ROL - Earnings call transcript Q3 2021

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Operator

Greetings, and welcome to Rollins Inc Third 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. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Joe Calabrese. you. Thank

begin. may You

Joe Calabrese

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

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

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

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

John Wilson

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

Julie Bimmerman

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

John Wilson

Thank you, Julie.

us operation. is recovering today's a quickly, future he replacement us not Before have is not today. well I call. in therapy that physically forward actively is from rejoin a his sure We physical look you He's position join and conference knee while on on rehabbing Gary he And He with calls. to him well. very am Gary noticed just we doing begin, is wish having to

the very I of over to strong Jerry shortly. some our with go In and wanted addition will those During interim, Directors. to the of you share we quarter, business the Rollins latest third achieved results, news Board

As you Operating addition diversified of recognition several leadership latest and his to year, and new have pleased that his I very already long-term over and Gahlhoff. know, President am the previous Officer, strong in company's Rollins' group is with enhanced announce members. deep Chief to commitment This Jerry we our is success. the

our proud adds an in a future We important greater moving role serving since and his working Jerry the and in-depth our Rollins knowledge experience company. Board to team, the him business perspective. gained is on of in Jerry from are forward. We're fortunate leadership our and our of part direction to of XXXX have have industry assume

over you turning first X to Jerry, to have call I the on. update items Before

the responsibility work The which Rollins' development to we take governance in seriously that and We in first social will we commitment. recent very have live. represent communities the environmental, a and

PPE, Federal recent Emergency Hope and $X.X quarter. Cope a costing items. Personal Agency masks, million originally worth Disabled share we're in-kind an third that XX Equipment, donation million as gloves Protective with pallets the as As of Rollins Adults Food Friends Working has pleased made example, or Foundation Preparedness well we Children, of the including organizations, of of or pieces during to Management items Bank and other Los donated Angeles, in and the the X.X philanthropic several

business EFC as of communities execution live. more responsibility of is we in which work and as to strategies successful us. important solid our our results, well we to the the a and more becoming achieving business also is a to addition facet In have

are We ASC which an accounting U.S. has to related to by previously have we this been these established have Securities the consider the matter, company we XXX, support we reserve initiatives. responding with as In investigation standard accordance disclosed, a Last, and proud to Exchange Commission. immaterial.

is cannot this Q&A, during With investigation call the over answer will to that ongoing, Jerry. I that, Given questions focused remain we on we any our but resolving our inquiry. turn

Jerry Gahlhoff

third Good $XXX.X third our John. increased million pleased to Thank compared with for you, last very to XX.X% million year. results. morning, the Revenue everybody. quarter quarter of $XXX.X We're

year. Julie $X.XXX compared income GAAP for last the of $XXX.X the to or Our increase XXXX. $X.XX period million were $X.XXX $XX.X XX.X% months year. million for to billion period totaled comparable last $XXX.X diluted the compared results XX% or X for months first $X.XX or share period for million billion, review diluted per diluted increased same the $XX.X the income to same diluted non-GAAP an for the or X of and first share per to share net per $X.XX share compared will per Net in million Revenues $X.XX shortly. XXXX

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

the the enter dedicated years into well is Canada, the fumigation, to an attracting Wildlife launching focus XXXX an without States, operates Looking the in And not experiencing customers XX.X% termite expanded Mansfield, this to And business Overall, are team our Control's remainder one one franchises, wildlife franchise There services than a our in years an ago shutdowns. Wildlife when service. are the we as acquiring system. the XXXX, as offerings. different Day-to-day operations with division nation the a have expansion wildlife another our franchisees. I'd XXXX. strongest impressive Southeastern brand currently Control our as well for Additionally, much franchise we adding our growth also quite has delivered year the positioned platform. of business on is by across Rollins pleased it's growth third XXXX, business area improvement all a United focused Critter in XX of remains we're pest growth franchises over Rollins This a and X.X% year. over COVID-related XX Since operating to The has Rollins' of continued and like to the We most anticipate a we first Canada. new into recent thriving performance. deeper business Ohio. also at family our and excluding today XXX%. needed with quarter running in brands. is grown with strong commercial, in followed and last control on the typical Trutech results, joined are X Originally were country with operating international year into service concentrated Critter business, finishing of proud in

franchise or like growth meaningful quarters forward growth believe multiple We business and and passion to it X Ida. former have been customer to Wildlife service within discuss as is I'd for ahead. also for updating our entrepreneurial our ownership path the fortunate corporate We look opportunities, now there franchisees, opportunity Hurricane and employees a have be in you wildlife have to company. continued of employees add who drive in career the an

and in hurricane storm the was Relief Fund, far are our they of enable several amazing their worse in essential Thankfully, negative than plan the first needs. our did were greater region X implemented full to were shut team down hurricane. must employees the impact Our the to and but within for the X the Gulf branches impact following our area of for then, week yet weeks. following storm. significant more shut emergency safe, our received employees employees days, members I quarter. impacted about Since in the X The down personal address we employees have locations alleviate that XXX Through needs. to to days But grants hearts need hardships address by Rollins helped who Coast we affected assistance. of area. our go that the our impact to I to inspired out employees an that in granted the by the those admit our to another were endured team the their business all They grants Employee

Additionally, immediate fuel, members. mitigation that our preparedness our essential led to such Orkin needed emergency for families, supplies division, a readily quickly assist and and initiated fans, conditioners, provisions included much to were portable their team Morris, air as generators, accessible Central of our and by South procurement other employees This not Leland locally. plan water them

work areas supplies hours, most were Our to drive in their after these fortunate team and them that Ida's volunteered force to those time of load trucks members need. often to energy, in and brunt box into adjacent the avoid

compassion and effort, keep For their continue was to to their are another. This one tremendously to care, of employees and running. fuel a these generators weeks, to proud team shuttle and we they total commitment up

and we can we In expand with in respond that this formalize their or program of fact, areas plan effort we're other pleased emergency. so a so the of that country to natural case disaster in rapidly

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

Julie Bimmerman

Thank you, Jerry.

business As from forward. will X we along with we received articulate presenting quarterly the the measurements and about additional Rollins' questions to community, in measure how routine best performance moving we future, our now what think investment be

to over of The have our EBITDA presenting financial high clearer Due taxes, operation's to averaged to of interest, Think regularly performance. this, we acquisitions years, measure acquisitions before consistent these acquisitions, the last hence, a year. is high and and referred and X related per expense a or provide depreciation have volume periodically we earnings first will XX our about ongoing picture that amortization. is amortization EBITDA,

both By our the both revenues were baseline all and to process, revenue our growth revenue will historical both acquisition constant rate. Next, we actual we our utilizing able rate betted This within measurements. clarity through will calculations, tuck-in. begin bring include acquisitions the for and growth due consistency exchange diligence acquisitions and stand-alone presenting organic and exchange to through

generate be will cash with We Rollins' we'll ability flow. that believe you illustrate strong free to properly our Third, cash. providing this

is a property. taken as operating calculated defining to activities, which and cash simple equipment of flow, free purchase by net provided have approach less We cash

provide enable our of these future our Our to investors hope performance business. is deeper better assess view measurements operating the in that will and a

included on each published to GAAP press metrics release earnings have morning. of on this reconciliations these non-GAAP We our

on So to the numbers.

organic revenues last XX.X% exchange actual growth, rate third of the and to million year. was X.X%. X.X% over was XX.X% increase revenue Of growth acquisition Our of quarter $XXX.X equated an

percentages growth of the For rate, exchange within the therefore, actual calculated same. the exchange presented the rate, the growth constant hundreds

acquisitions billion of XX.XX exchange growth. me, For related represented growth rate -- organic X.X% total XX.X%, XXXX. Of The revenue XXXX, or acquisitions revenues X XX.X%, was increase growth September exchange organic equaled of to for revenue growth. revenue and total rate, months actual X.X% X.X% XXXX an year-to-date constant this X.X% of over of the year-to-date ended excuse $X.XXX percentage and was X

all grew over the digits termite and pointed commercial Jerry double this As last year. out, residential, same quarter quarter

for lead determining take I in Wildlife, to specifically discussing my So today, yet operations. focus company-owned decided I'm Jerry's and Wildlife discuss

in XX.X% of XX.X% this year. For presented the XX.X%. revenue that has grew after And quarter strong What year. is impressive Wildlife XXXX, growth last over year-to-date, growth revenues third their is makes an this of Wildlife overall last particularly

So to similar negative pest control, not a pandemic. growth the feel to revenue did our Wildlife during impact residential

Wildlife way to the to go team. So

on Now our income. to

comparison of third For for sale due first our our quarter in several Chairman and EBITDA properties XXXX the grant third in quarter busting and late the months our of super X of the of year-to-date, Clark impact on XXXX. of the the stock to we onetime are adjusted gain presenting purposes of

quarter or million adjusted quarter third $XXX.X The was X.X% EBITDA third of over $XXX.X EBITDA XXXX million. XXXX

EPS diluted quarter share adjusted Third the improvement EPS. was third per over XXXX quarter X.X% or XXXX $X.XX

For per adjusted adjusted XX.X% year's XXXX last EPS of $XXX.X XXXX, or over $XXX.X EBITDA Year-to-date, September $X.XX last our diluted EBITDA million was the ended share months XX.X% or over X was adjusted million. year.

were as sale the quarter and $X.X was third increased increase the improvements and general XXXX in or This and in the XXXX by strongly acquisitions. of third administrative quarter high quarter the quarter of to year of multiple lower due this a travel compared expenses function. in mentioned to over by approximately IT third decrease customer equated gains vehicle was million an a Travel by third increase overall our quarter depreciation third costs, Sales, offset year. Overall, in year. XXXX, SEC to due X.X% supplies centralizing vehicles materials owned last increase lift negatively for amortization to and John. last the primarily XXXX. increased margin gross margin $XXX,XXX accrual contracts PPE amortization of over Amortization and $X from of have by previously X.X% over expenses third fleet company impacted increased have the the XX% fuel our begun over last depreciation also $X.X in to to offset For million and donations of quarter million the $XXX,XXX from restrictions. Strong we

an $XX.X million our was Our foreign over the We paid XXXX XX.X% current year-to-date million in dividends ended year. $XXX.X $XXX.X of which with last period increase million was or subsidiaries. held by cash, of

So free us to our the this of new measurements, brings final cash flow. X

our decrease quarter XX.X% quarter last million of free For cash the was or XXXX, of $XX.X same a the year. third over flow

financial receive will For the XXXX. XXXX. as our greater to X This Act. flow hope These ended $XX.X FICA were that under We of cash decrease million the while XX.X% CARES allowed over million the clarity XXXX, free taxes the new in of September XXXX in reviewing $XXX.X months deferral taxes equals performance. remitted year-to-date due in you of fluctuation discussion these payable associated a measurements, our occurred or then

want I close XXXX, XX% has XX, we dividend. of quarterly share XXXX. November to were that our $X.XX stockholders our share paid increased from will $X.XX at and to yesterday, record on that December a of extremely dividend business -- The the to per approved to per to be on announce Lastly, pleased discuss increase Board $X.XX XX,

reflects of growth. approved I'll also our Board's the be Board for XX, to the and continued you. XXXX, our dividend as $X.XX our outlook financial underscores back in The capital dividend the paid our year Additionally, December first a the strength, increase solid of it special John, turn months well. confidence X in performance position and strong to on

John Wilson

Thank you, Julie.

at We this questions are any to time. happy take

Operator

Instructions] Our comes with Mulrooney Blair. [Operator William Tim question first your proceed with from question. Please

Tim Mulrooney

my and and quick Gary on good to sending question Jerry Julie, John, a for morning. my Thanks taking best recovery.

X yes, So just for questions me.

I organic segments it, The growth apologize but first did by missed I the you one, prepared remarks? Julie, if in give

Julie Bimmerman

organic the we not. overall. did No, the gave We on just

Tim Mulrooney

in policy a understanding is that? That's it been Is how us in critical change be company providing company now that the pretty the for you won't of terms performing.

Julie Bimmerman

by At to clarity this change, clean numbers. our we're giving trying point, acquisition a additional the and very with you growth give organic

here we now. for So staying will for be

Tim Mulrooney

organic acquisitions, And to The know and area of confirm been focus. I that number I an all quarter large that's want bolt-on? did both this because excludes

Julie Bimmerman

Yes, excluded. XXX%. All acquisitions are

Tim Mulrooney

enough next XXX you from margins. caused that think this to year? on I margin is that point the points labor basis have probably supplies points to imagine and about I a about a to COGS materials the us third it's related don't sequentially. large wanted primary basis because Can year-over-year My contraction your and quarter the I contracted, But cause that. of to get of of headwind. question think, that your on thoughts are quarter EBITDA talk XX basis component second really I factors much XXX

Julie Bimmerman

to if ahead and Jerry, that. on to to to this I'll I then go going add anything I'm kick first see and want

Jerry Gahlhoff

up From to labor of significantly. manage percentage the a The expense was part fuel this well. was Fuel headwind -- were in biggest deal. revenue, of We as pretty big quarter, had, labor we wasn't as the is Tim, prices. a Jerry, able

what you to just we more had that? fleet expenses So than John, higher probably would add Anything? anything.

John Wilson

-- a Yes. I focus that's our less labor our increase of it, our revenue would that we the operations. mean fast increase. and one Tim, was -- I track always the a grew growing XX% is labor revenue, than of labor part. our second than as And was expenses revenue ways percentage for less

Tim Mulrooney

color. typically your you No, me sales that's percent fuel represents? remind really that. appreciate good I what Can of

Julie Bimmerman

fleet We break buried specifically. well don't know. number that you we out our as the keep Well, fuel into

But this just about said, the fuel we're $X you we not as because talking well. that increase on think increasing, also well, vehicle as the as it's only So fewer had million. quarter about gains the $X also million under

John Wilson

X per teams worse. $X and in have that cost, achieving, think Julie routing had I field years. per that as the been Tim. know, increased several efforts said our without million it our reduced more, prepared miles scheduling With we've effort you fuel stops for in stop or would remarks, active and month million And are

Operator

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

Mario Cortellacci

Maybe running how Just kind pricing of off us a part it. margin just can right is of you for of now. the give piggybacking sense

helping like is the maybe the I some above there, it could X% that equation? you running quarter, side the the offset in think just equation? of X% hot side said fuel of pressures. to of flex and the historical is up the last of labor But Or the Or to guys you help The the receivable? range some fleet offset cost lag pricing any pressures? there

John Wilson

on broke part as extraordinary up not a whole. bit that. any taken you a action real of pricing little So We've

our As we people the many on of talked plan. productivity are of our -- previously, pay paid about vast a majority

reflect. and a of is and So we pricing. of we sort our really doesn't do, inflation any have our that's effort wage But of call impact close then rates And our take been on, sort the above that are our looked use way, the sort room do the increasing, in do we or concerns to evaluate team What if in center no are And always trending that a maybe branches market we've to close for at. then action. that economic pricing then right? well the conversely, same a have tells norm, have us matter goes -- other particular it if different room rates going we would we that

Jerry Gahlhoff

core what is they're and of some is our certainly impacted what price quarter. helps at this as we adjusting But also make ability certainly, increase time based most this that. to offset did price demand call that of the adjustments it, The those costs. past increase data annual fuel those look component on of price the Yes. But to implement and how they're a summer like selling center has the just real lot selling, our that

Mario Cortellacci

up housekeeping then us provide there you to slowing? any you going to have trended? helpful. of some growth slowing, the any give I it accelerating? resi commercial then issue. also, more and -- guess, are Just I can of just historical organic guess to context Was quarter, the guys kind context the new commercial how ready within how within context commercial have pick disclosure, be And corporate Is continuing things average? would and trended that Or we in any a relative with so or

Julie Bimmerman

Well, to these forward. to numbers. in new from put going and new basically, we will it's the point measurements be we're place We're what going -- down getting this on

So as growth of from to, of we QX last today, that perspective. gave are give historical we we back how this point relates numbers. this But told not planning at you go and you to year, obviously, so

sense from makes that hopefully, So that standpoint.

Mario Cortellacci

can just the so you commercial the resi how within can and that help then performing? we with is trend quarter gauge each And

Jerry Gahlhoff

I strong. termite I all real I say appears commercial is the would is acceleration remains and, on rebounded remains way Jerry. pandemic probably now, to completely would this some it's been again, from side. doing mean have function the -- it see consistent Residential The well. the to strong.

us quarter. so positive board. And going And services for across probably strong a important there's in really been really ancillary growth a are our driver lot all trend the in and in the of more continue direction. to third and But on positive things that's termite

Operator

Capital question. Please Sabra Markets. your RBC comes question from Next with proceed Ashish with

Ashish Sabra

coming the key with relocating return wondering post on related was resi out as summer again on summer is season. how retention I the resi And office? sales tracking, people of also as retention -- particularly follow-up the well selling as a the to been side side, Just maybe about can a the like you momentum if question has on side. talk

Julie Bimmerman

anything you and in add can jump then if want I'll to. you

still the residential strong. very So on side,

sitting bring of resi. As on we an there summer, increase QX that, you with we you XX.X% year. last around had still to were our if And about last a it, increase said, over XX.X% we just think

we see year last was did decline So our like businesses on -- we not a side. did did or like residential commercial many

year. last level the increase the double-digit double-digit increase top that on of -- So was

standpoint, So still is from very that strong. running it

any seen add Jerry, On strong would Is quarter. on fluctuations anything the to -- our retention or we there else, this John like to that? have you not

John Wilson

No. our bit surprised Frankly, a we customer over influx this to pleased in last with load on ability over the customers new and Ashish, added team's I've handle the them summer that that year. the put and the we've little increasing been

are near both term. measurements for medium primary or the remained is X sat term steady. And And customer relatively retention Our a the of then more indicator. customer our lagging have

Ashish Sabra

good timing X. and if can question color Phase you helpful wondering I X very could Maybe technology the and rollout. as a the the update I the and Phase hear was provide on launch are as on an if just that. well That's ask to progressing X how for and X of

John Wilson

want that? to Do you handle

Jerry Gahlhoff

can. I is This Jerry.

or -- heavily So different there's way. lot with utilization. what on along that And in inning us guess, -- in. game lot drive of desire in still get to done a fuel, there's a we're that upside adoption. in we John we're often the to describes of field for and adoption there in increase seeing it still the an the the and And maturity increase are phases phases that of baseball operations more we're very we're and this different awful of focused I field adoption levels the different, or like

regard have time. we're we're But in that. that's of and we the long continuing to improvements. getting still have go. way runway doing improvement what about to we plenty better all all to And see incremental And a So still that continuous is

Julie Bimmerman

to still referenced just we back the the to in game, sides Jerry the of we're early early I'll on And John's that that said baseball is analogy

Jerry Gahlhoff

of The the early sides game?

Julie Bimmerman

innings, the early Sorry, early innings.

Jerry Gahlhoff

think football. must playing They we're

Julie Bimmerman

Well, okay.

Jerry Gahlhoff

okay. It's Just an inning.

John Wilson

well Yes,

John Wilson

ahead. Go

Ashish Sabra

ahead. go Sorry,

John Wilson

it, users. if you're a great now team end it. done delivering you in field mantra our ton the to our sort mindset use add of utilize it, bought has adopted we're that of have a of, really to I technology we've got for of a pushing now paying job let's bought IT And "You it, What So kind a that, leaders might our it."

that's we're working XXXX. really so on And in what

Operator

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

Michael Hoffman

to John Gary, rehab and best to pass Julie, my on Jerry, and is challenging.

what's growth, organic customers, new us can price, you then? cross-selling? excess so you took if it’s [X.X%] the -- excess it On think in excess you As and understand approximately about help

Julie Bimmerman

It's what was very past. similar to it in the

just X% broad would price of average, customers customers. increase. be then additional a do but the with combination just don't rest very to on sales think out break We X% that existing And say take out we new the part, I So to is your price increase.

Michael Hoffman

on fuel Okay. had you've price, I remember And then historically a surcharge, correctly. if

you are So

John Wilson

Michael, off get never Well, John. to a out have what fuel then that said back. our do We one and -- I really customers We've do may And have this takes down it when goes it so and is you at never. added you time surcharge. that found

So time, but But quickly customers how I one found never. feel. have out say we that shouldn't really may we our made

Michael Hoffman

Okay. Then corrected. I stand

are to going this And then? inflation so offset how you

John Wilson

of fuel? additional inflation fuel, The

Michael Hoffman

how pressure, cost it? you going fleet The offset to cost. fleet are the Yes,

John Wilson

miles course pursuing rounding same were as of reducing Well, add customers we we'll And we new stop. keep our the and have then improve gently. we mission with efficiently more people

Julie Bimmerman

miles I was said. talking the about expand just what did say innings, ago I would won't it, back that we it. in correctly those just innings mean, I I few minutes have change if guys, are what going early stop, it with here, is, say to -- I'm a we on per to scheduling mean, kill totally a the a going I and Yes. and our John bring early think about were It analogies we and to we routing on on long literally, now gets lowering long runway, can in that what

to on long We have go a that. way

fuel offset, help increases. saying, definitely will as John this the So was

Michael Hoffman

exist does X what the influencing. Okay. items, understand it's just line in where And we then lastly, so Wildlife

Julie Bimmerman

It would will be The in on the occurs. whichever the be residential. line majority Wildlife item it of

Jerry Gahlhoff

a commercial. customer service, But Right. needed if But store, grocery hit it a would a hit say, homeowner, commercial residential. that was it it that would residential was it if

Julie Bimmerman

Wildlife squirrel. I've service our I'm with just flying because it used very before, familiar

Jerry Gahlhoff

to going -- their it But it's mix be the a So certainly would majority those. business of residential. is of

Julie Bimmerman

comment want presented way so Wildlife. That just know. the is the we just Michael, I to one make have always you

on new nothing do is that So that. how split we

Michael Hoffman

Fair enough.

were since emphasizing it. by influenced understand you which to needed it, Just was part being

Operator

the call over Okay. session. We've reached management turn now closing to the to I'd back like of comments. question-and-answer end the for

John Wilson

our for Thank today. you your joining We in us company. appreciate all interest

calls, underway call. our that you've as customers' an several during the and As improve on programs our as will again. financial better company well our fourth to look heard update We past experience year-end giving results. and have make Thanks our you we quarter forward

Operator

This conference. concludes today's

disconnect your participation. your and this for thank we time, you lines may You at

Rollins (ROL) 27 Oct 212021 Q3 Earnings call transcript