Pest Control

U.S. Pest Control Is Set To Boom & Gross Margins Have Investors’ Interests Piqued; Enviro-Serv Inc (OTCMKTS:EVSV)

The U.S. pest control industry made about $7.466 billion in total service revenue in 2014. This is a 3.5 percent increase from the $7.213 billion measured in 2013. In addition, about 8.75 million people were serviced under either “cleanouts” or annual contracts in that year. This is over the 25% target market  – households making over $75,000 a year – of professional pest control serviced in the U.S. Furthermore, 3.75 million accounts are serviced for termite control.

“Assuming no overlap of services, that would bring the total residential accounts serviced to 36.3 percent of the ‘target market.’ The percentage of all U.S. households (2013 = 122,952,000) receiving professional pest control was slightly more than ten percent,” Gary Curl, president of Specialty Products Consultants, tells PCT Magazine.

Professional treatments to control bed bugs are still expanding in the U.S. Six of ten customers claim to have used insecticide treatments to control bed bugs. Around one in ten used heat treatments. Overall, the bed bug service revenue increased 5.6% from the year before, and resulted to over $470 million.  “We estimate that more than 725,000 bed bug jobs were completed in the U.S. this past year,” said Curl.

Pest control operators reported great growth in commercial service revenue since last year. There was about a 4% increase in the amount of post-construction termite jobs completed. Increases in pricing actions pushed the post-construction job 3% higher to $861.38 per treatment this year. Pest control operators have also released data showing over 17% of post-construction termite treatments were done on commercial accounts this past year. Pre-construction termite treatment revenue increased 8.2% in privately owned new housing units. Over 45% of all privately owned housing in the U.S. has received a pre-construction termite treatment this year.

A market report predicts an increase in pest control service revenue through 2016, and pesticide product category sales through 2019. Because of mosquitos and wildlife populations rising, pest control is predicted to continue to improve. Another prediction of improvement in the market is due to the rebound of the overall economy, meaning more people will be looking to construct houses and new build sites.

Enviro-Serv Inc (OTCMKTS:EVSV) has found itself in the midst of this movement in pest control industry growth.  Rising demand and service prices have resulted in higher profit margins for pest control companies. “While profit margins declined slightly during the recession due to rising fuel expenses and price-based competition, heightened demand for industry services has favorably affected margins overall and allowed operators to pass on price increases to consumers,” says IBISWorld Industry Analyst Stephen Morea.

During the last 3 months OTCMKTS:EVSV has begun to roll out a full market penetration campaign following the successful involvement and approval of becoming a Pestmaster Franchisee.  Its previous XTerminate subsidiary effectively became Pestmaster Tampa and has been focusing largely on two distinct markets: Government contracts and commercial clients.  Due to the overall margins that this market has, the opportunity to turn a “would-be” small sale (IE. $5,000 or less) into a revenue generating machine becomes very likely with the limited need for high overhead and the overall impact that economic growth has had in 2015.  In fact, for Pest Control companies, the gross profit margins have been found to average over 60%!

Enviro-Serv announced that it is finalizing yet another commercial GHP contract with a pair of large property investors.  In the release CEO Chris Trina stated that he feels that simply based on the quality workmanship and overall cost effectiveness that EVSV holds above and beyond its competition, more clients will continue to drop their current providers, opting to work with Pestmaster Tampa.  If you’ve ever thought about pest control realizing incredible profit margins, you’re in luck because based on these findings, the industry stands to see continued growth for the foreseeable future and with successful organizations keeping over 60 cents of every dollar that is paid in.

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