Janitorial & Carpet Cleaning Services

Transcription

1 INDUSTRY PROFILE Janitorial & Carpet Cleaning Services NAICS CODES: 56172, SIC CODES: 7349 About First Research First Research, a D&B company, is the leading provider of Industry Intelligence Tools that help sales and marketing teams perform faster and smarter, open doors and close more deals. First Research performs the heavy lifting by analyzing hundreds of sources to create insightful and easy to digest Industry Intelligence that can be consumed very quickly to better understand a prospect s or client s business issues. Customers include leading companies in banking, accounting, insurance, technology, telecommunications, business process outsourcing and professional services. Used by more than 60,000 sales professionals, First Research can benefit any organization which has prospects in multiple industries. Attention: This Profile purchase is an individual license and is not to be distributed to additional individuals even within the same organization. For corporate or small business subscription information, visit or call or toll-free International

2 Industry Overview Companies in this industry clean building interiors, windows, carpets, and upholstery. Major US companies include divisions of companies such as ABM Industries and ServiceMaster, as well as Coverall Health-Based Cleaning System, Jani-King, and Stanley Steemer; major international companies include divisions of Aeon Delight (Japan), CNS Consorzio Nazionale Servizi (Italy), ISS Property Services (Australia), and Wisag (Germany). Globally, janitorial and carpet cleaning services companies are more common in industrialized countries. Demand for commercial janitorial services is dependent on extensive infrastructure, while demand for carpet cleaning services relies on a large population of middle class customers. The industry is heavily concentrated in Australia, Canada, Japan, the US, and countries in Western Europe. But demand is growing in developing countries like China and India. The US janitorial services and carpet cleaning industry consists of about 50,000 janitorial companies and about 9,000 carpet and upholstery cleaning companies with combined annual revenue of about $35 billion. A key growth driver for the janitorial industry is demand for office space. Competitive Landscape Commercial real estate occupancy drives demand for cleaning services. The profitability of individual companies depends on good marketing. Large companies have an advantage in serving customers with multiple locations. Small companies can compete effectively in local markets, especially for small business and residential customers. The US janitorial services industry is fragmented: the 50 largest companies generate about 30 percent of revenue. The US carpet cleaning industry is highly fragmented; the 50 largest companies account for about 20 percent of revenue. Products, Operations & Technology Janitorial services account for about 90 percent of industry revenue. Janitorial work includes general services, such as cleaning, trash pickup, floor polishing, and the specialty services of cleaning carpet and ducts and washing windows. Operations consist of crews cleaning commercial, industrial, and residential buildings by hand or with the help of basic equipment like floor polishers. Service Segmentation by Revenue - Census Bureau Carpet and upholstery cleaning firms account for about 10 percent of industry revenue. Water, steam, and/or various chemicals are injected into a carpet and removed by vacuum along with dirt and stains. Some companies use proprietary application/extraction systems. Cleaning companies buy supplies and equipment from distributors and manufacturers. Some carpet cleaning companies also offer water damage restoration services, leather cleaning, tile and grout cleaning, and cleaning for cars, boats, and RV interiors. Sales & Marketing Customers include owners, managers, and tenants of commercial, industrial and residential property. Janitorial

3 companies usually market to commercial companies or building operators through sales visits. Carpet cleaning companies usually market to residential customers through referrals. Customer retention is important because of high levels of competition. Janitorial service companies bid on annual contracts for a fixed price, with a 30- to 90-day cancellation notice and automatic renewal. Some contracts are cost-plus-fee, which indicate that customers reimburse wages, payroll taxes, insurance charges, and other expenses, plus a stated profit margin. Contracts usually specify a particular cleaning program, with a list and schedule of tasks to perform. Finance & Regulation Profit margins are typically low, as barriers to entry are low and competition is fierce. Large companies may have a high percentage of contract business and steady cash flow. Payroll costs for janitorial services are about 50 percent of sales; payroll represents about a third of carpet and upholstery cleaning sales. Both segments of the industry are labor-intensive: for janitorial services, average annual revenue per employee in the US is about $35,000; for carpet cleaning, about $60,000. Some firms franchise their names and business methods to local operators. Franchising is more common for firms serving the residential segment than for those specializing in commercial customers. Federal, state, and local environmental regulations apply to the disposal of trash that is collected, especially if it contains hazardous materials like medical waste or toxic metals and chemicals. Chemicals in cleaning products and improper disposal of trash can contribute to poor indoor air quality (IAQ). Companies in this industry are susceptible to regulations regarding the hiring of immigrants. International Insights Globally, janitorial and carpet cleaning services companies are more common in industrialized countries. Demand for commercial janitorial services is dependent on extensive infrastructure in office, retail, educational, health care, industrial, transportation, and government facilities. Demand for carpet cleaning services relies on a large population of middle class customers. The industry is heavily concentrated in Australia, Canada, Japan, the US, and countries in Western Europe. However, opportunities exist for companies to expand to emerging countries. Growth of GDP, a demand indicator for janitorial and carpet cleaning services, is forecast to rise at a much faster rate in emerging economies in 2014, according to the Conference Board. Collectively, developing economies are expected to grow 4.6 percent in 2014 compared to the prior year; developed economies are forecast to only grow 1.7 percent. Among emerging economies, China and India should see the greatest growth, with rises in GDP of 7 percent and 4.4 percent, respectively. GDP in areas in Asia outside China and India are forecast to grow 4.6 percent. Latin American GDP is expected to increase about 3 percent; growth in the Middle East is forecast to be 2 percent. Of the advanced economies, the US is projected to see the most GDP growth in 2014, with a rise of 2.3 percent, followed by Europe with growth of just over 1 percent. Japan's growth is expected to be flat, growing by less than 1 percent. In selecting possible expansion strategies, large companies in developed markets may opt to move into markets geographically close to home. US companies may look for opportunities in Latin America; European players may turn to Eastern Europe and Russia; and Japanese firms may explore opportunities in Southeast Asian nations and China. Japan's Aeon Delight has expanded into China, Malaysia, and Vietnam. In 2012 the company increased its number of locations in China from four to 16. Regional Highlights Because US business activity drives demand for cleaning services, janitorial services and carpet and upholstery cleaning companies tend to cluster in states with large amounts of occupied office space. Janitorial services and carpet and upholstery cleaning companies are most prevalent in California, Florida, New York, and Texas. Human Resources Most janitorial and carpet cleaning employees work short weeks, because much of the cleaning at businesses must occur after hours. Average hourly pay for janitorial workers is significantly lower than the national average. Pay for carpet and upholstery cleaners is moderately less than the national average. Companies have the high employee turnover typically associated with low-wage jobs, and many rely on immigrant labor. Small firms often employ family members and tend to have lower turnover. The industry s safety record is similar to the national average. Industry Employment Growth

4 Bureau of Labor Statistics Average Hourly Earnings & Annual Wage Increase Bureau of Labor Statistics Industry Growth Rating Demand: Depends on business users and consumer income Need efficient use of low-cost labor Risk: Cuts in office space and consumer spending on outsourced cleaning Quarterly Industry Update Opportunity: Health Care-Associated Infection Prevention - Health care-associated infections, or HAIs, are a growing concern for US medical centers, bringing new opportunities to the facility management industry. On any given day, about one in 25 hospital patients has an HAI, some of which are life-threatening, according to a report from the US Centers for Disease Control and Prevention. Janitorial service providers are expanding offerings for customers in the health care industry to meet the rising need to control the spread of infection. Targeted efforts can include use of new disinfectants and cleaning equipment, as well as new training programs for cleaning workers to ensure proper infection-control processes. Industry Impact - Adding specialized infection-control cleaning procedures, equipment, and training programs can give facility management companies an advantage in winning contracts with medical centers, as well as schools and other places where infection control is a concern.

5 Industry Indicators The value of US nonresidential construction spending, a driver for commercial cleaning services demand, rose 4 percent year-to-date in March 2014 compared to the same period in The value of US residential construction spending, which impacts demand for carpet cleaning services, rose 16 percent year-to-date in March 2014 compared to the same period in Total US revenue for other administrative and support services, which includes janitorial services and carpet cleaning, rose 0.5 percent in the fourth quarter of 2013 compared to the previous year. Industry Forecast The output of US janitorial and carpet cleaning services is forecast to grow at an annual compounded rate of 4 percent between 2014 and Data Published: February 2014 First Research forecasts are based on INFORUM forecasts that are licensed from the Interindustry Economic Research Fund, Inc. (IERF) in College Park, MD. INFORUM's "interindustry-macro" approach to modeling the economy captures the links between industries and the aggregate economy. Forecast FAQs Industry Drivers Changes in the economic environment that may positively or negatively affect industry growth. Data provided by First Research analysts and reviewed annually Energy Prices Change in crude oil and related energy prices Consumer Spending Change in overall level of consumer spending on goods and services Technology Innovation Advances in science and technology, including information technology Critical Issues Revenue Depends on Business Activity - Demand for commercial cleaning services depends on the amount of

6 office space that businesses occupy, which varies according to the health of the economy. During the late 2000s recession, office vacancy rates in some markets exceeded 20 percent, according to real estate advisory firm Newmark Grubb Knight Frank. Demand for residential cleaning services is linked to income growth; during economic downturns, consumers cut cleaning services. Labor Supply - Due to the relatively low prices that cleaning companies can charge, they depend on a supply of low-cost workers. However, low pay and often-difficult working conditions lead to high personnel turnover. To provide contracted levels of service to customers, companies frequently have to find new sources of labor and provide adequate training. Cleaning crews often consist largely of immigrants. Business Challenges Competition from Diversified Companies - Large customers are increasingly negotiating multifunction, multisite contracts with large service companies that can provide a full range of services. Janitorial companies usually don't have the range of expertise to compete with diversified companies for such contracts. Bundled services may include electrical and mechanical maintenance, energy management, pest control, security, parking, snow removal, recycling, and grounds maintenance. Customer Concentration - Many small janitorial companies depend on a few large customers for the bulk of revenue. Large commercial properties are anchor accounts for many floor-cleaning contractors. To get large accounts, small cleaning companies must usually build their reputation by starting with smaller properties. Cleaning companies can damage their reputation by taking accounts that they aren't equipped and staffed to handle. Competition from Customers - As consolidation has increased in the building management industry, particularly with the growth of apartment and office REITs, some managers of large buildings are achieving efficiencies by operating in-house janitorial services. Janitorial companies may have to lower prices, offer extra services, or offer expertise in environmentally friendly cleaning methods to appeal to some customers. Ease of Entry for New Competitors - With costs largely determined by labor availability and contracts often awarded through competitive bidding, new competitors with low-cost labor can easily enter and compete successfully with established firms. Janitorial services are considered by customers to be a commodity product that should be bought at the lowest cost. Liability for Worker Exposure to Hazardous Substances - On many construction, manufacturing, and health care sites, janitorial service workers can unknowingly be exposed to hazardous substances. Many cleaning products also contain chemicals with volatile organic compounds (VOCs) which can have adverse health effects. Inspections by Regulators - Due to the potential for financial abuse of their low-wage labor force, janitorial companies are a frequent focus of state and federal labor regulators. The large number of immigrant workers also increases scrutiny from immigration inspectors. Companies that violate labor or immigration laws face substantial penalties. Business Trends Standard Building Services - Although corporate customers with office space in large buildings may hire their own janitorial company, more building managers provide janitorial service as part of the office lease. With security a greater concern in office buildings, operators prefer to approve just a single company to clean all the offices. Green Cleaning Products - Concern is increasing about the damaging impact of cleaning chemicals on the environment, which is influencing the types of cleaning supplies companies buy. With more environmental laws, frequent inspections, and higher fines, companies have an incentive to adopt a proactive, environmentally friendly "green" housekeeping program. Using green chemicals is potentially less harmful to the environment and employees working with them, and disposing of green chemicals is less expensive than disposing of hazardous chemicals. Conservation Measures - Most maintenance companies are taking measures to be more environmentally responsible by recycling solid waste and water, reusing materials, using natural daylight or retrofitting lighting fixtures, buying recycled office products, and instituting employee education programs. A survey by the International Facility Management Association shows that 95 percent of facility professionals consider sustainability an upcoming important issue for their profession. House Cleaning Demand - Demand for residential cleaning services is impacted by household employment.

7 Families with two earners have less time to clean house but enough income to hire cleaners. During periods of substantial job loss, such as the late 2000s recession, demand for cleaning services declines as households have less disposable income and more time to clean. Industry Opportunities Outsourcing by Customers - Companies that can't afford the time or money to maintain their own maintenance staff are increasingly outsourcing janitorial and other facilities services. Outsourcing noncore functions by many businesses and smaller apartment building managers has expanded the market for commercial janitorial services. Cross-Selling Services - Companies that provide diversified services can serve a larger variety of customers. While not all janitorial companies can also provide engineering and mechanical or electrical maintenance services, because they require a more-skilled workforce, many can provide security, parking, and snow removal. New Cleaning Methods - New solvents and patented technologies for dirt removal can make inroads in an industry with old technology. Most carpet cleaners use techniques that haven't changed for decades and are ineffective for removing modern dyes and chemicals from modern fabrics. Over the last several years, new developments in cleaning technology and methods have revolutionized the industry. For example, new products like premoistened, disposable wipes, and microfiber can improve productivity. Executive Insight Chief Executive Officer - CEO Expanding through Service Diversification Building service contracts generally specify in detail the tasks to be completed by service crews. Offering additional services such as cleaning awnings, canopies, blinds, and ducts can increase the value of contracts. ABM Industries built a multibillion-dollar business by providing facilities management and other services along with custodial and cleaning services. Developing Green Cleaning Business Americans are becoming more environmentally conscious and demanding healthier environments, including indoors. The EPA reports that exposure to pollutants can be up to 10 times higher indoors than outdoors, much of this due to use of conventional cleaning agents. Businesses and the federal government are increasingly inserting greening language in solicitations with requirements that cleaning products used will cause minimal skin, eye, and respiratory irritation; are biodegradable; avoid use of undesirable or unnecessary dyes and fragrances; and use recyclable containers and minimize non-recyclable waste. Chief Financial Officer - CFO Maintaining Even Cash Flow Most cleaning contracts are annual and specify monthly payments. Smaller companies usually have a large number of individuals or small companies they service. In economic down cycles, smaller companies can encounter receivables problems due to companies going out of business, closing offices, or stretching out their payables. Many small janitorial companies depend on a few large customers for the bulk of revenue, and the loss of a large customer can severely disrupt cash flow. Ensuring Proposal Accuracy Most contracts result from proposal responses to solicitations and are for a year and then renewable by mutual consent. The solicitation specifies, sometimes by task, the work to be done and its frequency. Some tasks are intricate, such as waste disposal and separation of recyclables. The proposal states a price for performing the tasks and is normally fixed price. Profitability on an account depends on its being accurately estimated with regard to labor materials and external services required. Chief Information Officer - CIO Complying with Trash Disposal Regulations Government regulations require that hazardous materials, like medical waste, toxic metals, or chemicals, be separated from other solid waste and disposed of safely. Custodial contracts require the contractor to set up separate collection containers and dispose of hazardous materials properly. To ensure compliance with trash disposal regulations, firms track which customer contracts require special hazardous material disposal and provide work orders, supplies, and training for field crews. Firms can use off-the-shelf software to do this type of

8 tracking and reporting. Applying Technology for Productivity Gains Cleaning and other custodial activities are labor-intensive and, while the labor is not easily reduced by use of machines or automation, application of even rudimentary technology can have big returns in increasing productivity. Many companies are implementing labor reporting and inspections systems, supplemented by wireless phones with two-way radio options. These reporting and monitoring systems allow closer tracking of employees as they complete jobs and move to other sites. Human Resources - HR Hiring Multi-Lingual Supervisors Many employees in the industry are unskilled or have limited or no English language skills. In many metropolitan areas, employees are recruited from one or two large immigrant pools and the dominant language may be Spanish, Chinese, Russian, or Slavic, making communication with management or customers difficult. Multilingual supervisors are essential to give directions, oversee cleaning tasks, and respond to employee questions. Frequently, employees become eligible for supervisory positions as they acquire facility in English. Dealing with Unions A large number of labor unions represent custodial employees; the largest is Service Employees International Union (SEIU). SEIU, which has more than 2 million members, has aggressively organized employees at large contractors, and then pursued higher wages and benefits, and better, safer working conditions. Large companies believe that threats of labor strikes and the higher wages disadvantage them when bidding new contracts. HR must ensure that the company conducts itself in accordance with prevailing labor laws and practices in dealing with union organizing activities. VP Sales/Marketing - Sales Developing Service Mix for Local Sales Building owners and managers prefer to deal with a minimum of contractors to keep their buildings clean and functioning. Most companies pursuing janitorial and cleaning contracts have a direct sales force that calls on the building owners and managers to tout their company s capabilities and express interest in participating in upcoming bids. Being able to bundle services such as electrical and mechanical maintenance, energy management, pest control, security, parking, snow removal, recycling, and grounds' maintenance is a distinct advantage in pursuing new business. Expanding into Residential Cleaning Most commercial cleaning services are conducted at night, which leaves the company cleaning equipment (trucks and vans, vacuums, polishers, etc.) idle during the day, and creates an opportunity for companies to expand into daytime residential cleaning. Transferring some staff from the later shifts is usually easy and allows the company to take advantage of increasing demand for residential cleaning services. The outsourcing of non-core functions by many businesses and smaller apartment building managers has expanded the market for commercial janitorial services. Marketing is normally by word-of-mouth, local advertising, and through mailers. Executive Conversation Starters Chief Executive Officer - CEO What plans does the company have to diversify services? Offering additional services, such as cleaning awnings, canopies, blinds, and ducts, can increase the value of contracts. What potential does the company see in offering green cleaning services? Demand is rising for green cleaning that minimizes irritation and waste, and uses biodegradable, dye-free products. Chief Financial Officer - CFO What challenges does the company have maintaining even cash flow? Smaller firms service other small companies, increasing the risk of receivables problems, due to the high failure rate of small businesses. How might the company improve the accuracy of its proposals? Profitability depends on accurate estimates of labor, materials, and any external services, such as recycling fees.

9 Chief Information Officer - CIO How does the company track compliance with trash disposal regulations? To ensure compliance with trash disposal regulations, firms track which customer contracts require special hazardous material disposal and provide work orders, supplies, and training for field crews. What plans does the company have to use technology to improve operations? Wireless phones and two-way radios help personnel report job and inspection completion onsite, increasing productivity. Human Resources - HR How important is hiring multi-lingual supervisors? Multi-lingual supervisors are necessary in some firms to communicate with workers who have limited English skills. To what extent does labor union activity affect the company? A large number of labor unions represent custodial employees; the largest is Service Employees International Union (SEIU). VP Sales/Marketing - Sales What types of services do prospects and customers request that the company doesn't yet provide? Being able to bundle services such as electrical and mechanical maintenance, energy management, pest control, security, parking, snow removal, recycling, and grounds maintenance is a distinct advantage in pursuing new business. How is the company taking advantage of the increased demand for residential cleaning? Transferring some staff from the later shifts is usually easy and allows the company to take advantage of increasing demand for residential cleaning services. Call Prep Questions Conversation Starters How have changing economic conditions impacted the company's business? Demand for commercial cleaning services depends on the amount of office space that businesses occupy, which varies according to the health of the economy. How does the company find and train enough workers? Due to the relatively low prices that cleaning companies can charge, they depend on a supply of low-cost workers. How does the company compete with companies that offer a variety of services, like maintenance or security, in addition to cleaning? Large customers are increasingly negotiating multifunction, multisite contracts with large service companies that can provide a full range of services. How has outsourcing increased demand for the company's services? Companies that can't afford the time or money to maintain their own maintenance staff are increasingly outsourcing janitorial and other facilities services. What strategy does the company have to serve different types of customers? Companies that provide diversified services can serve a larger variety of customers. What newer cleaning methods has the company adopted? New solvents and patented technologies for dirt removal can make inroads in an industry with old technology. Quarterly Industry Update How is the company looking to expand services for the health care market? Health care-associated infections, or HAIs, are a growing concern for US medical centers, bringing new opportunities to the facility management industry. Operations, Products, and Facilities What cleaning services does the company provide?

10 Examples include cleaning, trash pickup, floor polishing, carpet and duct cleaning, and window washing. What types of add-on cleaning services does the carpet cleaning company sell to gain additional revenues? Some carpet cleaning companies also offer water damage restoration services, leather cleaning, tile and grout cleaning, and cleaning for cars, boats, and RV interiors. What other services besides cleaning does the janitorial company offer? National companies offer building and equipment engineering and maintenance services, as well as security, parking garage attendance, electronic monitoring, gardening, and snow removal. What system does the company use to clean carpet? Some companies use proprietary application/extraction systems. Where does the company buy cleaning supplies? Cleaning companies buy supplies and equipment from distributors and manufacturers. Customers, Marketing, Pricing, Competition Does the company serve mainly commercial or residential customers? Commercial customers have more intensive janitorial needs. How much of the company's business comes from just a few customers? Small companies may have only a few customers. What is the company s annual customer turnover rate? Because of intense price competition, customers often switch companies. What types of contracts does the company use? Customers often prefer to have fixed-cost contracts. Who in the company prices new contracts? Extensive experience is required to price contracts properly. How does the company get new customers? Sales calls and referrals are common. How does the company keep contract bids both competitive and profitable? Fierce price wars have led contractors to hire part-time workers with low wages and no benefits. Who are the major local competitors? Most markets have numerous competitors, with national competitors in major markets. How does the company structure contracts with commercial clients for carpet cleaning? Contracting with customers to provide routine and scheduled carpet care leads to steady revenue. Regulations, R&D, Imports and Exports What regulations does the company face regarding immigrant labor? Cleaning crews often consist largely of immigrants. How does the company comply with environmental regulations? Hazardous materials like medical waste or toxic metals and chemicals are common in commercial waste. How proactive is the company about using environmentally friendly products? With more environmental laws, frequent inspections, and higher fines, companies have an incentive to adopt a proactive, environmentally friendly "green" housekeeping program. How is the company addressing the issue of sustainability among companies? A survey by the International Facility Management Association shows that 95 percent of facility professionals consider sustainability an upcoming important issue for their profession. Organization and Management How does the company train employees on different cleaning processes and products needed for different types of carpets? For the professional, knowing how various types of carpet fibers respond to cleaning processes and products can be instrumental in planning a successful maintenance program. How much employee turnover does the company experience? Because of poor working conditions and low wages, personnel turnover is high. How much of the company's workforce consists of part-time employees?

11 Many companies use part-time workers, who typically don't receive benefits. What employee benefits does the company provide? Examples include health insurance and retirement plans. Financial Analysis What percentage of operating costs is labor-related? Payroll costs for janitorial services are about 50 percent of sales; payroll represents about a third of carpet and upholstery cleaning sales. If the company operates a franchise, what are the terms of the franchise agreement? Franchises are more common in residential cleaning services than in commercial cleaning. How does the company calculate profit margins? Profit margins are typically low, as entry barriers are low and competition fierce. Business and Technology Strategies What is the company's strategy to compete with in-house janitorial services? As consolidation has increased in the building management industry, some managers of large buildings are achieving efficiencies by operating in-house janitorial services. How much flexibility does the company have to handle a higher or lower work load? Access to labor is the key factor in handling a variable work load. How does the company incorporate proprietary application/extraction systems into its value proposition? Some carpet cleaning companies use proprietary application/extraction systems. Financial Information COMPANY BENCHMARK TRENDS Quick Ratio by Company Size The quick ratio, also known as the acid test ratio, measures a company's ability to meet short-term obligations with liquid assets. The higher the ratio, the better; a number below 1 signals financial distress. Use the quick ratio to determine if companies in an industry are typically able to pay off their current liabilities. Financial industry data provided by MicroBilt Corporation collected from 32 different data sources and represents financial performance of over 4.5 million privately held businesses and detailed industry financial benchmarks of companies in over 900 industries (SIC and NAICS). More data available by subscription or single report purchase at

12 COMPANY BENCHMARK INFORMATION NAICS: 56172, Data Period Last Update March 2014 Table Data Format Mean Company Size All Large Medium Small Size by Revenue Over $50M $5M - $50M Under $5M Company Count Income Statement Net Sales 100% 100% 100% 100% Gross Margin 80.5% 74.2% 73.2% 86.2% Officer Compensation 3.0% 0.9% 1.7% 4.4% Advertising & Sales 1.4% 1.5% 1.5% 1.3% Other Operating Expenses 73.2% 69.0% 66.5% 77.7% Operating Expenses 77.6% 71.4% 69.7% 83.4% Operating Income 3.0% 2.8% 3.6% 2.8% Net Income 1.6% 1.6% 2.0% 1.4% Balance Sheet Cash 13.9% 13.0% 14.6% 14.1% Accounts Receivable 25.9% 29.0% 29.5% 22.4% Inventory 2.2% 1.6% 2.1% 2.6% Total Current Assets 56.0% 56.5% 62.7% 52.4% Property, Plant & Equipment 11.5% 8.3% 7.6% 15.1% Other Non-Current Assets 32.5% 35.1% 29.7% 32.5% Total Assets 100.0% 100.0% 100.0% 100.0% Accounts Payable 12.7% 11.9% 16.2% 11.3% Total Current Liabilities 34.6% 36.4% 37.4% 32.3% Total Long Term Liabilities 25.5% 22.3% 22.3% 28.9% Net Worth 39.9% 41.3% 40.3% 38.9% Financial Ratios Quick Ratio Current Ratio Current Liabilities to Net Worth 86.8% 88.2% 92.8% 83.0% Current Liabilities to Inventory x15.60 x23.20 x17.81 x12.27

13 Total Debt to Net Worth x1.51 x1.42 x1.48 x1.57 Fixed Assets to Net Worth x0.29 x0.20 x0.19 x0.39 Days Accounts Receivable Inventory Turnover x17.46 x29.98 x22.14 x11.57 Total Assets to Sales 52.3% 57.1% 59.7% 47.2% Working Capital to Sales 11.2% 11.5% 15.1% 9.5% Accounts Payable to Sales 6.5% 6.7% 9.6% 5.2% Pre-Tax Return on Sales 2.5% 2.6% 3.2% 2.3% Pre-Tax Return on Assets 4.9% 4.5% 5.4% 4.8% Pre-Tax Return on Net Worth 12.2% 10.9% 13.4% 12.4% Interest Coverage x5.00 x5.90 x6.70 x4.26 EBITDA to Sales 5.5% 5.6% 6.2% 5.1% Capital Expenditures to Sales 3.5% 3.7% 3.3% 3.5% Financial industry data provided by MicroBilt Corporation collected from 32 different data sources and represents financial performance of over 4.5 million privately held businesses and detailed industry financial benchmarks of companies in over 900 industries (SIC and NAICS). More data available by subscription or single report purchase at ECONOMIC STATISTICS AND INFORMATION Change in Producer Prices - Bureau of Labor Statistics VALUATION MULTIPLES Janitorial & Carpet Cleaning Services Acquisition multiples below are calculated using at least 41 private, middle-market (valued at less than $1 billion) industry asset transactions completed between 1/2003 and 2/2013. Data updated annually. Last updated: November Valuation Multiple MVIC/Net Sales MVIC/Gross Profit MVIC/EBIT MVIC/EBITDA Median Value