ROL - Earnings call transcript Q2 2021

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Operator

Greetings. Welcome to Rollings Inc.

Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. this being note Please Instructions] conference recorded. is [Operator conference your host, will now Calabrese. to the turn I Joseph over Thank you.

You may begin.

Joseph Calabrese

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

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

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

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

Gary Rollins

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

Julie Bimmerman

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

Julie. you, Thank

share Wilson the get noticed joining started, with that probably on Northen John is today about that we call. now. you us will not Before more you Eddie

John Wilson

know, Yesterday, role you Vice been has Interim has will Finance known Julie She and Financial Good sustainability. finance since and of both be tax and you She's President morning. Officer as joining as us our Directors per experience, our operational many as she Relations. available internal of corporate and after of into role. significant Julie and described having Northern industry Vice has President in the this accounting, Prior Senior call morning. appointed on Investor Chief been and focused XXXX, an Eddie investors Board Julie worked in recently release our usual. in audit most already with been moved to Rollins, corporate as analysts we to audit many to of the Bimmerman, press who Treasurer. issued institutional

SEC this We to also filed over in developments an our I morning. X-K Gary. will the investigation now turn updating back call

Gary Rollins

Board customer far exciting results financial Now normal will We our than growth the in the shortly. higher our of our of a field and for XXXX. Rollins Jerry incredible contribution significantly of the results profitability were details will appreciate to Directors, news. strong quarter, dedication corporate continued I'm well-positioned you made and second report possible truly by our share to and remain their XXXX. very and generated that recent additions so These performance teams. Julie in has delivered focus that John you and we financial with while a give to pleased

call Now let me John. over to turn the

John Wilson

Gary. you, Thank

Carson. newest Morrison and Board moment enhanced diversified have with and Gregory Board welcoming new I'd we Rollins' year, of past additions. Donald Directors today several a like two to the Over spend our members,

to our Bank, Wachovia and banking, strategic releases, Greg technology to thrilled Enterprises, Board, operations years he who cyber having to Officer, company. to led commercial for Don, financial the for and the Information transactions the in detailed their add Board. and was and May forward We're expertise Chief knowledge worked in Cox As our these company. on of information in press will many to counsel former investment we the level high outstanding look our a contributions including our group of leaders brings individuals to add

I Now quarter overview provide over call turn the will to the to strong of completed. an Jerry just

Jerry Gahlhoff

And everybody. good John. morning, Thanks,

some an their begins of brand. recent successes it service, time was few year minutes Orkin As spend opportune thought the of highlighting we a of to XXXth the

For completing our Orkin company millions remains the may X,XXX team original XXXX years, involved deeper worldwide. pest disease a annually National serve, you and of Science Orkin for centers brand, Association, in our appreciation very of health us. acquired maintaining and members first a the that Teachers Rollins commitment work natural those public who and around as over the into education, us started From and employing services largest venture followed Orkin that is by they fosters strong control the have collaborations recall communities understanding Orkin Today, was to in control. responsibility. their environmental major world universities and to with with the over and the prevention

Orkin routing previously you tick, over technician efficiencies the customer has the a Rollins. service which both and name Overall, bug, scheduling new long-term few. years, Orkin offerings shared bed with past contributed technologies, new have of the few designed improved COVID-XX. with service to has has communications adopted we to and recently, customers, and fight years, As Orkin Through and flea like grown, most and mosquito optimized has our significantly customers success to new adding VitalClean, increased

diluted million pleased very second XX.X% million quarter $XX.X year. increased for As $XXX.X to and Gary diluted mentioned Julie grew last to the the share, $X.XX for Revenue results will Net compared income of to $X.XX XXXX. or per $XX.X compared same we're million, million, results the the $XX.X quarter. with per our second earlier, review for shortly. GAAP to non-GAAP period in or share

XX.X% lines XX.X% residential business termite all growth in our increasing XXXX. quarter, we with and the For quarter second experienced solid over

XX.X% impressive an an delivered also last weren't X year. fumigation over shutdowns. quarter COVID-related years we is second of when This excluding growth ago experiencing improvement growth over XX.X% commercial, Additionally,

we forgo year, during thought was it the price our last recall, may you pandemic. to prudent annual increase As

that's Now the end all economic price of of encouraged the recovery the expect second have throughout at XXXX year. underway, quarter, benefits see as our annual we brands. the our increases we the at that increases rolled we by the move remainder of out these will Implemented we

within from pest Through tool, reopening, feedback commercial profitability also during clients. we as our are the regulatory six gives get web ability our tickets alert the our that relationships service for checks monitor or Additionally, This we're audits. the have the XXXX. made commercial great easily and their control economy as and customer reporting the It we've and at has only completed specific necessary InSite, to party business. allows the commercial first our driving the ability our produce pest And customers of also reduce InSite especially timely receive months third to will confident and customers not pest level. We we from to Orkin's growth facilities, but confident with benefited our quality notifications. assurance ability continue pleased commercial technology. InSite are in which on of growth, use for treatments be progress with customer strong activity to Overall, from in reporting strengthen feature this look ahead,

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

Julie Bimmerman

At to constantly all Thank our Rollins, in you, improve areas looking Jerry. are business. we for of ways

improvement of many is of As part know, continuous culture. important our you an

significant that that I strong We the during like XXXX. gains have XXXX. of financial gains on a are experienced the quarter we But lot of to would top opportunity for recognize the from this remainder of

Even converted growth year, as these XX.X%. revenue at into above in net our X.X%. income entering economic of historic were Both of grew QX of was different our a numbers averages. we at time That steady all XXXX a were back or last

all business second and the the Keys pest revenue for revenue strength, presented XX% growth, revenue service included lines over mosquito growth. Jerry quarter revenue control quarter improving to improvement as impacting commercial strong significantly. XXXX, positively So pricing continued noted,

was our total X% in our the for revenue. over has Additionally, our revenue of time, first bedbug revenue this service surpassed quarter mosquito

Looking numbers. the at

The second million. was quarter of of $XXX.X prior year's an over second million quarter increase the revenues of revenue XX.X% $XXX.X

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

to XX.X% Our net million, up income XXXX. compared was $XX.X

per diluted XX.X% earnings in to XXXX, or compared were share increase. a $X.XX share $X.XX Our per

XXXX. we a reminder, and non-GAAP on gain reported results of As our positively by both our The were GAAP impacted several quarter properties. the of for non-GAAP of first financials sales

billion, prior year's the For was months of increase revenue billion. XX.X% first first revenues six the an over six of were XXXX, of $X.XXX months $X.XXX which

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

net XXXX. Our was GAAP to compared million or XX.X%, $XXX.X income

of impacted or not demand new share growth to areas but the business time in revenue what look revenue by in more of earnings predict by a were but rather new difficult healthy pent $X.XX in needs Our in impacted XXXX. diluted checks based XXXX increase XX.X% per up like of demand was that per were pandemic, It we spent companies levels We demand both seem awareness growth, remain stimulus does home. negatively strong. GAAP like or followed of $X.XX and Overall, consistent some a XXXX, maintained diluted XXXX. share EPS XXXX the our in X.X% most compared on to will these that in our be residential future, have at It the pest optimistic. would per

XX% remaining XX.X% and from termite services included the our from for commercial and up XX.X% growth. acquisitions revenue. and pest other new increased made revenue the pricing revenue; Residential approximately up XX%; total control up X.X% Our control, customer with pest quarter, our of XX% made and of significant

from by in double-digit commercial, less higher total, related but acquisitions, residential protective continued fleet wildlife XX.X%. inventory strong to XX.X%; was by costs equipment. XX.X%, margin fumigation, increased excluding the of grew offset XX.X% In of and up was growth. gross million XX.X% termite a overall $X.X In addition, revenue From ancillary were prior service and our PPE, our Improvements personal decreased Again, year's see were or our that, quarter. total significant total to write-down XX.X%. to made negatively up and in payroll

value to PPE needs in We will coming and continue the assess fluctuating future market our our quarters. for

company our quarters. quarter mileage and savings, making Depreciation in our for as and assets intangible addition in of Orkin future amortization year. These increased on-time XXXX Sales, July presented the since last to brands improvements benefits, acquisitions, Canada revenues implementation. delivery Adams X.X%. from on-day $X.X savings and are Pest Pest of over savings improvement increase expenses of expenses fleet and their project million, produced their Each $XX.X the Amortization of to regarding our $X.X an and savings will of progress December quarter cost million negotiated increased help general started. US improved decreasing well has in in from to telephone Orkin and In in revenues and continued BOSS including the support scheduling in routing and to XX.X% overall as sales several McCall XXXX, contracts. a administrative better the Service and due quarter administrative The in million Western Australia XX.X% X.X% XXXX. for salaries

spent $XX.X ended for had $XXX.X we to same on We XXXX. compared As year. of acquisitions our million foreign which held is and X/XX/XXXX, million dividends six CapEx for $XX.X last $XX.X to cash, paid with ending the our in million position, subsidiaries. million $XX.X million of period million in period by on million the the cash months in compared We $XX $XX.X

as XXXX like pushed I Fleets the press recent Rollins Before I to close was mention top list named would release, our where green XX by ranking. Automotive to fleet out,

As paid business $X.XX record be Directors opportunity this part Board in industry. it back XXth, we will approved per close a lots share I August Yesterday, dividend we you. the area, of XXth, the Gary, improvement XXXX, of the in I'll have stockholders regular of to mentioned but by on of in opening, of to are XXXX. cash of that this of future recognition the continuous September my our proud turn that at

Gary Rollins

take And at you, we're to time. questions Thank this happy Julie. your

Operator

you. Thank William is question Please [Operator Instructions] Blair. proceed. with from Tim Mulrooney Our first

Tim Mulrooney

morning. you Thank taking the questions. Julie, Gary, John, good for Jerry,

Gary Rollins

morning. Good

John Wilson

Good morning.

Tim Mulrooney

real a just housekeeping So here. quick

again growth numbers residential and pest, missed the that. residential organic? give can those I I you total for think pest us On

Julie Bimmerman

Okay.

Gary Rollins

Yes.

Julie? that got You

Julie Bimmerman

Yes.

get quick, Tim. for Let that me you real

Tim Mulrooney

Okay.

While question. second I you quarter a account ask guys I this that particularly you're Can strong trended many up, time I'll new to sales sales looking new the the period level time, during the high year, second how sales, through the you. And record days really next you quarter. the account of throughout Thank think follow-up you of question had around how the had quarter broader that this year this And that record talk group. of year, about all last is later? to highlighted compares my in have now year? think, you Julie, Last new residential. that just This

John Wilson

Wilson. this Tim, So I'll is take that. stab at John a

we that customer our the to year record the – new we largest. that course, up year. by near being over quarter, track and in of accounts. but course, brand of Our Orkin are continued that again improved near for ago number, is, But best not same the be this a And second

Tim Mulrooney

Okay.

Okay. to get total you Julie, were and growth? the able organic Thanks And very much. residential growth

Julie Bimmerman

Okay. Yes.

we're So the talk total total, growth [indiscernible] so standpoint. the Jerry from had talk We have talking about organic, that may the and about did that then about I actually

fume XX.X%, XX.X%. XX.X% residential So for in the of the the growth experienced increasing to the quarter, commercial, we termite excluding and

listening? You're

Tim Mulrooney

it. Okay. with Got you. I'm

Julie Bimmerman

a not I a just to make problem, problem. not Okay. wanted And then - sure.

for organic and XX.X%, excluding talking me. for fume XX.X%. the then at residential termite the Just new bear And side was This me, the is the XX.X%, with on Tim. commercial,

Tim Mulrooney

Okay, Thank okay. Julie. you much, Thanks Perfect. so everybody…

Julie Bimmerman

Tim. Thanks, Yes.

Gary Rollins

you. Thank

Operator

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

Mario Cortellacci

for well? was X% you cross-sell any was it guess like maybe as of Was on growth how slightly time. the to different help retention you as organic Thank improvement us And contributed quarter growth much introduced much guess on, a turned was to to Hi. organic sounds pricing just still existing maybe X% or products much you how customers? can quarter back then of the that new - for like your how Tim's that new this in growth or I understand organic I build-up customers, the asking range way. well? question the there

Julie Bimmerman

then on want I feel Okay. anyone in you this will and start if jump else, to free.

our put normally increase that of price have. First all, in we pricing, we the on normal would

we year. the because we So not last price did do increase something held additional

ranges in within normal to that. it So would the be answer

incremental see that the we growth retention year. retention trend our our years continuing seen this to on rate, consistent have X As a last over still do and

John Wilson

Yes.

with So This I'll of to Mario. kind the your to Wilson. line which John X.X%, historic above. is of that, norm adds. our the Pricing answer is amounted add is on to question pricing And in about what real all of

that, don't track selling piece that cross had we a So of what may add.

an mentioned added. our on - I with improved, you again, increase, then, don't minute did as give a ago Retention I on So can't of And Julie number I as mentioned. that. course, a we accounts Tim, have new

Mario Cortellacci

Got X% it. the just, other And some show pricing as what guess, then guys on I historically inflation you, and of in or you as this inflation maybe go its you we Thank a do that ugly following I that whatever follow-up inflation guys. for up. you maybe you. don't X% potentially did could range, I above and know have head inflation that environment. wage see kind But long you've been higher historical done like rear labor to range, If quarter. would X.X%

harder you the offset a following that it flex costs? over find year, next lot to would the wages a kind finding talent up pricing you're of higher, to - lot a little increased seeing higher really you're If ramp the over

John Wilson

Yes.

we've we capable do. various So will, is the we to wonderful rates we we're is mean, our call there. of elasticity and pointed a could. obviously, I what always market getting laboratory center our can with what to dictate pricing what that test close our have But

we need it. now, don't at but Right Mario. take to, a we'll look that, at look absolutely would we So feel a

Mario Cortellacci

in housekeeping, Got you year-to-date it. so the QX you remarks, far? I deals or And disclose missed how in then many guys and did say or it just prepared a quick maybe closed

John Wilson

don't I know number. that

Julie Bimmerman

you gave on that. the just dollars We

Mario Cortellacci

Got it.

you. Thank Okay.

Julie Bimmerman

Mario. Thanks,

Operator

question with proceed. from is Instructions] Please Stifel. Michael Our next Hoffman [Operator

Michael Hoffman

on have to much. going cost. more on focused very I'm sales, you the others focus And Thank since

little So from sustain there's given as less XX% - on gross margin, on giveback And where forward, inflation meaningful in is a to improvement embedded in gross point trying than there understand, are? I'm SG&A. you but And revs can you a in well SG&A, wage is then that or of the margin, fleet? the this versus not

Julie Bimmerman

Hey, Michael.

payroll mean, to an answer the margin, our see we improvement in total gross that. - within So in did we did I actually

to that you've remember overall, technicians the So got are tied work producing. they're directly with that

tied are if the jobs, when complete they to wages - and you their at their - front. recall on So through that go

the and cost, as did as fuel yes, far that, cost, know, increase that have was fleet the fleet predominantly we As in within the you an improved [ph].

Michael Hoffman

Okay. And then G&A? the

Julie Bimmerman

side, better salaries, some administrative were improvements really On And with able the in then though, for as the new pricing. saw our that G&A our it work you year. definitely telephone we said, same quarter also sales SG&A we and on to last was some contracts over

Jerry Gahlhoff

Michael. is Jerry, This

would careful been in cost costs adding our I our business thing our very in made year. we've been adding what from operations some structure. is into We about other an ago. over standpoint, say we're The business terms careful year a very back the And we've past about changes back of

So - to of and overhead has do lot with our - our expenses. a controlling that

Gary Rollins

an this as has Well, technicians productivity on more of Julie on control a majority pest opportunity to and our And vast schedule, is Gary. Certainly, given the and are plan. get pay us done. revenue said,

So turnover as more they with that reduction. they do helps more, and make

together So all coming those elements are fortunately.

Michael Hoffman

completing after SEC tell they you the investigation. then because completed made And they you completed supplemental that tell to it? us my an Have they follow-up, earnings release it? a Terrific. released if reference So you X-K and when can they're never

John Wilson

Yes. Michael.

referred and completed, no. that ongoing. X-K the is it ongoing, not is think it's I So is It

Michael Hoffman

very Okay. Thank much. you

Julie Bimmerman

Thank you.

Operator

with a We have follow-up proceed. William do question Mulrooney reached have Tim from we Please - Blair.

Tim Mulrooney

the I know me your been just my ask is topic virus spend the elevated about this has a with rates [ph] virus rise, side offering time. are over moderate because assume services that spend customer still universe. to wanted for of issues this in. Thanks protection. I as virus I term highly vaccination hygiene folks your Hey. side on in across would sensitive to coverage base, across squeezing would But

So bit Can and about am about you a demand talk that? side little offering how that's trending? I right your virus for

Jerry Gahlhoff

My office is their while people the Elliott we have is that people concerned disinfection best. Jerry, in [ph] still are still being where workers and want best Freeman also there seen moderate, there that talking spaces to of barometer kind coming service are where term. to is I This about My And Tim. at still There back right Orkin. that's places it demand, occurring. is think and

So it's there. still

where offices and are more that. they've like markets things the than people Some better to returned others

So to it's it still a viable business, moderated. point, although, your has

Tim Mulrooney

you me Okay. squeeze And I'll to I your picture. got is wanted while M&A color big more but thanks here, for on about to that, one maybe try this in, Jerry. and pipeline, ask like the

it So how all seen consolidation XX ago? ago? compared over control smaller much say your is pipeline X, it last larger given to how M&A would looks today years? the the it the every Really day? way? to would characterize how Is relative because emerging pipeline years Is say more other you we've curious X years X companies are pest Or you

John Wilson

Yes, is John. maybe past, that it. way. I and at the at still the in used the word stab and it's a take Jerry Tim, can so frothy think start this I'll that I've add to

coming years D.C., you would been it's don't - know, similar. would whether has it's have whatever. X of Washington, Our And guess taxes pipeline I a contemplated or out from driver - is I tax number changes state of to big I ago, but that late

the some that that's we've conversations driving of had. of And so some

Jerry, you if that? to to have So add anything

Jerry Gahlhoff

us Yes. sense of to at deals We're an makes appropriate what evaluating looking still seeing things and price. at plenty

have plenty still going action on of there. So we

Julie Bimmerman

to, let real was back it to Okay. me on Mario's and jump that question. goes actually I quick, think, And this

deals XX through QX. end of closed have the We

Tim Mulrooney

Thanks helpful. everybody… color, That’s for Okay. the

Julie Bimmerman

XX% one XX% to thing want is front throw like Jerry me. that of said put our a revenues, do in of pest note just revenue. made incorrect. there. I out our said up, It control residential I It when I is I sounds And other that believe, of

So…

Jerry Gahlhoff

you're it. I can't understating believe

Operator

turn the reached like of to back closing have conference I the We management for question-and-answer to session. end would over our remarks.

Gary Rollins

reporting your results interest in us you joining Thanks, our company. look We and our updating thank in Well, quarter And today. Okay. on third again. appreciate you our forward October, for progress. to

Operator

This conclude does you. Thank today's conference.

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

Rollins (ROL) 28 Jul 212021 Q2 Earnings call transcript