Rollins, Inc. · NYSE:ROL
Rollins — 14th Annual Global Services Conference (2012)
35 slides from Rollins's conference presentation, 2012
Slide 1: 14th Annual Global Services Conference
14th Annual Global Services Conference
Slide 2: Gary W. Rollins and Harry J. Cynkus
Gary W. Rollins Chief Executive Officer, President and Chief Operating Officer Harry J. Cynkus Senior Vice President, Chief Financial Officer and Treasurer 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 14 consecutive years of improved earnings 10 consecutive years of increased dividends of 12+% 111 year history with operations in U.S., Canada, Central
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: $7.0+ billion industry
Roughly 70% Highly fragmented $7.0+ billion Increasing health residential and 30% with numerous industry awareness commercial small operators Two public Rollins, Terminix, competitors: Ecolab and Ecolab generate (NYSE:ECL) and over 30% of Rentokil (LSE:RTO) industry revenues 6
Slide 7: Acquirer of Choice
• 1999 – Acquired Orkin Canada, Prisim, and Redd Pest Growth through Control • 2004 – Acquired Western Pest Services Selected Acquisitions • 2005 – Acquired The Industrial Fumigant Company “Acquirer of Choice” • 2008 – Acquired HomeTeam Pest Defense and Crane Pest Control • 2010 -- Acquired Waltham
Slide 8: Revenue % by Business Line
Revenue % by Business Line Other <1% Termite 18% Commercial Commercial 42% Residential Residential Termite 40% Other 8
Slide 9: Revenue Percentage by Operation
Revenue Percentage by Operation Orkin is the industry’s leading brand and today represents just under 2/3rd of the company Home Team HomeTeam provides a strategic entry into a 12% new market channel (new home construction and access to the new home owner). Western Pest Services founded in 1928 is
Slide 10: Brand value grows with importance of Internet marketing
111 year old company Brand value grows with importance of Internet marketing National ad campaign – “Keeping Pests in their Place” Approximately 5% of revenues spent annually on growing and preserving the brand “Orkin” man icon – 70% brand awareness 10
Slide 11: Orkin Advertising
Orkin Advertising 11
Slide 12: Commercial
COMMERCIAL No. 1 commercial pest control provider in North America – 20% market share Orkin, LLC Nationwide service network with 53 dedicated Orkin Canada commercial branches Highly recession resistant; customer’s reputation Western Pest Services and risk too great High growth opportunity. C
Slide 13: Commercial Growth Potential
Commercial Growth Potential Food and Beverage Processing Healthcare Increasing demand driven by health and safety concerns Hospitality Long term growth potential through increased market Food Service Retail penetration and service frequency Largest 20 national Apartments accounts make up less
Slide 14: Residential
RESIDENTIAL Recession resistant – non-discretionary purchase Rising concern over health, safety and protection of Orkin property HomeTeam Pest Better informed consumers, targeting specific Defense segments Orkin Canada Internet will provide accelerated growth Primary service offerings – va
Slide 15: Termite
Termite damage -- $5.6 billion annually, a real TERMITE threat to homeowners. Orkin Shares many of the same characteristics of our HomeTeam Pest other businesses – strong recurring revenue and Defense high retention Western Pest Claims costs reduced over the last 10+ years Services Invigorat
Slide 16: Bed Bugs
BED BUGS Bed bug industry grew 25% to $320million in 2010* Orkin, LLC Rollins data shows company growing faster than Orkin Canada industry Home Team Pest Recurring revenue growth through inspection and Defense remedial services. Western Pest New opportunity to introduce residential and Servi
Slide 17: Employee and Customer Satisfaction
Employee and • Improving on lowest employee turnover rate in company history Customer • Improving ability to please customers Satisfaction • Improve retention Technology • Testing and rollout of common branch operating/CRM system Improvements • State-of-the-art customer sales, internet and call cent
Slide 18: Commitment to Training
Cafeteria Commitment to Training 27,000 sq. ft. Training Center unique to pest control industry 13,000 sq. ft. commercial training facility includes commercial kitchen , hotel room, hospital room, Commercial Kitchen cafeteria, warehouse , supermarket, bakery and Hospital Room pharmacy Attracts custo
Slide 19: Residential Training Facility
Residential Training Facility Commitment to Training Residential facility incorporates a 2,400 sq. ft. fully constructed home and termite treating pavilion Named to Training 2,400 sq. foot home Magazine Top 125 Training Companies for Termite pavilion last nine years National satellite training deliv
Slide 20: Homeleam
Homeleam : PEST DEFENSE* CANADA" DY LeEsTERN [igh ROLLIN : O S Pest and Termite Control Since 1893 Crane PEST CONTROL ® Creurectt)
Slide 21: Cash Provided from Operations
Cash Provided from Operations EBITDA EPS grew Current increased increased from $0.56 in dividend yield from $110.8 from $164.4 2009 to $0.69 approximately million in million to per diluted 1.3% 2009 to $199.1 million share in 2011 $155.2 million in 2011 21
Slide 22: Revenues ($ in millions)
($in millions) $1,205 $1,250 $1,200 $1,137 $1,150 $1,074 $1,100 $1,021 $1,050 6.0% 5.9% $1,000 5.2% 14.0% $950 $900 2008 2009 2010 2011 22
Slide 23: Quarterly results ($ in millions)
($in millions) $330 $310 $290 $270 $250 $230 $210 $190 $170 $150 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 2008 2009 2010 2011 23
Slide 24: Quarterly EPS
$0.25 $0.20 $0.15 $0.10 $0.05 1st Qtr 2ndQtr 3rd Qtr 4th Qtr 2008 2009* 2010 2011 *Rollins, Inc.’s 4th Qtr EPS adjusted for the impairment of assets and conversion of subsidiaries to LLCs was $0.20 per share 24
Slide 25: Cash From Operations
$155M 175 150 Cash From Operations 125 100 75 50 25 0 2008 2009 2010 2011 Capital Expenditures Dividend Payout Free Cash Flow 25
Slide 26: Cash Flow for FY 2007 - FY 2011
Sources of Cash Cash From Operations 570 Cash Flow for FY 2007 - FY 2011 (in millions) Debt Issued 90 800 Other 11 $11 Decrease in Cash 17 700 $90 Balance Total $688 $216 600 Uses of Cash Net acquisitions $216 500 $78 Net Capex 78 Dividends Paid 150 400 $570 $150 Net repurchase of Stock 154 300 Debt
Slide 27: Share repurchases by year
(In million) Year #of Shares Cash Paid • 2008 • 2,078,213 • $22,139,826 • 2009 • 2,515,800 • 27,820,860 • 2010 • 1,889,141 • 26,410,570 • 2011 • 1,458,282 • 27,313,985 • Total • 7,941,436 • $103,685,241 1.1 Million Shares Remaining to be Repurchased at 12/31/2011 27
Slide 28: Dividends: $0.32 in 2012
$0.32 in 2012 $0.35 +14.3% $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 2002 2004 2006 2008 2010 2012 10 consecutive years of minimum of 12% increased dividends 28
Slide 29: Depreciation and Amortization
$ in millions $ in millions $40 $35 $30 $21.3 $20.4 $22.4 $25 $19.2 $20 $15 $16.0 $10 $15.9 $15.1 $14.2 $5 $0 2008 2009 2010 2011 Depreciation Amortization 29
Slide 30: 10-Year Performance with dividends reinvested
(12/31/2001 – 12/31/2011) 10-Year Performance w/ dividends Reinvested (1/4/2001 – 12/31/2011): Total Annualized Rollins Inc. 537.0% 20.3% S&P 500 Index 33.3% 2.9% Russell 2000 Index 73.1% 5.6% Source: FactSet, Bloomberg 30
Slide 31: Homeleam
Homeleam : PEST DEFENSE* CANADA" DY LeEsTERN PEST SERVICES 2 Pest and Termite Control Since 1893 ROLLINS ® Crane PEST CONTROL ® Creurectt)
Slide 32: EBITDA (Excluding Gain)
2007 2008 2009 2010 2011 EBITDA (Excluding Gain): Net income $ 64,731 $ 68,934 $ 83,984 $ 90,002 $ 100,711 + Interest Income (2,289) 761 964 437 508 + Taxes 40,182 44,020 42,307 53,543 60,385 + Depreciation & Amortization 27,086 33,443 37,169 36,408 37,503 EBITDA (Excluding Gain): 129,710 147,158 16
Slide 33: Free Cash Flow and Gross Margin
Free Cash Flow: 2007 2008 2009 2010 2011 Cash Flow from Operations $ 88,795 $ 90,744 $ 110,846 $ 122,054 $ 155,169 - Purchases of Equipment 16,244 14,815 15,740 13,036 18,652 Free Cash Flow 72,551 75,929 95,106 109,018 136,517 Gross Margin: Revenues $ 894,920 $ 1,020,564 $ 1,073,958 $ 1,136,890 $ 1,
Slide 34: Reconciliation of Non-GAAP Financials
ROLLINS, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIALS (in thousands except per share data) (unaudited) Fourth Quarter Ended Twelve Months Ended December 31, 2009 December 31, 2009 Net income per share - diluted as reported $ 0.13 $ 0.56 Add: Impairment of project (net of taxes) $ 0.01
Slide 35: Company history timeline
Rollins, Inc. acquires Rollins buys Orkin for Orkin celebrates 100th HomeTeam Pest $62 million when Rollins Anniversary and Defense, the 3rd largest revenues were only $9 Smithsonian/O. Orkin Insect residential pest control million (Orkin revenues Safari begins touring company and Crane were $34 mil
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