Rollins, Inc. · NYSE:ROL
Rollins — Investor Presentation (2016)
30 slides from Rollins's investor presentation, 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 2016 2
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 ap
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
Increasing health Roughly 70% residential Highly fragmented with $12.3+ billion industry awareness and 30% commercial numerous small operators Three public competitors: Rollins, Terminix, and Ecolab (NYSE:ECL), Ecolab generate over 30% ServiceMaster (NYSE:SERV) of industry revenues and 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 Over 30 branches Acquirer across Canada of Choice Headquarters Location 8
Slide 9: Franchises Globally
49 54 149 198 International Domestic Franchises Globally Critter Control • South Korea • 97 Domestic • China Franchises • People’s Republic • 2 Canada Franchises of China • 49 • Domestic • Ireland Franchises - • Cyprus • Turkey Right to • Tbilisi, Georgia Repurchase • Guam • Mexico • Panama • Costa
Slide 10: Revenue and Retention % by Business Line
Revenue and Retention % by Business Line Retention Retention between approximately 85% Other <1% 88%-90% Termite 19% Commercial Commercial 39% 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 Western Pest concerns Services Worldwide service network with 103 dedicated IFC commercial branches PermaTreat Highly recessio
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 Waltham Service Recession resistant – non-discretionary purchas
Slide 14: Termite
TERMITE Orkin Termite damage -- $5.6 billion annually, a real HomeTeam Pest threat to homeowners. Defense PermaTreat Shares many of the same characteristics of our Western Pest other businesses – strong recurring revenue and Services high retention Rollins Australia Invigorated sales
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 Rollins bed bug revenue history
Bed bug industry grew 25% to $320 million in 2010* Rollins data shows company growing faster than industry Recurring revenue growth through inspection and remedial services. New opportunity to introduce residential and commercial pest control services to new bed bug customers *Specialty Prod
Slide 17: Objectives and initiatives
Advance service and product line offerings Expand customer base Increase customer retention and satisfaction Improve productivity and reduce operating costs Achieve continuous financial improvement Initiatives to meet these objectives Rollout of branch operating/CRM systems (BOSS) List
Slide 18: Commitment to Training
Cafeteria Commitment to 2,400 sq. ft. home Training • 27,000 sq. ft. Training Center unique to pest control industry • 13,000 sq. ft. commercial training facility • Residential facility incorporates a 2,400 sq. ft. Commercial Kitchen fully constructed home and termite treating pavilion • Named to Tr
Slide 19: Pest Control Down to a Science
PEST CONTROL DOWN TO A SCIENCE
Slide 20: Revenue ($ 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 $1,000 2010 2011 2012 2013 2014 2015 20
Slide 21: Quarterly results ($ 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 • 419,329 • 11,175,264 • Total • 12,059
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
ED EZ Orkin began Rollins buys Orkin operations; Otto for $62 million Orkin “ The Rat Man” sold poison door-to-door 1968 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 tind H