ROL - Earnings call transcript Q3 2018

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Operator

Good day, and welcome to the Rollins Inc.

Third Quarter 2018 Earnings Conference Call. Today's conference is being recorded. At this time, all participants are in a listen-only mode. Later, we will be conducting a question-and-answer session and instructions will be given at that time. like Meek. introduce would today's host I Marilyn call, Instructions] to your now for [Operator Ms. may you Meek, begin.

Marilyn Meek

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

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

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

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

Gary Rollins

good disclaimer you begin. of will Marilyn. Conference our Eddie you statement Third Quarter morning. for we'll and We XXXX Call. appreciate Thank read looking forward joining and Yes, then us and all our

Eddie Northen

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

Gary Rollins

grew quarter Net increased X.X% we're million $X.XX to nine same quarter the billion, in $X.XX to Revenues compared Revenues the to compared consecutive share $XX.X first the earnings to $XX.X $X.XX quarter $X.XXX diluted diluted to same for same million $XXX.X diluted Net Well, for last to compared of XX.X% million X.X% with period the period or per million, to $XXX.X per report last rose $X.XXX months for year. very to $XXX.X earnings. income Eddie. last share year. billion for approximately for XX.X% you, income compared increased revenue or improved share the year. million, for or of $X.XX Thank pleased $XXX.X year. the share to per last our million diluted XXth per period same

and We're and in on as period at history their XX%. growth two listing in only financial moments. New of X.X%, and so Henry was business anniversary Exchange. in results milestone historic August up of our Randall distinction for we of will grew the York detail both a Stock anniversary Rollins, the and commercial Chairman, anniversary contribution XXth our our our on in rang on to with XX, a termite the Eddie X.X% hold New the its Tippie To significant XXth company's occasion, and level. few have trading being leadership On our The the They celebrate fortunate the closing directors doing that are made and to Exchange. for for the company's Exchange. York initial in privileged present expect Stock Rollins all We ancillary well. Lead a pest the greater quarter provide personal in bell residential the celebrate business rose control good lines the Director

Exchange. rationed. a This was [ph] wagon era our that As as World Analyst well and Rollins in square the historical an II from as provide as showcased experienced in Day many an when horse-drawn exhibit exhibit Stock hosted War bicycle items such also gasoline of technicians you Heritage Orkin front know, our we've service to Center of used

our Western, from Orkin like Waltham, the displayed HomeTeam, brands today. Northwest and trucks Control, current also Critter used various that We are

recognizing In non-pest its premier in focus the XXX new how XXs, countries. unveiled the that franchises and open Since our then good our Orkin provided on today. remains control field an and achievements control We're acquisitions on XX XXXX, branches, years. in some all and the same both from operations industry commercial the more were, early that we've all we're in began have suite to XX commercial control more rolling addition, out of past we few and pest with new proud detail Orkin of international of our to this company operations application. pest In we at [ph] Orkin grown heritage technology services the Orkin a made and acquiring than narrowed global Rollins which created U.S. consumer businesses. a iPad over strategy, of the initiated domestic We sold

Waltham we companies by was in Australia, in leading now time of goal and Canada's were Other improve. Pest would followed the at the Canada purchase United and purchase the the which control pest many was Defense Orkin be companies to also XXXX, recently started which all PCO to with able pest HomeTeam company. is the Our This services, fourth the company time at followed by control largest United followed States. grow control Kingdom and other acquiring largest which of were acquired Singapore. others, These and international Western, which at pest

U.S. realized the During and pest largest of complement commercial to Fumigation, control largest our in this brand, industry the fumigation would company our portfolio Industrial there control today, master we're Critter States, that Control. franchise country's wildlife the the By control Trutech wildlife United the best-known later way, U.S. or the that company. acquiring growth strategy. in the pest the we added We were segments also time,

[ph] None I of and past that have and who people our company. central employees the Control of our company's asset. would precious OPC grow successes possible saying our recognizing continued are tired purchase with never without most these acquisitions strategies present recently the Our has been accomplishments. part Northwest Rollins' been and Pest of most of have Exterminating Kentucky's

Our today, what we only but will team's and in who not dedication will are future. direct experience do we shaped the

We have a all while our existing tremendous businesses same our of at expanding and new opportunity locations footprint to time improve through acquisitions. the global

call turn now me the Let John. to over

John Wilson

you, Thank Gary.

help most our came six relates know was Hurricane and okay. have at lost as families Hurricane Right where two, due the impactful As The large for office know Thursday. facilities our middle and spoke mainland, our most September, Florence team U.S. the storm near hurricanes stalled all the mostly of I that Beach to North in destroyed He of larger their to others category feet. a customers of by parts on you and Beach storm team team. beach were of in to and to am storm. with our done City Hurricane I significant least everything Michael through for X accounted on and was there it Carolina. manager I of four Michael that loss working report ashore damage the get back flooding. with members on-site the all Orkin our our hit [ph] Florida. and that was came was that happy both region month, area the Mexico the the Panama

also Rollins team have Relief of course, Fund Of our folks these we engaged and support Employee in others.

were September, having our on to quarter talent but us. we're maintain in brands has was employees of recruit team X.X% rates for recall member At call, for in new may well. market pressures. then maintain consistently candidates. discussed time, impacting labor to some order I our our become for You to people declined still how it more that viable tight rate fairly with Since and handling experiencing even high our important unemployment second conference hiring a the We competition pipeline retention the for it new industry,

portion U.S.-based ever up our As beefed savings step of XXX(k) we in the was adjust regard the improved for and what can we in ensure to and stock important of most employees and our we working; form a act to or initiatives just we in assess our human employees. employees of tax to To good first directed our HRIF further be will decision will toward have choice. to our mentioned, the is efforts, and out remain U.S. do share recruiting Gary support the A in match upon continue any retaining we take need our grants to employer what system we additional XXXX. steps we asset hiring our rolling as resource

from all for us is president career initiative. of the human track This training, and development performance specialty in globe sponsor Jerry our resources part brands All seamless executive this benefit effort. the leads this and location. enable of be that Gahlhoff Our important people the better an as to current future will and employees will and leaders around will this development groups one is greatly

focus veterans and add Our provide opportunity significant to continues females talent. hiring to on

can't has considering talent ignore nearly many we females employees. Our population attracted afford make know this and we the to industry Plus, on historically half not source. they excellent

have the leading well ones brands to for we for brands, enables growth. in continue Rollins us management split acquisition talent people prepare and acquisitions, as our we grow, a to new talented our contender that We as As and with be that continue branches all efforts and want talent. to existing add development to make know choices

our XXXX As our the our in experience continuing and organic been lines results, in are growth More our has ancillary good growth the quarter termite across services. business reflected of growth service. service emphasis of of is third areas mosquito in we to including

and as Zika service by on rate around on contributor this We us come. public answers case, year-to-date. our concern and mosquito can many expansion other issues, we XX% to [indiscernible]. believe for been growth strongly This customers related the to disease-borne mosquitoes major While are threat. years and to including this come growth relatively has grown largely line will service awareness the And of continue to low business raised driven over have to seeking diseases QX a increased line

based cross-sell industry the for offered a already many from they in the straightforward customers someone have We and is trust. of this customers largest our residential

great also that From our the time. way customer also that wildlife that service is We same we satisfaction In group does an when we service a the fact, our customers. do the a technician mosquito efficiency pest the message recognize helpful and to marketing customers same getting pest offer the this must get standpoint, those it of is that their have can the control know at service customers all rate. performs of highest and to job services have

variety are there aware, are decision. their consumers of you make a wide to ways As use

providing is their and team Probably marketing our them. that to now connectivity of it our differentiate a for from continue than us customers number maybe a platform is digital most up short efforts best less competition. from and connection made that mobile consumer Only over years and to works Our importantly few standpoint, XX%. XX% our ago,

Our to the needs customers' share variety compliments the have a mostly ways, and refer anything through more satisfy are mobile and of priority those resolving into golden because today Well is in to proactively readily efficiently communicate and media, a Customers relationship. of social and management strengthen issues More that many responded we recently, online turning to our events do. reputation those want design through better we issues effort. situation as of cases, job opportunity online in things in have forums, and done a how supporting concerns a we our a potentially quickly we first to before so handled. various customer positive damaging customer

us, over our find experience. satisfaction customers. success it to our that rapidly the with all advancing is to critical also key I but effort the time is change platform will the As things is service and you resulting that forward, of turn our of the business, as the helps the Eddie. and for to Technology technology rep our place at the support customers moves to call in improving change getting know right customer our right us employees' now to

Eddie Northen

John. you, Thank

We that fluctuating now tied also is tariff, by or to oil in an industry but trade talks be minimally are fortunate interest rates prices. impacted the strongly or

as mentioned during development past a While Rollins we do evolving we had these enhancements, requirements talent opportunities mentioned offerings a consumer our quarter. our present for do celebrate, tackle the own I via such and basis. as the both daily we technology on acquisition have challenges to this multiple the as continued changing base and John of

Pestkare which celebrate In I opportunity addition will Northwest to the that and Exchange, to mentioned one anniversary development topnotch the XXth international our the Singapore. in have leader York acquisition in celebration the of our show country Pest Gary ability historic we more and also of with the to as on talk These year Exterminating continues. detail industry Stock of the U.S. New the about our of Control company find and acquire celebration Aardwolf in and the companies

the in line entry included profit For growth and per gallon. fuel as showed increases of least Aardwolf from our the and Singapore was which increased revenue drove acquisition just into expense significant previous cost recurring quarter, increased by with mentioned, keys fleet price all from the service quarter of cost have to increase an quarters I and Pestkare impacted gains

to revenue. increase of X.X% over before prior XXXX. Looking was at $XXX.X million million the third third two $XX.X of in taxes XXXX quarter included Northwest numbers, income of X.X% an million. QX $XX.X increased revenues million the are revenue quarter from $XXX.X Income the year's months

beginning recurring revenue earnings of XX.X%, historically $XX.X to third from that increased saw XXXX. per are diluted to income $X.XX reap share quarter share QX. as to benefits we per per Net high share the diluted the the compared million in XX.X% growth in We anticipated rose and $X.XX

discussed two have of they few we prior historic the profit compared numbers over that unusual affected quarters, items remainder to there as the As XXXX. the quarters, were for will past

EPS enhanced was third by which the quarter the penny. first employee The impact benefits a

be John As U.S. match very one-time as continue a ramp our employees. mentioned, and reminder of approved by and employee. positively many our to These our XXX(k) enhancements stock to based provided just we received

of number amortization by the our quarter intangible increased significant Additionally, of acquisitions for recent assets the XX.X%.

tremendous average by benefits earnings believe just year-over-year has last the penny. our increase to the amortization we half past our X.X%. been And this per future. enhancements, our significant over five intangible a for of years, also Over of assets like Compared a is year, impacted share investment increase

will wince forward, a we Moving that measurement meaningful reporting at EBITDA be time. will this begin more

For XXXX. over QX, EBITDA was XX.X% $XXX.X million, up

year caused the amortization been Financially, key of to great is we the one intangible this continue which share. at of have with and of Northwest Northwest anniversary acquisitions execution advertising better incredible of gain able market features year, our than August grow were enables them a Rollins has Their One overall continues Exterminating. revenue On many Northwest that Pesky increase at Day levels average. you it significantly to our unique in year. recent X the Analyst service combined our hat meet their Mouse to to celebrated with

of that of program. learn leading needs. that specialty Elite industry the for of with One consider to shared been geography types customers their green of great and and those business on this has example past. quality companies the our for brands have are solutions Green offering is and unique termite good other based the This them, treatment. An combines that these mosquito Rollins' things prefer offerings acquiring from These share pest, byproducts we their with service able is companies fact grown we learn Northwest their we other to from in also

has Northwest benefits the group obtained that Company's of margin our helps and enabled to has Northwest talented business area other This to Northwest brand efficient. is to CRM a we opportunities up year Rollins' savings. more us. the customer been Recent healthy of have have combine our our during of become that streamline one our cost of past Company's negotiations with improvement group. IT geographic and and access addressing One IT the receive When found offerings our footprint, all Northwest to upgrade

grow. as our types these to continue continue see to of company's will We opportunities,

service quarter. Let's o the look by through take a third for revenue line the

we by was of segment XX% which up of remaining total and several total and from routing Both September X.X% increase revenue, the and revenue since for Depreciation XX.X% that million million, gallon up residential prior saw QX, acquisitions and amortization we vehicle the decrease growth the revenue, expenses or from down or expenses In up a was million acquisitions XX% routing plan quarter and quarter year's leased mentioned. that of X.X%, over made were which or our quarter termite fleet earlier. mile growth. rate X.X% increased even have and and that fleet $XX.X approximately as of organic for million due up of that services, is for lapped and the point and driven revenue efforts in and salaries $XXX.X salaries, X.X% per termite expense. cost stock lower and slower increased intangible wrap $X.X by improved Northwest residential up we OPC the Again for expenses revenue, equipment of stocks well due million the XX% XX% X.X% revenue ago. residential included increased The several up The acquisitions quarter. from assets price increased Depreciation as was percent XX%. scheduling This grants our to benefited A due quarter or helped third control, quarter X% the than as was Personnel-related contracts as revenues pest mosquito improved for percentage we advertising, and X.X% acquisitions. XXXX for termite X.X%. of fastest pricing the as $X.X XX.X%, million revenues lower our included projects. increased from and alleviate commercial is Commercial an up announced less from XXX(k) reduced in and the ancillary acquisitions. million revenues scheduling higher purchases, sales made X.X% to professional from XX.X% of residential various X.X%. efficiency quarter. over positively and which of administrative increased total In impacted a up administrative $XXX.X was quarter was and John pest increased a and was of increased total year increased three-tenth made expenses technology, benefited Sales, by XX.X% discussed growth gross of expenses, per to improved up percent up as of the As by to general the control, the from $X.X $XX.X X.X% up amortization Fleet earlier, revenue, which from was and third our match while amortization the and to margin increase XX.X%. XXXX. in to due $XXX,XXX the customer costs third of

cash our XXXX, back position same for million as on buy spent acquisitions As period last million continue we $XXX.X franchises. period companies for good we quality Control September XXth, year, the continue find to ending control and to the pest compared $XX.X to Critter

had also of million on an We $XX.X increase XX%. dividends,

a BOSS of Northwest period to of common $XXX.X from the shares. approved with CapEx, the Fractional shares share shareholders paid held. cash. our split share of for planned We the be The XXXX. shares million every December one from stock subsidiary. XXXX primarily $XX.X close in foreign on the The IT business by roll-out will which was stock We our investments and Xth, on Canada amounts common Board resulting three-for-two split in the issuing be two such distributed million split which by additional November will Last Directors stock of held have at be is ended to million record of will XX.X% of $XX.X additional XXth, affected up shareholders common as from of night XXXX of the acquisition. cash, Company's

$X.XX shares. Xth, XXth, share, at be December of cash year-end declared of XXXX. record share November to per regular Board special payable of paid per the shareholders addition, pre-split XXXX a quarterly dividend will on In $X.XX the Dividends plus close business dividend of a both

to time the Before truly that would that spent Stock you hope you. Gary, I New time We I thank join team. time and and to made the with event. our call back call XXth you the like Gary, I'll with Exchange back to you for turn enjoyed to the our over found value of those spending turn us York

Gary Rollins

time. you, take Well, happy your we're this Thank to questions Eddie. at

Operator

Thank [Operator with Hoffman Instructions] Michael comes Stifel. question from Our you. first

Michael Hoffman

Hi, prior you about and how us they we thank When you increasingly of we in organic margin more they -- you questions. incrementally the all initially, little growth profitable. are get bit new add this quarters, for pressure from with about then not taking shared customers, think should think the profitable a

frame much of because sort outright you growth, versus how new where were since can organic was So two retention talk going leverage the forward? price? about customer in margins are the And into we or points your also renewals those

Eddie Northen

Yes, for question. the Michael thanks

don't communication improvements the quarter. we will make by specifics price a a continue area and about retention that through experience high team customer that the levels at improved, kind we So John and better. helping of The and new to as a think as We'll is I our customers. cancel have to to that you really retention, the level. out of I well break tell talk make customer that of be good quarter. we continue overall in service the reducing technology had

definitely us. retention a positive for So

add to that intact seen probably and our and customers relatively X% quarters previous range. X% between continue has what We somewhere pricing with stayed in we've new

Michael Hoffman

I a Okay. mean And it it retention ago did QX, so. QX get versus you in when or good, -- year better is frame

Eddie Northen

we've but positive It quarters was over step -- better our the last for seen of now, a did bit better we've and probably incremental there retention seen little get even improvements QX eight in us.

Michael Hoffman

it's improvement year-over-year year-over-year? as and sequential so Both well as Q-on-Q,

Eddie Northen

Correct.

Michael Hoffman

you model given means should equipment. that things you to XXX XXXX? that from us be what you lots ASC in that lease us today? to then modeling are And think telling think do the of How business about What about Okay. the

Eddie Northen

time to with in We this don't share numbers any at have point everyone.

facilities, different that. things some and vehicles, leases, like also such we leases, other have leases have outline things we like as have and We uniforms

with anything At We'll still information So as process. prepared, as calls. you. materially that moving this have we'll we're working in more there future time, being we anticipate we share different, we're be forward that through don't but

Michael Hoffman

then some And the Okay. question growth... of on organic last one

Eddie Northen

take -- out Mike could. question if someone take you else your Sorry. let's

the into We will back you get queue.

Michael Hoffman

Okay.

Eddie Northen

you. Thank

Operator

you. Thank

next Our Jamie comes question Research. Clement with from Buckingham

Jamie Clement

Good morning, gentlemen.

Gary Rollins

Good morning.

Eddie Northen

morning. Good

John Wilson

Good morning.

Gary Rollins

morning. Good

Jamie Clement

on your having earlier. Does call that in players me, have accelerated. Thank I industry, have just some activity acquisition forward? on the any those the strategy it difficulties What's some among if second ramifications I players of seems stuff, be going of think people there? going do a mean just take doesn't retire, seems ready to just smaller what they And over mean, might local industry reading of getting you. pace generation to prior some just have I to business. to seems merger that? it to on We're like even technical think demographically me Gary, some you explaining tier it or third the

Gary Rollins

and one and the that the give guys. is if versus see have and last the fact we these you the companies case numbers is market other of phone the companies acquired some of motivation. that of the American probably the we efforts activity areas they're only with think think in a the absorbing a acquisition call happy deals realizing that -- [ph] I North good aging thing or the other of the reputation them the we companies and And in last were accelerated these that that certainly business, and But interested suitable particularly some There's with one what of in I is international in have no is in is made that's we in really our owners of cases cost couple lot that's are Well, do the interest not. new -- area. that's There there saying great energy. some things

though, we it's very price when we we're the we our just stepped one success a for drives fact we rates the bit company the that of mean business we're don't charge do. to good that little So the anything foolish buy just a on gas -- I things low particular want and that is

So company we're we hard the to the and working right have individual, at it. find right

Jamie Clement

and rate much and Okay. were all around one Thanks very kind think low of comments being I making recruiting unemployment color. that John, the stuff. the the you for

that in the has one mentioned I you is high. technicians do retention a your the industry right think your among recruiting very over millennial How is message How convince rate pest control years? changed you them? for still the

John Wilson

James, a is always hire today. working that as question. far would group great millennials I that. you the on that know don't largest that's how as go. answer We're That we

Jamie Clement

Right.

John Wilson

So a good to we're continuing are to attract them. many we still or of continuing

So have turn a it's low and harder pressure. slightly and a is up, lot over law our We retention just of looking harder. to rocks keep

Jamie Clement

enough. Fair time as for always. Thank you, all, Okay. your

John Wilson

Thank you, Jamie.

Gary Rollins

Thanks, Jamie.

Operator

Thank you.

with comes next Chris Sidoti Our question & Company. from McGinnis

Chris McGinnis

forward pretty rate? strength little is just like why growth a you of sound a with Good high my in the little going itself bit feel throughout maybe you questions. around and bit a quarter. just pretty confident maybe at more Can talk taking maybe morning. it Thanks about the for that the Nice network or -- growth why more penetrated that mosquito, how rate that is

Eddie Northen

Yes, This Chris, Eddie. thanks. is

on into products it offered really the a and one but So the several we operation been is we've for had time years, from put not mosquito a lot effort the side. basis of and marketing that coordinated

several the we're trying forefront, a marketing have out work same on are good to as it that we've to -- Orkin, forward. seen those had -- growth. continue the on that that, of win in the that kind and there to see first page, we trying other has mosquito And of push now kind think I our that so as we really were XXXX brands, saw on this of the good a saw out start well really that We And that there we'll in were XXXX. as momentum HomeTeam, good brands put step Northwest business.But operators

forward in this, you to if know, anything else as to as move we there that we'll don't see think is I as continue John concern. far time. add want I

John Wilson

I do.

our always as for we've Our touched on on customers, opposed have relied Eddie that. -- service offering that to advertising technicians always them

as And so as that Northeast many greatest Southeast. well probably been with first and started penetration in great probably that's not has markets, the but so the where our we is

your question answer two those penetration. as about those We those still have of the well as the just a So to -- elsewhere. markets, what's both opportunity in areas were our market were ton two

Gary Rollins

the created think I also greater health risk has demand.

more read change. other problems. has week there's articles been the that going you really to about any assurance health attention see think not mosquito-related us almost I CDC given these or that's every that We even don't

are it keeping it a back think continue we are I we're can enjoy -- the with highly in pick to up, I lifestyle the service. their them house. giving not really will customers will mosquitoes barbecue them satisfied they just mean, the backyard and if this plus when think better

Chris McGinnis

Great. Do And have on of one little and Can terms did not or new then Thank a coming were any the they say you organic color you on Appreciate a in color color. you. growth offhand? beforehand prior give rate you -- -- solution that to question, they just that have other wins. in. customer were customer -- the the

Eddie Northen

Chris, this is so Eddie. Yes,

So have piece about. what share we'll what some of and that exactly -- mosquito. just of can wallet about have talking We'll the were' be we're

our they're they're seeing some So also new and customer of them that cross so and We But that seeing in. markets talked at as we revenue that we I are But incrementally are this point ours. share. time. up games they taken of about sell specifically pest companies some mosquito in in are that market with the the control an we the Northwest existing pick other in well.

out -- really both for I us. So are that going both think it's that are --

Chris McGinnis

Thanks for QX. luck my taking Good Great. in questions.

Eddie Northen

Thank you.

Operator

Thank you.

Sean question comes next with Kennedy Nomura. from Our

Sean Kennedy

everyone. morning, Good Hi.

Eddie Northen

Good morning.

Gary Rollins

Good morning.

Sean Kennedy

quick two have questions. I

anything in deceleration comment you in could to Does general? hurricanes on just do first, commercial. The with have that or the the

Eddie Northen

bit quarters a little The current the of kind look in you going the impacted more by seen over in we the line absolutely always impacted growth QX between had lumpiness second hurricane in I then don't that comping XXXX it. full we've three to also what of quarter. but the now. year, previous probably probably a at the in years had we're quarters. [Indiscernible] of year the the little as it's bit When And well. have with we're the know think we it's beginning biggest had this that if have we would hurricanes, the of

Sean Kennedy

And wondering especially near you data? also deceleration to housing Okay. any Thank slowing revenue then, you've a term if the I in comment recent you. for Great. could HomeTeam due economic if trends recent seen was on

Eddie Northen

at -- Taexx they all the in. we have We put million seen that any over HomeTeam. They the have slowing with put customers or not system a

some housing being and even time, new of we slow, So win at new to have homes will does able which it even built. without go they know course if a database be point to customers in

the very for So also that. the service. termite also working in robust the business. then about we before have the termites well talked on termite as as They of mosquito a that recurring business pre-treating And they're constantly

revenues with. So they've and the what is Taexx do, they're been that other have also known are that they successful things there they for but big

Sean Kennedy

Great. Thank you. quarter. Congrats on the

Eddie Northen

Yes. Thank you for that.

Operator

you. Thank

Blair. with from Our comes Mulrooney Tim question William next

Tim Mulrooney

morning, Good everybody.

Gary Rollins

morning. Good

Tim Mulrooney

update Orkin you on Can the us give a of system Orkin maybe VRM and in Canada? where quick you at your deployment initiatives, terms X.X are tech of in BOSS

Gary Rollins

in for system BOSS one us the be last So I the to able think, I'll something with first track They're see Orkin on early Canada. XXXX. to just start

through So pretty that the benefits able something through we But the early rolled made be out Canada. different to like be for be we're see able of currency, for feel for see XXXX which development, we'll services, we've need some adjustments some should going going for type we frequency to gone through lines. XXXX, toward to means well of the of service end --

we're giving our with have continuing -- that customer communication We're concerned, we're when and year. we about giving of feeling the lapping that The far to customers As do kind them improvements talked and that our miles that having the route the the management, going -- overall in customers the roll we're better Analyst Stock we talked Exchange them a with to to out another September as experience. are good about even about feedback a Day. for from and saw that get are we little bit at better other virtual over after were test to this that's I with visibility continue new initiatives you that

gain previous seen -- what X% September top year. of in we've previous on over in So alone in the

most team sure to are request make we And operations effectively. So top small all XXX and staying forward move gets monthly upgrades the basis. I continue a the from implements on is well. initiatives and think using of on IT efficiently side group that the the most IT BOSS on The to average,

So they're and bit constantly a better and little us. little and little tweaking to just it, a just it fine tuning customer-friendly make use easier to bit bit more for

in positive momentum continued So those areas.

Tim Mulrooney

Thank you. it. Got

as higher consider are -- Eddie forecasting highlighting lower more. Moving a services-related costs margins. labor issues maybe labor one industries to availability particularly and of key on when lot

labor year in how what what And maybe you -- of this can us, increase as remind much gross quantify -- labor just in detail? maybe quarter, a pressured maybe its much any other the total So just the cost any costs sales? been are, has margins you how can percentage your or

Eddie Northen

I'll a us say to for enough not headwind. that highlight as it's

Tim Mulrooney

Okay.

Eddie Northen

our basis. of It growth of are our has a kind as know kind a overall. you on based operations of working revenue lot productivity And stayed intact on

efficient for place it to they opportunity jobs. work them pay benefit -- little of from of So to and them a the more do from able getting had to more that less we sense makes and the a perspective, use more be getting more be they're when get that technology in to benefit, an to to where drive they're bit for this

that ahead is, out really thing at wouldn't costs listed areas. sure not we'll even there because headwind we're three something any finding can cost-related got of best be related new make an that of we as not we seeing to there we're that on retaining that staying the But and it's The continue to employees our So four as course, item are this are point, hiring, or top again we the are -- of but manage that. is that to employees. hiring to

Gary Rollins

One not if of the their higher pay. hold pay our compensation take their home that benefits, or -- -- reasons than we people certainly increased benefits equal,

move which our North employees, retaining made our and to American big stock the as and in far difference employees. a a improving XXX(k) big and -- we the scholarships as So both pretty we think recruiting make will

proud of that other done. we the The how is stocks well thing are

We plan. XX% employees XX% were have XXX(k) our and the in about of

you know, go go assets up. up, their goes retirement up their stock benefits the and when So

really was lot got people some spend we a the amazing of us for and others things working that that really took how it, we've a of employees. money think few tax So invested the don't. It -- with their

Tim Mulrooney

color you that you, Good Right. back in Thank point, hop I'll Gary. and queue. for the thank Eddie.

Gary Rollins

Thank you.

Operator

Thank you.

comes question next Research. from with Our Gabelli Fanelli Paul

Paul Fanelli

morning. Good

Gary Rollins

Good morning.

Paul Fanelli

taking our Thanks for questions.

recurring that startup with associated growth you've quarter to Has trend higher out second all? the revenues continued QX cost or at started in the call, in of On called revenue. sort some those mature recurring

Eddie Northen

and number. the taxes see We take income you'll acceleration did compared little income we an of bit a the see, year-to-date and QX had if after, you look a the at before to

So revenue saw, see we rate. high in are QX from but we our a revenue at recurring QX benefits that of did seeing historically the the some growth recurring we higher-than-average growth grow

So we're in that to we degree continuing again not QX. see -- in area to same positive not the saw

anticipation that see into our our So would as year. little we are that and benefits that of we move of be, into next of -- started that that bit we and continue -- to majority we'll as have QX, move are saw the

Paul Fanelli

follow-up. then Okay, great. just a And

continued to cost been that BOSS the and mileage. You X% in give Can cost offset? with VRM at least able fuel system around, and to you color fuel the much discussed how some the being sort in offset you've of increase trends cost any improvement able leasing

Eddie Northen

did a of So not we haven't it. broken that XXX% offset out. It

is Our gallon which price was up increase. year-over-year, significant a per $X.XX

did not it, that. will offset say it So than half offset said I more that. we of But

Paul Fanelli

Okay, that's hepful. Thank you.

Eddie Northen

Thanks.

Operator

Stifel. Thank do question have you. Michael We follow-up [Operator Hoffman a with Instructions] from

Michael Hoffman

one how compression in that earlier some positive first was half, of margin the I starting operating this growth, we the benefit the or where this second gain of to leverage, see a we're slightly expansion remember growth? the from trying would questions just on your half. of the but Do you end we see that end margin and does flat follow-up EBITDA do in asked accelerate, frame like of year? to on you the margin, to in as some investing up How we some we understand saw with should this bias I'm

Eddie Northen

we service. revenue as we and is positive see what is fourth see into to flat slightly year. go benefits the acceleration think from we'll as finish we'll see, more I The from this then after that. out I the recurring the little bit that time XXXX, Michael, we think a And third

see that. depend benefits So the service from that has the based customer will frequency the on we will on when

benefits. as really move months, at other we just saw recurring high in again QX So when every the growth in you would look the QX, again improvements from average growth, math you And far where as in as do well, customer, we can see which I then positive forward as historically revenue rates mentioned, see we'll like so. we above if

Michael Hoffman

stays that story Okay. was And do at to XXX(k) XXXX. then XXXX then margin tying in the investment intention level that it to your level that at and it in

should benefit being of a see, I into XXXX all I So that get equal? else

John Wilson

were options The option Yes, The that' event, you're well. a as correct. stock right. stock one-time incrementally, but

XXX(k). that the have already will on lapped We

Michael Hoffman

pressure What Right. about of of margins? the that? points on basis ti's Did was calculate correct, it we XX benefit

Eddie Northen

that a what head. can number was top see that that. little look of I is. it a take think on than We bit more I don't have and my

Michael Hoffman

those at only like in Okay. having [indiscernible] help And that utilization something drive labor to look us look to technology the chewed are one bringing sort patience. all in issues people. at technology last able traps, your you [ph] you have helped leverage for well where one, in hiring progress bait. thank we XX like bait And Where in much labor went on are of particularly you things where thing as to and or as the bait in that things commercial you use to traps,

Eddie Northen

sorry, for you. Yes, Michael, question as call last take -- the I'm the we'll this the you or last for

technology perspective. We continue to opportunities a look from at the

an is This are. human right customers time. that still opportunities same important best a with at sure the the have we all want at there. single are probably that what different opportunities are we look the opportunity sure our understanding is that that's Making business out every we that I there, part. to to believe continue extremely make out We We've the connection tested,

be put technology in had understand and to opportunity, We through those going in well. and a places put market where that be operating continue we'll all would the sure go have But only to to we're as BOSS really there to we make So positioned have exist if benefits don't the place. indeed we and we in system perspective is that able from make what we'll sense, we'll where that that place. and most when

Michael Hoffman

you. Thank

Operator

Thank you.

Clement Buckingham Research. Jamie with Our next comes question from

Jamie Clement

the come a Yes. last Cuts mean, recollection to your the very, of is the fourth noise Eddie about year, I Jobs fourth very from we Thanks and yet? of anything the the need last for fourth we that think year excluding in there model quarter quarter Tax from out perspective follow-up. quarter was I my hasn't recollection year-over-year Is on as call strong. my the Act

Eddie Northen

I there's come call. hasn't don't believe out the on anything it

last the where profitability question, where recurring revenue side. see we'll and think the I about the on talked the we improvements

QX we'll moving and into think see help that in I next us continue year. to

based know right it what know we anticipate now. view on are items. the the everything We those We still of impactful right most hurricanes. being anything probably think we have I don't from based on a everything full don't now, material

Jamie Clement

Thanks the terrific. time. appreciate extra much right, All it. I very for

Eddie Northen

Jamie. Thanks,

Operator

Thank William question next from Tim with Mulrooney comes Instructions] Blair. you. Our [Operator

Tim Mulrooney

many cash paid? Thanks this year-to-date the maybe Yes. in was follow-up. for remarks, the you how but companies total acquired I and what Eddie, think you said have prepared the

Eddie Northen

so we we last year year. purchased million it [indiscernible] I this that's $XXX looking The don't the a have Yes, can number numbers we going Northwest take believe to last number million have, is right. it's real had the here. in quick take was of think we we're see we $XX said we've XX. dollars because I that But if we I'm year, -- do can look million companies. -- $XX

that So be a our the $XX once look made But we available be will take far year. million have have the we'll we of XX-Q to of And if this so would available. number see companies course, available, companies.

Tim Mulrooney

You what, know Thanks, I'll guys the wait quarter. Bye. on the for Congrats XX-Q. just

Eddie Northen

it. that. Thank Appreciate for you Yes.

Tim Mulrooney

Thanks.

Operator

at additional questions this time. Thank you. There are no

Gary Rollins

to our results Okay. Well, your our We forward today. January. for in look company all, in joining us we fourth interest year-end and appreciate reporting you, thank and quarter

Operator

Ladies and Thank gentlemen, you. today's concludes this presentation.

now may You disconnect.

Rollins (ROL) 24 Oct 182018 Q3 Earnings call transcript