New ServiceMaster CEO Travel Patterns Hint at Lucrative Expansion Strategy

On Wednesday, July 26, ServiceMaster Global Holdings (SERV) announced that Nikhil Varty would replace Robert Gillette as CEO, effective immediately. ServiceMaster’s primary business lines are residential pest control (through Terminix) and home warranties (through American Home Shield).

Varty had previously served as global vice president of mergers and acquisitions at WABCO Holdings (WBC), a manufacturer of parts for commercial vehicles. Given that ServiceMaster’s business would be vastly different from Varty’s experience at WABCO, he said in earnings calls that he would tour the country to see operations, meet people and learn as much as possible.

In February 2018, on an earnings call to discuss 2017’s fourth quarter, Varty followed up on his promise to tour the country by saying, “I've had the great pleasure of meeting many of our approximately 13,000 employees over 15,000 contractor partners and more than 4,500 franchise owners.”

But statements like this leave a question: Is this just the right thing for a new CEO to say? Or, had Varty really invested time in visiting ServiceMaster locations and personnel around the country?

JetTrack provides 2 interesting insights in this case. First, it helps confirm whether or not a CEO is being truthful in earnings calls when describing where he or she has been traveling. And, second, it also helps investors compare the travel patterns of 2 different CEOs —information that can help predict the direction a new CEO is planning to take a company.

Here’s a look at what JetTrack can tell investors about ServiceMaster’s new CEO, his truthfulness on earnings calls, as well as his plans for the company’s future.

Did Varty Really Travel the Country?

JetTrack’s database includes one aircraft connected to ServiceMaster — a wholly owned Cessna Citation Sovereign.

Tracking this jet over Varty’s first 6 months as ServiceMaster’s CEO indicates that overall trips jumped 50% year over year. In the days after taking his new position, Varty had promised to meet with suppliers, clients and customers as well as to conduct interviews at branches, all in an effort to get up to speed as quickly as possible and to learn as much as possible while transitioning to an entirely new industry.

Beyond the 50% increase in year-over-year trips, it’s also insightful to look at where Varty spent a disproportionate amount of his time.

Where Did Varty Spend Most of His Time?

A breakdown of Varty’s trips by region indicates that he didn’t distribute his time equally around the country. In some regions, he took 50% more trips, which aligns with the overall increase in travel. In Florida, Georgia, Alabama and the Carolinas, for example, he took 8 trips in his first 6 months — a 50% increase over the 4 trips taken to that area by the previous CEO the year prior.

Some parts of the country saw much larger increases in the number of trips, though. For example, Varty visited the Northeast United States 18 times in his first 6 months, which is a huge jump over the 5 trips taken by the previous CEO in the year prior.

Also, some parts of the country saw sharp decreases in the number of trips. For example, Varty visited Texas and Oklahoma only 6 times in his first 6 months, which is far fewer than the 15 trips taken by the previous CEO in the year prior.

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What do these disparities tell investors? A natural next step would be to examine the business units located in the Northeast United States and to evaluate why Varty might be spending a disproportionate amount of his time there. Also, what business units are located in Texas and Oklahoma? And why might Varty be spending less time there than the previous CEO?

ServiceMaster’s business includes far more than just Terminix and American Home Shield — it also owns AmeriSpec, Furniture Medic, Merry Maids, ServiceMaster Clean and ServiceMaster Restore. In the past, ServiceMaster has shown a willingness to spin off TruGreen, its lawn care business. And one of Varty’s first orders of business was to begin spinning off American Home Shield so that it might become its own publicly traded company. What other moves might his travel patterns foreshadow?

The answers to these questions could yield actionable investment insights for analysts using JetTrack.

It Matters Where Executives Travel

JetTrack is designed to be a reliable source of alternative data for analysts and investors. Its database includes thousands of corporate aircraft, allowing users to track the regulatory approvals process, follow up on rumors, or even to identify unusual travel patterns as mega acquisitions are about to close.

It matters where executives travel, and JetTrack gives you a clear view into where company executives are going, how long they are staying in certain locations, as well as how rare it is for them to visit specific destinations.


 

Interested in taking a closer look at JetTrack? Contact us to learn more.