster 2016 investor...

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