Financial Data and Key Metrics Changes - Rollins reported revenue growth of over 11% in Q1 2023, with earnings per share (EPS) increasing by 20% to $0.18 [2][22][34] - The company achieved a 15% improvement in operating cash flow and a 17% increase in free cash flow [22][49] - Gross profit margins were reported at 50.3%, reflecting a 30 basis point improvement [47] - EBITDA margin improved by 130 basis points to 21.2% [48] Business Line Data and Key Metrics Changes - Organic growth exceeded 9% for the quarter, with strong performance across all major service lines [29][31] - Acquisitions contributed approximately 2% to total revenue growth, with expectations for meaningful improvement from the recent Fox acquisition [31][35] Market Data and Key Metrics Changes - The company noted that currency fluctuations reduced quarterly revenue growth by 60 basis points due to a stronger dollar [32] - Rollins is well-positioned for strong demand in the spring and summer months, benefiting from recent wet weather patterns [12] Company Strategy and Development Direction - The acquisition of Fox Pest Control is seen as a strategic growth opportunity, expected to add between $90 million and $100 million in revenue for 2023 [35][90] - The company emphasizes the importance of integrating Fox while maintaining customer-facing operations [56][90] - Rollins aims to continue its focus on acquisitions as a key part of its growth strategy, with a healthy acquisition pipeline [51][68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive strong operating results and maintain a balanced capital allocation strategy [3][12] - The company anticipates that the Fox acquisition will be accretive to earnings in the first full year, with more significant contributions expected in the latter part of the year [50][51] - Management highlighted the importance of customer retention and the integration of Fox into the existing business model [90] Other Important Information - Rollins has engaged Deloitte as its new external auditor, replacing Grant Thornton [36] - The company is focused on improving its insurance and claims experience, which has been a headwind to margins [77] Q&A Session Summary Question: What contributed to the unexpected strength in the commercial pest business? - Management attributed the strength to investments in hiring and staffing on the commercial side, leading to increased new business [54] Question: How is marketing spend tracking for Q2 2023? - The company plans to ramp up investment in customer acquisition-related costs as it enters the busy season [58] Question: What is the outlook for customer acquisition through digital channels post-Fox integration? - Management indicated that it is premature to provide long-term insights but emphasized the potential to leverage Fox's marketing efforts [74] Question: How should the $90 million to $100 million in sales from Fox be allocated across business lines? - The majority of the revenue is expected to come from the residential segment, with a ramp-up in Q2 and Q3 due to seasonality [86] Question: What are the expectations for incremental margins for the remainder of the year? - Management expects to maintain incremental margins around 30%, with potential fluctuations based on customer acquisition investments [87]

Financial Performance & Growth - Rollins expects $90-100 million in sales and $18-22 million in EBITDA from the Fox Pest Control acquisition in 2023[1] - Rollins achieved 11.4% overall revenue growth in Q1 2023[41] - Rollins experienced a 9.2% organic revenue growth in the first quarter[41] - Rollins' GAAP Net Income increased by 19.6% to $88 million in Q1 2023[41] - Rollins' Q1 2023 EBITDA margin was 21.2%, an increase of 130 basis points[41] Acquisitions & Capital Allocation - Rollins financed the Fox Pest Control acquisition of $350 million, including $32 million of contingent consideration, through cash and $305 million in borrowings[1] - Rollins deployed over $300 million for the Fox acquisition in April[41] - Rollins invested $15 million in 6 acquisitions during Q1 2023[31] Cash Flow & Balance Sheet - Rollins maintains a strong balance sheet with less than 0.5x Debt to EBITDA at the end of Q1[49] - Rollins reported greater than 100% free cash flow conversion in Q1[31] Revenue Breakdown - Rollins' residential revenue grew by 12% in Q1 2023[25] - Rollins' commercial revenue grew by 14% in Q1 2023[28] - Rollins' termite and ancillary revenue grew by 14.1% in Q1 2023[17]

Financial Performance - The company achieved record revenue of $2.7 billion in 2022, reflecting an 11.2% increase from $2.4 billion in 2021[116] - Net income for 2022 was $368.6 million, a 3.4% increase compared to $356.6 million in 2021, with earnings per diluted share rising to $0.75 from $0.72[116] - The gross profit for 2022 was $1.4 billion, a 10.0% increase from $1.3 billion in 2021, with a gross margin of 51.5%[128] - Total revenues for the year ended December 31, 2022, were $2,695,823, an increase from $2,424,300 in 2021, representing a growth of approximately 11.2%[183] - Net income for 2022 was $368,599, compared to $356,565 in 2021, reflecting a year-over-year increase of about 3.3%[183] - The company reported an operating income of $493,388 for 2022, up from $447,636 in 2021, indicating a growth of approximately 10.2%[183] Cash Flow and Investments - Operating cash flow increased to $465.9 million in 2022, up from $401.8 million in 2021, marking a 16.0% growth[144] - Cash generated from operating activities increased to $465.9 million in 2022 from $401.8 million in 2021, representing a $64.1 million increase driven by strong operating results[145] - The company used $134.1 million in investing activities in 2022, up from $99.0 million in 2021, with $30.6 million allocated to capital expenditures compared to $27.2 million in 2021[146] - Cash paid for acquisitions totaled $119.2 million in 2022, down from $146.1 million in 2021, with expectations for additional acquisitions in 2023[146] - Cash used in financing activities increased to $336.0 million in 2022 from $290.2 million in 2021, including net debt repayments of $100.0 million compared to $48.0 million in 2021[147][149] Debt and Liquidity - The company repaid $100 million in debt during 2022 and made $119 million in payments for 31 acquisitions[116] - The effective interest rate on outstanding debt as of December 31, 2022, was 5.123%[141] - The company maintains a $175 million revolving credit facility and a $300 million term loan facility, with adequate liquidity to finance operations and expansion[151] - Total contractual obligations as of December 31, 2022, amounted to $383.7 million, with $119.8 million due within one year[153] - The company had outstanding borrowings of $54.9 million under the term loan as of December 31, 2022, with no borrowings under the revolving credit facility[158] Revenue Breakdown - Residential service revenue increased by 10%, commercial revenue also grew by 10%, and termite and ancillary revenue rose by 15% in 2022[116] - Residential revenue increased to $1.2 billion in 2022, a rise of 9.9% from $1.1 billion in 2021, and $977.5 million in 2020[251] - Deferred revenue recognized in 2022 was $205.3 million, compared to $187.3 million in 2021, indicating a growth of 9.0%[251] - Franchise revenues for 2022 were $15.7 million, slightly down from $15.8 million in 2021[243] - The company reported a total of 137 domestic franchise agreements as of December 31, 2022, an increase from 135 in 2021[242] Expenses and Liabilities - Sales, general and administrative expenses rose by 10.3% to $802.7 million, but as a percentage of revenue, they decreased to 29.8% from 30.0%[129] - The accrued insurance liability increased to $39,534 in the current year from $36,414 in the previous year, showing a rise of about 5.8%[182] - The total current liabilities slightly increased to $493,784 in 2022 from $491,162 in 2021, indicating a marginal rise of about 0.5%[182] - The company’s long-term accrued liabilities include deferred compensation, acquisition holdback, and earnout liabilities, reflecting ongoing financial commitments[232] Acquisitions and Growth Strategy - The company made 31 acquisitions in 2022 for a total cash purchase price of $116.0 million, compared to 39 acquisitions for $146.1 million in 2021[249] - Goodwill from acquisitions in 2022 amounted to $65.0 million, reflecting strategic benefits expected from the acquisitions[250] - The company is well-positioned for growth in 2023, with a strong acquisition pipeline and plans to renegotiate its credit facility expiring in April 2024[117] Shareholder Returns - The company paid cash dividends of $211.6 million in 2022, or $0.43 per share, compared to $208.7 million, or $0.42 per share, in 2021[149] - The company paid dividends of $0.43 per share in 2022, up from $0.42 per share in 2021, reflecting a growth of approximately 2.4%[183] Operational Efficiency - The company engaged an actuarial specialist to evaluate the methods and assumptions used in determining the accrued insurance reserve, highlighting the complexity and estimation uncertainty involved[179] - The independent auditor confirmed the effectiveness of the company's internal control over financial reporting as of December 31, 2022[165] - The company recognizes compensation expense for unvested restricted shares over the service period, based on the stock price at the grant date[311] Market and Economic Factors - The company believes that foreign exchange rate risks will not materially impact its results of operations going forward[158] - The company plans to raise prices for services in the first quarter of 2023 to offset inflationary pressures[128]

Financial Data and Key Metrics Changes - In Q4 2022, the company reported revenue growth of 10.2% to $661 million and net income increased by 26.1% to $84 million [19][40] - For the full year 2022, revenue growth was over 11% with net income also improving [24][21] - Adjusted EBITDA margins for the quarter were 22.1%, up approximately 180 basis points year-over-year [41][49] - Quarterly free cash flow grew over 20% compared to the same period last year, with a total of $116 million generated in Q4 [52][41] Business Line Data and Key Metrics Changes - Organic growth was reported at 6.9% for Q4, down from 7.8% for the full year, with slower growth noted in the residential sector [29][40] - The termite and ancillary service lines grew by 15.4% year-over-year, indicating strong performance in these areas [30] - The commercial line also showed robust growth at 10.3% over the prior year, driven by strong sales efforts [31] Market Data and Key Metrics Changes - The company noted a 15% decline in category searches for pest control across the industry, indicating a broader market trend [76] - Despite challenges in the residential housing market, demand for termite services remains strong, with good performance in baiting programs [90] Company Strategy and Development Direction - The company is focused on driving revenue growth through cross-selling activities and strategic acquisitions, having completed 31 acquisitions in 2022 totaling $119 million [35][40] - Technology investments are being made to improve operational efficiency, with routing and scheduling technology being rolled out across various brands [36][38] - The company plans to implement earlier price increases in 2023 to manage inflationary pressures [33][41] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to continue driving growth and improving profitability, with a focus on maintaining or exceeding historical growth rates [72][73] - The operating environment is viewed positively, with expectations for mid to high single-digit growth in the long term [72][73] - Management acknowledged ongoing inflationary pressures but emphasized their strategy to stay ahead through pricing adjustments [81][82] Other Important Information - The company corrected immaterial misstatements in financial statements, resulting in a minor increase in historical earnings [55] - The company remains in a net cash position with negligible debt, positioning itself well for future investments [53][54] Q&A Session Summary Question: SG&A as a percentage of sales - Management acknowledged strong performance in cost control and indicated ongoing evaluations for further improvements in SG&A [60][61] Question: Pricing strategy for 2023 - Management plans to implement pricing increases similar to previous years, with expectations for better performance in 2023 [64][65] Question: Residential growth drivers - Management attributed January's improvement in residential growth to better marketing efforts and a favorable business environment compared to the previous year [68][71] Question: Industry trends affecting residential growth - Management noted a consistent decline in category searches across the industry, impacting growth [76] Question: Cost inflation and pricing power - Management discussed managing inflationary pressures across various cost categories and the importance of pricing strategies to maintain margins [78][81] Question: International market performance - Management expressed optimism about growth in international markets, particularly in the UK, while emphasizing the US as the largest and fastest-growing market [85] Question: Termite business performance - Management indicated continued demand for termite services despite concerns about the residential housing market [90] Question: Organic growth components - Management estimated that underlying real growth rate, excluding price increases, is around 4% to 5% [94][96]

LONG TERM ANNUAL HIGHLIGHTS SAFE HARBOR Ken Krause EVP, CFO and Treasurer 1Key metricsfor latest 12-month period ended December 31, 2022 2These amounts are non-GAAP measures(see Appendix) $570 $593 23.5% 22.0% 5 QUARTERLY REVENUE GROWTH Q4 2021 Q4 2022 $M ¹These amounts are non-GAAP measures (see Appendix) Acquisitions • 31 acquisitions in 2023; 4 made in fourth quarter • Pipeline is robust and expect to be acquisitive in 2023 Reconciliation of GAAP and non-GAAP Financial Measures Set forth on the following ...

Rollins, Inc. Baird 2022 Global Industrial Conference Kenneth Krause, EVP and CFO November 9, 2022 Safe Harbor Except for historical information, certain statements in this presentation may contain forward-looking statements that involve risks and uncertainties concerning the business and financial results of Rollins, Inc. Forward-looking statements include, without limitation, all projections and anticipated levels of future performance. These forward-looking statements involve risks, uncertainties and oth ...

Rollins, Inc. (NYSE:ROL) Q3 2022 Earnings Conference Call October 26, 2022 10:00 AM ET Company Participants Joe Calabrese - IR Gary Rollins - Chairman and CEO Julie Bimmerman - Group VP, Finance and IR John Wilson - Vice Chairman Jerry Gahlhoff - President and COO Kenneth Krause - EVP, CFO and Treasurer Conference Call Participants Tim Mulrooney - William Blair Ashish Sabadra - RBC Capital Markets Seth Weber - Wells Fargo Securities Hans Hoffman - Jefferies Operator Greetings. Welcome to Rollins' Third Quar ...

FORM 10-Q Filing Information This section provides essential registration and filing details for Rollins, Inc.'s quarterly report Registrant and Filing Details | Detail | Value | | :--- | :--- | | **Registrant Name** | ROLLINS, INC. | | **Commission File Number** | 1-4422 | | **Quarterly Period Ended** | June 30, 2022 | | **State of Incorporation** | Delaware | | **Trading Symbol** | ROL | | **Exchange** | NYSE | | **Filer Status** | Large Accelerated Filer | | **Common Stock Outstanding (July 15, 2022)** | 492,417,332 shares | [PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%201%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and related notes for the reporting period [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements of Rollins, Inc. and its subsidiaries, including the Statements of Financial Position, Income, Comprehensive Income, Stockholders' Equity, and Cash Flows for the periods ended June 30, 2022, and December 31, 2021 (for balance sheet) or June 30, 2021 (for income/cash flow statements). These statements provide a snapshot of the company's financial health, performance, and cash movements. [CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20FINANCIAL%20POSITION) Condensed Consolidated Statements of Financial Position (in thousands) | ASSETS | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $ 220,964 | $ 105,301 | | Trade receivables, net | 162,755 | 139,579 | | Financed receivables, short-term, net | 29,822 | 26,152 | | Materials and supplies | 29,515 | 28,926 | | Other current assets | 63,942 | 52,422 | | **Total current assets** | **506,998** | **352,380** | | Equipment and property, net | 130,424 | 133,257 | | Goodwill | 742,019 | 721,819 | | Customer contracts, net | 318,015 | 325,929 | | Trademarks & tradenames, net | 111,040 | 108,976 | | Other intangible assets, net | 10,004 | 11,679 | | Operating lease right-of-use assets | 252,355 | 244,784 | | Financed receivables, long-term, net | 52,961 | 47,097 | | Other assets | 43,666 | 34,949 | | **Total assets** | **$2,167,482** | **$ 1,980,870** | | **LIABILITIES** | | | | Accounts payable | $ 50,702 | $ 44,568 | | Accrued insurance | 37,724 | 36,414 | | Accrued compensation and related liabilities | 95,948 | 97,862 | | Unearned revenues | 165,220 | 145,122 | | Operating lease liabilities - current | 77,867 | 75,240 | | Current portion of long-term debt | 15,000 | 18,750 | | Other current liabilities | 75,283 | 73,206 | | **Total current liabilities** | **517,744** | **491,162** | | Accrued insurance, less current portion | 32,470 | 31,545 | | Operating lease liabilities, less current portion | 178,021 | 172,520 | | Long-term debt | 219,858 | 136,250 | | Other long-term accrued liabilities | 73,822 | 67,345 | | **Total liabilities** | **1,021,915** | **898,822** | | **STOCKHOLDERS' EQUITY** | | | | Common stock | 492,417 | 491,911 | | Additional paid in capital | 109,070 | 105,629 | | Accumulated other comprehensive loss | (31,149) | (16,411) | | Retained earnings | 575,229 | 500,919 | | **Total stockholders' equity** | **1,145,567** | **1,082,048** | | **Total liabilities and stockholders' equity** | **$2,167,482** | **$ 1,980,870** | [CONDENSED CONSOLIDATED STATEMENTS OF INCOME](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Condensed Consolidated Statements of Income (in thousands, except per share data) | | Three Months Ended June 30, | | Six Months Ended June 30, | | :--- | :--- | :--- | :--- | :--- | | | **2022** | **2021** | **2022** | **2021** | | **REVENUES** | | | | | | Customer services | $714,049 | $638,204 | $1,304,729 | $1,173,758 | | **COSTS AND EXPENSES** | | | | | | Cost of services provided | 336,780 | 297,862 | 632,158 | 559,414 | | Sales, general and administrative | 219,987 | 183,482 | 398,772 | 345,690 | | Depreciation and amortization | 24,325 | 23,306 | 49,172 | 46,902 | | **Total operating expenses** | **581,092** | **504,650** | **1,080,102** | **952,006** | | **OPERATING INCOME** | **132,957** | **133,554** | **224,627** | **221,752** | | Interest expense, net | 880 | 506 | 1,448 | 1,112 | | Other (income), net | (1,911) | (891) | (3,190) | (33,151) | | **CONSOLIDATED INCOME BEFORE INCOME TAXES** | **133,988** | **133,939** | **226,369** | **253,791** | | PROVISION FOR INCOME TAXES | 33,689 | 35,085 | 53,625 | 62,294 | | **NET INCOME** | **$100,299** | **$ 98,854** | **$172,744** | **$191,497** | | **NET INCOME PER SHARE - BASIC AND DILUTED** | **$ 0.20** | **$ 0.20** | **$ 0.35** | **$ 0.39** | | DIVIDENDS PAID PER SHARE | $ 0.10 | $ 0.08 | $ 0.20 | $ 0.16 | [CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Condensed Consolidated Statements of Comprehensive Income (in thousands) | | Three Months Ending June 30, | | Six Months Ended June 30, | | :--- | :--- | :--- | :--- | :--- | | | **2022** | **2021** | **2022** | **2021** | | **NET INCOME** | **$100,299** | **$ 98,854** | **$172,744** | **$191,497** | | Other comprehensive income (loss), net of tax: | | | | | | Foreign currency translation adjustments | (16,913) | 704 | (13,786) | 283 | | Unrealized loss on available for sale securities | (362) | — | (952) | — | | Change in derivatives | — | (439) | — | (276) | | **Other comprehensive income (loss), net of tax** | **(17,275)** | **265** | **(14,738)** | **7** | | **Comprehensive income** | **$ 83,024** | **$ 99,119** | **$158,006** | **$191,504** | [CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY) Condensed Consolidated Statements of Stockholders' Equity (in thousands) - Key Changes for Six Months Ended June 30, 2022 | Item | Amount (Six Months Ended June 30, 2022) | | :--- | :---

Financial Data and Key Metrics Changes - Rollins reported revenue of $714 million for Q2 2022, an increase of 11.9% compared to $638 million in Q2 2021 [16][24] - Net income for the quarter was $100.3 million, or $0.20 per diluted share, compared to $98.9 million, or $0.20 per diluted share in the same period last year [16][24] - Adjusted EBITDA for Q2 2022 was $159.2 million, a 1.2% increase from $157.3 million in Q2 2021 [40] Business Line Data and Key Metrics Changes - Residential pest control revenue increased by 11%, commercial pest control was up 11.2%, and termite services grew by 15% [25][39] - All service lines experienced double-digit growth, continuing from the previous year's strong performance [25][39] Market Data and Key Metrics Changes - The company faced inflationary pressures, particularly from fleet-related costs such as fuel and vehicle repairs, which impacted gross margins [41][41] - Fuel costs increased by over 50% compared to Q2 2021, contributing significantly to the overall cost structure [41] Company Strategy and Development Direction - Rollins is focused on enhancing operational efficiency and reducing carbon emissions, with plans to increase the hybrid truck fleet by 2024 [29][30] - The company has a strong acquisition pipeline, having completed 22 strategic acquisitions in 2022, including significant expansions in the UK [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate inflationary pressures and maintain customer satisfaction despite rising costs [26][34] - The leadership transition plan was highlighted, with Jerry Gahlhoff set to become CEO in January 2023, ensuring continuity in strategic direction [10][12] Other Important Information - Rollins has partnered with Everside Health to provide on-site health services for employees, enhancing employee benefits [17][19] - The Board of Directors approved a regular cash dividend of $0.10 per share, reflecting strong performance and confidence in future growth [44] Q&A Session Summary Question: EBITDA margins were down more than expected; what were the main headwinds? - Management identified advertising expenses and fuel costs as the primary factors impacting EBITDA margins, with advertising increasing by 2% of revenues [49][52] Question: Can you elaborate on revenue growth drivers? - Management noted that aggressive price increases and improved customer retention contributed to revenue growth, alongside effective advertising campaigns [57][59] Question: What is the capacity of the sales force and hiring plans? - Management indicated that the sales force is well-staffed but always looking for opportunities to improve capacity and drive incremental growth [62] Question: Should gross margins improve for the rest of the year? - Management stated that gross margins depend on fuel prices and supply chain stability, with potential for improvement if conditions stabilize [67][70] Question: Will there be another price increase due to inflation? - Management indicated that while they are monitoring inflation, they prefer to avoid frequent price increases and will assess the situation carefully [73]

Financial Performance - Revenues for Q1 2022 increased by 10.3% to $590.7 million compared to $535.6 million in Q1 2021[86] - Net income decreased by 21.8% to $72.4 million, with earnings per diluted share of $0.15 compared to $0.19 in the prior year[91] - Residential pest control revenue grew by 10%, commercial pest control revenue increased by 9%, and termite and ancillary services rose by 13%[92] - Cost of services provided rose by 12.9% to $295.4 million, driven by increased personnel and material costs[94] - Sales, general and administrative expenses increased by 10.2% to $178.8 million, primarily due to higher personnel costs[96] - Other income decreased by $31.0 million due to a prior year gain from sale-leaseback transactions[98] Cash Flow and Investments - Net cash provided by operating activities was $87.5 million, down 26.7% from $119.5 million in Q1 2021[102] - Cash used in investing activities was $19.9 million, compared to cash provided of $40.1 million in the prior year[106] - Total cash at March 31, 2022, was $258.3 million, with $86.1 million held in international accounts[109] Debt and Financial Position - The company maintained a leverage ratio compliant with debt covenants at 3.00:1.00 as of March 31, 2022[111] - The company believes that its current cash and cash equivalents, along with future cash flows and available borrowings of $175.0 million from its revolving credit facility and $300.0 million from its term loan facility, will be sufficient to finance operations and fund business expansion for the foreseeable future[122] Legal and Regulatory Matters - The company reached a settlement with the SEC, paying an $8.0 million civil penalty related to the investigation of accruals and reserves for the periods from January 1, 2016, to December 31, 2018[116] - The company does not expect any pending claims or investigations to have a material adverse effect on its financial position or results of operations[117] Accounting and Estimates - The company has no changes to its critical accounting estimates since the last Form 10-K filing for the year ended December 31, 2021[118] - The company anticipates that total unrecognized compensation costs related to time-lapse restricted shares will be recognized over a weighted average period of approximately 4.1 years[122] - The company expects that acquisition-related goodwill recognized during the quarter will be deductible for tax purposes[122] - The company has established loss contingency reserves based on outcomes it currently believes to be probable and reasonably estimable[122] - The company has not identified any impairments of its goodwill or other intangible assets[122] Market Risks - The company maintains an investment portfolio subject to short-term interest rate risk exposure and is also exposed to market risks from changes in foreign exchange rates[125] - The company believes that foreign exchange rate risk will not have a material effect on its results of operations going forward[122]