ROL - Earnings call transcript Q3 2017

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Operator

Good day and welcome to the Rollins, Inc.

Third Quarter 2017 Earnings Conference Call. Today’s conference is being recorded. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. now Meek. introduce would today’s host I Marilynn call, Instructions] like your to for [Operator Ms. may you Meek, begin.

Marilynn Meek

By all of received you. a Thank now, copy the you press should have release.

to missing XXX-XXX-XXXX at we distribution you will release and anyone are our a and a you make if please contact is would However, like and receive send on one, office Company’s copy sure the The run one a can week. list. the begin the of by be accessed XXXXXXX. X-XXX-XXX-XXXX, replay will replay the hour There for call dialing and will which call after passcode one be with

being at available is call the will replay and be Additionally, XX days. webcast www.viavid.com a for

Operating today line like Chief some Chairman the Executive open Rollins�� opening Treasurer. Officer; Officer with me Gary Chief Northen, up we’ll the are Wilson, and questions. make to would and begin? and President Vice your and Officer; On Financial Management Eddie and Chief remarks Vice Rollins, will you John then Gary, line and for and presenting President

Gary Rollins

Yes. Eddie Thank our conference then good XXXX begin. all appreciate forward-looking quarter third us We call. you we’ll morning. joining read and of disclaimer, for our statement and you, will Marilynn and

Eddie Northen

cause to risk more to today. ended and the XX-K discusses statements today’s year and the been our call, refer from for forward-looking release factors and contains Form for outlook that business These particular uncertainties, actual results make facts Factors are information that XX, filings, we materially statements. historical excluding risks our differ. Risk differ Please number forward-looking release and risks XXXX December statements of made a any earnings and Our of including statements our press other this may actual SEC section all could certain have on to and subject the

Gary Rollins

results revenues quarter record XXth quarter our consecutive profits. the well Thank and of for posted improved as as We you, Eddie.

were the to quarter before year. same for for for per nine million two disasters. subject Mississippi negatively provide our of the disappointed more and termite X.X% closed hurricane to For Net grew $XX.X compared with John were diluted we're acknowledge billion, million, income months quarter to to and taxes our compared growth at million million XX.X North first We $XXX.X the control year. or several increased million or commercial and per inability same August all North share ancillary in to the Mississippi. per business grew impacted the million diluted These on same X.X% of Revenues personally with up pest million rose on branches Harvey In Oklahoma third a Huston last of but $X.XXper X.X% of $X.XX summer Metro, company’s grew revenues our flood to the profitability regions, X% Commercial period. previous with in share period billion Texas, and per South how XX.X% $X.XXX these $XXX last last quarter compared rose the compared for rose XX our residential customers. many Income XXXX. followed $X.XX preparation however for impact again. and want to starting areas and Georgia, or West Louisiana the response conditions, Florida, earnings share $X.XXX quarter the $XX.X share, to diluted natural to X.X% during Eddie third will at the diluted Central prior Net Hurricane or income proud year. lines to and to South I of $XXX.X to share experience to Texas, compared to service $X.XX X.X%, $XXX.X customers period year with the with employees Irma articulating of XX.X%. Alabama, effect revenue by and and our end of detail branches their again this Louisiana

experience of damage operations in running own. our dedication While all getting hardships their thankfully, were and endured personnel safe back significant up Good in is property many selling admirable.

news, the both X, XXXX of South the the Carolina of Northwest good turn other. John many XXX,XXX opportunity now John? this some will customers see XXXX, learn and in in would have to on to Southeast. Georgia, Alabama, and family over Tennessee, Phillips and We completed was Wilson. company Northwest combination. to outstanding provides presence purchase expand The and August Carolina. We established grow Exterminating. Northwest from we I like our the benefits approximately for each call Northwest in significant North Rollins acquisition by this from serves

John Wilson

as and to operations brands Thank affects of experienced employees Gary customers you, of our by our several these it When and lose and we customers. to even employees states storms. access businesses impacted damaged service across multiple we and the our Gary. tremendously. XXXs business thousands our of indicated many In their our customers temporarily ability were associates of

flooded impact customers close Our of the many and of roads dealing service ability branch impacted safely to were team members highways the that and their areas. those and with reach

impacts During our our highest closed. branches of XX were day

power an passed. storm branch after two As mason weeks for our without example, Florida was the

tragedies our to fund, XXXX natural were emergencies who people that nonprofit Rollins with familiar employees to The that for and relief priority they are we which up these, such our disasters REIF. organization company This unharmed; the in involved other unable remember as We crises. of work. or funds always medical is compensated we set a employee is like our facing however announced or make although many were you available were the those may wellbeing employees us. to of top Those were pleased

and has I by in normally. Texas of Over and personally the Florida the areas of Irma. are south locations past several their our in dozens of our and back grants committee support Rollins need. of for employees this situations during the to emergency time to affected the and employees reviewing another running committee up REIF weeks Harvey Most worked want thank earnestly east issuing

what of In to ways finding damage. providing flood with particular All based may were some homes serious services customers their are needs on cases, support remediation moisture we locations be. these other to

will protective services is for providing reapplying barriers to to the us allowed others It noteworthy that areas we primarily our also in these It branch and we termite that with major our others are flexibility, standing For books exists. during a be though we Even locations are to this business times. many due had not needed our new run to was mosquito caused flooding where benefit remotely BOSS flooding operating related that system benefit wish to impacted us branches. via pleased another investment. factors by close and customers storm directly and close other our find BOSS communicate from we water we

that to the business Given people faced normal. challenges we look our performed operations back well, our but to getting forward all

the Speaking our dramatically. virtual things are of system that way management of and they our [contending] with operations do locations branch BOSS route maturation pretty in changing the

brief past We these or which we're in have [X.X.X] calling what is transforms the made references branch locations.

to and rolled has of a these branch the anticipate continues We be front-line and have more to XXXX. improved concentrate fully we're scheduling experience able an to teams changes more by accurate timely to and QX reduced, technology As routing support and be transactional our out customer on of all work technicians. added branches

spending are resolution, including frequent we of that positive locations certain have improved call today branch one the of our service a technician calls schedules, mangers customers life incoming communication to and care technicians with more customers less more as are couching time the technicians witnessed branch, name Some to few. their better which fewer our driving more outcomes to balance. work and translates miles, And of better outside customer mentoring

enable to see margin quarters. to continue efforts Eddie. I expansion area, this in to to now the believe As we that call in the continue to these would mature like we over turn us will coming

Eddie Northen

my add Thank diligence fund for tremendous during that also always want you, Rollins support with to relief hurricanes. members those all employee the they the in employees I who of the helped John. our do and I committee, need. thanks to showed want as John Along thank to

our from specialty in storm. addition growth the the brand new greatly Northwest areas through demand most saw we the partner While subside we quarter in Exterminating, of celebrated the impacted same latest

profits discussing QX. or of in the Even extreme and our or When does While home are the weather customers employees. the in a to impact from team, of still our significantly weather calls damaged set support destroyed we our we we adversity, priority. on not revenue to these refrain face service record businesses and normally were storms able is deliver thanks operations

John For the costs quarter demand storms the included and improvements service impacts branch growth company, mentioned of into our and BOSS, quarter all Exterminating and the keys as lines implementation. our integration and to transformation accelerated Northwest to showed related of

XXX quarter Xst realize XXX.X of revenues prior quarter third of million. recorded on company over third Exterminating an the to Northwest months numbers of X.X% revenue. We year's August on the the at added closed of Looking million increase two revenue

the I year per our versus earnings income $XX.X share X.X% last to quarter. credit tax negatively the quarter were related increased per impacted. For Income to was share expenses positive $XX.X third increased $X.XX before revenue X.X% the as Net X.X% in tax and million diluted million. income to $X.XX to mentioned up difference and third

compared XX.X%. was nine was increase Income to last $X.XX the of share XXX.X up X.X% year is $XXX XX.X%. first taxes were $X.XXX X% at Our million per revenue Earnings an months $X.XX income before net rate. of growth for billion up and million

a look quarter. take lines revenue for service the to Let’s third the by

from several pest look you growth X.X%. up XXXX up up a XX% increase included revenue line and of our largest, of and our services, up is was was X.X% residential and northwest Our growth. of of X.X% X.X%. to Doctor enhanced that across hurricanes of trees the was XXXX Clemson control, their renowned ants. he was that a state. pricing acquisitions was University the pest termite breeding severe the ancillary Eric XX.X%. made you recently with total the X.X% revenue we improved was take foreign in made had termite forward pest up XX.X%. In revenue impact total revenue our Many meeting less approximately rates. X.X%, termite X.X%, about was populations up currency and improved of from organic from made at our on X.X% X%, up Commercial move up significant the we later the X.X% who commercial XXXX, there acquisitions and commercial weather and This growth at for Again, was pest a remaining increase his control, quarter in X.X% study Entomology that following X.X% was total Coincidently in Doctor control and residential time. asked When down taking of organic is X.X% due was out XX% the which surmised of which impact come of increased of with which Benson XX% that revenue in which shares Benson, Professor up as have grew residential had and total of in ant population. grew we [indiscernible]

for pests other creates have that many Additionally, moisture prime pest population expansion. laden new areas environments

[indiscernible] disrupted when people control are tech forced visible and move and they bats advised surroundings. wildlife natural sometime critter and where raccoons, become as new others our different work. that as seek often which severally the more are areas, live Finally, Animals to such possums, storm areas include people to

critter of increase the believe customers' regard see coming increased because a a business our these demand. As result should of this in result, months that as will the Overall in our factors. needs we hurricanes control

of that tested products different pest our This testings needs. management and rodent disruptions of and is impacted continue rodents. we products dozens related will and move to embedded related rodent Services different ongoing options and Managing technology Dr. the our to of by will and of different control. with team testing Another of Beavers have properly Technical to his for stages involved director new team forward be technology are customers' in weather

hopeful are that better we for We in future. methods management will rodent find the

where very with the front an Northwest members the of Northwest to begun. integration. result, a of them were team in our previously improvement a have perspective materials and have as better customer revenue results well. large Northwest to the and leasing From In Northwest those XX.X% slightly the by and vehicle already replaced important locations have adopting the has quarter third Communication gross in any branches and margin that is not at did integration consistent years XX positive. outsourced days. the meetings the at Working locations, in XX.X% we to Northwest our had compared Phillips example purchasing of customer such get to presence. of team family integration sharing started An done which road XX as hit for total, and using and opportunities serviced outsourced ensure Rollins. supply account. branch Rollins is margin As to for This declined group more welcome John process regional a a experience will piece this discounts business locations previously has has eight a XXXX. retail successfully along help throughout The to

revenue and integrating the related Northwest storms in the additional related cost to reduction from Our margin. to combined storm impacted expenses the with

cost. the which incorporating higher vehicle amortize to For of for the software, improved personal increasing company The percent to XX% offset the increased of that to increase X.X% contract of addition salaries reduction BOSS in and with third higher as with to increased with was expense third Northwest increase experienced and of with cost to of route various Exterminating. by quarter of Depreciation The of routing to Depreciation printer amortization the line which encored, X.X%. administrative The year which general assets support most higher the from quarter the for prices times by related to million scheduling we revenues. Sales, efficiencies made to were M&A quarter materials increasing percent Amortization with percent the $XXX,XXX $XXX,XXX revenue enhancement. increased million supplies of benefited a the continued as as $X.X management Murray high percentage higher revenues up $X.X increase of in expenses as including sales year. related activity. throughout lower BOSS of increases depreciation. of increase we million, additional acquisition were acquisition and amortization offset of in acquisitions the virtual BOSS quarter customer four And mostly increased and and cost increase the has and due was of is an help point last fuel efficiencies continued we $X.X planned from due and gains continued has lapping fleet which Northwest our and for revenue. miles lead to administrative iPhone increased The $XX.X [batting] the $X.X million, with our but to the subside depreciation Northwest. portion expenses salaries due from amortization third commissions our higher intangibles million or partially and a contractor revenue will outside XX.X% an the and term

September with XXX down primarily year. was As nine project cash XX ended ended from from million our we dividend acquisition of last on We million XXXX for position from on completion of XX.X%. the XXXX expenditures increase BOSS down XX of spent had in and million months capital which an for a the and XXX.X cash XX, the million XX% XX.X%

year dividend dividend is for on DecemberXX, off at good the will cash Exterminating. XXXX. increase all the regular paid special use Northwest dividend and that to XX, Gary. has of the year. prior Directors a cash and be stockholders successfully quarter consecutive start a turn a dividend of acquisition XX%. the $X.XXX XXXX of finish now share This call the back of minimum of the we year Last a XXth Board close reminder a a note We're the over increased integrate over XX% declared our in share our night strong marks business regular per to The to to by I’ll on Board a to $X.XX November cash the record Northwest of of As Exterminating. per

Gary Rollins

Thank you, Eddie.

questions at your take to this happy are time. We

Operator

ahead. Please Nomura. we And will from question Instructions] first go our take [indiscernible] [Operator with

line open. Your is

Unidentified Analyst

of I So, see you will how discuss hurricane? And accelerate the quickly organic a you because growth maybe the up. can then have follow

Gary Rollins

I entomology very talked about we time. point back we with back, some see had know was I that could which an if the the be bit this Katrina would John think at overtime. a that to have compare that storms will I magnitude of little and only from to things that thing ever don’t two we perspective of involved

an that going normal about John's pest what on see he but control the going the of some activities our we perspective future from would in know areas, we -- operations So, that separate different talked say other in growth are I during these entomology remarks to the may be. have from prepared

and that’s look I think will part be needed other when will over as be going residences know I the of know as to the don’t exactly up that and that services will is coming running and months. any businesses the of like us back get the our

Eddie Northen

after to really we these is I have that and about events talked might revenue on again gain hard service we much was quantify early I it's one-time add what that.

rebuild fashion rebuild businesses home looking as that a rebuild customers growth organic to areas revenue the As recurring then are start in is the add which as owners we we for.

Unidentified Analyst

is, And question what the look also the the margins of quantifying you like hurricane so last maybe deleverage of [indiscernible]. would of can impact M&A, may then my or be the

Gary Rollins

We are us. not These that are out. going to markets break competitive for big

we not had that areas. had and in profitability we the more would as well because would a give and of into clarity out break much normal, as lot these It's looked the not our have to storms. quarter So, millions are total those revenue going that far

Operator

Clement with will our Macquarie. We from take next ahead. Please question Jamie go

Your line open. is

Jamie Clement

to right? still some some or the that would to I -- assumed I you cleanup expect would metric quarter, from have would community's in just the was and this things, you have would be have XX to kinds have branches I all these you still activities assume wanted these what fourth are that down with to clear residual down impact but imagine respect branches of on I

John Wilson

and of running, is take All a peak the up Yes, branches or are and that three. was that XX mention only or This I'll Wilson. number was really that. the back day two John I'll

so well Key when a pest is as their our impacted heavily can ready you torn they, been up in most would as your West can to and imagine and be higher customers would service. control branch pretty branch, your I that taking they you running that’s decimated, taking accept as Florida power Our much are services, have roof apart, and rest of care determine the

slow So and it will were. be that’s sort of we to where back where we are [bill]

Jamie Clement

you have know, the in similar have was the and seen half we and profitability year-over-year growth have would that very what that guys. number this hearing we a QX seen Eddie message would that kind kind In of you impression from seen Okay would again, a saw you guys we impact it, of is storm is rate this similar the of it. in the we're QX, we what of year, from first perspective

Eddie Northen

we to been taking have post and that would It also, sense but revenue related on Northwest we consideration the well. bringing much as make that acquisition the of Jamie, that also that

think you that that is if and all probably statement think in net very factor I together, fair. your I

Gary Rollins

still were have and standing and hurricanes. And on that we these from termite has key the learning at again a had John are nice mildew, past treated moisture still to the put the to to very some to just you renew in it think mosquitoes experience, send will water. water past this based is done, to it termite [mildew] very a comes what our on a and on barriers positive bulletin touched that is going it's non-customers this, number it's that. where flooded typically will a our for to add have this, but like we there situation and going the at want to if their homes that the touched from and have where we structures John difficult few consumers boosters we have measure Houston to out it's uptake abetment, the give states and termites there but barrier, look it mold and hard rest, mosquito that would risk, indicate to call but that difficult put on stand figure so quite that customers I a the a be we're to us

Jamie Clement

outside I question a their and you customer Garry home kind is to brutally do was I'm flooded back have and to on that repay a a that you go the that, do of, glad treat dime. termite [indiscernible] do the or if it of the you is brought the it you, about company’s and home have land responsibility to

Gary Rollins

really itself its it upon really but it. and we the do customers is cost home we want into No, about a owner's at our this we like preying don’t basis, to situation responsibility feel just terrible are a

So, under if just benefit I so this a inappropriate, the have get barrier. two support isn’t to is tremendous your the obvious a termite say you're going as little is state really yard water something but this that’s that surrounding activity, they deterioration it of really for days, deep

Operator

[Operator Instructions].

We go will from with our KeyBanc. Box next Joe ahead. take Please question

line open. Your is

Joe Box

is that questions what the it on hurricane more apologize obviously to would then guess to there quantifying which guys first normal incremental much saw something go the is to comment of just is the operating have impact of you XX% growth to of a the to drill an the margin and year? aren’t your around explicitly we in of XX% lot assume in normal. looked about about want do fair quarter because tune impact. down Eddie in but I I the half back tune is organic X% that just

Eddie Northen

as that are -- would and running I up it consideration we getting staking very I expenses to again then close them you will close related the be in and much and would be would as take seeing have your and say true. long acquisition northwest them say and

Joe Box

So, think of amortization? that front on called that I what $XXX,XXX incremental you

Eddie Northen

so. believe I

Joe Box

think we that expenses about? What should were the other integration

Eddie Northen

big that are in to we had and plans legal the some that. we to of Well that the are other Those we going disclose. place, having We things not with that breakdown put items. do was part had compensation main

Joe Box

operating would that of to incremental XX? box you kind of Northwest ex that of items, thinking So, margin out million are you we if XX $X be would

Eddie Northen

that’s fair. think I

Joe Box

good cost but we on about the there prepared termite XQ there was is I carryover color that cost a be would expense in work a a we that rebuild of the sort Should should for think for how XQ? being think any

Eddie Northen

I don’t so. believe

I some hurricane going in been to I worse the of of cases Key were mentioned things that a decimated much we most some different couple have are had issues all that moving to rest part Johns more point that the Naples has now hurricane them the for is the West, But behind any with are preparation we part other don’t than was do some branches know that I same. to up to think vehicles we as us, on. of Florida he building think closing have of buildings had we for of had that the right any I up. go having After and back us believe think do we had storms. the of have others, repair But passed the we running expense the that

Joe Box

just maybe a are that or start improvement is improvement of for getting module can as trajectory lastly potential installation of steady are And through accelerating margin you if we you in margin potential then John me, all just of about a installing. we margin I'm stream margin talk it modules you place. to BOSS maybe from that are different work putting to curious the you new the point where could a see this

Eddie Northen

you gives John Hey color. Joe in some before me jump let

this that’s after. isn’t retention module we customer necessarily are new gap] really this what improved is [audio a a So,

Operator

at questions time. this further no are there And

Gary Rollins

in you holidays. on and you your for our We Thank for our forward and meantime, best In year we accomplishments family end Thank reporting fourth quarter us. January. share joining results and the wishing are the look to you. the

Operator

Thank program. and does disconnect any may participation time. today's you This conclude at for your you

Rollins (ROL) 25 Oct 172017 Q3 Earnings call transcript