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, VP, CFO and Treasurer 2016
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 -- Brand sustained Solid track record of and infrastructure profitable growth Shareholder Value create barriers Strong balance creation 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 across Canada Acquirer of Choice Headquarters Location 8
Slide 9: Franchises Globally
55 144 54 199 International Domestic Domestic Franchises Globally Critter Control • 94 Domestic Franchises • South Korea • Turkey • China • Tbilisi, Georgia • People’s Republic of China • 50 • Hong Kong • Domestic • Ireland Franchises - • Cyprus Right to Repurchase • Guam • Mexico • Panama • India •
Slide 10: Revenue and Retention % by Business Line
Revenue and Retention % by Business Line Retention approximately 85% Retention between 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 Orkin, LLC Orkin Canada No. 1 commercial pest control provider in North America – 20% market share Western Pest Services Increasing demand driven by health and safety IFC concerns PermaTreat Worldwide service network with 103 dedicated Waltham Services commercial branche
Slide 13: Residential
RESIDENTIAL Orkin HomeTeam Pest Rising concern over health, safety and protection Defense of property Orkin Canada PermaTreat Better informed consumers, targeting specific Waltham Service segments Rollins Australia Internet providing accelerated growth Recession resistant – non-d
Slide 14: Termite
TERMITE Orkin HomeTeam Pest Termite damage -- $5.6 billion annually, a real Defense threat to homeowners. PermaTreat Western Pest Shares many of the same characteristics of our Services other businesses – strong recurring revenue and Rollins Australia high retention 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 revenue history
Bed bug industry grew 25% to $320 million in 2010* Rollins data shows company growing faster than industry Recurring revenue growth through inspection and remedial services. New opportunity to introduce residential and commercial pest control services to new bed bug customers *Specialty Prod
Slide 17: Strategic objectives and initiatives
Advance service and product line offerings Expand customer base Increase customer retention and satisfaction Improve productivity and reduce operating costs Achieve continuous financial improvement Initiatives to meet these objectives Rollout of branch operating/CRM systems (BOSS) List
Slide 18: Commitment to Training
Cafeteria Commitment to Training 2,400 sq. ft. home • 27,000 sq. ft. Training Center unique to pest control industry • 13,000 sq. ft. commercial training facility • Residential facility incorporates a 2,400 sq. ft. fully constructed home and Commercial Kitchen termite treating pavilion • Named to Tr
Slide 19: Pest Control Down to a Science
PEST CONTROL DOWN TO A SCIENCE
Slide 20: Revenues ($ in millions)
($in millions) $1,500 $1,400 $1,300 $1,200 $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 • 835,559 • 22,751,230 • Total • 12,841
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)
$ 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
Company History Orkin began operations; Otto Orkin “ The Rat Man” sold poison door-to-door Rollins buys Orkin for $62 million Rollins, begins trading on the NYSE First Orkin franchise opens Orkin acquires Prism, Orkin Canada, and REDD CANADA First Orkin international franchise opens Orkin named to T