PEST CONTROL DOWN TO A SCIENCE - Rollins...

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PEST CONTROL DOWN TO A SCIENCE

Transcript of PEST CONTROL DOWN TO A SCIENCE - Rollins...

Page 1: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

PEST CONTROL DOWN TO A SCIENCE

Page 2: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

Eddie Northen

Vice President, Chief Financial Officer and Treasurer

22016

Page 3: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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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Page 4: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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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Page 5: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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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Page 7: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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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Page 9: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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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

Page 10: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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%

Page 11: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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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Page 12: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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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Page 13: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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

Page 14: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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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Page 15: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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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Page 16: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

$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

16

$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

Page 17: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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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Page 18: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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

Page 19: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

PEST CONTROL DOWN TO A SCIENCE

Page 20: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

$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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Page 21: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

$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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Page 22: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

$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.

Page 23: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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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

Page 24: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

$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)

Page 25: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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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Page 26: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

$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.

Page 27: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

$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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Page 28: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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]

Page 29: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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]

Page 30: PEST CONTROL DOWN TO A SCIENCE - Rollins Inc./media/Files/R/Rollins/reports-and-presentations/...Leading pest and termite control company ... • Egypt • Turkey • Tbilisi ... National

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.