ROL - Earnings call transcript Q1 2021

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Operator

Greetings, and welcome to Rollins Inc.

First Quarter 2021 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Joe Calabrese.

Joe Calabrese

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

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

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

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

Gary Rollins

Joe, disclaimer, you, begin. you Julie first read appreciate call. all statement XXXX good us we'll for Thank Yes. our morning. joining quarter forward-looking our will and conference and then and We of

Julie Bimmerman

Thank you, Gary.

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

Gary Rollins

recognize Henry like our the behalf our done he's team Tippie on to for I'd XX of by for taking organization you, entire Thank years. and to Board, our myself everything Julie. start over a moment last

aware, leaving recently are its you and service largest best become incredible of Henry's Board, to Mr. Rollins many legacy from pest our customers. shape control retired world's helped and to an knowledge Tippie financial employees As and company. the guidance of leadership Rollins, and behind

time, present Rollins, During York X the for of at buyout years over the initial was leveraged Henry longest-serving year be Rollins' his the XXXX, XXXX. Randall studied not career, the distinguished listing stock the on first-ever our Henry, was through in Chairman our considered is with only XXth and at were architect Incidentally, Rollins only Stock Exchange again, Orkin New Harvard along our Business Directors CFO of period and years, School. during was purchase our a he XX exchange for anniversary. this in to country's

the entire broader of without well. inducted today company in recognition the of behalf to into their Rollins as world, would XXXX the York inducted contributions. in leaders. his you, of the Henry On of it wall numerous thank Rollins Additionally, was business New Randall be Henry's Henry. is impact Stock not employees, Rollins family Exchange exclusive

We're building company's as earned the and to to it. the every continue improve to it employees recent In positive honor well guide to before. going above occasion, not developed his Rollins, ever our day. during continue accomplished a risen important selected extraordinary asset. and He the valuable and team IT will the past all the dedication have I'd again are into through They presently, helped their but a company make his to while our in They all acknowledge down like provided. most Lee with year. beyond career XX-year end, several they've and hard of truly team. will comes our fantastic the contributions future. from We technology grateful that performance to Lee for dedication best advancements, We work wish prevail you your only retirement many He's legacy also Rollins Throughout and the Lee Information of adaptability the example Crump's Officer. what retirement. Chief

by over While greatly operations, quarter year, we we the successfully faced and many performance. we challenges continue are to past improve our first encouraged our

momentum are we overall technology are business another from successful think I forward and and our year. investments to looking benefiting

call the turn now me John. over Let to

John Wilson

and everyone. good morning, Thank you,

this by just is are returns results the XXXX. XX.X% highlighted $X.XX XXXX. to for mentioned, our in X.X% and pleased we Revenue commercial or lines, impacting $XXX.X our progress but during not with X.X% same per the diluted improved year. income to first per share this single GAAP XXXX has we quarter once are XX.X%, Gary as every service quarter shortly grew Eddie will reaching the the one results steady we strong for growth non-GAAP million million the and share rose quarter termite our quarter, our diluted compared again in $XX.X first results. growing review continued in was last $X.XX As to compared $XXX.X the performance financials. over It $XX.X and residential business, business million Net pleased are and there Further, respectively. adjustment quarter seeing with, or to first the quarter million of

Tippie too, made, many grateful, am his to Mr. leadership the greatly management appreciative only notable of has as well. impact company would acknowledge I, Next, I years of a member. our me, as with of but team on and like part as not our Board

that of months. have have of that stronger company the Harry that join forward. believe of the follow Bell, to Board an areas Susan our a bring and They Many we over the different While experience are past already experienced make distinguished impact, Gunning strong diverse that in many with recent pleased us additions made knowledge each Jerry Directors agreed it's a with who executives moving several someone of may Board you Patrick and never Cynkus. to footsteps enhanced will of recall type we Nix, easy of the wealth in we and as

chair designations. new as and of our Committee, as now selected chairs also Compensation Rollins, our Jerry as several recently was Executive our our a Director committee appointed member Governance our Nominating and as will We announced also well committee on Gary is Committee to serving joining on He Chairman, Lead new chair was and appointment and the Audit Committee. Nix be our Committee. have

Audit Additionally, Diversity Committee Susan Gunning was appointed was to selected chair be our our chair Audit to Committees. our Bell Rollins of and a Committee. member Patrick also to

tenure, contributed Lee is Rollins' very and is Lee retires. as him Succeeding just mentioned, to has wish significantly new he Chief Tesh. Thomas As the Information Gary Crump our best we during success his Officer,

having transition, for have Thomas Information spent the him Rollins several record Thomas working been part his technology President we Technology. to of the a has journey improvement as important this and ensure months X rollouts since While seamless a is family Vice through solid And led XXXX, qualified, of previously years. key the uniquely last the track believe we extremely major our makes position. qualified over deep experience serving

our Jerry, over the more let who on details Now provide turn businesses. will to call me

Jerry Gahlhoff

Thanks, good John, morning, and everybody.

of fume grew lines. less the These double-digit growth business was segments X.X% XX.X%, extremely XXXX exceeded of acquisitions, both quarter residential XXXX. And XX.X% respectively. growth quarter X.X% positive Commercial, as XXXX. our acquisitions, solid environment of and have over less business first anything first significant presented experienced. first levels has we've quarter quarter This time growth our our revenue, significant last first over all and total revenue, presented first The across segment ex improvement growth reaching sequential recently since since for enjoyed April, termite

dedication XX segment. and has continued months the in over this serving their team's Our We're commercial past our with in customers pleased been the achieved progress steady recovery outstanding.

to service. mosquito Turning our

recreationally families the mosquito-borne outdoors spend threat disease, growth of we're our continued this and significant As of more business. time in segment realizing with

mosquito our revenue over growth of quarter, the experienced XX%. For

our remains continued of and solid, in business strength the Additionally, we the termite future. expect growth

customers industry. quality joined HomeTeam Looking levels thriving family at Critter on performance wildlife Control purchase receive our customers experienced continues our a attract Rollins the in in Critter growth tremendous and service combine and they offerings residential to we highest strong wildlife to particularly residential realize on XXXX, results, consistent and high-growth continued operations. to U.S. has Northwest home the focused continued Trutech through pleased and Exterminating, together we which selectively brands. services Similar wholly Australia. we franchises We're we last the deeper our the with owned quarter, as our and ensuring with all their our in to U.K. growth commercial remain services. Southeastern Control of international Domestically, construction growing in capitalize them continue to brands. of Also, our Operationally,

system, operating we part our the XXXX, in As largest a branch at U.S. brand, began of of rollout new our approach Orkin BOSS,

place, XX% Orkin in add though successfully XXXX, routing Canada Orkin routing were achieved Services. Canada, this and this Western of system software brands, Even we're we BOSS Pest During management at we've processes. stages, in able and virtual in With we still our to route for improve deployed early scheduling to additional X new time. improvements over

years, next we the these the Over system additional few expect improvements maturity within gains brands. as

for investing a brands to to to the first customers' improvements with trust enhance in worthwhile for improvements well further as we made technology continuing to implementing continues committed the other and experience. of during to pleased operational remain deliver as Overall, prospects the efficiencies we are recover, encouraged by ahead, XXXX. order the as Looking we've our we're progress quarter our about improve and rest economy

the Now discuss over to let me turn our to Eddie call financials.

Eddie Northen

knowledge. in the on me. balance testament cost been benefited throughout Jerry. XX-year invaluable are, and involvement his and I, have have results part, this from of The managing experience, vast you, greatly and guidance too, to containment, His a sheet his quarter guidance to Mr. Thank with wisdom mergers Tippie's company. steady the acquisitions

across service good major our pest included control, improving quarter to retention and quarter, growth lines demand the the rates customer the pest commercial throughout board. and the cost weather overall with showed conditions across organization, and containment ancillary For residential categories all termite helped key that control,

reporting GAAP positively impacted of for the by which referenced, on sale will our I John be quarter, properties. As of non-GAAP financials both our several and were gain Clark the

properties and As available properties. we make we market estate secure control, distribution is a the we the competency Clark and purchased of XXXX, initial a and Real to when reminder, their decided branch business leases. the their to bought businesses owned in core ours, not pest

this a sold The included that our gain million first in group $XX netted numbers quarter.

quarter year's $XXX.X the prior numbers, first revenues the increased of over X.X% million of at $XXX.X first revenue quarter the Looking million.

Our before above or was taxes income XXXX. GAAP XXX.X% $XXX.X income million

was $X.XX property the gain $XX.X net million XXXX. our share. $XX million, And taxes were on GAAP in up up impact When XXXX $XX.X income XX.X%. per $XX.X sale share our income to million, of was GAAP compared earnings or diluted compared million the Our positive before per of the XXX.X% non-GAAP to income removing

Our $XX.X demand net non-GAAP of would in we to was new QX again This both see higher to our income XX.X% starts. technology compared tested customer of how million, levels customer and able new handle to existing be surge XXXX. up

we to and X of scheduling from we Stage transformation, experience. latest day Stage routing improve move changes X-stage a efficiency have to call customer and to our would X continue our their As give technicians the better what the our of enabled

latest to our updates ability of with customers to be are our reactive. Specifically, proactive our maximize helping instead

and that impacted our existing up some of Our schedule. for our margins needs. in have enables their a This our experience quickly customer them customers for to the If changes with time with added a in our to service time our an reason, new openings needs that better be planning able technician technicians a and or enables the a rates is the real use customer operations which customer for adjust group quarter. to to support support needs reschedule fill opens slot changing of the the during to day, efficient positively customer. retention slot has service more a These to support board,

Let's the quarter. revenue take first by a look through Rollins service for line the

revenue, from control, In our growth. up ex-fumigation, mentioned, up X.X% Our wildlife pest of and X.X% ancillary commercial, up strong X.X%. revenue, increase as from the residential growth. made double-digit and which Also, was Termite continued which significant up increased and grew see significant total were that, pest up made service of X.X% up revenue, XX% approximately less acquisitions, pricing services, total was remaining and X.X%; revenue, Again, our Jerry XX% XX.X%. termite our residential our up to were XX% X.X%, made control, which ancillary from commercial, and new acquisitions was total, included and and XX.X% up customer by of excluding XX.X%. was of fumigation XX.X%; revenue

first will XXXX. service expense the to and do as for not fleet business Sales, quarter impacted to salaries $XXX.X benefits, contracts. XXXX. negotiated down month expense salary to to continues this as business million efficiencies. continued seen revenues. XXXX, million what of $X seeing travel $X.X companies residential see planned increased well the savings XXXX. increased and business upgrades, inflation commercial expenses of in to compared to and In from we or quarter remainder and to April assets routing we due $X.X McCall XX.X% $XXX,XXX materially are from would in a see impact or prior million continued and Our for There's our our of exposure pest improvement the administrative our improvements increased X.X% telephone through to a commercial steady quarter improvements XX.X% was and December by expenses million X.X% We quarter This through lower economy control year's Depreciation control $XX.X XX.X% X.X%. major amortization increase was intangible positively or from our move due increased impact steady anticipate increased IT lower and a and administrative and Control inflation since margins gross in while margins. better several point, XXXX. Pest savings perform amortization for the the including general produced quarter. million, as discussion each has of pest At acquisitions, of Depreciation that an acquisitions related scheduling been the lot of well, in The total,

X our know, payroll At this you areas. largest are are improving mainly payroll, enhanced As efficiency. probably to time, materials and fleet technology supplies and and due expense margins

lower driven. mid-single-digit fuel positively by miles reduction and in a percentage fleet Our has impacted been our costs

our as materials protective equipment personal are and costs use of customer-facing even revenue, supply Finally, our percent by lower continued our a with employees.

of of the for compared our approved the during cash, capital the we XXXX, million expenditures, paid close per in period was on held call to had and on compared with share cash, for $XX.X million back a same last which million As XX, period of Board paid our slightly XXXX, subsidiaries. of million dividends that Directors March ended by million $XX.X stockholders XXXX. XXXX. acquisitions regular cash $XX foreign dividend period of be on ended XX, to higher which $X.X $XXX.X We $XX.X to the is Yesterday, at million spent May year. on business $X.XX you. of to the Gary, will the record June XX, I'll turn over We

Gary Rollins

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

Operator

[Operator Instructions].

Tim first Mulrooney from William of Our today Blair. is question

Tim Mulrooney

translate everyone's I on you the might organic to the strong So last that really in had year And of a side. questions growth residential think big on year is one XXXX. how mind

residential pest. have work-from-home several year up thinking, again, we're some last and quarters still that that a of to up in then accounts profitable coming lot But largely a visit. next the environment sit back, over I'm fourth signed probably third the turning got are or in you I up to now as difficult the finally You've think comparisons I

pandemic. all from continue the side curious the how I'm taking to business about residential of this just we that So you're into emerge account, as thinking

Eddie Northen

Yes.

Eddie. is this Tim, So

seeing, of But the we're work year. I real that time think living have I this think in as more overall So know is hybrid move seeing will of first all we're we're my we prepared I this good environment. Don't like of and continued the the seeing look we're things what in throughout we quarter. one remarks, mentioned remainder good demand. in the that did weather

we necessarily as it's So through we working working They're that not seeing to going of which this from believe hybrid only the not move only that's is some have more we've seen home. to that but we're eyes create still XXXX. people from going demand office, environment,

here. You the numbers see

Our those already for go to that's about. you very QX lap strong still numbers of lead us, generation starting and is that we talked as some into

us for exactly that be this us look to we're continue able demand think any that So of know I what I the are moving out. as see to there will to year like as don't things But plays positive entire know forward. are

Tim Mulrooney

the could know comments appreciate I Orkin it I - but new about before. If was news, that's Western I those good pivot, talking Okay. BOSS and I not implementing generation. know color heard lead in I you're about technology or think I'm on the that sure not Jerry I was that Canada.

Are brands" technology model investments give technology to plans as I you just guess, us year. out to there XXXX? update VRM in your keep an out rollout for on you're roll "specialty could any if mind we So expenses any this your or planning curious BOSS other that incremental, to maybe

Eddie Northen

then from Yes. and up there. I'll answer let Jerry follow

So always about point path yes, that we've in our now. pause seen that, if is we get are down moving the know let or a of as few there within further we that benefits know brands be let percent change a anything going a make forward. or else. say, the we down significant to from path a what more those of range time, to And plans decision maturity. and from historic we you And We've standpoint, to change But know a revenue They're or we'll units was like maturity. that that moving that. we moving those Orkin, make anything we X we right our at things before sure I else we're years, the We'll ahead a would then work over little of decision the what queue. Western were as bit to far time of added make towards getting modeling as to what this last anything through you the X take CapEx -

Gary Rollins

I'd when there's some some are company from we that, They're buy another products currently the not don't the paying what thing One there have that, And technology improvements the have. they for upgrades cases, typically, available Eddie, are best communications. rates to industry best in phone they add because systems. within

important although critical our be to to is is BOSS future. certainly So going

Does to the companies BOSS. able course, of acquired be plate help short help... that these are And of their future. newly with that will We on something in

Tim Mulrooney

Very helpful.

Operator

from Mario is question next The of Cortellacci Jefferies.

Mario Cortellacci

I organic to growth. about just wanted ask

verbiage organic growth using referring organic are you Are what when guess, commercial now. significant to like, termite? to, guys looks You in the all in I growth resi, you're and acquisitions able provide acquisitions less

Eddie Northen

This is for question. - yes, thanks that

technicians, small into to of, So add very in just confusion they let's them We we've that same clarity If And years. don't say, part. around of that that be Orkin a that Monday, way trying to we to we On embedded were probably able Thursday. acquisition measured have X the didn't This on for that give branch. the quarter, when acquire kind new new little small it parse a and every a just way a for here. a piece we vehicles, of XX we they're tuck-in we or out. - bit acquired mean is have last they're really were to uniforms, to

again, XX the years. at last same - the this least every is for is again, we've way that looked at this it quarter, So

it's at it from because perspective. number that So don't insignificant such look really an we

Mario Cortellacci

mentioning? acquisitions, those insignificant Just it's - in is the even like are those or that Is of - $XXX,XXX? $X types follow-up not million a that that. like With and it worth to revenue then maybe

Jerry Gahlhoff

absolutely That's correct.

Eddie Northen

Yes.

it material nothing be we it wording didn't we here. this looked a again, this throughout at time. mean And same the But that is would add be we've way else of would all. to confusion significant by part again, So at to that have

Mario Cortellacci

market. then labor Great. would just And my be Okay. follow-up on the

whatever with companies seeing think maybe You for they're labor, expected. in stimulus within from guys or for new that checks. savings the seeing commentary unemployment jobs anything other and to guess, your coming essentially you're actually that that labor hiring government and is efficiencies said with difficulty competing in people seeing looking better And and that, seeing, And similar you you're I than I Are there or heard something get staying hires? the Or even XX Are really are they that smaller you we've XX work is days them. guess, new bonus also new doing for with pest days they hires I they'll not bonuses companies for cards it similar? for you? is then or offering sign an and to the in additional that first

Eddie Northen

quarter specifically we that challenge right question, our Well, that back when always had levels news if I'll than this move significantly quarter kind the a us even would that the part, and to we're more to as seen would hiring good see any it and continues be are demand to us on is enables on news efficient. us, higher go times, to retaining employees. and we for you technology a your what ensure The finding for average last we've mature and good routing the be it and to of scheduling automatically

X:XX basically anything to So call be technician during said, real a and and new time. can see slot maybe out I technician just the not be day do. would In at center in empty the to X:XX. the branch world, that stops world, called they're can my our In someone time, our let's in that have talked home morning, real gone would have and available a old with remarks, went in going in that then and not say, about, well, XX:XX had X that this prepared at not see

So into new a now time that new a have customer, can we we slot. customer when slot

customer new as which customer us to also enabling with it's existing be efficient move demand, helping to continue with that well. with that more able So being and to that, the is

are issues doing that. are to to and make that sure we are with with a able we're it operations about. these finding that we battle said, with are And companies other out So it the be HR there go forward. need absolutely with all is the through business to to able talked keep But be that the tremendous offering being that levels, group hiring groups and of demand and folks that the that things some the a you've job moving having

Jerry Gahlhoff

this managers branch recruiting about as priority field I a recently had or do. Jerry. your that high at job branch you important is that's in a building first And with is John your and foremost, team. a #X leader Orkin - We the the and and #X meeting your put can most thing emphasis

referrals a place those friend have we over people bonuses things employees, on good pay and processes also activities those they longer, procedures bonuses, along getting and emphasis and is family lot for it that. behind there's new and a So of that tougher. lot But get we offer as along referral time, they said, stay referral referred lines. Eddie do lines if We things of incentivize

advantage take on everything a for our we talent. we in competitive can of that search the So hands get to keep advantage help

Eddie Northen

to be but successful And the is that as here well. as it importance as far more to far the a bit this importance at period - constantly moving tone X the with of as new is to years, it continue we're that forward be been new and this little this We've be might tone find ways as that's I've time. over focused that, been in with Jerry on. we're mean, the I able right again, industry. the gone successful this that is something service in of heightened nothing here, just set John time - in But set my that. moment nothing we've us for we'll as

Gary Rollins

very am going to Orkin a created that she doesn't slot control - and better that now a done? has we've job. of piece the that Canada, other that cancellation the I to tech that I unravel for through new beginning situation Western am we typically, This day's just really and in created slot get route. pest or a day, not we frustration down Eddie doesn't that And And to the staffing have that we get the customer retention. the have and how cetera. through? And a ratchets and have customer the going is that tools to was all in created It that in described have to have et can way to move it he mess How frustrating

So to the control job have interesting has see this areas to make that in it's better pest BOSS. going what those does technician to to be a retention. It for

Operator

[Operator Instructions].

Michael next is Stifel. Our question from of Hoffman

Michael Hoffman

Tippie sage the I beginning I've in ago was gave career he Rollins Environmental, at then, always almost me met of Henry modeling. followed very my when my - XX and which covering advice years I was

the wish him So best I of luck.

and residential to growth, you're single-digit the about high conversation get But very the anything So phenomenal. is I growth doing or market not the organic double-digit in of different significant. in language underlying growth relative

in are you come the your have are company? doing in to you're because you're clearly different do if So doing last year, share the well-run type still what what are gaining down anybody else allows, think, But what So you you doing that you're strong share? even that that because different, comps so gaining you producing of organic versus growth business it's different?

Eddie Northen

the a that as it's that good we're talked have gone we've these we trust continued to demand me, up in that intuitive of that that weather time ask. this again pandemic levels, I well. is control as that, of seriousness in us, worker created. and But sure, me, the with took us would status think, pest service one industry, I our I things and understanding. against question through remarks, my to think especially I drill started, really very think we've did prepared better separated to And I get industry within we Michael, down for to as the the higher a the separated essential into say,

technician. So we professional already a had very

been us to be would some already believe there. about early As with And others that professional. showed had service homes that looked board X, that worker into professionally. we brands combine this that our all have, felt technicians this didn't they trusted And that reflection comfortable able of that coming maybe with. in opening translated different out up a really you on. when trusted could that, in we we potentially we been person through across translated that's I'm we've our to the and more believe demand talked work believe have to brand. previously, we together And go from disheveled, into say, a that across grow status separated PPE a last, didn't them are X, essential impression to name, And that job sort across that come more of our person But I'll believe you open And trusted that their the seen that into all do my as have we've business a come we've of it's that you months, brand, that X invested able very and We've people to positively. really hope. best industries in trusted been look do people over home the

rate. and are and those with improve, to those and few enabling us continued on believe in that are competition our to When the think continues from win things communication at to we routing a separate high things. that's us customers that demand and the we couple scheduling to enhancements our So that you how with a retain high it these continue there out

Michael Hoffman

enough. Fair Okay.

your nice realize was updated it a recently. through took the all to clicking You By a corporate was me a I admit, moment to Had presentation it book. way, change.

the can growing way. it different you the there last less yet size? market bit market little defining associations and make as a put What's a domestic billion, But in market. size year. $XX rotate And to a you PCT's your major trade trying than about gap bridge it X% billion between - Just $X.X

Eddie Northen

numbers from those a chance get later you. you today to get to I'm tomorrow. probably have talk or we'll to I sure Michael,

marketing to with see our out talk us let's we do Let can group X. to and those difference what help between the

Operator

are There questions to closing back would like the time. remarks. management no at call additional I this turn for to

Gary Rollins

joining your We ahead Thanks progress. appreciate you for about you interest thank in updating us We're Well, next again. Rollins' our today. Okay. on company. quarter forward look and opportunities our optimistic to

Operator

today's concludes This conference.

your lines You disconnect Thank time. participation. may for your this at you

Rollins (ROL) 28 Apr 212021 Q1 Earnings call transcript