Rollins, Inc. · NYSE:ROL
Rollins — Investor Day (September 2016)
96 slides from Rollins's investor day presentation, Sep 20, 2016
Slide 1: Rollins Investor Day
Rollins Investor Day September 20, 2016
Slide 2: Cautionary Statement About Forward-Looking Statements
Cautionary Statement About 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 P
Slide 3: Table of Contents
Rollins Investor Day September 20, 2016 Table of Contents 1. “Overview” 2. “Rollins, Inc.” 3. “Foundation for a Well Run Service Company” 4. “Talent Management” 5. “A Technological Journey” 6. “Orkin USA” 7. “HomeTeam” 8. “Marketing” 9. “Emerging Opportunities” 10. “Key Financial Drivers”
Slide 4: Overview
Overview Eddie Northen VP, Chief Financial Officer and Treasurer
Slide 5: Rollins brands
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Slide 6: We are just a sleepy pest control company
“We are just a sleepy pest control company ….” ----Harry Cynkus, former CFO Rollins, Inc. 6
Slide 7: We were in a lot of really poor businesses
“We were in a lot of really poor businesses before we found a good business.” ----O Wayne Rollins 7
Slide 8: Financial Metrics
Financial Metrics Revenue (000’s) Net Income (000’s) $1,600,000 $155,000 $140,000 $1,400,000 $125,000 $1,200,000 $110,000 $95,000 $1,000,000 $80,000 $65,000 $800,000 $50,000 Earnings Per Share Margin $0.75 11.0% $0.65 10.0% $0.55 9.0% $0.45 8.0% $0.35 7.0% $0.25 6.0% 8
Slide 9: Key Financial Drivers
Key Financial Drivers Single Industry Increased Focus Efficiencies Training Conservative Financials Employee Satisfaction Leaders Customer Experience Customer Continuous Centric Improvement 9
Slide 10: Speakers
Speakers (in presentation order) Gary Rollins – Chief Executive Officer, Vice Chairman John Wilson – President and Chief Operating Officer Gene Iarocci – President of Orkin North America Lee W. Crump – Chief Information Officer 10
Slide 11: Speakers (continued)
Freeman Elliott – President of Orkin U.S. Jerry Gahlhoff – President, Specialty Brands Kevin Smith – Chief Marketing Officer Steve Leavitt – President, Emerging Opportunities Group Eddie Northen – VP, Chief Financial Officer and Treasurer 11
Slide 12: Rollins, Inc.
Rollins, Inc. Gary Rollins CEO, Vice Chairman
Slide 13: Rollins Welcome
Rollins Welcome 13
Slide 14: 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. (ROL-USA) [Delayed] S&P 500 (SP50-USA) [Delayed] 450 424.44 400 350 300 250 200 169.89 150 100 50 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 10-Year Performance w/ dividends R
Slide 15: 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. (ROL-USA) [Delayed] Russell 2000 (RUT-RUX) [Delayed] 424.44 400 300 200 184.89 100 90 80 70 60 50 40 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 10-Year Performance w/ div
Slide 16: Rollins Culture
Rollins Culture 16
Slide 17: Quote on people, customers and culture
“If someone asked you what Rollins’ most important assets are, you would probably answer our People and our Customers. That’s a ‘no brainer’. I would add our Culture as a close number three. You see, we believe that a strong, positive and enduring culture is critical to a company’s success” Gary W.
Slide 18: Three Legged Stool
Three Legged Stool 18
Slide 19: Our People
Our People 19
Slide 20: Conservative but …
Conservative but … 20
Slide 21: Hard Working
Hard Working 21
Slide 22: Ethical and Honest
Ethical and Honest 22
Slide 23: Customer is Always Right
Customer is Always Right 23
Slide 24: Net Promoter Score
Net Promoter Score 2 Listenz6o0
Slide 25: Image and Reputation
Image and Reputation 25
Slide 26: Partnerships, Associations and Relationships
Partnerships, Associations and Relationships 26
Slide 27: Dedicated to Continuous Improvement
Dedicated to Continuous Improvement 27
Slide 28: Constantly Evolving
Constantly Evolving 28
Slide 29: Providing Essential Services
Providing Essential Services 29
Slide 30: Foundation for a Well Run Service Company
Foundation for a Well Run Service Company John Wilson President and Chief Operating Officer
Slide 31: 31
31
Slide 32: Pr) S > a rr) in a o iat Zz ORKIN pe ad
Pr) S > a rr) in a o 24 iat Zz ORKIN pe ad
Slide 33: OL E ° 6) ul E o uw e
OL 4 E 2 ° 6) ul E 2 o uw e
Slide 34: Employee Retention
Employee Retention Goal – 80% or better • Hire “A” Players – Select Well • Train them for Success • Survey them regularly for job satisfaction • Recognize and reward top performers • Move poor selections off the team quickly 34
Slide 35: Undercover Boss – Bob Knox
Undercover Boss – Bob Knox 35
Slide 36: Customer Retention
Customer Retention Goal – 85% or better • Give the Customer a voice – Listen 360 • Not all customers are the same • Guarantee Satisfaction • Customize the Service Experience • Make it easy to do business with us – Auto Pay 36
Slide 37: Revenue Growth
Revenue Growth • Improving Customer Retention • Marketing – Digital, Yellow Pages, Brand Building Efforts • Pricing Opportunities • Share of Wallet Opportunities • Mergers and Acquisitions 37
Slide 38: Earnings Growth
Earnings Growth Employer of Choice: Employee Retention – Loyal team members – Loyal customers Pest Provider of Choice: Customer Retention – Loyal customers – Sustainable growth Investment of Choice: Revenue Growth, Earnings Growth – Sustainable growth – Long term earnings growth 38
Slide 39: Talent Management
Employee Talent Management Gene Iarocci President of Orkin North America
Slide 40: Sourcing The Best
Sourcing The Best • Continuously Recruit • Always Seeking New Talent • Engage Prior to Need • Build Bench Strength for Future Needs • Hire Hard • Insure a Cultural Fit • Clearly Define Accomplishments/Expectations • Hire the Best Available in Market • Provide Competitive Compensation 40
Slide 41: Organizational Vitality
Organizational Vitality • On-Boarding and Training – Ride Along/Field and Company Orientations – Award Winning Learning Center – Structured Curriculums – On-the-Job Field Reinforcement 41
Slide 42: Rollins Learning Center
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Slide 43: Single Family Home
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Slide 44: Restaurant
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Slide 45: Commercial Kitchen
Commercial Kitchen 45
Slide 46: Broadcast Studio
Broadcast Studio 46
Slide 47: Succession Planning
Succession Planning • Leadership Development – Career Opportunity Plans – Challenging Cross Fertilization – Field & Corporate Assignments – Company Wide Major Project Management • High Potential Identification – Advanced Leadership Programs – Future Leaders 47
Slide 48: A Technological Journey
A Technological Journey Lee W. Crump Chief Information Officer, GVP
Slide 49: Our Four Technology Pillars
Our Four Technology Pillars • Our IT strategy – Fully aligned with the business strategy with a focus on our employees and customers, providing tools for our Technicians and Sales People • Retain our Employees • Retain and Attract New Customers • Increase Revenues, Profit and Margins 49
Slide 50: Major Investments in Technology
Major Investments in Technology • Primary strategic initiative is our new Branch Operations Support System (BOSS) for our Orkin Brand – Five years development and implementation – Rolled out over 400 locations and 7,500 employees over 22 months and completed at Orkin in August 2016 – Foundational fo
Slide 51: BOSS Key Functionality
BOSS Key Functionality • For our Technicians – iPhones (6,200+) to provide a paperless service delivery capability – All customer information for technicians planned stops readily available – Service posted and credit cards charged at completion of service – New starts, schedule changes, and re-serv
Slide 52: For our Office Team
For our Office Team a Yh f < Pe Dior PI ta
Slide 53: BOSS Key Functionality
BOSS Key Functionality • At the Branch Office – 360 View of all customer services and locations – Key metric dashboards w/ drill-down capability for our managers – Branch month-end close measured in minutes vs. hours; August closed one day sooner with all our Orkin branches now live on BOSS – Additi
Slide 54: BOSS Key Functionality
Boss Key Functionality • VRM (Virtual Route Management and Scheduling) – Enhanced routing and scheduling utilizing Google Maps and our proprietary features – Routing and Scheduling functionality being delivered in staged enhancements 54
Slide 55: BOSS Key Functionality: Branch Manager feedback
Boss Key Functionality • VRM (Virtual Route Management and Scheduling) A thank you email from a Branch Manager after our July release: From: Norman E. Haskins III Date: July 15,2016 at 10:42:56 AM EDT To: Orlando Winder Subject: Route Optimizer Tool Ahhhh….cool! The new updates they did to the Route
Slide 56: Our Future IT Focus
Our Future IT Focus • Where to from here? – Continued monthly BOSS enhancements – Ongoing Routing and Scheduling Enhancements – Commercial Customer Web Portal – Customer touch-point contact preferences (voice, email, text) – Continued focus on network and systems security 56
Slide 57: Orkin USA
Orkin USA Freeman Elliott President of Orkin U.S.
Slide 58: Orkin USA
Orkin USA • Over 400 company-owned locations nationwide • Over 50 franchises • Over 7,500 employees • Over $1 billion in revenues 58
Slide 59: Revenue Mix
Revenue Mix • Orkin USA revenue mix consists of – Residential Pest Control 43% – Commercial Pest Control 38% – Termite Control 19% • Fastest growing segments are Bed Bug and Mosquito Control • Franchising strategy - Select proven Pest company managers in markets that can be developed in early stage
Slide 60: BOSS Operational Benefits
BOSS Operational Benefits • Enhanced customer communication • Auto-Posting • Virtual Route Manager (VRM) 60
Slide 61: Routing & Scheduling (VRM)
Routing & Scheduling (VRM) • Ability to reduce mileage and drive time, thus increasing productivity • Provides an organizational tool that enables an efficient means to reach our customers • Enhances customer and employee experience • Allows for seasonal and routine “on demand” optimization 61
Slide 62: Routing and Scheduling
Routing and Scheduling 62
Slide 63: Routing and Scheduling
Routing and Scheduling Before Optimization After Optimization 52 Miles, 2 Hours, 15 Minutes 29 Miles, 1 Hour, 18 Minutes 63
Slide 64: Break
Break (Presentations to resume at 10:40 a.m.)
Slide 65: HomeTeam
HomeTeam Jerry Gahlhoff President, Specialty Brands
Slide 66: What is Taexx?
What is Taexx®? 66
Slide 67: Customers Benefit From HomeTeam's Business Model
Customers Benefit From HomeTeam’s Business Model 67
Slide 68: A Day in the Life of a HomeTeam Technician
A Day in the Life of a HomeTeam Technician 68
Slide 69: HomeTeam's Competitive Advantage
HomeTeam’s Competitive Advantage Service footprint overlays well with the Top 15 National Homebuilders • Established relationships with leading homebuilders • A model that enhances customer service delivery 69
Slide 70: Marketing
Marketing Kevin Smith Chief Marketing Officer
Slide 71: Measurement – Cornerstone of Marketing Success
Measurement – Cornerstone of Marketing Success • Rollins Marketing - 8 Centers of Excellence – Pricing & Analytics, Branding, Sales Enablement, Media & Content Deployment, Marketing Technology, Innovation, Customer Acquisition, PR & Communications • Performance Management Emphasis • Core Customer Ac
Slide 72: Paid Search Management and Tracking
Paid Search Management and Tracking Database Call Campaign Center Management Tracking Code Landing Keyword Page 72
Slide 73: Performance Management
Performance Management WEEKLY DIGITAL PERFORMANCE WEEK ENDING Aug 10 2016 Weekly User Engagement > cae § cox 10 85% es Ge Se Pages Per Visit 569K 7 LI in L U a o ih 1:58. 2.07 Lead Trend Line 4,780+ = ~ 2,027 + eens RapOSERETAGR Reece pene peneeeneemn snes vmnt seen 1 ,l74 me Serene _ = sta Uz9.040
Slide 74: Resource Allocation
Resource Allocation Recurring Residential Pest Control Customer Lifetime Value by Season Customer Lifetime Value (CLTV) C Started C $1,000.00 L $1,500.00 L T $1,000.00 T$500.00 V V $500.00 $0.00 $ $0.00 Band 1 Band 2 Segments Band 3 Band 4 Band 5 Band 1 Band 2 Band 3 Segments Band 4 Band 5 Oct‐ Apr
Slide 75: Residential Sales - HomeSuite
Residential Sales - HomeSuite 75
Slide 76: Commercial Sales - BizSuite
Commercial Sales - BizSuite 76
Slide 77: SCOUT – Employee Engagement
SCOUT – Employee Engagement 77
Slide 78: Emerging Opportunities
Emerging Opportunities Steve Leavitt President, Emerging Opportunity Group
Slide 79: Our Emerging Opportunities
Our Emerging Opportunities • Industrial Fumigant Company • Wildlife Control – Trutech – Critter Control • International – Orkin Canada – Rollins Australia – Rollins United Kingdom 79
Slide 80: What is Wildlife?
What is Wildlife? Wildlife Removal Monitor Exclusion 80
Slide 81: Nationwide Coverage
Nationwide Coverage Critter Control Franchise Co. Owned Trutech and Critter Control Co. Owned dba Critter Control 96 Critter Control Franchises 13 Franchises purchased back YTD 33 Trutech markets 81
Slide 82: International
International 82
Slide 83: About Orkin Canada
ABOUT ORKIN CANADA • Largest Provider in Canada • 40% Market Share • 100% Canadian Coverage • 59,000+ Commercial Customers • 600+ Licensed Technicians 83
Slide 84: Australia / United Kingdom
Australia / United Kingdom • Third largest provider in Australia • National Footprint • Safeguard first operation in England • Potential to grow commercial/residential pest control 84
Slide 85: Key Financial Drivers
Key Financial Drivers Eddie Northen VP, Chief Financial Officer and Treasurer
Slide 86: Rollins Revenue Growth
Rollins Revenue Growth 2016 - Rollins first venture in 2.0M Customers UK with acquisition of Safeguard Pest Control (000’s) 2008 - Acquired HomeTeam 2001 – Orkin’s 100th Pest Defense $1,500,000 Anniversary $1,300,000 $1,100,000 $900,000 $700,000 $500,000 2004 - Acquired Western 2014 - Rollins first
Slide 87: Key Financial Drivers 2000-2005
Key Financial Drivers 2000 - 2005 US M&A Formalize Sales Group Operational Efficiencies 87
Slide 88: Key Financial Drivers 2006-2010
Key Financial Drivers 2006 – 2010 Employee Customer Training Organization Retention Growth HomeTeam Cost Employee Reductions Retention Pricing 88
Slide 89: Key Financial Drivers 2011-2016
Key Financial Drivers 2011 - 2016 HomeTeam Pricing Analytics Wildlife Bed Bug International VRM M&A International Franchise Cost Customer Reductions US BOSS Experience M&A 89
Slide 90: Revenue and Earnings per Share Growth
Revenue and Earnings per Share Growth Revenue (000’s) Earnings per Share $1,600,000 $0.75 $0.65 $1,400,000 6.3% $0.55 12.2% $1,200,000 CAGR CAGR $0.45 $1,000,000 $0.35 $800,000 $0.25 CAGR = Compound Annual Growth Rate 90
Slide 91: Capital Expenditure Trend
Capital Expenditure Trend 3.0% BOSS East and West Coast Call 2.5% Centers, GPS in Canada % of Revenue 2.0% 1.5% 1.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 06.2016 91
Slide 92: Capital Allocation at Rollins
Capital Allocation at Rollins Grow the Business Increase the Dividend Repurchase Shares 92
Slide 93: Acquisition Investing Activities
Acquisition Investing Activities 16.0% 14.0% 12.0% HomeTeam Pest Defense and % of Revenue Crane Pest Control 10.0% 8.0% Rollins AU and 6.0% Permatreat 4.0% 2.0% 0.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 06.2016 93
Slide 94: Committed to Shareholder Distributions
Committed to Shareholder Distributions Shares Repurchased (000’s) Dividends Paid per Share 0.45 6,000 0.40 5,000 0.35 4,000 0.30 3,000 0.25 0.20 2,000 0.15 1,000 0.10 - 0.05 0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 94
Slide 95: Key Financial Drivers: Looking Forward
Key Financial Drivers Looking Forward Customer Cost Experience International Reductions Franchise VRM Wildlife HomeTeam Build International US Operational M&A M&A Capabilities BOSS 95
Slide 96: Q&A
Q&A