NYSE:ROL Rollins Q3 2021 Earnings Report $56.70 +0.01 (+0.02%) As of 05/9/2025 03:59 PM Eastern Earnings HistoryForecast Rollins EPS ResultsActual EPS$0.19Consensus EPS $0.20Beat/MissMissed by -$0.01One Year Ago EPS$0.17Rollins Revenue ResultsActual Revenue$650.20 millionExpected Revenue$641.23 millionBeat/MissBeat by +$8.97 millionYoY Revenue Growth+11.40%Rollins Announcement DetailsQuarterQ3 2021Date10/27/2021TimeBefore Market OpensConference Call DateTuesday, October 26, 2021Conference Call Time8:00PM ETUpcoming EarningsRollins' Q2 2025 earnings is scheduled for Wednesday, July 23, 2025, with a conference call scheduled on Thursday, July 24, 2025 at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptQuarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Rollins Q3 2021 Earnings Call TranscriptProvided by QuartrOctober 26, 2021 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00Greetings, and welcome to Rollins Incorporated 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Joe Calabrese. Operator00:00:25Thank you. You may begin. Speaker 100:00:27Thank you. By now, you have all received a copy of the press release. However, If anyone is missing a copy and would like to receive 1, please contact our office at 212-827 3,746, and we will send you a release and make sure you're on the company's distribution list. There will be a replay of the call, which will begin 1 hour after the call and run for 1 week. The replay can be accessed by dialing 844 Additionally, call is being webcast at www.viovid.com and a replay will be available for 90 days. Speaker 100:01:19On the line with me today and speaking are John Wilson, Vice Chairman Jerry Gale, Jr, President and Chief Operating Officer and Julie Bimmerman, Interim Chief Financial Officer, Vice President and Treasurer. Management will make some opening remarks, and then we'll open the line for your questions. John, would you like to begin? Speaker 200:01:39Thank you, Joe, and good morning. We appreciate all of you joining us for our Q3 2021 conference call. Julie will read our forward looking statement and disclaimer, and then we will begin. Speaker 300:01:52Our earnings release discussion discusses our business outlook and contains certain forward looking statements. These particular forward looking statements and all other statements That will be made on this call, excluding historical facts, are subject to a number of risks and uncertainties, and actual risks may differ materially from any statement we make today. Please refer to today's press release and our SEC filings, including the Risk Factors section of our Form 10 ks for the year ended December 31, 2020, For more information and the risk factors that could cause actual results to differ. Speaker 200:02:34Thank you, Julie. Before we begin, I am sure you have noticed that Gary is not on today's conference call. He is actively rehabbing from a knee replacement operation and while he is recovering quickly, he is doing very well. He's just not in a position to physically join us today. We wish Gary well with his physical therapy and look forward to having him rejoin us on future calls. Speaker 200:03:00During the Q3, we achieved some very strong business results and Jerry will go over those with you shortly. In the interim, I wanted to share news of the latest addition to our Rollins Board of Directors. As you already know over the previous year, we have enhanced and diversified that group with several new members. I am very pleased to announce our latest addition is Rollins' President and Chief Operating Officer, Jerry Galoff. This is in recognition of his strong leadership and his deep commitment to the company's long term success. Speaker 200:03:36We are proud to have Jerry serving on our Board moving forward. Jerry is an important part of the Rollins leadership team and his in-depth knowledge of our business and experience gained from working in our industry since 1991 adds perspective. We're fortunate to have him assume a greater role in The direction and future of our company. Before turning the call over to Jerry, I have two items to first update you on. The first will represent a recent development in Rollins' environmental, social and governance commitment. Speaker 200:04:10We take very seriously the responsibility that we have to the communities in which we work and live. As a recent example, We're pleased to share that Rollins made an in kind donation originally costing $4,600,000 worth of personal protective equipment Or PPE items during the Q3. Working with the Federal Emergency Management Agency And several philanthropic organizations, including the Friends of Disabled Adults and Children, the Foundation of Hope Food Bank, as well as Cope Preparedness in Los Angeles, we donated 27 pallets or 6,800,000 pieces of masks, Gloves and other items. In addition to achieving the successful execution of our strategies as well as solid business results. We also have a responsibility to the communities in which we work and live. Speaker 200:05:06ESG is a Facet of our business is becoming more important more and more important to us. We are proud to support these initiatives. Last, as we have previously disclosed, the company has been responding to an investigation by the U. S. Securities and Exchange Commission. Speaker 200:05:25In accordance with accounting standard ASC 450, we have established a reserve related to this matter, which we consider immaterial. Given that the investigation is ongoing, we cannot answer any questions during our Q and A, but we remain focused on resolving this inquiry. With that, I will turn our call over to Jerry. Speaker 400:05:48Thank you, John. Good morning, everybody. We're very pleased with our Q3 results. Revenue increased 11.4 percent to $650,200,000 compared to $583,700,000 for the Q3 of last year. Our net income totaled $93,900,000 or $0.19 per diluted share compared to $79,600,000 or $0.16 per diluted share for the same period in 2020. Speaker 400:06:16Julie will review the GAAP and non GAAP results shortly. Revenues for the 1st 9 months of 2021 were $1,824,000,000 an increase of 12.2% compared to $1,625,000,000 for the same period last year. Net income for the 1st 9 months increased 44% to $285,300,000 or $0.58 per diluted share compared to $198,200,000 or $0.40 per diluted share for the comparable period last year. For the quarter, we experienced solid growth in all Our business lines with residential increasing 11.7% and termite presenting 15% growth over the Q3 2020. Additionally, commercial excluding fumigation delivered an impressive 10.1% growth over the Q3 last year. Speaker 400:07:10This is also an improvement of 7.9% growth over 2 years ago when we were not experiencing COVID related shutdowns. Overall, we are pleased with our performance. Rollins remains well positioned for the remainder of the year and into 2022. Looking deeper at our operating results, we're attracting customers to all our services and brands. And one area I'd like to focus on today is our continued strong growth in our wildlife service offerings. Speaker 400:07:42TruTek Wildlife joined the Rollins family in 2010, followed by Critter Control in 2015. Since 2010, the business has grown 800%. Day to day operations of operating a wildlife control business is quite different than running a typical pest and termite business and we are proud to have a dedicated team focused on this much needed service. Originally concentrated in the Southeastern United States, the business has expanded across the nation as well as into Canada. And with Critter Control's expansion into Canada, it's Rollins' 1st brand to enter an international country without acquiring another business as a platform. Speaker 400:08:25The Wild Life division also operates a thriving franchise system. There are currently 84 franchises with the most recent franchise launching in Mansfield, Ohio. We anticipate finishing the year with 12 new franchises, one of our strongest years in adding franchisees. We have also been fortunate to add 9 former corporate employees as franchisees, Employees who have an entrepreneurial drive and a passion for nuisance wildlife and customer service have multiple career path opportunities, be it ownership of a franchise or growth within our company. We believe there is meaningful opportunity for continued growth in our wildlife business and look forward to updating you in the quarters ahead. Speaker 400:09:11I'd now like to discuss Hurricane Ida. Our hearts go out to our Gulf Coast region and those that were affected by the hurricane. But I must admit, we were inspired by our team in that area. They implemented an amazing plan that helped our team members and alleviate the negative impact of the storm. Ida shut down several of our branches for days, but 2 locations were shut down for about 2 weeks. Speaker 400:09:36The impact to our employees in the days following the storm Was far worse than the impact to our business in the quarter. Thankfully, all of our employees in the area were safe, yet they did need assistance. Through the Rollins Employee Relief Fund, we granted 137 emergency grants to impacted employees within the 1st week following the hurricane to enable employees to address their personal essential needs. Since then, another 7 employees who endured greater hardships Receive full grants to address their more significant needs. Additionally, our Orkin South Central division led by Leland Morris Quickly initiated a preparedness and mitigation plan to assist our team members. Speaker 400:10:21This included immediate procurement of much needed supplies for our employees and their families, such as generators, fuel, portable air conditioners, fans, water and other essential emergency provisions that were not readily accessible to them locally. Our team members in adjacent areas that were fortunate to avoid the brunt of Ida's force volunteer their time and energy often after work hours to load these supplies into box trucks and drive them to those most in need. For weeks, they continued to shuttle fuel to these employees to keep their generators up and running. This was a total team effort and we are tremendously proud of their care, compassion and commitment to one another. In fact, we're so pleased with their effort That we plan to expand and formalize this program in other areas of the country so that we can rapidly respond in case of a natural disaster or emergency. Speaker 400:11:19Now, let me turn the call over to Julie to discuss our financials. Speaker 300:11:23Thank you, Jerry. As we measure our performance and think about how to best articulate Rollins' business in the future. Along with what routine questions we receive from the investment community, We will now be presenting 3 additional measurements quarterly moving forward. The first is a measure we have referred to periodically, And that is EBITDA or earnings before interest, taxes, depreciation and amortization. Due to our consistent high volume of acquisitions and hence High amortization expense related to these acquisitions, presenting EBITDA regularly will provide a clearer picture of our operations' Ongoing financial performance. Speaker 300:12:02Think about this. Over the last 3 years, we have averaged 30 acquisitions per year. Next, we will begin presenting our revenue growth through both constant exchange rate and actual exchange rate. By utilizing historical baseline revenues for acquisitions vetted through the due diligence process, we are able to include all acquisitions within the calculations, both standalone and tuck ins. This will bring clarity and consistency to both our acquisition and our organic revenue growth measurements. Speaker 300:12:353rd, we'll be providing you with our free cash flow. We believe that this will properly illustrate Rollins' strong Ability to generate cash. We have taken a simple approach to defining free cash flow, which is calculated as net cash provided by operating activities with purchase of equipment and property. Our hope is that these measurements will enable investors to better assess our operating performance in the future and provide a deeper view of our business. We have included GAAP to non GAAP reconciliations on each of these metrics on our earnings press release published this morning. Speaker 300:13:12So on to the numbers. Our 3rd quarter revenues of $650,200,000 With an increase of 11.4% over last year. Of the 11.4% actual exchange rate revenue growth, Acquisition growth was 2.2% and organic equated to 9.2%. For the constant exchange rate, the growth percentages calculated within the 100th of the actual exchange growth rate, therefore, presented the same. For the 9 months ended September 2021, revenues of $1,824,000,000 was an increase of 12.12 percentage over year to date 2020. Speaker 300:13:55Of this actual exchange rate, total revenue growth of 2 point excuse me, of 12.2%. 2.7% was related to acquisitions and 9.5% organic growth. The constant year to date exchange rate total revenue growth for 2021 equaled 11.6%, 2.7% represented acquisitions and 8.9% organic revenue growth. As Jerry pointed out, residential, commercial and termite all grew double digits this quarter over the same quarter last year. So, in determining my focus for today, I decided to take Jerry's lead and discuss wildlife. Speaker 300:14:42Yet I'm discussing specifically company owned wildlife operations. For the Q3 in 2021, Wildlife revenues grew 24.1 percent over last year. And year to date, Wildlife has presented an overall revenue growth of 27.6%. What makes us particularly impressive is that this is after their strong growth of 20.4% last year. So similar to our residential pest control, wildlife did not feel a negative impact to revenue growth during the pandemic. Speaker 300:15:15The way to go to the Wild Life team. Now on to our income. For the Q3 year to date, We are presenting adjusted EBITDA for comparison purposes due to the one time super vesting of our late Chairman's stock grants in the Q3 of 2020 and the impact of our gain on sale of several of our Clark properties in the 1st 6 months of 2021. The Q3 2021 EBITDA was $150,900,000 or 8.7 percent over 2023rd quarter adjusted EBITDA of $138,900,000 3rd quarter 2021 EPS was $0.19 For diluted share or 5.6 percent improvement over the 2023rd quarter adjusted EPS. For the 9 months ended September 2021, our adjusted EBITDA was $421,200,000 or 22 1% over last year's adjusted EBITDA of $344,900,000 Year to date 2021 adjusted EPS was $0.53 per diluted share or 26.2 percent over last year. Speaker 300:16:31For the Q3 2021, gross margin increased to 53% or 0.4% over last year. Strong improvements in our materials and supplies were negatively offset by high overall fleet costs, primarily from an increase in fuel of approximately $4,000,000 over Q3 2020 and lower vehicle gains of $900,000 compared to last year. Sales, general and administrative 3rd quarter margin increase over last year was strongly impacted by the PPE donations and SEC Accrual previously mentioned by John. Travel expenses have also increased $1,300,000 in the 3rd quarter as we have begun to lift our company travel restrictions. Amortization expenses for the Q3 20 21 increased $1,400,000 due to the amortization of customer contracts from multiple acquisitions. Speaker 300:17:28This was offset by a decrease And depreciation of $201,000 due to the sale of owned vehicles and centralizing of IT functions. Overall, this equated to a 5.1% increase in depreciation and amortization over the Q3 2020. Our dividends paid year to date 2021 was $119,700,000 or an increase of 30.4% over last year. We ended the current period with $117,700,000 in cash, of which $73,600,000 was held by our foreign subsidiaries. So this brings us to the final of our new three measurements. Speaker 300:18:06Free cash flow. For the Q3 2021, our free cash flow is $72,900,000 or a decrease of 27.5% over the same quarter last year. For the 9 months ended 2021, our free cash flow equals $278,900,000 or 13.6% decrease over year to date 2020. This fluctuation occurred due to the deferral of $30,300,000 in FICA taxes payable in 2020 has allowed under the CARES Act. These associated taxes were then remitted in September of 2021. Speaker 300:18:44We hope that the discussion of these new measurements, you will receive a greater clarity while reviewing our financial performance. Lastly, I want to discuss that yesterday, we were extremely pleased to announce that our Board has approved a 25% increase to our dividends. The quarterly dividend increased $0.10 to $0.10 per share from $0.08 per share and will be paid on December 10, 2021 to stockholders of record at the close of business on November 10, 2021. Additionally, the Board also approved a special dividend of $0.08 to be paid on December 10, 2021 as well. The dividend increase reflects our strong performance in the 1st 9 months of the year and underscores our financial strength, our solid capital position and the Board's confidence in our outlook for continued growth. Speaker 300:19:35John, I'll turn it back to you. Speaker 200:19:38Thank you, Julie. We are happy to take any questions at this time. Operator00:19:43At this time, we'll be conducting a question and answer session. We ask that you please limit to one question and one follow-up. One moment please while we poll for questions. Our first question comes from Tim Mulrooney with William Blair. Please proceed with your question. Speaker 500:20:22John, Jerry and Julie, good morning. Speaker 200:20:25Good morning, Ken. Speaker 500:20:27Thanks for taking my questions and sending my best to Gary on a quick recovery. So, Yes. Just two questions for me. The first one, Julie, I apologize if I missed it, but did you give organic growth by segment In the prepared remarks? Speaker 300:20:46No, we did not. We just gave organic on the overall. Speaker 500:20:51Is it a change in policy for the company now that you won't be providing that? That's been pretty critical in terms of us understanding how the company is performing. Speaker 300:21:02At this point, with our change, we're trying to give you additional clarity by giving a very clean organic And the acquisition growth numbers, so we will be staying for here for now. Speaker 500:21:15Okay. And I did want to confirm that because I know that's been an area of focus. The organic number this quarter excludes all acquisitions, both large and bolt on? Speaker 300:21:26Yes, 100%, all acquisitions are excluded. Speaker 500:21:30Okay, that's great. My next question is on margins. EBITDA margin contracted, I think about 60 basis points year over year and 140 basis points sequentially. Can you talk about the primary factors that caused that 140 basis point contraction from the Q2 to the Q3 Of this year, I have to imagine that it's probably labor related, because I don't think materials and supplies Are a large enough component of your COGS to really cause this much of a headwind, but I wanted to get your thoughts on that. Speaker 300:22:08I'm I'm going to go ahead and kick this first to Jerry and then I'll see if I want to add anything on to that. Speaker 400:22:12The biggest headwind we had, Tim, this is Jerry, in the quarter was fuel prices, fuel expense. It was up very significantly. We were able to manage the labor part pretty well from as a percentage of revenue. Labor wasn't as big of a deal. So we just had higher fleet expenses probably more than anything. Speaker 400:22:35John, what would you add to that, anything? Speaker 200:22:37Yes, I would second the labor part. I mean, our labor increase as a Percentage of revenue was one of the ways we track it, Tim, is our expenses growing less fast than our revenue, and that's always Focus for our operations in labor was grew less than that 11% revenue increase. Speaker 500:23:00No, that's really good color. I appreciate that. Can you remind me what percent of your sales typically fuel represents? Speaker 300:23:10Well, we don't break out the fuel specifically. We keep that buried into our fleet number, as you well know. So also think about it's not only the fuel increasing, As you said, the $4,000,000 but we're also talking about the increase because we had fewer vehicle gains this quarter as well, just under $1,000,000 on that as well. Yes. Speaker 200:23:28I think in our prepared remarks, Julie said $4,000,000 in increased fuel cost, Tim. And As you know, we've had a active routing and scheduling effort for several years with 1,000,000 stops per month or more. Without that effort and the reduced miles per stock that our field teams are achieving, it would have been worse. Speaker 500:23:53Got it. Okay. All makes sense. Thank you for taking my questions. Speaker 300:23:57Thanks, Tim. Operator00:24:00Our next question comes from Mario Cortellacci with Jefferies. Please proceed with your question. Speaker 600:24:06Hi, thank you for the time. Just kind of piggybacking off of the margin part of it, maybe you can just give us a sense for how pricing is running right now. I think last quarter you guys said that you could flex it up above the 1% to 2% historical range have offset some of the cost pressures, but is there any lag in there like The fuel side of the equation or the diesel or the fleet side of the equation or is the pricing running hot and just helping offset maybe some of the labor pressures? Speaker 200:24:38So you broke up a little bit on part of that. We've not Taken any real extraordinary pricing action as a whole, as we talked about previously, many of our The vast majority of our people are paid on a productivity pay plan. So Any sort of impact to wage inflation doesn't really reflect. What we do, do is use Our call center team and our close rates in our branches to sort of evaluate, do we have room in pricing? And that's been a historic sort of effort that we've always looked at. Speaker 200:25:23But If our close rates in a particular market are trending well above the norm, then that tells us we have room for pricing Increasing no matter that the economic or concerns that are going on, right? And conversely, if it goes the other way, We have the same then we would take maybe a different action. Speaker 400:25:47Yes. The call center has a lot of ability to look at data real time And make those adjustments to what they're selling, how they're selling it, what the demand is like and adjusting price Based on that, but we also did implement our annual price increase this summer just as our core price increase that helps offset some of those costs. But Certainly, the fuel is certainly the most impacted component of that this past quarter. Speaker 600:26:17Got it. And then just more of a housekeeping issue, I guess, with the new organic growth disclosure. Are you guys going to provide any historical so that we have some context in how things have trended? And then also, I guess, within the quarter, Can you give us any context within how resi and commercial trended relative to the corporate average? Was RESI slowing, is commercial slowing, is RESI continuing to pick up or commercial accelerating? Speaker 600:26:48Any kind of context there would be helpful. Speaker 300:26:53Well, basically, it's what we're getting down to the new numbers. We're going to we put these new measurements in place From this point on, we'll be going forward. So as of today, we told you how this growth relates Obviously, Q3 of last year, so we gave you from that perspective, but we are not planning at this point to go back and get historical numbers. So hopefully that makes sense from that standpoint. Speaker 600:27:19Sure. And then can you help with the resi and commercial Trend within the quarter, so that we can gauge how each is performing? Speaker 400:27:29I would say, this is Jerry. Residential remains strong. I mean, it's been real consistent. All the way from the pandemic to now, it remains strong. The commercial function appears to have completely rebounded and again is doing well. Speaker 400:27:48I would probably see some acceleration on the termite side. And so there's really a lot of positive things going on in our termite ancillary services Across the board and that's been a probably a more important growth driver for us in the Q3. But all are really strong And continue to trend in positive directions. Speaker 600:28:13Understood. Thank you so much. Operator00:28:17Our next question comes from Ashish Sabra with RBC Capital Markets. Please proceed with your question. Speaker 700:28:25Thanks for taking my question. Just to follow-up on the resi side, I was wondering if you can talk about the sales momentum coming out of the key summer selling season. And maybe a related question is also on the retention side, how retention has been tracking, particularly again on the resi side with relocate like as People relocating post summer as well as return to office? Thanks. Speaker 300:28:51I'll jump in and then you can add anything if you want to. So on the residential side, still very strong. As we said, we were sitting there with 11.7% increase Over Q3 of last year. And just to bring you around that, if you think about it, last summer, we still had a 10.5% increase on our resi. So residential was we did not see a decline last year like many businesses did or like we did on our commercial side. Speaker 300:29:17So The level that double digit increase was on top of the double digit increase of last year. So from that standpoint, it is still running very strong. On the we have not seen any strong fluctuations on our retention this quarter. Is there anything else John or Jerry you'd like to add to that? Speaker 200:29:38No. Frankly, Ashish, I've been a little bit surprised and pleased at our team's Field Team's ability to handle the load That we've put on them with the new customer influx over the summer and the increasing customers that we added over this last year, Our two primary measurements are customer sat For the near term or the immediate term and then our customer retention is more of a lagging indicator and both have remained relatively steady. Speaker 700:30:14That's very helpful color and good to hear that. Maybe if I can just ask a question on the technology rollout. I was wondering if you could Provide an update on how the Phase 1 and 2 are progressing and as well as the timing of the launch for Phase 3 and 4? Thanks. Speaker 200:30:31You want to handle that? Speaker 400:30:33I can. This is Jerry. So we are Very heavily focused on adoption in the field of the phases that we're in and different operations in the field or different phases of Or different, I guess, maturity levels of adoption. John often And describes it like a baseball game and what inning we're in. And we're still there's still an awful lot of upside there For us to drive utilization, and with this increase that we're seeing in fuel, there's a lot more Desire to get that done and increase the adoption along the way. Speaker 400:31:16So we still have plenty of runway in that regard To doing that and we're continuing to see incremental improvements and that's what we're all about is continuous improvement and getting better all the time. But we still have a long way to go. Speaker 300:31:29Okay. And I'll jump back to John's analogy that Jerry referenced to on the baseball is we say that we're still in the early sides of the game. Speaker 400:31:37Early sides of the game. Speaker 300:31:38Sorry, the early innings. I think we're playing football or something. Well, it's an inning. Okay. Speaker 200:31:53What I might add to that, Our field leaders have adopted sort of a mantra of you bought it, now utilize it. So we've got a ton of technology that our IT team has done a great job in delivering to our field end users. And we're really kind of pushing the mindset that you bought it, you're paying for it, now let's use it. And so that's what we're really working on in 2021. Speaker 700:32:23Thanks. Thanks, John, Sherry and Julie. Thank you, Operator00:32:39Our next question comes from Michael Hoffman with Stifel. Please proceed with your question. Speaker 800:32:44Thank you very much, John, Jerry, Julie, and to pass on my vest to Gary, rehab of an knee is challenging. On the organic growth, can you help us understand what's in it then? As you think about if you took 92 and said approximately X is new customers, X is price, X is cross selling? Speaker 300:33:13This is very similar to what it was in the past. So I think, just on very broad average, 1% to 2%, it would be The price increase and then we do say the rest is a combination of new customers with Additional sales to existing customers, we don't break out that part, but just take out your price increase. Speaker 800:33:34Okay. And then on price, You've historically had a fuel surcharge, if I remember correctly. So are you process Speaker 200:33:44of Michael, this is John. We've never added a fuel surcharge. Well, I said never. We may have at one time and found out that it really ticked our customers off. And so then what do you do when it goes down? Speaker 200:33:55And you have to give that back? So I shouldn't say never, but We may have at one time, but we found out really quickly how that made our customers feel. Speaker 800:34:06Okay. Then I stand corrected. And so how are you going to offset this inflation then? Speaker 200:34:16The inflation of fuel, Additional fuel? Speaker 800:34:19Yes, the fleet cost pressure, how are you going to offset it? Speaker 200:34:24Well, we'll keep pursuing the same mission we have With reducing our miles per stop and routing our people more efficiently and as we add new customers then we, of course, improve density. Speaker 800:34:39Okay. And last one for me, where does Wild okay, go ahead, sorry. Just one more question. Speaker 300:34:42Yes, I'm just going to expand on what John said. It just gets back to what we were A few minutes ago is literally, I mean, think about it, if we are in the early innings, did I say that correctly, guys? Early innings On our routing and scheduling and what we can bring in and lowering those miles per stop, I mean, we have a long run now I'm going to Change analogies here. I was going to say a long runway, that would totally kill it with it. We have a long way to go on that. Speaker 300:35:08So this will definitely help offset, as John was saying, the fuel increases. Speaker 800:35:14Okay. And then lastly, where does Wild Life exist in the three line items, just so we understand what it's influencing? Speaker 300:35:22It will be in whichever line item it occurs. The majority of the wildlife would be on the residential. Right. Speaker 400:35:29But if it was a commercial customer that needed that service, say, a grocery store, it would hit commercial. But if it was a residential homeowner, it would hit residential. Speaker 300:35:39I'm just very familiar with it because I've used our wildlife service before, flying squirrels. Speaker 400:35:44So it's going to be a mix of those. But the majority of their business is certainly residential. Speaker 600:35:54Yes. Speaker 400:35:54Right. Speaker 800:35:56Okay. Thank you. Speaker 300:35:59And Michael, I do want to make one comment, just so you know. That is the way we have always presented the wildlife. So that is nothing new on how we do split that. Speaker 800:36:10Fair enough. Just needed to understand since you're emphasizing it, which part was being influenced by it. Operator00:36:20Okay. We've reached the end of the question and answer session. I'd now like to turn the call back over to management for closing comments. Speaker 200:36:28Thank you all for joining us today. We appreciate your interest in our company. As you've heard during the past calls, we have several programs underway That will make our company better as well as improve our customers' experience and our financial results. We look forward to giving you an update on our Q4 year end call. Thanks again. Operator00:36:47This concludes today's conference. You may disconnect your lines at this time and weRead morePowered by Conference Call Audio Live Call not available Earnings Conference CallRollins Q3 202100:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsQuarterly report(10-Q) Rollins Earnings HeadlinesFive WWE Stars That Could Join Paul Heyman and Seth Rollins’ FactionMay 11 at 12:20 AM | msn.comJey Uso’s Next World Title Defense After Raw Classic with Seth Rollins Set for Saturday Night’s Main Event: ReportsMay 10 at 7:20 PM | msn.comMost traders are panicking. We’re cashing inMost traders are panicking right now. Bitcoin’s dropping. Altcoins are bleeding. The stock market’s a mess. The news is screaming fear. But while most traders watch their portfolios tank…May 11, 2025 | Crypto Swap Profits (Ad)Brooke Rollins traveling to UK to meet with country’s ‘key’ agriculture producersMay 9 at 8:25 AM | msn.com5 Minutes That Will Make You Love Sonny RollinsMay 8 at 1:19 AM | nytimes.comSeth Rollins Reveals How Much Time Is Left On His WWE ContractMay 7, 2025 | msn.comSee More Rollins Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Rollins? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Rollins and other key companies, straight to your email. Email Address About RollinsRollins (NYSE:ROL), through its subsidiaries, provides pest and wildlife control services to residential and commercial customers in the United States and internationally. The company offers pest control services to residential properties protecting from common pests, including rodents, insects, and wildlife. It also provides workplace pest control solutions for customers across various end markets, such as healthcare, foodservice, and logistics. In addition, the company offers termite protection services and ancillary services. It serves clients directly, as well as through franchisee operations. The company was formerly known as Rollins Broadcasting, Inc and changed its name to Rollins, Inc. in 1965. Rollins, Inc. was founded in 1901 and is headquartered in Atlanta, Georgia.View Rollins ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Why Nearly 20 Analysts Raised Meta Price Targets Post-EarningsOXY Stock Rebound Begins Following Solid Earnings BeatMonolithic Power Systems: Will Strong Earnings Spark a Recovery?Datadog Earnings Delight: Q1 Strength and an Upbeat Forecast Upwork's Earnings Beat Fuels Stock Rally—Is Freelancing Booming?DexCom Stock: Earnings Beat and New Market Access Drive Bull CaseDisney Stock Jumps on Earnings—Is the Magic Sustainable? 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There are 9 speakers on the call. Operator00:00:00Greetings, and welcome to Rollins Incorporated 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Joe Calabrese. Operator00:00:25Thank you. You may begin. Speaker 100:00:27Thank you. By now, you have all received a copy of the press release. However, If anyone is missing a copy and would like to receive 1, please contact our office at 212-827 3,746, and we will send you a release and make sure you're on the company's distribution list. There will be a replay of the call, which will begin 1 hour after the call and run for 1 week. The replay can be accessed by dialing 844 Additionally, call is being webcast at www.viovid.com and a replay will be available for 90 days. Speaker 100:01:19On the line with me today and speaking are John Wilson, Vice Chairman Jerry Gale, Jr, President and Chief Operating Officer and Julie Bimmerman, Interim Chief Financial Officer, Vice President and Treasurer. Management will make some opening remarks, and then we'll open the line for your questions. John, would you like to begin? Speaker 200:01:39Thank you, Joe, and good morning. We appreciate all of you joining us for our Q3 2021 conference call. Julie will read our forward looking statement and disclaimer, and then we will begin. Speaker 300:01:52Our earnings release discussion discusses our business outlook and contains certain forward looking statements. These particular forward looking statements and all other statements That will be made on this call, excluding historical facts, are subject to a number of risks and uncertainties, and actual risks may differ materially from any statement we make today. Please refer to today's press release and our SEC filings, including the Risk Factors section of our Form 10 ks for the year ended December 31, 2020, For more information and the risk factors that could cause actual results to differ. Speaker 200:02:34Thank you, Julie. Before we begin, I am sure you have noticed that Gary is not on today's conference call. He is actively rehabbing from a knee replacement operation and while he is recovering quickly, he is doing very well. He's just not in a position to physically join us today. We wish Gary well with his physical therapy and look forward to having him rejoin us on future calls. Speaker 200:03:00During the Q3, we achieved some very strong business results and Jerry will go over those with you shortly. In the interim, I wanted to share news of the latest addition to our Rollins Board of Directors. As you already know over the previous year, we have enhanced and diversified that group with several new members. I am very pleased to announce our latest addition is Rollins' President and Chief Operating Officer, Jerry Galoff. This is in recognition of his strong leadership and his deep commitment to the company's long term success. Speaker 200:03:36We are proud to have Jerry serving on our Board moving forward. Jerry is an important part of the Rollins leadership team and his in-depth knowledge of our business and experience gained from working in our industry since 1991 adds perspective. We're fortunate to have him assume a greater role in The direction and future of our company. Before turning the call over to Jerry, I have two items to first update you on. The first will represent a recent development in Rollins' environmental, social and governance commitment. Speaker 200:04:10We take very seriously the responsibility that we have to the communities in which we work and live. As a recent example, We're pleased to share that Rollins made an in kind donation originally costing $4,600,000 worth of personal protective equipment Or PPE items during the Q3. Working with the Federal Emergency Management Agency And several philanthropic organizations, including the Friends of Disabled Adults and Children, the Foundation of Hope Food Bank, as well as Cope Preparedness in Los Angeles, we donated 27 pallets or 6,800,000 pieces of masks, Gloves and other items. In addition to achieving the successful execution of our strategies as well as solid business results. We also have a responsibility to the communities in which we work and live. Speaker 200:05:06ESG is a Facet of our business is becoming more important more and more important to us. We are proud to support these initiatives. Last, as we have previously disclosed, the company has been responding to an investigation by the U. S. Securities and Exchange Commission. Speaker 200:05:25In accordance with accounting standard ASC 450, we have established a reserve related to this matter, which we consider immaterial. Given that the investigation is ongoing, we cannot answer any questions during our Q and A, but we remain focused on resolving this inquiry. With that, I will turn our call over to Jerry. Speaker 400:05:48Thank you, John. Good morning, everybody. We're very pleased with our Q3 results. Revenue increased 11.4 percent to $650,200,000 compared to $583,700,000 for the Q3 of last year. Our net income totaled $93,900,000 or $0.19 per diluted share compared to $79,600,000 or $0.16 per diluted share for the same period in 2020. Speaker 400:06:16Julie will review the GAAP and non GAAP results shortly. Revenues for the 1st 9 months of 2021 were $1,824,000,000 an increase of 12.2% compared to $1,625,000,000 for the same period last year. Net income for the 1st 9 months increased 44% to $285,300,000 or $0.58 per diluted share compared to $198,200,000 or $0.40 per diluted share for the comparable period last year. For the quarter, we experienced solid growth in all Our business lines with residential increasing 11.7% and termite presenting 15% growth over the Q3 2020. Additionally, commercial excluding fumigation delivered an impressive 10.1% growth over the Q3 last year. Speaker 400:07:10This is also an improvement of 7.9% growth over 2 years ago when we were not experiencing COVID related shutdowns. Overall, we are pleased with our performance. Rollins remains well positioned for the remainder of the year and into 2022. Looking deeper at our operating results, we're attracting customers to all our services and brands. And one area I'd like to focus on today is our continued strong growth in our wildlife service offerings. Speaker 400:07:42TruTek Wildlife joined the Rollins family in 2010, followed by Critter Control in 2015. Since 2010, the business has grown 800%. Day to day operations of operating a wildlife control business is quite different than running a typical pest and termite business and we are proud to have a dedicated team focused on this much needed service. Originally concentrated in the Southeastern United States, the business has expanded across the nation as well as into Canada. And with Critter Control's expansion into Canada, it's Rollins' 1st brand to enter an international country without acquiring another business as a platform. Speaker 400:08:25The Wild Life division also operates a thriving franchise system. There are currently 84 franchises with the most recent franchise launching in Mansfield, Ohio. We anticipate finishing the year with 12 new franchises, one of our strongest years in adding franchisees. We have also been fortunate to add 9 former corporate employees as franchisees, Employees who have an entrepreneurial drive and a passion for nuisance wildlife and customer service have multiple career path opportunities, be it ownership of a franchise or growth within our company. We believe there is meaningful opportunity for continued growth in our wildlife business and look forward to updating you in the quarters ahead. Speaker 400:09:11I'd now like to discuss Hurricane Ida. Our hearts go out to our Gulf Coast region and those that were affected by the hurricane. But I must admit, we were inspired by our team in that area. They implemented an amazing plan that helped our team members and alleviate the negative impact of the storm. Ida shut down several of our branches for days, but 2 locations were shut down for about 2 weeks. Speaker 400:09:36The impact to our employees in the days following the storm Was far worse than the impact to our business in the quarter. Thankfully, all of our employees in the area were safe, yet they did need assistance. Through the Rollins Employee Relief Fund, we granted 137 emergency grants to impacted employees within the 1st week following the hurricane to enable employees to address their personal essential needs. Since then, another 7 employees who endured greater hardships Receive full grants to address their more significant needs. Additionally, our Orkin South Central division led by Leland Morris Quickly initiated a preparedness and mitigation plan to assist our team members. Speaker 400:10:21This included immediate procurement of much needed supplies for our employees and their families, such as generators, fuel, portable air conditioners, fans, water and other essential emergency provisions that were not readily accessible to them locally. Our team members in adjacent areas that were fortunate to avoid the brunt of Ida's force volunteer their time and energy often after work hours to load these supplies into box trucks and drive them to those most in need. For weeks, they continued to shuttle fuel to these employees to keep their generators up and running. This was a total team effort and we are tremendously proud of their care, compassion and commitment to one another. In fact, we're so pleased with their effort That we plan to expand and formalize this program in other areas of the country so that we can rapidly respond in case of a natural disaster or emergency. Speaker 400:11:19Now, let me turn the call over to Julie to discuss our financials. Speaker 300:11:23Thank you, Jerry. As we measure our performance and think about how to best articulate Rollins' business in the future. Along with what routine questions we receive from the investment community, We will now be presenting 3 additional measurements quarterly moving forward. The first is a measure we have referred to periodically, And that is EBITDA or earnings before interest, taxes, depreciation and amortization. Due to our consistent high volume of acquisitions and hence High amortization expense related to these acquisitions, presenting EBITDA regularly will provide a clearer picture of our operations' Ongoing financial performance. Speaker 300:12:02Think about this. Over the last 3 years, we have averaged 30 acquisitions per year. Next, we will begin presenting our revenue growth through both constant exchange rate and actual exchange rate. By utilizing historical baseline revenues for acquisitions vetted through the due diligence process, we are able to include all acquisitions within the calculations, both standalone and tuck ins. This will bring clarity and consistency to both our acquisition and our organic revenue growth measurements. Speaker 300:12:353rd, we'll be providing you with our free cash flow. We believe that this will properly illustrate Rollins' strong Ability to generate cash. We have taken a simple approach to defining free cash flow, which is calculated as net cash provided by operating activities with purchase of equipment and property. Our hope is that these measurements will enable investors to better assess our operating performance in the future and provide a deeper view of our business. We have included GAAP to non GAAP reconciliations on each of these metrics on our earnings press release published this morning. Speaker 300:13:12So on to the numbers. Our 3rd quarter revenues of $650,200,000 With an increase of 11.4% over last year. Of the 11.4% actual exchange rate revenue growth, Acquisition growth was 2.2% and organic equated to 9.2%. For the constant exchange rate, the growth percentages calculated within the 100th of the actual exchange growth rate, therefore, presented the same. For the 9 months ended September 2021, revenues of $1,824,000,000 was an increase of 12.12 percentage over year to date 2020. Speaker 300:13:55Of this actual exchange rate, total revenue growth of 2 point excuse me, of 12.2%. 2.7% was related to acquisitions and 9.5% organic growth. The constant year to date exchange rate total revenue growth for 2021 equaled 11.6%, 2.7% represented acquisitions and 8.9% organic revenue growth. As Jerry pointed out, residential, commercial and termite all grew double digits this quarter over the same quarter last year. So, in determining my focus for today, I decided to take Jerry's lead and discuss wildlife. Speaker 300:14:42Yet I'm discussing specifically company owned wildlife operations. For the Q3 in 2021, Wildlife revenues grew 24.1 percent over last year. And year to date, Wildlife has presented an overall revenue growth of 27.6%. What makes us particularly impressive is that this is after their strong growth of 20.4% last year. So similar to our residential pest control, wildlife did not feel a negative impact to revenue growth during the pandemic. Speaker 300:15:15The way to go to the Wild Life team. Now on to our income. For the Q3 year to date, We are presenting adjusted EBITDA for comparison purposes due to the one time super vesting of our late Chairman's stock grants in the Q3 of 2020 and the impact of our gain on sale of several of our Clark properties in the 1st 6 months of 2021. The Q3 2021 EBITDA was $150,900,000 or 8.7 percent over 2023rd quarter adjusted EBITDA of $138,900,000 3rd quarter 2021 EPS was $0.19 For diluted share or 5.6 percent improvement over the 2023rd quarter adjusted EPS. For the 9 months ended September 2021, our adjusted EBITDA was $421,200,000 or 22 1% over last year's adjusted EBITDA of $344,900,000 Year to date 2021 adjusted EPS was $0.53 per diluted share or 26.2 percent over last year. Speaker 300:16:31For the Q3 2021, gross margin increased to 53% or 0.4% over last year. Strong improvements in our materials and supplies were negatively offset by high overall fleet costs, primarily from an increase in fuel of approximately $4,000,000 over Q3 2020 and lower vehicle gains of $900,000 compared to last year. Sales, general and administrative 3rd quarter margin increase over last year was strongly impacted by the PPE donations and SEC Accrual previously mentioned by John. Travel expenses have also increased $1,300,000 in the 3rd quarter as we have begun to lift our company travel restrictions. Amortization expenses for the Q3 20 21 increased $1,400,000 due to the amortization of customer contracts from multiple acquisitions. Speaker 300:17:28This was offset by a decrease And depreciation of $201,000 due to the sale of owned vehicles and centralizing of IT functions. Overall, this equated to a 5.1% increase in depreciation and amortization over the Q3 2020. Our dividends paid year to date 2021 was $119,700,000 or an increase of 30.4% over last year. We ended the current period with $117,700,000 in cash, of which $73,600,000 was held by our foreign subsidiaries. So this brings us to the final of our new three measurements. Speaker 300:18:06Free cash flow. For the Q3 2021, our free cash flow is $72,900,000 or a decrease of 27.5% over the same quarter last year. For the 9 months ended 2021, our free cash flow equals $278,900,000 or 13.6% decrease over year to date 2020. This fluctuation occurred due to the deferral of $30,300,000 in FICA taxes payable in 2020 has allowed under the CARES Act. These associated taxes were then remitted in September of 2021. Speaker 300:18:44We hope that the discussion of these new measurements, you will receive a greater clarity while reviewing our financial performance. Lastly, I want to discuss that yesterday, we were extremely pleased to announce that our Board has approved a 25% increase to our dividends. The quarterly dividend increased $0.10 to $0.10 per share from $0.08 per share and will be paid on December 10, 2021 to stockholders of record at the close of business on November 10, 2021. Additionally, the Board also approved a special dividend of $0.08 to be paid on December 10, 2021 as well. The dividend increase reflects our strong performance in the 1st 9 months of the year and underscores our financial strength, our solid capital position and the Board's confidence in our outlook for continued growth. Speaker 300:19:35John, I'll turn it back to you. Speaker 200:19:38Thank you, Julie. We are happy to take any questions at this time. Operator00:19:43At this time, we'll be conducting a question and answer session. We ask that you please limit to one question and one follow-up. One moment please while we poll for questions. Our first question comes from Tim Mulrooney with William Blair. Please proceed with your question. Speaker 500:20:22John, Jerry and Julie, good morning. Speaker 200:20:25Good morning, Ken. Speaker 500:20:27Thanks for taking my questions and sending my best to Gary on a quick recovery. So, Yes. Just two questions for me. The first one, Julie, I apologize if I missed it, but did you give organic growth by segment In the prepared remarks? Speaker 300:20:46No, we did not. We just gave organic on the overall. Speaker 500:20:51Is it a change in policy for the company now that you won't be providing that? That's been pretty critical in terms of us understanding how the company is performing. Speaker 300:21:02At this point, with our change, we're trying to give you additional clarity by giving a very clean organic And the acquisition growth numbers, so we will be staying for here for now. Speaker 500:21:15Okay. And I did want to confirm that because I know that's been an area of focus. The organic number this quarter excludes all acquisitions, both large and bolt on? Speaker 300:21:26Yes, 100%, all acquisitions are excluded. Speaker 500:21:30Okay, that's great. My next question is on margins. EBITDA margin contracted, I think about 60 basis points year over year and 140 basis points sequentially. Can you talk about the primary factors that caused that 140 basis point contraction from the Q2 to the Q3 Of this year, I have to imagine that it's probably labor related, because I don't think materials and supplies Are a large enough component of your COGS to really cause this much of a headwind, but I wanted to get your thoughts on that. Speaker 300:22:08I'm I'm going to go ahead and kick this first to Jerry and then I'll see if I want to add anything on to that. Speaker 400:22:12The biggest headwind we had, Tim, this is Jerry, in the quarter was fuel prices, fuel expense. It was up very significantly. We were able to manage the labor part pretty well from as a percentage of revenue. Labor wasn't as big of a deal. So we just had higher fleet expenses probably more than anything. Speaker 400:22:35John, what would you add to that, anything? Speaker 200:22:37Yes, I would second the labor part. I mean, our labor increase as a Percentage of revenue was one of the ways we track it, Tim, is our expenses growing less fast than our revenue, and that's always Focus for our operations in labor was grew less than that 11% revenue increase. Speaker 500:23:00No, that's really good color. I appreciate that. Can you remind me what percent of your sales typically fuel represents? Speaker 300:23:10Well, we don't break out the fuel specifically. We keep that buried into our fleet number, as you well know. So also think about it's not only the fuel increasing, As you said, the $4,000,000 but we're also talking about the increase because we had fewer vehicle gains this quarter as well, just under $1,000,000 on that as well. Yes. Speaker 200:23:28I think in our prepared remarks, Julie said $4,000,000 in increased fuel cost, Tim. And As you know, we've had a active routing and scheduling effort for several years with 1,000,000 stops per month or more. Without that effort and the reduced miles per stock that our field teams are achieving, it would have been worse. Speaker 500:23:53Got it. Okay. All makes sense. Thank you for taking my questions. Speaker 300:23:57Thanks, Tim. Operator00:24:00Our next question comes from Mario Cortellacci with Jefferies. Please proceed with your question. Speaker 600:24:06Hi, thank you for the time. Just kind of piggybacking off of the margin part of it, maybe you can just give us a sense for how pricing is running right now. I think last quarter you guys said that you could flex it up above the 1% to 2% historical range have offset some of the cost pressures, but is there any lag in there like The fuel side of the equation or the diesel or the fleet side of the equation or is the pricing running hot and just helping offset maybe some of the labor pressures? Speaker 200:24:38So you broke up a little bit on part of that. We've not Taken any real extraordinary pricing action as a whole, as we talked about previously, many of our The vast majority of our people are paid on a productivity pay plan. So Any sort of impact to wage inflation doesn't really reflect. What we do, do is use Our call center team and our close rates in our branches to sort of evaluate, do we have room in pricing? And that's been a historic sort of effort that we've always looked at. Speaker 200:25:23But If our close rates in a particular market are trending well above the norm, then that tells us we have room for pricing Increasing no matter that the economic or concerns that are going on, right? And conversely, if it goes the other way, We have the same then we would take maybe a different action. Speaker 400:25:47Yes. The call center has a lot of ability to look at data real time And make those adjustments to what they're selling, how they're selling it, what the demand is like and adjusting price Based on that, but we also did implement our annual price increase this summer just as our core price increase that helps offset some of those costs. But Certainly, the fuel is certainly the most impacted component of that this past quarter. Speaker 600:26:17Got it. And then just more of a housekeeping issue, I guess, with the new organic growth disclosure. Are you guys going to provide any historical so that we have some context in how things have trended? And then also, I guess, within the quarter, Can you give us any context within how resi and commercial trended relative to the corporate average? Was RESI slowing, is commercial slowing, is RESI continuing to pick up or commercial accelerating? Speaker 600:26:48Any kind of context there would be helpful. Speaker 300:26:53Well, basically, it's what we're getting down to the new numbers. We're going to we put these new measurements in place From this point on, we'll be going forward. So as of today, we told you how this growth relates Obviously, Q3 of last year, so we gave you from that perspective, but we are not planning at this point to go back and get historical numbers. So hopefully that makes sense from that standpoint. Speaker 600:27:19Sure. And then can you help with the resi and commercial Trend within the quarter, so that we can gauge how each is performing? Speaker 400:27:29I would say, this is Jerry. Residential remains strong. I mean, it's been real consistent. All the way from the pandemic to now, it remains strong. The commercial function appears to have completely rebounded and again is doing well. Speaker 400:27:48I would probably see some acceleration on the termite side. And so there's really a lot of positive things going on in our termite ancillary services Across the board and that's been a probably a more important growth driver for us in the Q3. But all are really strong And continue to trend in positive directions. Speaker 600:28:13Understood. Thank you so much. Operator00:28:17Our next question comes from Ashish Sabra with RBC Capital Markets. Please proceed with your question. Speaker 700:28:25Thanks for taking my question. Just to follow-up on the resi side, I was wondering if you can talk about the sales momentum coming out of the key summer selling season. And maybe a related question is also on the retention side, how retention has been tracking, particularly again on the resi side with relocate like as People relocating post summer as well as return to office? Thanks. Speaker 300:28:51I'll jump in and then you can add anything if you want to. So on the residential side, still very strong. As we said, we were sitting there with 11.7% increase Over Q3 of last year. And just to bring you around that, if you think about it, last summer, we still had a 10.5% increase on our resi. So residential was we did not see a decline last year like many businesses did or like we did on our commercial side. Speaker 300:29:17So The level that double digit increase was on top of the double digit increase of last year. So from that standpoint, it is still running very strong. On the we have not seen any strong fluctuations on our retention this quarter. Is there anything else John or Jerry you'd like to add to that? Speaker 200:29:38No. Frankly, Ashish, I've been a little bit surprised and pleased at our team's Field Team's ability to handle the load That we've put on them with the new customer influx over the summer and the increasing customers that we added over this last year, Our two primary measurements are customer sat For the near term or the immediate term and then our customer retention is more of a lagging indicator and both have remained relatively steady. Speaker 700:30:14That's very helpful color and good to hear that. Maybe if I can just ask a question on the technology rollout. I was wondering if you could Provide an update on how the Phase 1 and 2 are progressing and as well as the timing of the launch for Phase 3 and 4? Thanks. Speaker 200:30:31You want to handle that? Speaker 400:30:33I can. This is Jerry. So we are Very heavily focused on adoption in the field of the phases that we're in and different operations in the field or different phases of Or different, I guess, maturity levels of adoption. John often And describes it like a baseball game and what inning we're in. And we're still there's still an awful lot of upside there For us to drive utilization, and with this increase that we're seeing in fuel, there's a lot more Desire to get that done and increase the adoption along the way. Speaker 400:31:16So we still have plenty of runway in that regard To doing that and we're continuing to see incremental improvements and that's what we're all about is continuous improvement and getting better all the time. But we still have a long way to go. Speaker 300:31:29Okay. And I'll jump back to John's analogy that Jerry referenced to on the baseball is we say that we're still in the early sides of the game. Speaker 400:31:37Early sides of the game. Speaker 300:31:38Sorry, the early innings. I think we're playing football or something. Well, it's an inning. Okay. Speaker 200:31:53What I might add to that, Our field leaders have adopted sort of a mantra of you bought it, now utilize it. So we've got a ton of technology that our IT team has done a great job in delivering to our field end users. And we're really kind of pushing the mindset that you bought it, you're paying for it, now let's use it. And so that's what we're really working on in 2021. Speaker 700:32:23Thanks. Thanks, John, Sherry and Julie. Thank you, Operator00:32:39Our next question comes from Michael Hoffman with Stifel. Please proceed with your question. Speaker 800:32:44Thank you very much, John, Jerry, Julie, and to pass on my vest to Gary, rehab of an knee is challenging. On the organic growth, can you help us understand what's in it then? As you think about if you took 92 and said approximately X is new customers, X is price, X is cross selling? Speaker 300:33:13This is very similar to what it was in the past. So I think, just on very broad average, 1% to 2%, it would be The price increase and then we do say the rest is a combination of new customers with Additional sales to existing customers, we don't break out that part, but just take out your price increase. Speaker 800:33:34Okay. And then on price, You've historically had a fuel surcharge, if I remember correctly. So are you process Speaker 200:33:44of Michael, this is John. We've never added a fuel surcharge. Well, I said never. We may have at one time and found out that it really ticked our customers off. And so then what do you do when it goes down? Speaker 200:33:55And you have to give that back? So I shouldn't say never, but We may have at one time, but we found out really quickly how that made our customers feel. Speaker 800:34:06Okay. Then I stand corrected. And so how are you going to offset this inflation then? Speaker 200:34:16The inflation of fuel, Additional fuel? Speaker 800:34:19Yes, the fleet cost pressure, how are you going to offset it? Speaker 200:34:24Well, we'll keep pursuing the same mission we have With reducing our miles per stop and routing our people more efficiently and as we add new customers then we, of course, improve density. Speaker 800:34:39Okay. And last one for me, where does Wild okay, go ahead, sorry. Just one more question. Speaker 300:34:42Yes, I'm just going to expand on what John said. It just gets back to what we were A few minutes ago is literally, I mean, think about it, if we are in the early innings, did I say that correctly, guys? Early innings On our routing and scheduling and what we can bring in and lowering those miles per stop, I mean, we have a long run now I'm going to Change analogies here. I was going to say a long runway, that would totally kill it with it. We have a long way to go on that. Speaker 300:35:08So this will definitely help offset, as John was saying, the fuel increases. Speaker 800:35:14Okay. And then lastly, where does Wild Life exist in the three line items, just so we understand what it's influencing? Speaker 300:35:22It will be in whichever line item it occurs. The majority of the wildlife would be on the residential. Right. Speaker 400:35:29But if it was a commercial customer that needed that service, say, a grocery store, it would hit commercial. But if it was a residential homeowner, it would hit residential. Speaker 300:35:39I'm just very familiar with it because I've used our wildlife service before, flying squirrels. Speaker 400:35:44So it's going to be a mix of those. But the majority of their business is certainly residential. Speaker 600:35:54Yes. Speaker 400:35:54Right. Speaker 800:35:56Okay. Thank you. Speaker 300:35:59And Michael, I do want to make one comment, just so you know. That is the way we have always presented the wildlife. So that is nothing new on how we do split that. Speaker 800:36:10Fair enough. Just needed to understand since you're emphasizing it, which part was being influenced by it. Operator00:36:20Okay. We've reached the end of the question and answer session. I'd now like to turn the call back over to management for closing comments. Speaker 200:36:28Thank you all for joining us today. We appreciate your interest in our company. As you've heard during the past calls, we have several programs underway That will make our company better as well as improve our customers' experience and our financial results. We look forward to giving you an update on our Q4 year end call. Thanks again. Operator00:36:47This concludes today's conference. You may disconnect your lines at this time and weRead morePowered by