Rollins(US:ROL)2021-07-28 18:36Financial Data and Key Metrics Changes - Rollins reported a revenue increase of 15.3% to $638.2 million for Q2 2021 compared to $553.3 million in Q2 2020 [20][31] - Net income grew to $98.9 million, or $0.20 per diluted share, up from $75.4 million, or $0.15 per diluted share in the same period last year, representing a 31.2% increase [21][31] - For the first six months of 2021, revenues were $1.174 billion, a 12.7% increase over $1.014 billion in the same period last year [32] Business Line Data and Key Metrics Changes - Residential pest control revenue increased by 13.6%, termite services by 16.3%, and commercial pest control (excluding fumigation) by 17.4% compared to Q2 2020 [22][31] - Mosquito service revenue improved over 30%, surpassing bedbug revenue for the first time, contributing over 3% to total revenue [30][34] - Overall gross margin decreased to 53.3% from 53.8% in the prior year's quarter due to higher fleet costs and a writedown of $2.7 million related to PPE [36][37] Market Data and Key Metrics Changes - Residential pest control accounted for 46% of total revenue, commercial pest control for 33%, and termite and other services for approximately 21% [35][90] - The company experienced strong demand in both 2020 and 2021, with consistent revenue growth of 5.6% in 2020 followed by a healthy increase of 15.3% in 2021 [33] Company Strategy and Development Direction - Rollins has rolled out annual price increases across all brands, expecting benefits as the year progresses [23] - The company is focused on continuous improvement and has been careful about adding costs back into the business, maintaining a strong cash position [28][41] - Rollins was named to the top 50 green fleet list, indicating a commitment to sustainability [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to continue driving growth and profitability, citing strong performance in the first half of 2021 [26] - The company noted that demand for virus-related services has moderated but remains viable in certain markets [85] - Management acknowledged ongoing SEC investigations but confirmed that they are still in progress [79] Other Important Information - The Board of Directors approved a regular cash dividend of $0.08 per share, payable on September 10, 2021 [43] - Rollins closed 18 deals through the end of Q2 2021, indicating active M&A activity [89] Q&A Session Summary Question: Can you provide total residential pest growth and organic growth numbers? - Management confirmed residential growth at 13.6% and organic growth at 12.3% [22][58] Question: How have new account sales trended in Q2 compared to last year? - New account sales improved over the previous year but not at the record levels seen last year [55] Question: What contributed to organic growth this quarter? - Organic growth was driven by new customers, cross-selling, and improved retention rates [63][64] Question: How does the company plan to handle potential inflation? - Management indicated they could adjust pricing above the historical range if necessary, depending on market conditions [67] Question: What is the status of the SEC investigation? - The investigation is ongoing and has not been completed [79] Question: How does the M&A pipeline compare to previous years? - The M&A pipeline remains active, with plenty of opportunities for acquisitions [88]