ROL - Earnings call transcript Q2 2022

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Operator

Greetings. Welcome to Rollins Inc.

Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. reminder, is a recorded. As Instructions] this being conference [Operator Joe pleasure It my introduce Calabrese. is now to Thank you.

You may begin.

Joe Calabrese

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

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

offering call available following slide this you presentation, investors replay being is on morning www.rollins.com at which will can the be encourage that for and website be The with be days. our We'll found at www.rollins.com. a on call and also us. view a Additionally, XX Rollins that supporting webcast is presentation slide to Company

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

Gary Rollins

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

Julie Bimmerman

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

Gary Rollins

of Rollins to X, Chief XXXX, remain of Operating Gahlhoff, familiar areas be as while Chairman his very excited Company Executive The in well long-term responsibilities. Effective the believe by Rollins delivered plan management that share performance remains Board I'm deliver to our succession continue this report Thank President, Rollins. The well has a the right the that positioned his on is be President you, initiate January unanimously or and and future in to will current Officer very objectives. financial strategic becomes to with second the the On following time months role will and quarter today's transitional elevated more is our We Directors. leadership I'll Chief been financially to transition. will Board, Julie. I'm Jerry five Jerry firmly this Officer positioned important of strong Jerry involving the business CEO. approved of call, that operationally. pleased and our position

of We team, with closely confident to culture. to a brands a the a have in Jerry strong and ensure of forward working and proven leading smooth very management look Rollins I'm future transition extremely responsibilities.

on strategic and as I and day-to-day While serving will our of our goals focused business plans. remain company moving active as continue Board, I'll be from the away Chairman I operations, the

for fit XXXX be facet has of a Officer and Rollins service intimately as leadership industry instrumental and for unique and had most to Rollins of In great joined HomeTeam. opportunity sense vision Rollins his every years. understanding most to has Board years XX to of Directors. in in President and His a and deep exceptional involved know, Company our since was Jerry strong Operating XXXX, of experience, performance business He Chief acumen, marked of in father the success. our customers. organization. the heritage of utmost been duty the dad a he's his promoted Jerry with an President acquisition culture of have devotion Chief of confidence make leader As is accomplishments know record continue Jerry been a great and Officer grew to that What XXXX Orkin our Executive worked foster been company many in him our And Jerry role. and the strong employee. that the has you with to up Rollins His by don't our company and Jerry our I natural outstanding will was of promote His an accomplishments. is household Rollins. our assume to

now the call our me over Let some to Vice Chairman, Wilson, will provide John? business who turn John updates.

John Wilson

is as here you, us of us. and a morning, long anywhere customers, will employees. by Thank tenure continue multiple good On like been and he Rollins, resource of our valuable to Rollins the to has decades, part has isn't our results culture. to with steadfast XX-year Gary's unrelenting he high-performance everyone. and his CEO. be And and that addition tremendous at the of all been leader. career all best in successful in shareholders congratulate leading But company our superior our marked a an achievements over He's would on business Jerry on going behalf his this focus I to about Rollins' impressive change

our to Turning performance.

our solid to to second financial totaling our management quarter growth customer growth. pest strong levels share. achieve with $XXX per million pleased $XXX and are increasing results of million across and we or $X.XX income net continue revenue numerous with We brands Overall, experienced

regard Finally, They as say are success. our important employees integral of most you've asset. this our our times, me heard many we an part

at recognize Rollins office. features and talented approach, from to employees management home announce This we several As the that care has want Consistent screenings multiple pleased offers to partnered we urgent talent. for services center in our medications health leading choices, for a disease an and services immunizations, with continue program, be contender looking are for this Health we're and to prevention to to center the needs. appointments, and benefits ability Rollins health to with grow, we Atlanta draws, urgent people and XX/X of the area. care the thousand that and brands new our health have for continually There Everside offer including to employee convenient improve our mental located same-day everything a and team I'm on-site chronic primary lab next-day to on-site benefits reach and care that

Health we are facility, for this lives. have and lead primary live benefit employees our employees well-being Atlanta U.S. XX outcomes, XX care. we top states access employees healthier offering new our in better addition to to a In our priority, Everside allowing to believe safety virtual and is will health and to The live over clinics, of

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

Jerry Gahlhoff

Hello, Thank you, John. everyone.

I second say Before quarter about to a would words into get our I few operating Gary. review, like

mentioned, Rollins XXXX. through I acquisition in to came As the HomeTeam Gary

and and reassured many His in with know, my tensed me As found being meaningful a at has Rollins of Gary subsequent you home and those had those can personally. acquired. that worthwhile. here experience I been me actions for uncertain words be talked times

customers look and has I've more The his to in CEO results. on commitment that is the to Gary, this quarter forward deliver period. as incredible each honor the the of best a company truly on succeed directly Gary impacted and performance, this future. brings of XX,XXX our for exceptional It's Gary an continued whom our continuing employees, little actions of, XXXX lead to our guidance, later. so to XX an company, one will than non-GAAP commitment of this focusing walk our our to adjustments much build I'd Julie past proof every to and items great I'm as day. begin learned success the new With during years, unwavering our our there's now like from and chapter customers Over and a employees. address we second he Company's thing sure through operations of I the John's

XX.X% was per by share. is quarter $X.XX for compared diluted in the $XXX in year's million million share period revenue same our growth Net $X.XX was of compared $XXX.X million financial Looking second diluted or $XXX XXXX. results. last at This quarter. per second million $XX.X Rollins to income highlighted or to XXXX to

numbers mentioned, growth during Julie business lines organic growth. As review quarter, will our all as shortly. GAAP and revenue Operationally, results as non-GAAP experience to well solid the continued

XX.X% fact, of we double control came control of In XX%. recorded growth on in XX.X%. grew Keep increased QX historical highest company's Residential year this of all termite increased lines. and commercial level service pest in last our that XX%, up mind was growth top digits pest in

and fuel we've I'll implementing mitigate on the to an well feel continue and On as quarter the costs materials expense on inflationary as been repairs side, from give pressures. second fleet-related like actions during these the pressures update supplies. and insight these provide to we vehicle

efficiently and watchful is we're and costs fuel this have they navigating pressures, affect keeping our a on While proactive notable example. Rollins. Management through a initiatives supply eye chain that we're costs believe of fuel how helped, and period inflationary may expense

and equating average also to visits, increased time, technicians has which to over million. by the density. fuel As or less initiatives, over better coupled QX savings price $X.X between million gallon we windshield unproductive manage we reduce $XXX,XXX, net saved we've scheduling X.X in way. the offset along have was service customer savings grow, requirements. of costs of for created with a helped technology driven our job lowers miles fuel improved This overall And over them XXXX continue labor routing we our when mileage slightly We quarter as our our $XXX,XXX. per This plus

hybrid personnel. improvements. through and we're benefits XXXX, fleet XXth BMW the driven Rollins enhancing Furthermore, reducing also the fleets that June, announced ahead, States. we'll efficiency of our primarily sedans Group the ranked United This top Rollins second of of reflects in of carbon these expect sales emissions. green are see In being overall we the As XX we we ongoing while by the of to management looking half committed use move our that out

began of testing light-duty hybrid trucks. However, recently the we use

economy, we fuel fleet excellent are in a their our on hybrid truck uptick focused having sizable XXXX. Given by

of application recent our to battery Additionally, sacrificing quarters look a the given use power us equipment going ahead. without updating of the from advancements, emissions effectiveness reduce forward to been in these the battery-powered you compelling We to initiatives service. opportunity gas technology provides we've with on testing

recall chain calls, offerings and costs and in residential proactively supply been As service addressing termite we've from materials This ancillary well. control as our includes commercial pest you and increased conference may prior supplies.

only process, our so, doing having In materials operational levels we're few materials. We have not supply efficiencies having solid advising working order greater real-time manufacturers overall us long-term but visibility able deep supply quickly up when often relationships and into insights achieve chain. to also we shipped the have flexibility a often with the and in by to need

shipping We through continue seek and seek to suppliers opportunities diversify alternative efficiencies. freight and to actively

successfully the subject year. our of price earlier we On implemented increase pricing, annual this programs

call, May as initiated our mentioned conference our and price As aggressive months compared to early years. of on increases and brands the within summer last all April prior timing were during service historical

We growth put realizing net price service X% notable into our customers initiative a are satisfaction. our which increase increases benefit to of price more this confirmation from higher than is our already Overall, the little resistance past a levels we doubling from saw from programs. place, traditional on X%

pursuing. of strong, actively our on we pipeline, acquisition plenty that we and have it potential Next, are remains opportunities

acquisitions XXXX, the within important Kingdom achieved in strategic acquisition U.S., we an quarter XX of during Australia. far the and milestone U.K., Europest. with have So we the the completed In United

our within we within also coverage have first expanding is it footprint In this now heels addition Scotland. in the tuck-in within the comes our recent Strategically, location locations Wales. U.K. which on NBC our provided Environment, United the of as another Kingdom, full acquisition, U.K., to geographic transaction first

acquisitions forward, our to our Moving be component will expand an grow in initiatives continue important business. further and to Strategic

the call and are Rollins positioned turn remain I'll I it to Julie? XXXX. that with second well quarter emphasize how over we results now to pleased Julie, Julie. over Before for we to I turn want

Julie Bimmerman

Thank you, Jerry.

and have Jerry next the reaching HomeTeam to grow to Rollins their First, large of watching that have Jerry, both role. has in I to the excel career your shoes Gary, your Gary in CEO. exciting, impact on years would Rollins definitely from new I to also appreciate what leadership and careers. as been no doubt wait cannot extraordinary early days I has on you will at see this fill legendary. trust you your through like and congratulate pinnacles been the holds. future Jerry, our President and

the growth across numbers. financial to on We delivered key by significant So a now highlighted quarter strong metrics. second many

on we earnings To website, on view we are slide during a please and today's click the reminder, go our Events including discussed presents which deck, deck numbers presentation. to News a the As presentation. rollins.com, and

Our million of increase actual second quarter of X.X% $XXX an organic. XX.X% represented exchange revenues rate,

X.X% For exchange XX.X% rate, with total organic. the constant growth totaled the revenue

As double-digit quarter. Jerry strong residential, growth presented mentioned, organic. commercial for termite Commercial XX%, Residential X% and all X.X% grew grew XX.X%, organic. the

which grew termite, organic. have we Lastly, with XX% XX.X%

our on income. to Now

properties quarter in year-to-date, the are XXXX million adjusted XXXX. due several impact and we of For in presenting $XXX,XXX and for comparison of sale of year, QX of EBITDA our the purposes on second to year-to-date our Clark gain for last of $XX.X

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

EPS. quarter EPS Second per was share diluted adjusted $X.XX XXXX to XXXX equal

last decreased to or gross X.X below year. point XXXX quarter Second XX.X% margin

per another over SG&A from to of repairs these X.X% over paid gallon XXXX over these a manufacturers. out created equated over our quarter $X.X our and administrative, fleet increases the increased for by normalized increased price forcing point fleet-related XXXX expense in margin our additional a air of vehicle increase were $X.X QX a increases as an We longer, fleet year. Combined, percentage Fuel up gross of receipt and presenting expenses over of headwinds from strong overall XX% XXXX outside return This cost, travel equation, of Sales, revenue this repairs was taking last QX general, in to the in increased norm. continued of or to cars. last increases million increase were due in fuel driven X.X in vehicles due these travel over as fleet QX rental keep XXXX. average by to delay cost QX new leadership Travel the repairs XX.X%. contributor XXXX. XX.X% branch of Vehicle to trucks primarily to mentioned, million year. for As was -- a in along increased levels with locations XXXX

of and our impact increase of Aligning in We the X% change process accruing over an sales combination increase in equated advertising an saw of also in with to an along revenues for QX arrival spring a expenses. XXXX. high late costs our the these counteract QX of of advertising estimating our from advertising campaign a with to our in increase advertising

spend we historical year, full the normalized For expect overall levels for advertising.

our regarding flow. notes few a for Now cash

with increase QX Our XXXX. cash of subsidiaries. to XXXX, of totaled current We our foreign ended used in which, XXXX, cash, $XX.X or increased XX% over was for while by an dividends million million XXX.X% $XX.X period held acquisitions for $XX.X $XXX million the million

XXXX, September Last, of Directors over paid was of Our of driven primarily paid September you. over strong the XXXX. situates The to August represents our dividend continued in strength This growth. I'll increase confidence business and of to or share share to dividend flow will cash last cash free year. XXXX, be of the our Board that that our over QX in record X, $XXX.X our increase increase quarter was yesterday, $X.XX a Board's income on of million it back Gary, increase shareholders XX, regular reflects it an XX.X% timing payments. pleased the by dividend for per at turn a tax the of I'm This in approved XX% financial second XXXX. performance close

Gary Rollins

this We're time. Thank any to you, Julie. questions happy take at

Operator

Our Blair. first Instructions] Mulrooney with [Operator Tim question William from is

Tim Mulrooney

in you First, can congratulations. I look tenure success want forward the few level can to boast and to and regardless. say I just Gary, Very staying touch same to of that CEOs

Gary Rollins

Thank you.

Tim Mulrooney

quarter EBITDA most helpful for labor quantify quarter little fleet, last way materials, it, guys things you bucket if in those call you impacted were expecting. it. was these a being if to to margins The one that the is buckets any And EBITDA one, bucketed this margins another was there's major don't bit of your rank were to want than going primary is or the things another as what if I fuel cost headwinds terms and and you First us. more down I know

certainly really helpful would think for last for investors, be very I helpful quarter. that us it was

Julie Bimmerman

is this Tim, Sure. Julie.

jump in. I'll So

advertising to largest we getting would me, was of which X% will reflect better percentage was I this. of point to said, say for this, and back we spend digital point the advertising. our -- revenues. an advertising shift our is do updated on we gain this, increase expenses normalized ahead So whole. do as want is I processes accruing where excuse when the our a at estimating the expenses -- year look though, historical go our impact revenue the And or maintain to of and over the this want our go advertising I and This for to is the a make you key quarterly to

with largest been So fuel our dealing next the itself and was last year. item we million increase are fuel timing over $X.X there. a The would have

was last significant of year. QX that over So

Jerry Gahlhoff

from did would year-over-year. a keeping in job that wasn't of It's a I labor mentioned. service we pretty wages, good add on driver standpoint, everything. heavily significant a relatively That really what flat Julie particular, of

Tim Mulrooney

Okay.

So not, January. had what I saying It quarter. with disruption issue of that, said it's going I an consistent guess, wouldn't you much be But mostly that labor you sounds and very as mean in more fleet like were it's advertising last forward. that's expense.

helpful. really that's So

Jerry Gahlhoff

better we're was to is now. it driven little but right up managing the through back by seems be it which COVID ramping situation, just January, a again,

Operator

Ashish Our Sabadra Markets. is next from question Capital with RBC

Ashish Sabadra

you price could increase, a you, be you Jerry. I about more question talked there all help if revenue also obviously would aggressive momentum -- across but pretty parse strong can as was out How if the sales about first you My side, both Gary to more and on growth, you Congrats the businesses. wondering helped also how talk the being that the helping technicians well on on campaign can you improved you momentum. drive but sales the staffed? retention the improved as momentum talk ad is appropriately about of inbound,

some parse growth So quantify you tailwinds? of the those drivers some could and if just out of

Jerry Gahlhoff

well, really We -- from year, think a in that Julie, our increase additional was difficult the the us a -- things to price we customer through better up April June existing bit a pretty service than standpoint, and to in on quarter some a help customers. remains year on the customers, team Well, pretty quite lap May I second delivery. service lapping growth revenue we the last part bit. being from particular, a staffed get but lift were we helped quite a -- We're there. from in from and side, able standpoint, picked and remains growth doing certainly and new it our big job managed got to our to is on pretty of good Retention a recover technician XXXX month strong, ago retention were

particular, new with very we've good. strong gotten campaigns. the response to of feedback. all Orkin Especially lot a ad positive received -- transition that's a of with We've Pro, lot So to, their Orkin's in

that my seeing the good at attention. at lot from it's Our I really hear of people children Orkin, a about TikTok. because It's work on they're it -- like when our I getting it. it team members Orkin know

see ads to fun those so lot And and with have TikTok them. a on they seem of

Julie Bimmerman

over that that, brought in of we price commented section increase. our script think typically what And see on price as Jerry increase double our add I reminder, just then his the on to to from a Yes. annual is

So well. of growth that was a as that part

Operator

from with question Hamza next is Jefferies. Our Mazari

Hans Hoffman

plans sales Hamza. filling your us Could your how of Hoffman sense Hans much you you is for in and just a going are This force what forward? hiring capacity in have give

Jerry Gahlhoff

that hire we levels a there's drive both the back staffed the them at well high side, next to sales pretty when -- build full side. residential salesperson selling to on incremental in have up commercial room improvements. We're another capacity get always and can and continue and to improvements step drive growth -- for always do the and you is or monthly,

do to where we it always get and look always that of we we of to But we're So there staffing game just that's to capacity, kind always little And bit as math -- add makes game capacity better. we a play. there's -- a closer numbers sense.

Julie Bimmerman

deals our where of on started to that's really side so we sales and that prepared closing is at honestly And that just Yes. we able the today. could doing for force up last year this hard the be be able when we our end staff heavy be we're the worked year commercial of to close

Jerry Gahlhoff

that that those staffing commercial we're the rep for certainly, seeing. a increased productivity increased the of results getting sales and result -- are And the we're

Operator

from [Operator comes Instructions] Our question Seth Weber Securities. next Wells with Fargo

Seth Weber

started I I guys. on, picking think fuel a Congratulations, last June, June prices up XXXX. question just had

should the to about expect we apples-to-apples -- it that is we So the for so up it? to year-over-year right margin now an or going think kind have year of that be is rest way the gross of compare forward,

Julie Bimmerman

I'll say fuel but be we to are up. on side globe going that thing impression of start, in all jump comes same then lot that and a go then see that the areas happening I'm sure -- prices are as Jerry will fuel reading the the it we're -- other gives is -- want we the Everything to that down, could of things when well. things to going it the

much so that. depends So, on

relationships. to has not in well. But different because like phrase sometimes have or the and we is day We're costs supplies themselves. they purchasing It's where saying look looking happen the happen of use having single we to He a whack-a-mole really to we're every at to definitely that -- keep also depends I should on in and vendors. to that's in materials playing our that either have yesterday. jump jump feel what's vendors different does on depends the Board these going want need monitoring on in. what's And with group that Where to to So said supply cover And that prices. it keep Jerry do and keep commented are long their with purchasing. increases meeting supplies. see fuel -- we we suppliers. we materials assuming commented saying, our variability, And if shipping Jerry you're one to I'm having to go. the with and It honestly, to our we'll going be this going address that their and fuel having make mind. way as in thing And on cover

All would being calms of yes, want add that you said, to down, if then margins improve. Do that that? to

Jerry Gahlhoff

the And these ongoing I offsetting that with get us especially help with concerned the two out are we we of variables. expecting to be going routing tools during can -- increase can happens busy they and the It's delivered the to our to the technology fuel and costs we're then and of too would repair adoption get of will of us. with main we coming some what we scheduling, agree usage off season, get they those the are expenses benefit offsets. and plus time about side. have, have that having. some heading advancement fleet those more we of start that labor and delivered the there can on Can that over that can be trucks these get months and -- we Not

other basically to But increase price seems having wildcards and suppliers. fuel are and Those every make manage about like think materials some adjustments a vehicle it were from very that I that -- we'll week, the to through we're getting we're certainly, the labor. supplies. notified managed repairs

playing it's why whack-a-mole. that's Julie said So like

from remain on we the what that, vigilant as long That's we'll wildcard. fuel as standpoint. a So happens and see

Operator

is question Brian with Stifel. final Our from Butler

Brian Butler

of higher another surcharge is increase then potential the I to and a guess, offset to would that year or maybe If accelerate, pricing catch Or wait even on up a until address that? maybe and Just inflation up, to to higher the Rollins follow rate or inflation. costs? next half there back used move would continues be XXXX

Gary Rollins

really the research need We've having be far as year. bit experience you increase in studied have carefully. don't price very certainly, that we And been to our greedy. this and another frequency price concerned. done and of We the some opposed increases get And as time really are quite between it's a our would to amount

Operator

Thank over turn conference management back for comments. to you. to the would I like closing

Gary Rollins

Okay. interest to and thank today. all for you company, And we updating quarter your our look you forward our progress. in us on Well, We appreciate thanks joining next again.

Operator

conclude Thank today's conference. will you. This

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

Rollins (ROL) 27 Jul 222022 Q2 Earnings call transcript