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PEST CONTROL DOWN TO A SCIENCE - Rollins...
Transcript of PEST CONTROL DOWN TO A SCIENCE - Rollins...
PEST CONTROL DOWN TO A SCIENCE
Eddie Northen
Vice President, Chief Financial Officer and Treasurer
22016
Certain information provided during today's presentation will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. These statements may be identified, without limitation, by the use of forward-looking terminology such as "may", "will", "anticipates", "expects", "believes", "intends", "should" or comparable terms or the negative thereof. All forward-looking statements included in this press release are based on information available to us on the date hereof. Such statements speak only as of the date hereof and we assume no obligation to update such forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. These statements involve risks and uncertainties that could cause actual results to differ materially from those described today. Such risk factors are described in SEC reports including the Company's Form 10-K for the period ending December 31, 2015.
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Leading pest and termite
control company
Powerful “Orkin” brand
name – world renown
Over 2.0 million
residential & commercial
customers
18 consecutive years of
improved earnings
Dividend increased a
minimum of 12% for 14
consecutive years
Over 700 locations in the
U.S, and Canada with 207
franchises worldwide
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Strong management,
excellent depth Significant insider
ownership
Recession resistent – 80% of
revenues are recurring
Competitive advantage --
Brand and infrastructure create barriers
Focus on sustained
profitable growth Strong balance
sheet
Solid track record of Shareholder Value
creation
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$12.3+ billion industryIncreasing health
awarenessRoughly 70% residential
and 30% commercialHighly fragmented with
numerous small operators
Three public competitors: Ecolab (NYSE:ECL),
ServiceMaster (NYSE:SERV) and Rentokil (LSE:RTO)
Rollins, Terminix, and Ecolab generate over 30%
of industry revenues
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Internet lead development
Meeting our customers’ needs from sales to service
Increased yield and retention across all brands
Pricing power
Incremental marketing investments in strategic markets
Enhanced targeting to attract higher-income customers
HomeTeam’s unique Taexx® “tubes-in-the- wall” –high penetration into new home starts; in partnership with 20 largest homebuilders
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Over 30 branches across Canada
Acquirer of Choice
Headquarters Location
Australia
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• United Arab Emirates
• Saudi Arabia• Bahrain• Lebanon• Kuwait• Iraq
• 51• Domestic
Franchises -Right to Repurchase
• Mexico• Panama• Costa Rica• Honduras• The Dominican
Republic• Guatemala• El Salvador
• South Korea• China• People’s Republic
of China• Ireland• Cyprus
• Chile• Uruguay• Sao Paulo, Brazil• Belo Horizonte, Brazil• Quito, Ecuador• Paraguay• Columbia
• Jamaica• Turks and Caicos
Islands• Trinidad and
Tobago• US Virgin Islands
• Guam
• Nigeria• Egypt
• Turkey• Tbilisi, Georgia
207Franchises
Globally
54
Domestic
50
International
157
Domestic
• India
Critter Control • 106 Domestic
Franchises• 2 Canada Franchises
Commercial41%
Residential41%
Termite 17%
Other <1%
Revenue and Retention % by Business Line
Commercial
Residential
Termite
Other
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Retention between 88%-90%
Retention between 76%-85%
Retention approximately 85%
Approximately 5% of revenues spent annually on growing and preserving the brand
National ad campaign – “Pest Control Down to a Science”
Brand value grows with importance of Internet marketing
“Orkin” man icon – 70% brand awareness
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COMMERCIALOrkin, LLC
Orkin Canada
Western Pest Services
IFC
PermaTreat
Waltham Services
Crane Pest Control
Rollins Australia
No. 1 commercial pest control provider in North
America – 20% market share
Increasing demand driven by health and safety concerns
Worldwide service network with 103 dedicated
commercial branches
Highly recession resistant; customer’s reputation and
risk too great
High growth opportunity. CAGR 6.4% last 10 years
Highest customer retention of all service offerings and
higher average prices
Focused on five priority industries: food and beverage
processing, healthcare, food service, food retail and
hospitality
Largest 20 national accounts make up less than 3% of
business
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Rising concern over health, safety and protection of
property
Better informed consumers, targeting specific
segments
Internet providing accelerated growth
Recession resistant – non-discretionary purchase
Primary service offerings – varied across brands to
meet customer needs and improve profitability
HomeTeam’s unique service offering provides
recurring revenues and long-term profitability
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RESIDENTIAL
Orkin
HomeTeam Pest Defense
Orkin Canada
PermaTreat
Waltham Service
Rollins Australia
TERMITE
Orkin
HomeTeam Pest Defense
PermaTreat
Western Pest Services
Rollins Australia
Termite damage -- $5.6 billion annually, a real threat
to homeowners.
Shares many of the same characteristics of our other
businesses – strong recurring revenue and high
retention
Invigorated sales force, utilizing digital technology
HomeTeam providing pre-treat service to nation’s
leading homebuilders
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Wildlife – Accelerating our Growth Opportunity
North American Wildlife Category Opportunity of $500M+
Critter Control and Trutech are #1 and #2 entities in the category
Operations in over 150 of the top Markets with either or both brands
Built-in acquisition network with Critter Control
Immediate synergy created by integrating marketing and training
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$0.0
$20.0
$40.0
$60.0
$80.0
2010 2011 2012 2013 2014 2015
$6.2 $10.0$16.0 $20.8 $24.6 $30.0$18.5
$23.5$28.5
$33.3$39.3
$42.3
Bed Bug Revenue History(in millions)
Residential Commercial
$72.3
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$33.5
$44.5$54.1
$63.9
Bed bug industry grew 25% to $320 million in 2010*
Rollins data shows company growing faster than industry
Recurring revenue growth through inspection and remedial services.
New opportunity to introduce residential and commercial pest control services to new bed bug customers
*Specialty Products Consultants
Advance service and product line offerings
Expand customer base
Increase customer retention and satisfaction
Improve productivity and reduce operating costs
Achieve continuous financial improvement
Initiatives to meet these objectives
Rollout of branch operating/CRM systems (BOSS)
Listen 360
Big data analytics
Introducing new tools and advancing technology
Focus on acquisitions
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Commitment to Training
27,000 sq. ft. Training Center unique to pest control industry
13,000 sq. ft. commercial training facility
Residential facility incorporates a 2,400 sq. ft. fully constructed home and termite treating pavilion
Named to Training Magazine Top 125 Training Companies for last 14 years
Web-based employee training network utilized by employees and franchises worldwide
Attracts customers, regulators educators, university researchers
Cafeteria
Commercial Kitchen
Hospital Room
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2,400 sq. ft. home
Broadcast Studio
PEST CONTROL DOWN TO A SCIENCE
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
2010 2011 2012 2013 2014 2015
$1,137
$1,205
$1,271
$1,337
$1,412
$1,485
($in millions)
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$200
$220
$240
$260
$280
$300
$320
$340
$360
$380
$400
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
($in millions)
2010 2011 2012 2013 2014 2015
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$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
2008 2009 2010 2011 2012 2013 2014 2015
$0.30
$0.37 $0.41
$0.46 $0.51
$0.56
$0.63
$0.70
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All diluted earnings per share data is presented post-split for the three-for-two stock split effective March 10, 2015
for shareholders of record February 10, 2015.
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$0
$25
$50
$75
$100
$125
$150
$175
$200
$225
$250
2010 2011 2012 2013 2014 2015
Capital Expenditures Dividend Payout Free Cash Flow
Ca
sh
Fr
om
Op
er
ati
on
s
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
BeginningCash
Cash FromOperations
Debt Issued Other Net Acq. Net Capex Debt Repaid DividendsPaid
Net Rep. ofStock
Ending Cash
$71
$1,176
$90$7
$343
$168
$90
$427
$181
$135
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Source: Company Filings
Cash Flow for FY 2008 – FY 2015 (in millions)
Year
• 2009• 2010• 2011• 2012• 2013• 2014 • 2015
• Total
#of Shares
• 3,773,700
• 2,833,712• 2,187,423• 1,172,672• 511,049• 1,507,919• 19,137
• 12,005,612
Cash Paid
• 27,820,860
• 26,410,570
• 27,313,664
• 16,399,431 • 8,384,761• 29,394,633• 429,899
• $136,153,818
(In million)
5.9 Million Shares Remaining to be Repurchased at 12/31/2015
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$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
2008 2009 2010 2011 2012 2013 2014 2015
Dividends Paid excluding special dividends Dividends Paid with special dividends
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All dividend data is presented post-split for the three-for-two stock split effective March 10, 2015 for shareholders of record February 10, 2015.
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
2010 2011 2012 2013 2014 2015
$16.0$15.1
$15.2
$14.4
$16.6 $19.4
$20.4 $22.4 $23.4 $25.2$26.9
$25.2
Depreciation Amortization
$ in millions
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Rollins, Inc. 10-year stock performance (with dividends reinvested)vs. S&P 500 Index
12/31/2005 – 12/31/2015
Source: FactSet
10-Year Performance w/ dividends
Reinvested (12/31/2005 – 12/31/2015): Total Annualized
Rollins Inc. 419.0% 17.9%
S&P 500 Index 102.4% 7.3%
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '1640
50
60
70
8090100
200
300
400
500
163.74
443.49
Rollins, Inc. (RO L-USA) [Delayed] S&P 500 (SP50-USA) [Delayed]
Rollins Inc. 10-year stock performance (with dividends reinvested)vs. Russell 2000 Index
12/31/2005 – 12/31/2015
Source: FactSet
10-Year Performance w/ dividends
Reinvested (12/31/2005 – 12/31/2015): Total Annualized
Rollins Inc. 419.0% 17.9%
Russell 2000 Index 93.1% 6.8%
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '1640
50
60
70
8090100
200
300
400
500
168.72
443.49
Rollins, Inc. (RO L-USA) [Delayed] Russe ll 2000 (RUT-RUX) [Delayed]
1901 1941 1964 1968 1993 1994 1999 2001 2003 2004 2005 2008 2010 2014 2015
Orkin began
operations;
Otto Orkin “
The Rat Man”
sold poison
door-to-door
Orkin treated
military
establishments for
pest control
during WWII
Rollins buys Orkin for
$62 million
Rollins,
begins
trading
on the
NYSE
Orkin celebrates
the opening of the
Orkin Insect Zoo
at the Smithsonian
Institute
First Orkin
franchise
opens
Orkin acquires Prism,
Orkin Canada, and REDD
Orkin celebrates 100th
Anniversary
Orkin named to Training
Magazine’s Top 100
Training Companies
Rollins acquires
Western Pest
Services
Rollins acquires
HomeTeam Pest
Defense and Crane Pest
Control
Rollins acquires The
Industrial Fumigant
Company
Rollins acquires
Waltham Services
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Rollins acquires
Australian based Allpest
WA and Statewide Pest
Management and
Virginia based
PermaTreat
Rollins acquires
Critter Control, Inc.