Rollins, Inc. · NYSE:ROL
Rollins — Investor Presentation (2016)
30 slides from Rollins's investor presentation, Aug 3, 2016
Slide 1: Pest Control Down to a Science
PEST CONTROL DOWN TO A SCIENCE
Slide 2: Eddie Northen, Vice President, CFO and Treasurer
Eddie Northen Vice President, Chief Financial Officer and Treasurer 2 2016
Slide 3: Forward-looking statements
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. Forwa
Slide 4: Leading pest and termite control company
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 20
Slide 5: Recession resistant – 80% of revenues are recurring
Recession resistent – 80% of revenues are recurring Competitive Focus on advantage -- sustained Solid track record of Brand and profitable growth Shareholder Value infrastructure Strong balance creation create barriers sheet Strong management, excellent depth Significant insider ownership 5
Slide 6: $12.3+ billion industry
Roughly 70% Highly fragmented with Increasing health $12.3+ billion industry residential and 30% numerous small awareness commercial operators Three public competitors: Ecolab Rollins, Terminix, and (NYSE:ECL), Ecolab generate over ServiceMaster 30% of industry (NYSE:SERV) and revenues Rentokil (LSE
Slide 7: Meeting our customers' needs from sales to service
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
Slide 8: Acquirer of Choice
Australia Acquirer of Choice Over 30 branches across Canada Headquarters Location 8
Slide 9: Franchises Globally
50 54 153 203 International Domestic Franchises Globally Critter Control • South Korea • 103 Domestic • China Franchises • People’s • 2 Canada Franchises Republic of • Ireland China • 50 • Cy prus • Domestic Franchises - • T urkey Right to • T bilisi, Georgia Repurchase • Guam • Mex ico • Panam a •
Slide 10: Revenue and Retention % by Business Line
Revenue and Retention % by Business Line Retention approximately 85% Other <1% Retention between Termite 17% 88%-90% Commercial Commercial 41% Residential Residential 41% Termite Other Retention between 76%-85% 10
Slide 11: Brand value grows with importance of Internet marketing
Brand value grows with importance of Internet marketing National ad campaign – “Pest Control Down to a Science” Approximately 5% of revenues spent annually on growing and preserving the brand “Orkin” man icon – 70% brand awareness 11
Slide 12: Commercial
COMMERCIAL No. 1 commercial pest control provider in North Orkin, LLC America – 20% market share Orkin Canada Increasing demand driven by health and safety concerns Western Pest Services Worldwide service network with 103 dedicated commercial branches IFC Highly recession resistant; customer
Slide 13: Residential
RESIDENTIAL Orkin Rising concern over health, safety and protection HomeTeam Pest of property Defense Better informed consumers, targeting specific Orkin Canada segments PermaTreat Internet providing accelerated growth Recession resistant – non-discretionary purchase Waltham Service Primar
Slide 14: Termite
TERMITE Orkin Termite damage -- $5.6 billion annually, a real threat to homeowners. HomeTeam Pest Defense Shares many of the same characteristics of our PermaTreat other businesses – strong recurring revenue and high retention Western Pest Services Invigorated sales force, utilizing digital te
Slide 15: Wildlife – Accelerating our Growth Opportunity
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 Im
Slide 16: Bed bug industry and revenue history
Bed bug industry grew 25% to $320 million in 2010* Rollins data shows company growing faster than industry Recurring revenue growth through inspection and remedial services. New opportunity to introduce residential and commercial pest control services to new bed bug customers *Specialty Prod
Slide 17: Strategic objectives and initiatives
Advance service and product line offerings Expand customer base Increase customer retention and satisfaction Improve productivity and reduce operating costs Achieve continuous financial improvement Initiatives to meet these objectives Rollout of branch operating/CRM systems (BOSS) List
Slide 18: Commitment to Training
Cafeteria Commitment 2,400 sq. ft. home to Training 27,000 sq. ft. Training Center unique to pest control industry 13,000 sq. ft. commercial training facility Residential facility incorporates a 2,400 sq. ft. Commercial Kitchen fully constructed home and termite treating pavilion Named to Training M
Slide 19: Pest Control Down to a Science
PEST CONTROL DOWN TO A SCIENCE
Slide 20: Revenues ($ in millions)
($in millions) $1,485 $1,500 $1,412 $1,400 $1,337 $1,271 $1,300 $1,205 $1,200 $1,137 $1,100 $1,000 2010 2011 2012 2013 2014 2015 20
Slide 21: Quarterly revenues ($ in millions)
($in millions) $400 $380 $360 $340 $320 $300 $280 $260 $240 $220 $200 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 2010 2011 2012 2013 2014 2015 2016 21
Slide 22: Diluted earnings per share
$0.80 $0.70 $0.70 $0.63 $0.56 $0.60 $0.51 $0.50 $0.46 $0.41 $0.37 $0.40 $0.30 $0.30 $0.20 2008 2009 2010 2011 2012 2013 2014 2015 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. 22
Slide 23: Cash From Operations
$250 $225 Cash From Operations $200 $175 $150 $125 $100 $75 $50 $25 $0 2010 2011 2012 2013 2014 2015 Capital Expenditures Dividend Payout Free Cash Flow 23
Slide 24: Cash Flow for FY 2008 – FY 2015
Cash Flow for FY 2008 – FY 2015 (in millions) $1,400 $7 $90 $1,200 $343 $1,000 $168 $90 $800 $1,176 $600 $427 $400 $181 $200 $135 $71 $0 Beginning Cash From Debt Issued Other Net Acq. Net Capex Debt Repaid Dividends Net Rep. of Ending Cash Cash Operations Paid Stock Source: Company Filings 24
Slide 25: Share repurchases by year
(In million) Year #of Shares Cash Paid • 2009 • 3,773,700 • 27,820,860 • 2010 • 2,833,712 • 26,410,570 • 2011 • 2,187,423 • 27,313,664 • 2012 • 1,172,672 • 16,399,431 • 2013 • 511,049 • 8,384,761 • 2014 • 1,507,919 • 29,394,633 • 2015 • 19,137 • 429,899 • 2016 • 54,208 • 1,344,883 • Total • 12,059,8
Slide 26: Dividends Paid
$0.50 $0.45 $0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 2008 2009 2010 2011 2012 2013 2014 2015 Dividends Paid excluding special dividends Dividends Paid with special dividends All dividend data is presented post-split for the three-for-two stock split effective March 10, 2015 for sharehol
Slide 27: Depreciation and Amortization
$ in millions $45 $40 $35 $25.2 $26.9 $30 $20.4 $22.4 $23.4 $25.2 $25 $20 $15 $15.2 $16.6 $10 $15.1 $19.4 $14.4 $16.0 $5 $0 2010 2011 2012 2013 2014 2015 Depreciation Amortization 27
Slide 28: 10-year stock performance vs. S&P 500 Index
Rollins, Inc. 10-year stock performance (with dividends reinvested) vs. S&P 500 Index 12/31/2005 – 12/31/2015 Rollins, Inc. (RO L-USA) [Delayed] S&P 500 (SP50-USA) [Delayed] 500 443.49 400 300 200 163.74 100 90 80 70 60 50 40 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 10-Year Performance w/ dividen
Slide 29: 10-year stock performance vs. Russell 2000 Index
Rollins Inc. 10-year stock performance (with dividends reinvested) vs. Russell 2000 Index 12/31/2005 – 12/31/2015 Rollins, Inc. (RO L-USA) [Delayed] Russell 2000 (RUT-RUX) [Delayed] 500 443.49 400 300 200 168.72 100 90 80 70 60 50 40 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 10-Year Performance w/
Slide 30: Company History
Orkin began operations; Otto Orkin “ The Rat Man” sold poison door-to-door Rollins buys Orkin for $62 million Company History First Orkin franchise opens 2004 Orkin named to Training Magazine’s Top 100 Training Companies Rollins acquires HomeTeam Pest Defense and Crane Pest Control a HomeTeam 2. Rol