George Pickhardt's four-year mission to overhaul the pest control business that's been in his family since 1886 took a supersized step forward in January.
That's when Pickhardt hired nationally recognized CEO Joe Finney to oversee the vision and strategy, which includes the bold goal of becoming a $100 million company by 2016. Yet Pickhardt, chairman of Sarasota-based Environmental Pest Service, formerly Arrow Environmental Services, has lofty hopes that go deeper than revenues.
“We don't want to be another Terminix or Orkin,” Pickhardt says of larger peers. “We want to create a benchmark for the industry.”
The point man in that effort, Finney, is a rare find for any Gulf Coast business. His most recent gig was a four-year stint at the helm of Sears Automotive Group. That unit grew to $1.6 billion in sales and 14,000 employees spread through 800 Sears Auto Centers and 1,200 Kmart locations under Finney's watch. Finney's other career stops include CEO of Tire Centers, a $1 billion Michelin subsidiary, and a top senior executive at Terminix and ServiceMaster, where he led significant turnarounds.
“I'm proud Joe has joined us,” says Pickhardt. “There must be something we are doing right for him to come here.”
Finney got to know Arrow in 2010, when the Chicago-based private equity firm he worked for, Concentric Equity Partners, placed a multimillion-dollar investment in the firm. Finney, 49, comes to his CEO role at a crossroads for EPS.
That's because the past four years, backed by Concentric, now a majority owner of the firm, have been an acquisition-with-a-purpose binge. EPS has acquired 43 pest control and related companies from Naples to Atlanta since 2010. That includes the late 2013 acquisition of Atlanta-based Skyline Pest Solutions, a $5 million business, and the early 2014 purchase of Jacksonville-based Bug Out Service, a $15.6 million company. The 336-employee firm projects around $50 million in 2014 revenues — which would be up nearly 275% over $13.4 million in 2013.
Says Finney: “It's been a phenomenal growth story.”
The acquisitions, say EPS executives, are also an opportunity to grow new revenue streams in areas like termites, lawn care and irrigation. “It's one thing to buy a bunch of businesses,” Pickhardt says.
“But you have to do something with them. What we want to do is make one plus one equal four.”
Finney, to execute that mathematical mission, plans to create a corporate structure that capitalizes on economies of scale without sacrificing an entrepreneurial local-feel approach.
Must have balance
Finney breaks his tasks at EPS down into three segments: unity, liberty and balance.
Unity, he says, is how the company will centralize tasks common to all acquired entities. Things like payroll, benefits, fleets, purchasing and merging software programs. That's why the firm recently changed its name from Arrow to Environmental Pest Service. Executives sought one corporate name for the all the individual businesses that have been bought. (The purchased companies keep the names in the local markets for branding purposes.)
Unity also includes a challenging task Finney recently delegated to senior managers: To create the best employee-training program in the industry, from webinars to classes to fieldwork.
The next segment, liberty, is the ability for each branch manager at EPS to run his or her operation like a local company. This is how EPS hopes to avoid customer service pitfalls many large-scale businesses encounter during a growth spurt.
The firm recently backed the liberty concept with a financial incentive: Supervisors from branch manager up have an opportunity to buy stock options in EPS. “We want our management team to have an ownership mentality,” says Finney, “not an employee mentality.”
The third principle, balance, is what Finney considers a company bedrock. The idea is to keep customers, employees and shareholders equally in mind with every decision. Finney says sometimes decisions are made that might be good for customers but knock down profits. Or a decision could be profitable but have a more negative impact on employees.
But Finney believes there must be balance over the long-term in all three areas.
Keep it simple
Finney seeks to incorporate another principle into the EPS strategy outside of those three concepts. That guideline, simplicity, stems from decades of making high-level decisions.
Simplicity is why Finney says growing a pest control business isn't much different than growing a mammoth chain of auto stores. His rationale is both tasks require an ability to listen to customers to find new ways to sell more services.
Those customers will come from acquisitions and organic growth. The company splits acquisitions into two categories. One is what Finney calls platform businesses, which are core pest control firms.
The other is what he calls tuck-in companies, which fill in gaps in locations and non-pest control services in the EPS portfolio.
Organic growth is also important. The firm's internal sales team has grown from seven to 28 people since 2010. The results began to show last year, says Finney, when organic sales grew 67.8%, from $2.8 million in 2012 to $4.7 million. Organic sales at the company are up 240% since 2010.
Finney says a must-do with a sales department, a lesson he's learned at multiple past career stops, is to provide daily metrics for the entire team. This way everyone sees how others are doing and celebrates successes. “It raises the sense of urgency on what we are trying to do,” says Finney.
One aspect the firm doesn't plan to do much of is regional marketing. Finney believes EPS will gain and retain clients by spending money to become a better company — not bragging about it.
“Our marketing is not in your face,” says Finney. “It's not something where we think people will drive by a billboard with our name and order our services. It's something that's more word of mouth.”
The overall strategy at EPS is a marked contrast from the company's early days. Pickhardt's grandfather was the first in the family to get into the pest control business, when he founded International Fumigators in 1886 near Buffalo, N.Y. George Pickhardt's father, Vernon Pickhardt, worked in the field next, in Cleveland and later in Florida.
George Pickhardt recalls the days in the 1950s, when he handled and bottled pesticides and prepared cyanide and sulfuric acid traps to catch creepy critters. Back then he was a pre-teen assistant for his father.
Pickhardt later got another education in the industry: He earned a bachelor's degree in entomology, the study of insects, and a master's degree in ornamental horticulture from the University of Florida.
Pickhardt officially joined the family business in the 1970s. He oversaw growth spurts through the 2000s boom, when an influx of new homeowners brought a larger customer pool. But the recession forced Pickhardt to rethink the future of the business. That led him to Concentric Equity Partners, and Finney.
Now both executives, along with chief operating officer Bill Hurd, are excited to see where the business can go. “We have a vision to make this a lot bigger than we are today,” says Finney. “We are just getting started.”
Joe Finney says his greatest leadership lesson is obvious yet critical: Don't underestimate the importance of people.
“Great leaders own the responsibility for the culture of the company and recognize that getting this right takes time and effort,” says Finney, who has run two separate multibillion-dollar businesses. “Culture is not a statement that is out on the wall. It is the cumulative actions of leadership over time that creates winners.”
Adds Finney: “Good leaders recognize the importance of training, communicating progress, and celebrating success. When employee needs are met they tend to provide better service, which leads to happier customers and long-term relationships, which greatly benefit the company.”
Joe Finney, who leads the ambitious growth strategy at Sarasota-based Environmental Pest Service, formerly Arrow Environmental Services, ran large businesses for more than 25 years. Highlights include:
Regional vice president, Terminix: Managed a $74 million region with 27 branches and 850 employees in Texas and Mexico. Unit acquired and integrated 42 other companies over three years.
European managing director, ServiceMaster: Based in London, where he headed a $165 million business unit.
President and CEO, Tire Centers: A Michelin subsidiary with tire services and sales in 40 states and 2,100 employees.
President, Sears Automotive Group: Unit grew to $1.6 billion in sales and 14,000 employees in 800 Sears and 1,200 Kmarts in four years.
Sarasota-based Environmental Pest Service executives project the firm will be a $50 million business by the end of 2014 and could be a $100 million business by 2016. Formerly named Arrow Environmental Services, the firm has acquired 43 other pest control companies since 2010.
A $100 million pest control business would be in the industry's top 12 largest companies list based on 2013 revenues. Here's a glance at pest control companies with more than $100 million in annual sales.
Company. Environmental Pest Service Industry. Pest control, lawn care Key. Firm projects $50 million in sales in 2014 and around $100 million by 2016.
Due to incorrect information received by the company, this story has been updated to correct the number of employees at EPS.