Okay. Well, good morning, everyone. I'm Justin Hockey. I'm the senior analyst covering facility and industrial services. And presenting next, we have the pleasure of hosting Rollins, which is the largest pest elimination company in the United States and probably beyond that, too. But, yeah, so presenting is going to be, we've got Lindsay Burton, who leads IR, and then Will Harkins, who is the very newly appointed chief financial officer, but not a stranger to the company. So I'll let you guys do some little introductory remarks, and then we'll go into Q&A, a small So I've got questions, but when we open it up, we can also just take questions from the So I'll let you guys start.
Well, thanks for having us. It's great to be here. So, yeah, so we are, you know, it's honored to be here representing our 20,000 plus teammates around the world. We are a provider of essential services across a number of different offerings in both the residential and commercial space. Fantastic business model, fantastic culture with a very long history and pretty exceptional track record of performance. We, you know, 100, mirroring in on 100 straight quarters of growth, 75% recurring business. And, you know, at the end of the day, I think what we're really proud of is just how our teammates continue to evolve. Our portfolio brands is pretty exceptional. It's been built and curated very thoughtfully over many, many years. And so we think that's a very distinct competitive advantage. and you know from a financial perspective recession resilient model has proven to grown through a number of different cycles and really is is just a compounder and so it's it's an honor to be here and and we're happy to just kind of focus in on any any questions i'm sure
there's quite quite a few yeah um why don't we start off will just um you know since it is new new role for you just uh what's your kind of primary focus on on day one things that are different new whatever just kind of how you go about that absolutely so you know one of the good
parts about this transition is that ken you know hired me into the company back in march of 2025 and so it was something that when i got hired in this was very much on the agenda that he was looking for a successor and so nobody knew that june 2026 this was going to happen and so um it It wasn't exactly that well-timed out, but it was something I always knew about. So when we think about, is there going to be a big change in strategy, a big change in what we're focused on? There's not, because I've been around that table for the last year helping support the mission of the company. And so the entire finance leadership team is relatively new within the last two or three years. Ken hired all of us, and so we're all very much aligned. We just had an investor day two weeks ago. And so, you know, nothing that was presented at that investor day is going to be different than what you're going to hear me say today. And so I think that's a really good thing. The other piece is knowing about Rollins is I've never met a business that didn't run on relationships, but certainly at Rollins, relationships matter even more than any of the companies I've worked for in the past, just because, you know, the operators need to trust you. They need to have respect that you, you know, are in it for the full business. And so I think some of the big initiatives we have running, this is going to be a much more seamless transition than what Ken inherited when he first came in because Ken came in from outside of the business and he stepped into the CFO role on day one. And so I think we'll have a much better, more seamless transition this year.
Yeah, and I agree. I mean, for the background of where Ken's going, I think that's been kind of a focus. He's going to a pre-IPO data center AI play, just a really unique and awesome opportunity for him that we're thrilled for him that he has. And so, yeah, I think it's interesting. We were with Jerry yesterday at a number of meetings. He's the CEO. And he kind of talked about, you know, again, how Will in a lot of ways, because he's kind of starting a year in with those relationships. And this is a decentralized business in a lot of ways with different... I mean, the cultures are similar across the brands, but they all have their kind of unique nuances and things that you kind of have to work through that can add some complexity. So having someone that's already been there for a year and been intimately involved in a lot of the projects that we have that are already in flight gives me and others a lot of confidence that the momentum that we have is going to continue. Ken's built an incredible team, and we're incredibly thankful to him for that.
Great. No, I appreciate that. I just figured we'd start there because that seemed the most topical and relevant, and just to kind of baseline everyone. So, you know, I think in your prepared remarks, you talked about just the consistency of the business, which has been something very obvious, you know, as an outsider watching you guys over the years. So the organic growth, I mean, you've very consistently been kind of high single digits, 7%, 8%. Maybe you can just decompose that a little bit in terms of how much is pricing, how much is volume, new customers, you know, just the algorithm.
So it was a few years ago that the company made an intentional change to where they move to a CPI-plus model. Knowing that it's an essential service, it's something that people value, allowed us to be able to do that. And so you think CPI is in the 2% to 3% range, so we're ahead of that from a pricing perspective. Certainly from a volume perspective, we see that we are continuing to see improvements there as well. So we overall, and then M&A, of course, tax on, we say 2% to 3%. it's been four percent last year uh was was north of that range uh we see ourselves being around the three percent range for this year um and so you know i think the seven to eight that we have consistently guided to that is that is something that that you know people have asked are you going to come off of that not at all um you know ken ken mentioned during the investor day that some quarters are going to be lower and some quarters are going to be higher but from the full year perspective um you know you should expect seven to eight percent growth at the at the top line from us and and so far this year i mean we did see a choppy start everybody saw in q1 it was 6.6 organic growth and and so you know we still see choppiness and and you know in in april and in some into may where we're getting our numbers for may right now um but certainly the best months are ahead of us and so when we think about that thinking about june and and all those peak summer months um we we do not see any reason to to come off of that seven to eight percent guidance yeah
and and you know i i think the other thing you mentioned too and it's you know i think it's obvious but like you talk about the recession resistance and the fact that you've been able to grow you know and throughout cycles maybe just um you know talk about the peaks and troughs and you know how discretionary is it um particularly on the residential versus you know
commercial side maybe that's probably where you see some of the choppiness that we talked about in the first quarter and even now as we go through is that in more the one-time business that we've had um you know in the in the 75 is recurring yeah and it is essential so people aren't really going to live with pests right um so if it's something that they can you know and it's a fairly small ticket item if you're thinking about a hundred dollars of service um but but in the one-time items that's where those ancillary services those those are really high ticket values i mean those are um you know quite expensive for people and so you know in in this moment if you see any pressure on a consumer that might be where we're trying to dig into that we've got a we've got to you know do some more work there to figure out what could be driving some of that one-time choppiness um but certainly it stands to reason that that maybe people are feeling a little bit more pressure and so some of the one-time services that we have those are are not growing as as fast as they had
in the past. Yeah, and in general, I think we have a very healthy subset of the consumer economy in terms of most of the people that we have are homeowners, gainfully employed, have seen home price appreciation in a pretty meaningful way over the last decade plus. So it's a healthy consumer. I think there's brands like Orkin that cover such a vast footprint that can have more exposure to some of the lower income brands, lower income bands, from a consumer perspective. But in general, the resilience of the model has been that it's an essential service. It's a low-ticket item, and for many people, it's kind of a set-it-and-forget-it, at least on the residential side. I think on commercial, arguably even more essential, right? Essentially, there's regulatory components involved there. That's been an area of the business that we've certainly invested more meaningfully. We've always been focused on commercial, but I think we see this opportunity in the marketplace as the pest control space, particularly on the residential side it's incredibly fragmented, 30,000 plus players. More consolidation at the top on the commercial side but we have seen opportunities in areas within verticals that we've been targeting to go after that business in a more meaningful way and have put the resources towards it over the last several years and are now kind of, there's a longer cycle, there's a more upfront investment for that commercial business before you can really drive some of the returns but we think we're there and seeing those returns flow through, and that should continue. But, you know, across the board, very essential. Arguably, commercial may be a little bit more so.
Go ahead, Niu, please. One other piece that I would just say is that some people don't realize that we have a financing arm of our business for especially residential customers, so it's called Rollins Acceptance Corporation. And when you get into these big-ticket items, it's something that we are trying to drive more uptake on. It's around the fact that you can, you know, If you have a $10,000 bill that shows up on your front door, we do have a financing opportunity for people. And so 90 days, same as cash. And so that is often helpful to folks as well. So we're trying to do more of that to alleviate some of the strain that people are seeing.
Do you manage that all kind of centrally, or do the different brands kind of offer their own? No, it's all managed centrally.
And what we're doing is that we haven't seen a lot of our – so the business is broken up into Orkin, which is about 50% of the business, and then all of our other brands, which are about 50% of the business. And so our other brands have not done as much of the RAC, the Rollins Acceptance Corporation offering. And so that is something that we're trying to expand today. Well, and as
you heard at our investor date, that's one of the levers of growth that we're really excited about is if you think about the ancillary business, which has been growing really solid double digits for a number of years at this point, that's really been concentrated in the Orkin portfolio, some of the exclusion work that we do there some of the insulation work those type bigger ticket projects that are really aimed at either preventing a pest issue or remediating after a pest issue has wreaked havoc on your attic as was the case for a friend of mine who had a rat infestation recently not pretty at all but those are larger ticket but really again concentrating the Orkin portfolio there's no reason as we continue to drive collaboration and share best practices across the portfolio of brands that you can't see other brands really meaningfully step into that ancillary side of the business, right? If you think about Northwest that has really fantastic customer relationships, like I look at ancillary as a proxy for our ability to deepen our relationship with our existing customer base. And so we're excited about that opportunity ahead. Ed Donahue is a long-tenured career with Orkin, and has moved over to the brand side to kind of help them get some of the ancillary and sales force focus going and have seen really nice results coming out of that.
Yeah, and I mean, if I'm not mistaken, I think even some of those other brands were exclusively more of a niche ancillary service to begin with in terms of... Wildlife and things like that. I guess I want to talk about M&A. Obviously, that's been a really important thing. I think you said, what, three or four percentage? Two to three percent, but I mean, it was four percent in 2025. So maybe just talk about it's a fragmented market, but, you know, the depth of it, why people choose to join at Rollins, how you incentivize, things like that.
So you've heard Jerry talk a lot. I mean, the one thing that's been impressive to me since I joined was just I come from companies where there are two heavy hitters at the very top, and they just trade share back and forth, and they are sworn enemies to each other. Whereas in this business, it does feel like you've got 30,000 different competitors out there. And Jerry is like one of the – he's the mayor of the town, essentially. Everybody knows Jerry. And so it's a very collegial atmosphere. So you go to Pest World, and there are a lot of people that are right there very friendly towards each other. And folks that come for – or who are trying to sell their business, I mean, you think about the Northwest story. So Stanford Phillips and his father and grandfather, they built this tremendous business in the northwest portion of Atlanta. That's why it's called Northwest. It happens to sit in the southeast portion of the United States, but it is the northwest portion of Atlanta. And so they built this amazing business. And when it came time to sell, Rollins was the place that they wanted to go to. And that's because we are a business that you still have the northwest brand out there. You still have all of those great associates that had supported and built that business. They still are wearing the Northwest shirts and logos. And so families who have built these businesses can still go into their communities and not feel like they completely sold out to their associates. And so I think when you think of the competitive landscape of who's coming to us and how are we buying businesses, folks, we're an acquirer of choice is what you'll hear Jerry talk about. And that's because people are looking for Rollins to come and be where they sell their business.
Yeah, and it's interesting. The opportunity set, if you look at the PCT top 100 list of companies, that's a trade magazine for the industry. As acquisitive as this industry has been over the last 10, 15 years, the pipeline continues to get refreshed. I think about a business like Fox that we bought in 2023. Fox was a $200 million business. when it didn't exist 10 to 12 years prior to when we bought it. So it's just, I think, you know, the industry is so attractive, the market's so attractive, there's secular tailwinds at the back of everybody in terms of just general climate and do-it-for-me kind of shifts and things like that. And so the pipeline continues to get refreshed. Rising tide kind of lists all boats. I think the CAGR on that PCT100 2014 to 2024 was almost 10%. I think it was right around 9%. So it tells you, again, just an incredibly attractive market. I think the beauty is that we can be, because the opportunity set is so vast and continues to refresh, we can be very selective in terms of what we choose to bring in, particularly when we're looking at a standalone brand, right, which is going to be a larger, more platform-type acquisition that's going to stand on its own, keep its brand name, and whatnot. So it all kind of starts with the cultural gating factor you've heard us talk about, right? It has to be a business that's been obsessed with taking care of its people and taking care of its customers. And then from a financial perspective, you know, high level, all the KPIs, we look for creatively growing businesses. If you're going to be a standalone brand, you have to be growing faster than the overall average, essentially, is the way we think of it, and just have kind of nice accretion and return profile up and down the P&L, not cash intensive, not dilutive from a retention standpoint. And we've been fortunate to partner with really great businesses. And I think that's also inflected, by the way, our organic growth over the last 10 years. I think that's been a contributing factor. And so we'll continue to do that and see the opportunities set in front of us as continues to be very attractive.
When you, I understand that the platform ones, but the more tuck-ins so economically is there a route density aspect to it or how do you think about like you know what what's the accretion that comes
from those it's more I mean you think in a route business you're never really fully optimized yeah and so I mean a lot of the ones that we we tuck in I mean they're gonna be of course the smaller businesses so it's gonna be the standalone ones are gonna be of a certain size certain value they're gonna cover a certain geography but certainly it's around route to be it's just
building out that localization and that closeness to a customer in a particular geographic area. But yes, the route density is a huge piece of that. And I think Christian's pretty attractive right off the bat.
Yeah, I mean, you guys have done a lot on the margin efficiency stuff over the last, the system that you guys put in a few years ago that, yeah, BOSS, right, that has, you know, kind of improved things. But where are you on kind of like the technology rollout and additional stuff that you guys are working on that?
So one of the things that I actually, in my chief accounting officer role, the largest, one of the big four projects that the company was working on was about putting in an EPM, so an enterprise performance management tool. And so, you know, you think the size business we had, we needed that we've got, you know, our systems were not, they were fairly old. And so, and then they worked for us for many, many years. But we have, this year, I've been working heavily to be able to put in at the top of the house a consolidation tool and a better planning tool. that's also going to be able to utilize AI features. And so as we think about how we forecast for the future and we look at our business as a total, there's a lot of data that's sitting there, but we just haven't been able to pull it all in to be able to really analyze it and to be able to make sure that we're making better decisions as a result of the data that's sitting there. And that's what this tool is going to really be able to enable for us going forward. And so that's a technology aspect. You know, we spend a lot of time forecasting a 75% recurring business. And so there's no reason that we should spend as much time as we do and involve as many people as we involve. So, you know, that is one of the things that we're looking forward to most is as we roll out this new tool. You know, but there's a lot of opportunities around margin. So think about procurement. A lot of people see Rollins as, you know, multiple different brands. And so they don't necessarily look at the Clark brand or the Northwest brand or the Western brand and think of that all under the Rollins umbrella when it's a vendor that we're negotiating with. And so we're really trying to drive a lot of improvement around how we purchase our materials and our supplies and do that centrally so that we're getting the benefit of our breadth and the volume that we're purchasing across all of our brands. So that's going to be a nice improvement for our market store.
What are some of those bigger categories? I mean, labor is obviously your biggest cost factor, but in terms of the procurement side, what are some of the...
Some of it's technology that we're using across all of our different brands, but a lot of the materials, the different brands are using the same materials, many of the same materials, as they go and they service all of the customers that we have. So it's not that they're all using specialized secret sauce materials for each of those brands. We're purchasing those from providers that provide it to all of them. So that's going to be a heavy...
We're just not leveraging our scale as well as we could today. And I think that's the opportunity that's ahead of us. And I also think our procurement function, it serves a purpose, but we could also continue to leverage data and tools to continue to evolve that and to add an even higher level of rigor and sophistication to the function. So that's one of the areas. You asked about the technology question. I mean, I think we look at technology through the lens of how does it enable a better customer experience or how does it enable the technician experience? How does it make their life easier? So that's where we're focused. That's kind of the anchor at which we look at every investment that we make from a technology standpoint. We get the AI question a lot. We are not AI developers. We can partner with the large, massive R&D budgets of the people that we work with to introduce AI into the business. And there's so many areas that it's ripe for. But, you know, you think about route optimization. We've had machine learning models and AI components to that for years. And I think in a route optimization business, you're never done with route optimization and making sure technology is continuing to advance that. So on that side of the house, that's where we're focused.
What's your average number of stops per day for a tech?
It can depend. I mean, it can depend. We actually have a preference to kind of keep it probably more towards the lower end because we want to make sure that the tech has a sufficient amount of time to really spend with customers. We optimize it, but it's going to depend on the market. It's obviously going to be commercial or residential. But we really want to make sure that we're optimized from a route perspective, but also allowing time for that technician to develop that relationship.
I think that's a really good point, too. I mean, even my wife recently sent me a text and said, all right, so the guy who was doing the weeds in our lawn shows up, and three minutes later he's already gone. And she was like, what are we paying for? Because I see a lot of weeds in our yard, but I yet do not see the person that's doing this and really working through it. We talk about the fact that we want our technicians to spend time with the customers because in an AI world, people want to see the service that you're providing. They want that personal connection. And I think that makes our customers stickier. I mean, when you realize, and they walk you around and they show you where things are, potential opportunities for ancillary services being added on in the future.
This business focuses a lot and has continued, and that was the message that hopefully came through in Jerry's presentation at our investor conferences. we are really focused particularly in a world where the headlines are dominated by AI on developing the soft skills in our people throughout the organization so empathy, listening emotional intelligence just making sure that we are investing in training and development programs that actually teach those skills because I do think that's what will differentiate us with our customers I do think that lends to the stickiness that we have with the culture with the customer base that we have um and so it it sounds soft but it is it is very very important and has been a huge focus and push of ours for the last several years because you know at the end of the day for me that's what's memorable about my experience with my pest control technician who i have a great relationship with he he truly views himself as a partner in my home right he saved me a massive headache by just walking around he happened to be behind the water heater, notice that there was a leak that was starting and that could have flooded my entire basement and caused a problem. He didn't have to do that but that's just, that's what we're trying to develop and what we're trying to encourage and incentivize people to bring to their relationships as this partner, home protection
partner mindset. Yeah, I mean, you've got people in intimate areas of your house, you know, so like, you know, you want to have that trust, obviously. With about five minutes left, I want to make sure that anyone from the audience that has a question before I continue. Okay. Feel free to stop me if one does come up. Maybe a little bit more shorter cycle, but there are some seasonal elements to the business, especially on the termite side and kind of the summer selling, door knocking or whatever. Maybe just kind of what are you seeing in terms of the swarm this year and trends as we're moving into the warmer months?
yeah i mean i wish jerry was here that our resident entomologist he would have a much more scientific answer to this question but you know from what we're seeing the the environment and conditions have lent itself to be a very healthy and active season and so we're we're ready for it we're staffed for it as will mentioned you know there there has been a i would say a little bit of choppiness to start the year certainly um but you know we have our best months ahead of us and we're ready. So what we're seeing right now gives us encouragement that the demand environment's intact and solid. And so that's where we're focused.
The one thing we know is that pests aren't going anywhere. Right. I mean, as temperatures rise, I mean, and it gets warmer and warmer. I mean, it's quite warm in Atlanta today. I mean, it's going to, you're going to see more and more pests. I mean, kind of the peak season is when those evening temperatures are 70 degrees and above right and so as that happens you're going to see a lot more activity and and so they're not going anywhere they don't and that's
something that i think we've seen the shoulder season the lengthening of the shoulder seasons in general over the last several years is something we've seen relatively consistent with consistency consistency right it's not that it peaks in july and august and then kind of goes downhill from there we've actually seen those seasons really extend into the october Sometimes in a couple of years, recent years here, October's been one of our stronger months because you are getting some of these longer shoulder seasons, which is a benefit to the business overall.
I wanted to maybe move over on the commercial side, going back to the technology question. But some of your peers, if you will, have been using more like Internet of Things type connected devices and stuff like that. Yeah, so maybe just talk about, you know, the opportunity there to kind of reduce labor or what you're doing on that front.
And we are, you might have heard Scott Weaver, who leads our commercial division, he talked to Adam Best today about the fact that we are doing the same thing. I mean, so there are customers who want that, customers who don't want that. They want to have, you know, that hands-on touch in their business. But certainly, as you think about the build-out of AI data centers, that is going to be something that you probably could use some of that remote monitoring. So there's not as many people there. There's not as many people there. That's exactly right. You've got these massive warehouses that you are trying to take care of because certainly you don't want rodents in that kind of an environment where they could be eating through wires. And so we use it as well. I think that we also have benefited from the fact, Lindsay mentioned, we're not the ones, we don't have the R&D budget, that we're not the ones out there that are developing this. we are using our partners and purchasing it. But because we weren't such a fast early adopter to it, per se, we are benefiting from the fact that technology has gotten better and technology has gotten cheaper. But it's not something that I guess we're as vocal about, but it certainly doesn't mean that we're not doing it just like our competitors are.
Again, I think what we would say is that we kind of follow the customer preference on that, right? And just because we have remote monitoring doesn't mean that you're not going to see us, right? Our expertise, our value proposition is that we are the experts. So that's one aspect of pest management, this remote monitoring side. How can we redeploy the technician's time more effectively to do other value-added things around a customer account? Because there's so much that goes into managing the pest environment at a 100,000-square-foot fulfillment center, right? So this is one component of the service, but it is not... I think at the end of the day, it's important to stress this is not the service, and again, we kind of look at it as how can it enable a better customer or technician experience and allow us to redeploy that time into other value-added service offerings that we can provide.
Last minute and a half that we have here or whatever, maybe just a final note on just capital allocation. You guys have been pretty disciplined on it, but just where the balance sheet is, anything
that you know you want to kind of stress on that you know we're at a turn of leverage right now and so and i don't see any just to say it directly i don't see any change happening in the way that we have been allocating our capital in the past so you know we continue i think over the last um i don't know what the number of years is but since 2022 i believe you know our dividend has increased 80 so you know you're going to continue to see that you're going to continue to see share repurchases you know when when the time is right you're going to continue to see i think the The best use of our capital is M&A. That's what we've proven many times over. So that's where you're going to see us just continue to focus. But no meaningful changes in the way we've been doing it.
Well, with that, I mean, I think we're kind of at our time, unless there's anyone else from the audience that has a quick one that they want, because we're not doing a breakout, I don't think. Yeah, so. Not then. I think we'll just leave it there. Thank you. Thank you guys very much for your interest.