Slide 1: Interim Results 2024: Investing for Growth
Interim Results 2024 Global Leaders in Pest Control and Hygiene & Wellbeing Services Investing for Growth 25 July 2024 1
Slide 2: Cautionary statement
Cautionary statement In order, among other things, to utilise the ‘safe harbour’ provisions of the U.S. Private Securities Litigation Reform Act of 1995 (the “PSLRA”) and the general doctrine of cautionary statements, Rentokil Initial plc (“the Company”) is providing the following cautionary stateme
Slide 3: Agenda | Interim Results 2024
Agenda | Interim Results 2024 Introduction and Highlights Andy Ransom Group and Regional Financial Results Stuart Ingall-Tombs Operating Model and our global Business Categories Andy Ransom North America in H1: Overview Andy Ransom North America: THE RIGHT WAY 2 Plan for Organic Growth - Investing f
Slide 4: H1 2024 Group Highlights
H1 2024 | Group Highlights £2.8bn +2.8% +1.5% £455m H1 REVENUE NA PEST CONTROL SERVICES ADJUSTED OPERATING PROFIT GROWTH OF 4.0% ORGANIC REVENUE GROWTH Q2 ORGANIC REVENUE GROWTH. GROWTH OF 4.7% 50bps up on Q1 16.5% £253m £81m 2.8x ADJUSTED OPERATING MARGIN STATUTORY PROFIT BEFORE TAX ANNUALISED ACQU
Slide 5: Progress in North America Pest Control
Progress in North America Pest Control THE RIGHT WAY 2 Growth Plan – positive early signals Significant focus, actions underway across the business and encouraging signs of progress in many key metrics: • c.$21m of the additional $25m spent in H1: Brand marketing, lead generation, new sales & market
Slide 6: Progress on integration plan
Progress on integration plan Excellent delivery in H1 Phase 2 - preparation for branch integrations – completed in H1: COST SYNERGY • Legal merger delivered DELIVERY • All pest service lines of business aligned and standard pricing tool • Significant progress with end state systems working well. Ext
Slide 7: Financial & Regional Review
Interim Results 2024 Financial & Regional Review Stuart Ingall-Tombs 7
Slide 8: Group Financial Highlights
Group Financial Highlights Revenue +2.8% Organic Revenue H1 24 £2,756m plus 23 bolt-on acquisitions Δ Δ £ million AER CER AER CER Profit Revenue 2,706 2,756 1.3% 4.0% £455m +4.7%. Margin up 10bps Adjusted Operating Profit 445 455 1.9% 4.7% Free Cash Flow £172m 62.2% Adjusted FCF conversion (AER) Adj
Slide 9: North America
North America Regional Organic Revenue +1.3% • 50bps QoQ improvement in Pest Control services organic growth H1 24 Δ (1.0% in Q1, 1.5% in Q2). Positive movement in leading indicators • Pest Control +1.1%, impacted by weaker Q2 products distribution Revenue £1,662m +1.1% business performance Organic
Slide 10: Europe (incl. LATAM)
Europe (incl. LATAM) Revenue +7.0%; Organic Revenue +5.8% H1 24 Δ • Pest Control Revenue +8.0%, with a strong contribution from Revenue £562m +7.0% larger markets (Germany, Italy and Benelux) • Hygiene & Wellbeing Revenue +5.2%; improved performance in Organic Revenue +5.8% Specialist Hygiene and Cl
Slide 11: UK & Sub-Saharan Africa
UK & Sub-Saharan Africa Revenue +13.2%; Organic Revenue +5.1% H1 24 Δ • Pest Control Revenue +5.2% Revenue £213m +13.2% • Hygiene & Wellbeing Revenue +21.4% Organic Revenue +5.1% Adjusted Operating Profit +9.3%. Margin remains strong at 23.0% • 90bps margin reduction in H1 due to upfront short-term
Slide 12: Asia & MENAT; Pacific
Asia & MENAT Pacific 7% of Group Revenue 4% of Adjusted Operating Profit 5% of Group Revenue 5% of Adjusted Operating Profit H1 24 Δ H1 24 Δ Revenue £178m +7.5% Revenue £135m +10.4% Organic Revenue +4.7% Organic Revenue +4.1% Adjusted Operating Profit £24m +1.7% Adjusted Operating Profit £29m +5.0%
Slide 13: Group Margin Development
Group Margin Development 10bps Group margin improvement: Group Adjusted Operating Margin • Continued execution on strategy: densification of routes and 2024 H1 vs 2023 H1 products; optimisation of overhead; technology and innovation; active management of cost base £(17)m • Integration activities dri
Slide 14: Group Cash Flow
Group Cash Flow @AER £ million H1 24 H1 23 Commentary Adjusted Operating Profit 445 437 Adjusted EBITDA up 1.5% to £611m Depreciation 153 147 Working capital outflow of £97m in H1 from a slightly softer debtors’ performance and improved supplier Other 13 18 payment processing at the end of H1. These
Slide 15: Group Cash Flow cont'd
Group Cash Flow cont’d @AER £ million H1 24 H1 23 Commentary Cash interest (104) (114) Cash tax (31) (58) Cash interest payments were £10m lower due to higher interest received on deposits Free Cash Flow 172 229 Acquisitions (76) (175) Cash tax payments of £31m, down £27m year on year due to prior y
Slide 16: Net Debt
Net Debt @AER £ million H1 24 H1 23 @AER Net decrease in cash and cash equivalents (104) (159) Debt related cash flows 10 3 IFRS 16 liability movement (1) (7) Debt acquired (4) 18 Bond interest accrual 35 35 Foreign exchange translation and other items (12) 136 Decrease/(Increase) in net debt (76) 2
Slide 17: Presentation Currency and Listing
Presentation Currency and Listing Change of Presentation Currency from GBP to USD • The Group has used British Pound Sterling (GBP) as its presentation currency since inception • After the acquisition of Terminix, the US represents c.60% of Revenues and c.67% of Adjusted Operating Profit. The conver
Slide 18: Technical Guidance for FY 2024
Technical Guidance for FY 2024 P&L Guidance Cash Flow Guidance • Restructuring costs: £5m; • Overall one-off and adjusting items: c.£85m-£95m • One offs and Adjusting items excl. Terminix*: £15-£20m • Working Capital: c.£50m-£60m and c.£55m-£65m of (previously c.£10m) provision payments • Terminix i
Slide 19: Global Leaders in Pest Control and Hygiene & Wellbeing Services
Interim Results 2024 Global Leaders in Pest Control and Hygiene & Wellbeing Services Andy Ransom 19 Innovation: Bird Alert uses the calls of predatory birds to scare away nuisance birds.
Slide 20: Our Operating Model
Our Operating Model Execution of our plan starts by getting it right for our colleagues Strong progress on Colleague Safety, Retention, Recruitment and Sustainability World Class Safety Performance in H1 Impact on Employer Health and Lost Time Accident Rate c.13% improvement (vs FY 2023) at 0.31 Soc
Slide 21: Spending on Pest Control is increasing in every market
Spending on Pest Control is increasing in every market Per capita spend continues to increase driven by global trends 2023 Pest Control per Capita ($) Pest Control Growth % ($bn) 2018 2023 (18=>23) Global $25.93 $2.41 $3.25 35% Regional variances also influence North America $13.43 $18.02 $22.43 24%
Slide 22: H1 2024 | Pest Control Revenue Growth
H1 2024 | Pest Control Revenue Growth H1 Revenues from £386m to £2.2bn in ten years Revenue £m H1 2024 £2,500 2.8% Revenue growth in H1 to £2,186m: £2,000 10-YEAR CAGR • North America (inc. Dist, Lake, Vector): 1.0% 18.9% • Europe (inc LATAM): 8.0% • UK & SSA: 5.2% £1,500 • Asia: 9.2% • Pacific: 12.
Slide 23: H1 2024 | Pest Control Adjusted Operating Profit
H1 2024 | Pest Control Adjusted Operating Profit H1 Profit from £65m to £421m in ten years Adjusted Operating Profit £m H1 2024 £450 Adjusted Operating Profit growth of 2.2% £400 10-YEAR in H1 to £421m: CAGR £350 20.4% • North America (inc. Dist, Lake, Vector): 1.1% £300 • Europe (inc LATAM): 6.9% •
Slide 24: H1 2024 | Hygiene and Wellbeing
H1 2024 | Hygiene and Wellbeing Strong performance in H1 Revenue £m 500 H1 2024 450 10-YEAR Revenue growth of 9.6% to £448m in H1: CAGR 6.3% 400 • North America: 8.0% • Europe (inc LATAM): 5.6% • UK & SSA: 21.4% 350 • Asia: 3.9% £448 • Pacific: 8.1% 300 £409 £381 Organic Growth of 4.8% £348 £344 £32
Slide 25: H1 2024 | Hygiene and Wellbeing
H1 2024 | Hygiene and Wellbeing Strong performance in H1 Adjusted Operating Profit £m 100 H1 2024 90 10-YEAR CAGR 80 Adjusted Operating Profit growth of 14.3% in H1: 8.0% 70 • North America: 51.5% 60 • Europe (inc LATAM): 14.4% 50 • UK & SSA: 16.6% £88 • Asia: 2.2% 40 £78 £77 • Pacific: 5.9% £68 30
Slide 26: H1 2024 | Workwear
H1 2024 | Workwear Good growth in Revenue and Adjusted Operating Profit Revenue £m Adjusted Operating Profit £m H1 2024 H1 Revenue growth of 7.5%, all Organic growth, to £116m 120 25 110 20 Adjusted Operating Profit growth of 9.4% to 100 £20m and margin of 17.2% (up 30bps) 15 90 80 £108 £116 10 £20
Slide 27: Good progress in bolt-on M&A
Good progress in bolt-on M&A 284 deals mostly in Pest Control, ~£909m of acquired revenues since 2018 Value creating M&A bolt-on programme (2018 to H1 2024) 16 deals in Pest Control and 7 in H&W in the # Acquisitions First Half. Annualised acquired revenues of £81m. Consideration of £112m Bolt-on ac
Slide 28: North America Organic Growth Plan and Integration Update
Interim Results 2024 North America Organic Growth Plan and Integration Update Andy Ransom New US Innovation Centre was opened in H1. 28
Slide 29: North America Pest Control: Invest for Growth
North America Pest Control: Invest for Growth Early progress in growth plan metrics and integration on track ▪ $21m spent of additional $25m in H1 on digital search, web content, social platform optimisation, brand advertising campaign, local events and partnership programme ▪ Encouraged by early pr
Slide 30: Reinvigorating Organic Growth in North America
Interim Results 2024 Reinvigorating Organic Growth in North America Brad Paulsen Chief Executive Officer North America 30
Slide 31: THE RIGHT WAY 2: People and Service
THE RIGHT WAY 2: People and Service Encouraged by continued improvement in both Technician and Sales colleague retention What we delivered in H1 2024 THE RIGHT WAY 2 Growth Plan ▪ Implemented standardised talent acquisition and onboarding processes. Revamped Terminix compensation plan for new sales
Slide 32: Invest for Growth - Customer Retention
Invest for Growth - Customer Retention Significant growth opportunity Focus on Customer experience and Retention +1pt of increased customer retention on a full year basis delivers c.$27m in organic revenue ▪ Utilise customer experience data to identify and address customer frictions points ▪ Launche
Slide 33: THE RIGHT WAY 2: Brand advantage
THE RIGHT WAY 2: Brand advantage Terminix It brand campaign received well by our customers - positive early signs What we delivered in H1 2024 THE RIGHT WAY 2 Growth Plan ▪ New team in place. Restructured digital marketing team. New media agency appointed - delivering expected value ▪ New Terminix I
Slide 34: THE RIGHT WAY 2: Brand advantage
THE RIGHT WAY 2: Brand advantage Brand marketing launched mid-March - significant reach and increase in branded search 96m 685m Unique Reach / individuals Impressions / Views in Total +29% +6% Increase in specific brand Direct visits to search for Terminix Terminix.com +26% Website leads generated f
Slide 35: THE RIGHT WAY 2: Technician leads & productivity
THE RIGHT WAY 2: Technician leads & productivity Excellent progress in Technician sales and leads programme What we delivered in H1 2024 THE RIGHT WAY 2 Growth Plan ▪ Trusted Advisor participation rates up in H1 - from c.50% to 61.5% in June. In Terminix from 44% to 56%. In-market training, performa
Slide 36: THE RIGHT WAY 2: Sales efficiency and pricing
THE RIGHT WAY 2: Sales efficiency and pricing Improved sales colleague retention and training to create more efficient sales organisation What we delivered in H1 2024 THE RIGHT WAY 2 Growth Plan ▪ Efforts underway to increase Sales colleague retention – expected to have a positive impact on conversi
Slide 37: Terminix Integration Plan
Terminix Integration Plan Good progress to date ✓ Culture: Streamlined and unified organisational / one team culture COST SYNERGY DELIVERY ✓ secondments. Improved colleague retention, Technicians and Sales in particular People: Invested in new talent – leadership, marketing, sales, plus Group 2026 T
Slide 38: US Integration Plan: Phase Two
US Integration Plan: Phase Two Phase Two completed on schedule at the end of H1 2024 What we delivered in H1 2024 Our plan PEOPLE AND SYSTEMS ✔ Final developments in HR and Finance systems necessary for Legal Merger to occur. Legal merger then delivered ✔ Launched consistent training and development
Slide 39: US Integration Plan: Phase Two
US Integration Plan: Phase Two Phase Two completed on schedule at the end of H1 2024 What we delivered in H1 2024 - continued END STATE COMPENSATION REPORTING AND KPIs ✔ Harmonised pay plans for field leadership as well as ✔ Established shared reporting and KPIs for field National Account sales team
Slide 40: US Integration Plan: Phase Three
US Integration Plan: Phase Three First branch integrations underway following extensive planning and testing in H1 9 BRANCHES 160 TECHNICIANS ~20,000 First RESIDENTIAL market 13 SALES CUSTOMER LOCATIONS goes live COLLEAGUES ~2,000 ~10,500 NATIONAL COMMERCIAL CUSTOMER ACCOUNT LOCATIONS LOCATIONS Term
Slide 41: US Integration Plan: Phase Three
US Integration Plan: Phase Three First branch integrations - good start and on schedule Single set of systems operating well Technician retention in line with expectations 100% colleagues and customer data migrated Sales teams all using The Winning Formula tool Sales lead flow working well Sales ret
Slide 42: US Integration Plan: Phase Three - Process
US Integration Plan: Phase Three - Process Disciplined approach to branch merger over 6 – 10 months ▪ Disciplined approach using our proven playbook. Repeatable process - same systems, same processes ▪ Broken down to ~15 regional integrations ▪ Programme Implementation Teams (PIT): Highly experience
Slide 43: US Integration Plan: Phase Three – Branches
US Integration Plan: Phase Three – Branches Evolution of our US branch network - data-driven approach TODAY END STATE Sub-scale Branches: Our main focus Sub-scale c. 160 branches operating at below $3m c.0-10 Small Branches Small Branches c.230 branches operating at $3m to $6m c.150 Medium Branches
Slide 44: US Integration Plan: Phase Three – Branches
US Integration Plan: Phase Three – Branches Evolution of our US branch network Not about creating mega-sized branches but combining properties just as we have done in the US and around the world with our bolt-on programme for many years ✔ Increases route density and reduces property overheads – marg
Slide 45: US Integration Plan: Phase Three – Brand Evolution
US Integration Plan: Phase Three – Brand Evolution Data-driven brand strategy - global, national and strong regional/local brands Today: Multiple brands National brands Regional brands Small / local brands US National Accounts and High Dependency Future customers US Residential, Termite and SME Comm
Slide 46: Terminix Termite Control
Terminix Termite Control Encouraging progress on termite warranty claims ✓ Significant reduction in Complex Litigated Termite Damage Claims Filed: • 75% reduction in H1 2024 vs. prior year ✓ Open warranty claims further reduced: • • 16% reduction on 30 June 2024 vs. prior year 60% reduction on 30 Ju
Slide 47: H1 2024 Summary
H1 2024 Summary Good Overall Group Performance in H1 4% growth in Revenue to £2.8bn, 2.8% was Organic Growth 4.7% growth in Adjusted Operating Profit 10bps improvement in Margin to 16.5% RIGHT WAY 2 Growth Plan Positive signs of progress in many key metrics - people, brand awareness, leads. Expect f
Slide 48: RIGHT WAY 2 Growth Plan: Investing for Growth
Appendix RIGHT WAY 2 Growth Plan: Investing for Growth $25m $25m Committed at 2023 Preliminary Results Committed at 2024 Interim Results ■ Digital lead generation ■ Digital lead generation / organic search ■ Creative brand content ■ Brand marketing ■ Brand campaigns ■ Targeted customer marketing ■ R
Slide 49: Disciplined integration plan
Appendix Disciplined integration plan Area Activities Status People Single people management system (Workday) and single payroll system in place Google Workplace in use as standard incl. collaboration tools Colleague retention improvements throughout 2023 and H1 2024. Greater focus on sales colleagu