ServiceMaster Warns

The third quarter is hit by hot weather.
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The ServiceMaster (SVM) - Get Report warned Wednesday that third quarter and full year performance will fall short of management estimates, citing the effects of a hot summer.

The Downers Grove, Ill., lawn and pest control company said it expects to make 20 or 21 cents a share from continuing operations for the third quarter, down from 23 cents last year. Analysts surveyed by Thomson Financial were looking for 25 cents a share.

The company expects to make 59 to 61 cents a share for the year. Excluding restructuring charges, ServiceMaster expectes to make 61 to 63 cents, shy of the 66-cent Thomson target.

"The summer of 2006 was one of the warmest on record for the country as a whole and in many of our key operating regions. This, along with other unrelated factors, impacted several of our business units, causing the change from our prior estimates," said CEO J. Patrick Spainhour. "At American Home Shield, as a result of heat and inflationary pressures, we experienced much higher than expected claim costs. At TruGreen ChemLawn, weather-related factors caused a significant increase in service calls, while sales of supplemental and full program services fell short of expectations. At Terminix, the substantial, industry-wide decline in termite lead flow that began during the weak termite swarm season earlier in the year, continued in the third quarter. This was mitigated somewhat by continued solid improvements in our lead to sales conversion rate."