TMX - Earnings call transcript Q2 2021 | Terminix Global Holdings Inc

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Operator

Ladies and gentlemen, welcome to the Terminix Second Quarter 2021 Earnings Call. Today’s call is being recorded and broadcast on the Internet. Beginning today’s call is Jesse Jenkins, Terminix’ Vice President of Investor Relations, FP&A and Treasurer. I would now turn it over to Mr. Jenkins who will introduce the other speakers on the call.

Jesse Jenkins

you. Thank welcome. and morning Good

we begin, today’s assist you throughout operating to in I’d management may like performance. and call, strategies to the remind make understanding that company’s Before forward-looking you statements

morning, filings today, all no X, filed release in issued legends the performance the today’s press call and may and guarantees materially any XXXX statement our a that Exchange SEC on Slide on update These in with of and our factors including stated discussed forward-looking at X-K, are The contained statements the be those on results. quarter website contained XXXX. release, the Investor subject This found with from The related discussed filings second results August to the X-K obligation as our of the Relations forward-looking Terminix to on actual are risk to financial statements. on statements can in investors.terminix.com. public Commission. our company Information forward-looking unaudited subject undertakes forward-looking speaks to press Securities public information cause not only Form As call. X, are presentation vary today’s contemplated

financial to we financial non-GAAP we throughout non-GAAP financial measures. our will comparable in We certain have reference definitions these today’s have call, included most of measures of press In performance, measures you GAAP order understanding assist in and release. included reconciliations our terms these the financial to better

Investor for of of begin followed unchanged website Brett we I reviewing today. to Ponton; performance of to opening Ponton questions. our financials presentation Riesbeck. up will the then will by With overview X discussion. and agenda today’s on Bob open turn now over the section initiatives, it an it with outlook, we our and will Brett? and CEO, call our the CFO, on Brett me are Bob the cover up Brett Joining Terminix’ shows posted Slide Relations

Brett Ponton

highlighted Jesse. for lapping organically, pricing Residential pay highlighted $X to delivered as we million new X% in in execution the pandemic. this unit of retention of revenue million the growth strong the a Thanks, year, impact pest double-digit on we steady continue we X% for was commercial in business In improvement our by X% our in gains X%. monthly recognition strategy. $XXX grew when and revenue offering. migrate wake of the to strong by organic growth prior line as termite service the growth second grew Despite our adjusting timing quarter, total pest termite growth

EBITDA adjusted Second or X% quarter XX%. was for $XXX million, margin of $X up year-over-year million a

were see Margins management increase commercial as continue the expected chemical revenue to by making capabilities competitive. in is from recovers labor in helping costs are markets over business term. we also as offset growth COVID that changes the become We year-over-year strengthen impacted and operating fleet drive mix sustainable as more to labor investments to will well an a as long key which costs year-over-year, benefits our

Joy systems Wald and enhance as time the businesses. reshape million $X.XX allowing role in from as General our GC brings our Information returning with standards share Terminix over The the prior through per has value also our filling Counsel management customer operational business have team as our flow, crucial excited income, experience assumed with reduction be cash informational share. sale move teammate net take improved recently training we our care. I of experience businesses including valuable be we and will CIO proposition Way. will platform. roles. us am Joy plan, M&A completed multiunit experience to We our well adjusted adjusted our through the as brings of initiatives. wide a roles, drove management range and our up with experience Her the a experience count free as continue Officer to to debt and through year share systems distributed a Chief in Deidre workforces at XX% of up EPS, in and in Richardson range well customer serve as the and ServiceMaster Her quarter. strategy to wide held recurring of generate with purchase operational team our where repurchase revenue $XXX shares the million she substantial reduction in brand and aggressive forward X.X will the shareholders we the by number

we As customer coming enabling better through These penetration commercial. the on a capabilities and the will residential in form areas, our teammates service our operational both focusing specific the is few key leadership and of work behind through backbone both growth together, team CXP. Way to are alignment and gaining enable excellence Terminix

each on into vital these priorities. our familiar Turning they is look and to you. slide I should details will fit more This how investments go Slide that of to a strategic X, into

than a of to making said CXP consistency of out the the each guide we our and little I will roll the ways improve As meaningful that Terminix since a progress a instrumental four on undertake it ability ago, several have initiatives will in impact them these quarters. year in and current next that less start we as the priorities our business. is these are we pillars over as Way results initiatives

our teammate foremost, experience. must we and First enhance

day basis our touchpoints are Way. to of Terminix forms teammates XX,XXX business most use and the work asset the Our and our enhance tools important of customer they training the over the per in

share technicians expertise found to deeper excellent their penetration. with best customers drive and that customer our service deliver effectively have We

years, customer key capabilities To has current lead working about a they a our is the pockets to developing we while future in will assemble This through experience at century to to the deliver an the and enhanced as to Ultimately, will the across while over ranks. takes learning from develop XXX XXX experience years Terminix is pest focused to skills Terminix technicians The as only of team in from ability came team careers. for together platform. role, is company succeed rollout preparing jobs our Terminix. of training this curriculum branch first bringing to this Terminix what and University improved for of termite it into standards of and route are improved as team our and in new initiative their combined a end, team to their excellence Way. managers. standards, good of superior these on all have talent which positions operational their excellence all in drive those University understands a to We own over build that have business that those train standards develop playbooks step that built teammates

into work While lot ultimately, rest engagement and our in stages, efforts confident Way of over we are that the of XXXX remains there’s Terminix performance, satisfaction. the clearly teammate the are improve early and a XXXX, and will

current As the year-over-year. an of did expected, the labor see we markets, increase state given in turnover

remain in to our become help and growth employer teammate desired build we We defined we in of the proposition training us become clearly place the improve enhancing conjunction a to work to this career. plans, do Terminix teammates support have While and playbooks rates, choice University, industry. of will a in more believe value ahead with for turnover clearly XXXX prospective

on order customer improving organic and keenly to remain better We also our drive penetration focused growth. acquisition capabilities in

remains on our capability. focus improving marketing Our digital

management experience, we am progress search website making track. be we the customer growing so on are experience. I are local when customers, a accelerated confident is which a relevant optimization, our We and new develop and areas on Winning take to search our prospective key the base. for These enhanced local priority pest time will by searching a and to are right

job While in digital, of make to strength with mosquito we exclusion. existing do pest imperative with offerings and both products our customers, a it core is and penetrating pest we termite our and expertise wildlife like strides and leverage adjacent brand better

technicians they our occur before through identify enhancing robust businesses. additional selling a As all we provide inspection with additional by and technicians. service potential designed unlock potential our cross-selling are protect abilities needed Terminix this best instrumental diagnose we relationships is capability. guiding with expertise to can to process customer our to opportunities by of technicians deepen the robust share problems homes to to the will and ways grow and reinforce customer CXP confidence of developing A base. us Way, enabling the a technician our a business sales with our seamless of the process maximizing allow to our expertise part the playbook, CXP our will

and across technology improved the performing While definition all enhanced our today, teammates. of these create technicians – will are performance selling consistent or excuse me, inspections

we tool out quarter, our sales to last recently sales commercial mentioned As we customer commercial teams. our management rolled

visibility the gain by this pleased been in area. have We

have happy peak CXP team get late still early, pest on it’s While to of past for The in flight. this are is portion the season. and the back as of remains the now we CRM energized, CXP rollout broader track in year we

other customer The avenue growth is of retention.

in XX-month quarter. retention and termite the make to We in in area, improvements this continue progress delivering residential management trailing pest

finalize We in ensure us program commercial service as process and improving automated to to priorities quarter, from customers customers’ management to that technicians insights simulation is both coordinate X,XXX COVID every customers we are ability will allow deliver gather offset immediate our productivity operational to executive recently feedback real-time will impact provide Way ultimately deliver over standards. meet all and delivery with automated teammates quality finally, exceeding of our customer provides to the Terminix that our comparison. with service In spreadsheets The residential in labor us CXP Retention And our our be incorporated standardize expand we will quarter. strong the that fleet Terminix prior e-mails commercial local streamline leadership the our to sales CXP the will throughout maintenance mix. of to improved cancel our through and both with in a management platform had of The management will satisfaction extending flow from enhanced in chemical deliver. will visibility process most management an Similar of partially Memphis the users needs design. the guide from service retention commercial of over branch and productivity to our the end dashboard will to This to last product the of teammates branch Improved chemical we are XX these This managing accelerate and sales client saw accounts additional saw they from response elements customers platform. This to the improve the week, the our management gains. through real-life was addition CXP costs assurance forward. we of going the designed also expenses of the important verticals give local profit process division. lower and we efforts to to move of step by in will tools This and the to XX% experience the the of users our will purchasing of the due platform away customer We with we revenue country. power technicians that quarter rates non-negotiables by resolution this sophisticated expectations. commercial case all our costs go highest profitability quarter, higher year-over-year, rollout through as quality improvements the customer our enhancements improvements allow heavily to able over have we margins. vehicle CXP a were year concerns through consistent with improving Way. in need will drive checklist

the expecting is competition increases. labor to we As compared improve and have elevated for labor as turnover XXXX been markets

mentioned strides to technology vital our continue the people are improve future. our our and teammate the proposition and us in earlier, Terminix will of to better rates turnover As tools, help value training making improve part a business through

our international the impact past in in in integration the We we with move Canada seen well as margins up strong UK the as UK pandemic efforts have as businesses also year. gains of productivity the and prior

seeing we in already a claims where expectations part our the in opportunities year, growth both by damage expansion per costs margin are are cost we encouraged in Termite trends the litigated are we growth in in in the new the downward behind per presence. claims, We down in value non-litigated continuing investing for counts this contractor quarter this in case per on non-litigated and XX% year-over-year coming encouraged by labor. and internationally claims and systems due non-litigated non-litigated did decrease XX%. claim cost continues but the down properties. slightly second Mobile have increase areas are point we significant Despite higher by Area elevated cases our We are and as materials Bay claim claims lower quarter, counts cases are to driven and see the at outstanding to building elevated with see cost

XX% was counts case timing cost have the by down to year-over-year of in the case of continuing XX%, predict right and quarter-to-quarter, litigated litigated and we is are Bay but we rest outstanding encouraged the with cases Outstanding always the in said, As Mobile and per were country down Mobile over respectively. X% difficult we of Bay the to track. cases decline, remain on value

Mobile am we Way playbooks into reduce expenses historical the made our in seen have can norms priorities. claims nationwide, damage QX in and Bay, we best and we Terminix Overall, As time. scale I incorporate practices making our executing them we as are over confident on beyond the we progress to from progress

to to will in face that across to our the of course the will year. some consistency the strong industry shareholders. to are our a continue discuss turn opportunity return and with we will Bob CXP the moments. quarter. with take over continue I accelerate despite with steps team Terminix with by our of competition, expand headwinds over some ultimately drive growth, business We the the Way And have margins of we will I and and for And to energized in value we a position on create financial the will am to the deliver closing it that, specifics thoughts excited on I commitments. this few

Bob Riesbeck

Thanks, Brett.

growth up reported on $XX the $XX X completions termite down top Let’s were as rates services performance. monthly completions pay Home of revenue by start Breaking million product. million million of X% left saw X%. second or quarter Overall, XX% growth Core further, the completions impacted completions by quarter. as Termite with termite primarily side growth in the labor Services from in quarter. our were home impacted X% turnover markets Slide decreased $XXX X% down very also made by lapping quarter, our revenue the growth core completions driven the hiring with labor review in impacted completions introduction organic up XX% challenges home Beginning we of a delivered were column we in of or of strong in and with the the growth staffing year-over-year. the termite XXXX $X Termite outside completion components and competitive of X% termite detailed revenue line up the our million, by this of sales completions the and have professionals in pool. of in services

recognition growth renewals headwinds were in a As in X%, will improve the from total are driven Brett up by for million our growth have Adjusting cross-selling revenue X% and digital monthly quarters. our future change, in down termite strides that X% would been product. mentioned, up capabilities $X the in renewals have for would approximately revenue quarter. recognition we change and termite been also marketing by making in Termite pay

and growth monthly renewal in strong in the remain X% on For pest year, revenue of we Residential track for despite moving into the completion organic the with growth growth lapping termite product pay second our of grew the unadjusted X%. quarter, full impact period.

sales service in strategy benefits as partners, to summer at the see executing in growth impacted and increased as tracking by partner competitive our pest cancellations lower Growth this salespeople constant negatively driven second our due grew Revenue lower-than-expected market, door-to-door pest, quarter, staffing year-over-year X% We including now grew in Commercial strong historically by our and in continue but residential moves includes line was The which market. improvements European XX% retention. the sales businesses, labor basis, future uptick a impact organically. benefit we customer we the monitor the that periods. organic at currency was an Pest was in our On X% may from to commercial continued the quarter. customer in continue sales, sequential by in foreign in the translated well total internationally than the of highlighted and pest staffing pricing to difficulties growth Growth exchange labor by U.S. the double-digit in improvement less company market. of growth are housing quarter. XX%, strong to

Looking of more rebound pest, impacts revenue line, to mid-single of were over we organically on the commercial strong while the have are the up continue the in half year progress and revenue In lessens. the for in timing as the organic X% termite saw prior we Way can product as marketing in a growth prior X%. confident lap would as we as Overall, advancement impact digital residential growth in to impact approximately sustainable and moderate back in been towards revenues the digits. normalized the With we other about quarter second recognition, expect of severe COVID. year, was Terminix impacted organic termite make rates the capabilities pandemic recognition. levels of the to progress year business sales the by growth Normalized consistency meaningful the CXP, well currency to

adjusted financial the to can for X, Turning quarter. the drivers detail summary Slide on you in see EBITDA the

repurchases covered Brands XX% added aggressive adjusted income per ServiceMaster or slide, year-over-year to the a in or pest. in share see page, from million the adjusted driven $XX of and net a Labor finally, Adjusted adjusted Revenue and million revenue quarter in pay-down the a million continued or see XX% of primarily at commercial or expense net debt million competitive markets an the after income. the growth EBITDA $X.XX in the in adjusted mix the lower of increase quarter, And increase as drove EBITDA. growth towards improvement million you the $XX of slide, interest X% sale from growth to to EBITDA On the turnover the share. can the $XX the $X increased quarter. P&L revenue the we Across shift increase EPS in previous on by you X% leads higher $X.XX as can the labor top $XX led EBITDA well left quarter. for bottom the adjusted drivers the

expect we quarter, Way purchasing in generated first million discussed improvements in fleet of in EBITDA. are Key the to million in $X office the year prior As from aided and higher are and historic CXP likely quarter. XXXX timing these costs by in headwinds by up related we management costs chemical are COVID. and we by approximately full last These quarter. Terminix are in from year $X about the we partially continue productivity were turnover impacts and and million. the Direct saw marketing cost offset favorability Sales as second in the that back investments $X lap were adjusted

costs increases $XX the termite in revenue. are $X pressures, the commissions in increases claims of non-litigated damage termite commercial quarter, was from claims damage by expense revenue a product. digital million year. from of year largely paid million lower growth mitigation about and As of the quarter, revenue roughly marketing inflationary capabilities X% discussed expense investing driven the second impact monthly baseline total and Total marketing the with Termite prior are earlier, offset sales per in increased over lower we claims while expense in of litigated percent lead in as to Increases than maintaining $XX of million approximately the spend million sales by termite prior flat. improve costs generation $X partially in

mentioned, inflationary quarter. to termite litigated higher revenue the in in cost non-litigated due pressures expense in Brett uptick came on than cases per and As expected an claims in part claims new

continue we as are Mobile counts for Best we confident termite these are practices and resolved. incorporated a contracted case difficult will remain near-term in are Way quarter-to-quarter basis, In into EBITDA While the it right we year-over-year. progress adjusted being taking pressures remains margins our on the XX% Bay points Terminix claims total, predict of XX damage basis to steps.

adjusted remember XX been million this expanded recognition to revenue absorbing the termite and timing we However, in by basis the it margins adjusted are from $X have impact is for and and in would revenue approximately renewals. important EBITDA impact, approximately points. of XX.X% period that both When

on As XX% we track few and year will full in our expansion slides, year margin outlook and are largely annually. on outlook in the to still margin a adjusted full EBITDA targeting touch we approximately remain with

$XX $XXX left And from share $XXX year, authorization. million been the acquisition far million deals the have Shifting uses our purchased the existing use of tax $XX damage worth through on Slide summary in XXXX of X, have use flow million the will completed we active deferrals Under to the and you be repurchase high of shares paid has expectations, monthly is this and we cash on to in flow full XX% sheet for pipeline. Including a line tuck-in reserves purchases $XX remains cash, XXXX, year and conversion we $XX for made to balance full the flow cash has remain payments obligation M&A year. this cash as of the move Turning Working to a between have and year. the QX. deferred cash absorb mid Copesan expected remain on the capital the cash on with payment program. million from conversion we have unwind program, for the see quarter. the in and Year-to-date, claims with million termite the million XX%, year-to-date the we use from scheduled impact the the small primary year of range product. finally, in last been vehicles lease approximately debt for for track on track payroll so the We free for year. was to of work CapEx completed and full through we in worth termite

cash our leverage million the priorities with additional to quarter capital accretive have shareholders. cash with million allocation in return and remain ended targeting M&A Our manageable we level we are $XXX flexibility leverage liquidity us we ratio of X.Xx. a in leverage This Terminix with accretive towards growth ample position implementations invest of allows long-term M&A sheet through to net our to about believe the ability target continue We to term progress cash available X.Xx. debt at balance Way, very and in $XXX and unchanged and as capacity CXP longer the

outlook remains Moving our on Slide on we plans remain our to year. XXXX the X, with guidance track unchanged firmly as for

in We the third Organic between change grow strong impact billion, and the new $X.XXX in realization between to expect growth million growth strong full growth in recognition is approximately the expected is expected absorb from pest to contribute expected we services grow is Residential X%. offering. $XXX monthly between our with X% year billion timing and million, revenue XX%. and of approximately Commercial quarter second with XX% an termite the between XX.X% Termite as expected revenue million moderate prior EBITDA expected $X is $XXX margins and the incrementally. pricing improved $X.XXX in to with to COVID subscription-based from year Adjusted the impact as revenue home of organic is revenue slightly quarter pest retention. and subsides.

Terminix model. and as expense as the marketing see drive as open in remain initiatives will business. make markets well expect in we’ve with operational progress investments We in business key as to and growth plan up job Way we to of that our the sales We encouraged consistency by seen headwinds operations improving labor the and on future fundamental CXP make and what

back training, are teammates work us some everyday. ahead over to back these hard tools our be are half in comments. And in our I that, investments growth standardized technology confident business for profitable enablers going Brett to will and excited XXXX to customers key of are deliver dedicated in We of closing to with the playbooks turn for it of and our serving capabilities the

Brett Ponton

am last I excited full the closing, board Thanks has Bob. encouraged In and to over quarters, and initiatives. direction. the have strategic on I’m our priorities proud how the aligned the am with same team together team of I and come business behind progress and few

from And our and with profit done We to it Jesse progress our the to in experience by proud will the track committed value proposition to Way customer. we train enhancing the we will improved sales I am to and our service provider. expand e-commerce deliver through customer margins. necessary customer and and customer the best-in-class to teammate improve platform to the believe making the the with teammate towards have teammate Overlaying are enhance branch the acquisition Terminix and improve to to the technology to our Q&A. track create are find us us share management Terminix and a to frictionless platform the ultimately a Terminix work deliver penetration experience, from to we shareholder of and our are branch, will more who seamless to the industry-level drive technicians teammate us additional customers’ refreshed consistent growth These improving over and needed Way offer buy right and process quality customers Way on a I standards, marketplace. experience already and expertise improved to deliver also will trusted for priorities to our will CXP the returning investments and and pest goal developing able problems. that, be tools bridging customer effectively investments to a web. the solutions critical the in to inspection competitors capabilities when gap on value retention easy the CXP and are lead that progress the become on on considerable marketing as are and initiatives profitability Digital from hand

Jesse Jenkins

in yourself we the line to allotted limit a to time. line questions. you morning, question many can for single the I With let’s please so this that to open analysts Thanks, Operator, Brett. ask get everyone in

Operator

Please comes Our [Operator Instructions] you. with Baird. question Wittmann from Thank Andy proceed. first

Andy Wittmann

Great. Thank you.

and like here. sounds I Brett, know just is it line more the inefficiencies be guidance labor about So of changed. is raw ramifications due hoping of affect And it’s can this guys, a related me. P&L. but there you of There that changed, think the training I new There backfill. out But mention. to ways price I I it people of can the labor There the generally some to people to was that that, that your is could there to talk having lot that you’re be may stood just was on have inflation. lot business. turnover. costs is be probably labor pay to if didn’t your can There labor higher inside in can just don’t And is to impacting the a even others quarter commentary because unchanged. of ways

the I and is detail. on be to situation? So the talk that there, I of have points. but little a impacted you is you this? a those the just of to just talk grasp this you something And key think could on a thought hoping impacting a was labor I do this processes you about in address And given touch then going maybe I issue. of apologize, is place that the know there So dynamics how bit have of good rest said could some about plans some in year, of that the it’s I more quarter you And some that and those lot

Brett Ponton

the question. with way. our unpack technicians But is you’re labor there a Yes, the why and for there by because professionals just landscape think each. to with in I lot bifurcate question. certainly, backdrop a the the is by business the between different that first right, start don’t of we And let’s little sales good morning, Andy, discussion Thanks

then, can Let’s was I issues understaffing going you up turnover as coming And we first that’s related near technicians. hard some issues year because potential knew lows, in service We comp pretty the against with create issues various a at to were guess, start overtime with labor in branches. pay, and we going that our characterized, turnover, have into premium XXXX. all-time to

pay generally we’re team the business. to technician And But side, our But inflation that on are fact some most entry we’re the most markets through And productivity related that of are wage just markets given side. also attractive nice to costs turnover feel fairly areas be fair the basis. good we of competitive speaking, I done a – or the on where expecting it’s – in are And more to in think I a rates demand the job has exceptions say pretty on quarter. we our that. in. outlier a to pretty the there of paid of labor. think the lot to at so about think haven’t that, and So tech cover shortage we navigating in we’re techs with are that seeing in in the in But wage premium a certainly I shortage high-growth would deal seen

provide to tools to we’re that our value and even and Terminix it’s with Our stronger there, enhanced proposition Way, going Terminix path going there. the is strong Career into team University get

challenging a we for a our talk little different environment there. been there, rely today, It growth, to the a us. of think sales pool a model new labor Let’s for and or Because on professionals In professionals. that’s sales been drive and unit – story a they outside. more bit lot OSPs, little has sales a lot little has professionals very our our I the on competitive our cross-selling bit do gears about switch

some there had challenges we’re our So some to of of would on services, particular, termite we the our home we things be OSPs, may to performance with and back doing improve. in that in point our dissatisfaction

needed some modifications line proposition versus to grow made with minor how that We And we to tweaks terms coming market we an their to approach pay our and for in opportunity our to and recognized tweaks the opportunity making some in. have our marketplace and that benchmark prospective marketplace are plans compensation them create is in develop at Terminix careers. in to to people value here ensure of the our have we

lot important customers, But to in to certainly our from we issues here. business and effects recognized model to deliver certainly, our that that create come there. great how excellence a is service labor downstream any So, this

to new as HR online improving a well. new wonderful using I’d has well hires proposition prospective how leave feel with our team as new campaign is prospective to a So value the job I thing as you channels Andy, Terminix done market new maybe here like last in reach we hires whole with,

referral addition In more launched attract to a internally recent to that, our company. program we’ve talent into

a of here, long-term underway business. our initiatives well lot as So both in near-term to the really strengthen proposition value as

Operator

with Blair. Please Mulrooney Our next proceed. comes question Tim William from

Tim Mulrooney

taking the – you my Bob question one Jesse. on Thanks Good Bob, have morning, for and question. one for just I guide. Brett,

line the back guidance the for the your that the in seasonality? primary factors given of also, margins And year. sequentially think to Thank conservatism some ongoing we the half into uncertainty Is that I not, the half in versus can XX% implies numbers expected compression saw about with year driving second with typical just if you margin the of So EBITDA XX% is the first maybe half? Delta? from first about half the And built here, the you. talk there of

Bob Riesbeck

is Yes, Thanks. but is year. on. better It prior you’re business, spot it with Tim. seasonality morning, slightly the in Good line the of than the

We’re growth some going margins. see we show on point to to do consistent labor, there. continue To in headwinds Brett’s

then quarter sales then also do and will our we P&L significant of the kind and our to CXP marketing. have guidance that is other the perspective expecting in of Way that marketing we’ve turnover not some a travel. It factored rates from digital in. also investments continue year was and record and So the in and And prior hit headwind last Terminix

individuals We CXP we group bit little this of later, are road. week. we a here training getting have more do for some about more people a on When in back the talk

did the more on quite getting road back So prior a we the than bit are year. we

key top year. So, line really half there. see – drivers are the do that We first consistent those the the with being of growth

kind organic guiding we midpoint had about compared that first the to at half. in growth growth are X.X% at X.X% the revenue of we So

we be So to market. the out smart trying about put progress, continued what in again just

Operator

Our next question comes from Ian Zaffino with Oppenheimer. Please proceed.

Ian Zaffino

I you Hi, the the how for the same kind general the just on year of the of also competition, second wanted your just Thanks. you in great. within then Thank doing outlook you thoughts guys ask vein? half second quarter, versus and to completed both are very much. where

Brett Ponton

across our and ask this will Good the the year. in recognize coming areas those if we create outlook and take do color It reminder, guide really, us to we to our still Brett. committed driving focused is QX, in is, aligned that meaningful core our I remain and part that our here, company consistent a service as we’re the speaking, and here. improve service team much the the is for think very the quick the help that generally here. staying that’s lead and Bob really well. just base. team the our of opportunity with we on do is some critical And to our customer We strategic strong after all really you number we’re better on do progress retention performance some plan three right, to Way versus to I’ll But And pleased morning, a all Terminix opportunities again, of have I Ian, on in the business. the we improve significant and comes the customer we quality, making have retention. assessment just that priorities add look as this and business on first improvements But where in assess raised for together QX. think that some guide here, we I’m quality are here one, of really value real to at QX through industry, shareholders

to our on on. around Terminix going stronger that. really to then and And cross-selling, residential, do with finally, not good on base, only for significant Secondary that’s identified, cross-marketing to provide is at digital that technicians but very commercial penetration. efforts I our in that where progress for brand, potential on much Terminix the opportunity customers our CXP enable with of improve just made customer better into has We’ve to help that through help a us help think, the more that opportunity team marketing deeper relationships much the to also us unlock is comes some value and acquiring And pointed new Way efforts tools forward.

with close So with tools, in there to capability like a strong seeing give company of industry a significant the we opportunity what feel gap service recognize could that with we this like what we’re versus is improve got the that of in to our we brand opportunity a here, And and a other a we’re marketplace once relative improve also reinforce lot ahead that performance attractive industry to Terminix us. install team footprint, That the we national with really today. well-recognized and our competitors.

year, As want do that? to on it relates to outlook the the take you

Bob Riesbeck

Yes. Good morning, Ian and thanks.

our plan ago, As guide growth we X.X% X.X% that I our the continue year. versus mentioned second the just really on midpoint the residential and business. stabilize termite is in And is mean, the and a consistent revenue prior organic growth

comps last the commercial coming from also summer on sales. are some year year, back to the tougher over up comps as in termite compared some started headwinds to market tougher so also prior We open the and the half of completion year some

point, we gap a now. got the Brett’s So right on of And competition, working versus close and we’ve we’re guide to towards comfortable with the we’re where to are that. lot

Brett Ponton

Yes, on maybe just good as add here. feel progress you our about a saw I color QX that. on really in little bit results that more commercial,

nice Bob really team back knew a to the comparables, And think termite, I half. first to we’re of half a that compared capitalizing job seeing we there, as strong pretty the is resi on nice and going Stable our said. in have consistent we’re recovery demand, doing recovery. across

here focus ahead committed and there. leverage work improve company leads guidance again, us on the to feel like to So on at create that, the tools penetration opportunity right the technicians with customer we’ve giving keen us on second the to And we’re here here, digital marketing to but end to that QX. quite resources got half. and the focused I in think that with the selling by some a and we’re a in the unlocking help on our will more them us But despite more business, I thing drive of of termite we’re confident our also for here be cross-sell termite

Operator

Our proceed. next Please Judah JPMorgan. from with question comes Sokel

Judah Sokel

Hi, good morning.

quarter you’re forward? of maybe the to cash as be setback on maybe Just the a see repurchase type step-up bit you or different of just on little pay With you capital as how turnaround the the needs Can towards a us give buyback past the going just this philosophical Thank well bit major pivot a Clearly, share one saw a like repurchases. bit a investment wanted in you. going for to more touch approach a front? in in M&A. little the do things as where allocation, opportunistic aggressive little balancing quarter share of

Bob Riesbeck

year. Good spent morning, on transactions. $XX up only Judah. And in We We year $XX on this obviously, million our has picked million year-to-date spent last total five XX activity M&A transactions.

there So M&A. forward on is significant going a pipeline

return at is in in critical price obviously along investing So about Way $XXX quarter We an the did Terminix CXP growth average with and the million $XX.XX. M&A. with of

kind million trading under attractive buy. So that’s of of to price do to for sub-XXx returning have at million to X.Xx. us to authorized good $XXX of we are that’s remaining that an shareholders. committed We the and to We we’re want capital EBITDA. $XX be We leverage and capital like target feel stewards still get

we on it. focused are So

them got it. more weeks. quarter. We’ve Our a meetings we the Board do next few And communicated plan to on next some over focused have is with plan

Brett Ponton

add that, to color too. Just bit of a to Bob, little

we’re the for M&A. market to our investments operational think in while the Just I balanced capability underscore, there, remain reinforce with and in to right, stay and trying we company strengthening

technology near-term, right part the platform as that So, that’s building with of and deals Ways we’re here while focused on we training. tuck-in we’re reason here the why strengthened Terminix

the look of and strengthen deals increase So to platform. growth it evolve we as will be drive us to confidence, think, and flow and I may continues that to once more to stabilize mature, that future improve platform give

Operator

Our next George proceed. Goldman Sachs. question Tong comes with Please from

Zach Lopez

pay progressing subscription wondering George. what you Hi, sales product? kind that’s are Lopez of new the if monthly on termite about percentage of monthly Zach could good just talk the I currently service up kind This for and and made is morning. was how of of

Brett Ponton

the and handle [ph] Aaron the part. first Bob I’ll take second let part,

the continue I I will team developing done service pay related termite option XX% think roughly But bringing of with the momentum our on taking there. pay monthly see there. with proposition to has in our that good a And job, out is good pay the new monthly package value of option we’re a to put we think, strong all line, product. customers monthly especially nice evolution the we

going marketplace expect to that the a of momentum see spirit and the our match So needs we it’s again to going be aligning model go-to-market of of with forward, to part forward. to our the key value there continue and continue proposition going

Operator

proceed. Our next Hoffman question Please comes with Stifel. from Michael

Michael Hoffman

the Hi, question. for taking thank you

in ratio about XX%, cadence I first going And flow. EBITDA the is broken and from you’re on in second conversion question a the is into half, about cash So if to the at half? what XX% free the half in sales, XX% end up to quarters the second drag down particular, have that

Bob Riesbeck

carry-back NOL issues. benefit refund issues the we QX. million in Termite capital is Michael. from up a have tax that dragged we other on morning, is an payroll Obviously, some – And in got CARES We side $XX it kind of Act obviously, care second There the the working we picked in the year. evolution QX, drag other and got the a Good half. from last are some deferral.

kind still in the way, and are high of major cash overall free XX%. goal flow far reasonable our of issues We – the a XX% the those see overall back working as half. impact the as in So the

Michael Hoffman

sales to how the that? and cadence guide, the EBITDA think And meet three XQ to by about and

Bob Riesbeck

X.X% Yes. organic it to roughly half is in half. the stable. X.X% our We compared just in see of guide back first Again, growth the

Brett Ponton

way. add Brad. Let me to that, color It’s some the Michael, good by just morning

I of think relative demand seeing year. I table from year, we’re think last table the look consistent last demand to this demand year I

pacing. consistent expect would I So

Michael Hoffman

you. thank Okay,

Operator

comes next Please from Mario Cortellacci Jefferies. Our proceed. question with

Mario Cortellacci

maybe your what’s contributing in end again, pricing growth mentioned within QX, to are customers towards there to harder? or it’s also – higher see how a color of even need I quick pull commercial, range you’re what that realization really within just in the the question growth then And If you pricing that’s little resi that little some you Hi, that currently? price, to do where you of then not market within there? range? that level just us outlook resi coming within give on can think the to guys is price price or high I’m wondering much historical within a contributing from you a And above pushing historical expecting kind strong

Brett Ponton

saw industry a and probably off Good stronger the Brett. going in way, QX team think X% here in QX, is question. job termite analytics. feel X.X% also I little more Good line has call by and this line If forward. But to is we like and an service baseline, on our priced historically morning, we resi probably building it, we a stronger anchor much we that pricing as really commercial. significant runway The have in nice of a done

pricing shape confidence to to with historically pricing by will a levers bit helping aggressively our understanding a more a behavior actions. build and that’s than think little of little going forward us those strategy give more forward that certain consumer I reaction deeper demographics going

more year. will about second built be informed analytics I think, have feel that us, in we So the the of that we QX good very help half

Jesse Jenkins

That in question the last was our queue.

the November X. company. you earnings concludes for We scheduled forward continued to look for call, today’s that talking Thank Tuesday, our So again interest tentatively you. on you call. next your to Thank in

Operator

conclude We great Ladies today. day, ask for everyone. you line. the your that a and please and participation you call thank gentlemen, that conference Have does disconnect for your

Terminix Global (TMX) 7 Aug 212021 Q2 Earnings call transcript