Thank you everyone for joining us at the beginning of day three of our Baird's Industrial Conference. My name is Justin Hauke. I'm a senior associate covering facility and industrial services here at Baird. Presenting next, we have the pleasure of introducing Rollins. Rollins is, for those of you who don't know, the leading pest control provider in North America and increasingly globally. It's a great service industry, great long-term trends, great cash flow story. We'll hear all about it here, but presenting is gonna be Ken Krause, the company's Chief Financial Officer. We also have Lyndsey Burton in the audience, who's their new head of investor relations. Ken, we'll do a formal presentation, maybe leave a couple of minutes at the end. Sure for Q&A, if you wish. Sure, certainly. I'd stand, but I'm afraid I might back up- Yeah and trip over this chair behind me. But great to be here. Thanks for that warm introduction, Justin. I really appreciate it. And great to talk a little bit about Rollins. Before I do that, I just wanted to highlight the forward-looking statements that we're all aware of and the risk of those forward-looking statements, as well as some of our general disclaimers, and remind you that we certainly will talk a little bit about non-GAAP figures, but there's a reconciliation to GAAP items in our appendix here in our presentation, as well as on our website. You know, starting at a very high level, we execute and operate and compete in a very fragmented industry, in a very attractive industry with a tremendous amount of secular tailwinds. It's a great market, no doubt about it. It's got pricing, it's got growth, it's got secular tailwinds that make it very attractive for us. But the two or three things that I wanna focus on is, what do we do that makes us so special? First and foremost, it's really about consistency, whether it be consistency in leadership, or consistency in focus, or certainly consistency in our financial returns. We've been fortunate enough to be able to grow this business through just about every economic cycle, and see very consistent growth over a very long period of time. The second item that I wanna emphasize is the essential nature of our service. What do we do? Well, we're not just a pest control company. I think that what we do is very essential, and I know what we do is so essential to our customers. We help protect their brands on the commercial side of the business. We help protect health. You know, mosquitoes are certainly very dangerous, and a lot of the other pests that we manage are certainly dangerous and very harmful to health. And then, we protect people's assets, whether it be our businesses, whether it be our homes through termite control, the protection of assets is certainly very important. And we go to market through a very diversified portfolio of brands. And I think that provides a bit of a separation for us versus many other of our competitors. We have a very well-known national brand, Orkin. I'd be surprised if I polled the audience that you weren't aware of the Orkin brand. But you probably aren't aware of Northwest or Clark or HomeTeam, or even our recent acquisition of Fox. So what that does for us is it gives us multi-access points. It gives us what Jerry Gahlhoff, our CEO, oftentimes talks about, is a second bite at the apple. We may not be successful with the Orkin brand, but we have the Northwest brand in Atlanta and in Florida and Alabama. We have the Clark brand out in California. We've got HomeTeam across the country, and that all gives us a special second bite at the apple. So it's... Those are the two or three things I just wanted to highlight before we got more into the details here and looked at our third quarter performance. We closed out third quarter, Justin and I were just speaking, and two weeks ago today, it's hard to believe it's been two weeks already, but two weeks ago, we announced our third quarter results, had a really strong, third quarter, continuing to execute very well. We're seeing double-digit growth, across all of our service lines. Organic growth is up over 8%, and it's been very consistent. Sequentially, it strengthened from Q2 to Q3, which is really good to see. It's hard to find businesses today that are sequentially strengthening between Q2 and Q3, knowing a lot of the pressures that people are feeling, around the potential looming recession. We continued to focus on, margin improvement, 150 basis points of gross margin improvement. That fell down through to EBITDA, and so we were able to leverage that through the P&L and see 150 basis points. What was really important for us to see was our ability to leverage price. We've consistently talked about pricing in our business, and that we have the benefit of a market that is receptive to pricing, and we did see benefits on the pricing. Not only did we see benefits to margin associated with the Fox acquisition that we made a few quarters ago, but we also saw benefits on the organic side, where we saw leverage in our people, our materials and supplies, and our freight, which is really the three big areas of cost of services. And the cash flow continues to be pretty strong for us. That enabled us and provided us an opportunity to continue to focus on the dividend. We raised the dividend 15%. If you look at the last 12 or so months, last year, around this same time, I pivoted away from the special dividend that we were paying, and we baked that into the regular dividend, raising it 30% at that time, and then just recently, 15. So we've raised the regular dividend by 45% over the last 12 months. Speaking to some of the consistency in the business, when you look at our business over cycles, whether it be the great financial crisis back in 2008 and 2009, the industrial slowdown that many of the other companies that are in our conference today certainly felt during 2015 and 2016 when the price of oil went from north of 100 quickly to $25 a barrel, or during the most recent COVID pandemic. We've consistently saw and recognized growth across all of those macro economic cycles. So you can see 20+ years of consecutive growth, 7% annual CAGR from 2008 to 2022. More recently, and I'll speak to that here in a shortly, more recently, we've seen that CAGR step up to a higher number than what we saw during that period. Recurring revenue is around 75%, and margin improvement is consistently a part of the equation as well. You can see during this time period, we saw 750 basis points of margin improvement. Looking at revenue growth trends, and what's interesting here is what we've tried to do is isolate the growth trajectory that we're seeing, not only through a long period of time, but more recently. A lot of times we get questions around what kind of growth are we seeing in post-COVID, and do we see that turning back to pre-COVID levels? Because if you look at this slide, you can see, you know, between 2016 and 2019, our growth ranged from 5% to roughly 11%. Now, during 2017, 2018, 2019, we started to make some, some more significant acquisitions. It helped lift the growth a bit. But during, you know, 2020-2023, you can see we are-- we're growing faster than any other period during the last 14 or 15 years. And what's even more interesting is when you look at the organic growth, and you look at organic growth in 2021, 2022, and then year to date in 2023, organic growth has stepped up considerably in our business. We've seen roughly 10% organic growth in 2021, around 8% in 2022, and then more recently, eight to nine percent. So we continue to see pretty steady organic growth, and then we've been very active on the acquisitions. This year, we spent roughly $350 million year to date on acquisitions. We were successful in acquiring Fox, and that certainly has been a tailwind to our growth rates this year. When you look at... You know, I talked earlier about the access points that we have with our various brands. The other thing that's really important to remember is that we're not just a single access point in terms of pay per click, pay for advertising, digital advertising. We've got a very broad assortment of avenues that we reach our customer with, whether it be door-to-door business like Fox, whether it be cross-sell. Our technicians actually are incentivized to cross-sell services. So they may be providing the pest control service, but they're focused on selling additional services so that every single customer can be a multi-service customer of any one of our brands. And so door-to-door, digital, technician cross-sells are all really important part of the equation, in addition to home builders and the relationship that we have in that space with, especially with our HomeTeam business. So we continue to certainly focus across those various channels. The other thing that's important is when we look at our business, we've got a really strong residential business, and many of you are probably aware of that. But what we also have is a really strong business and a strong focus on our commercial business. Going out and helping our commercial customers protect their brands is really an important part of the equation, and more recently, we've really stepped up our focus on investing in that commercial area of our business. How do we continue to double down in that and acquire additional customers to accelerate growth? Speaking of growth, it's a big part of the strategy. You know, when you look at the business, whether it be the organic revenue growth side or the accretive M&A, growth is certainly the focus for us. We certainly look at, and we're gonna continue to look at our cost structure through two lenses. One lens that we look at our cost structure through is, how do we continue to get better? If you've ever spoken to Gary Rollins, it... I would, I would challenge you to find a time when he doesn't use the words continuous improvement. That is really a big part of what we do from a cost structure perspective. How do we continue to improve our cost structure? Take that from 29% or 30% of sales down to 27%-28% of sales. That's a focus. But also another focus, from a cost perspective, is how do we challenge ourselves with where we're investing those dollars? Can we maybe reallocate, reprioritize investments? Maybe there's an opportunity to shift advertising or shift dollars we're spending into higher returns. Return on ad spend is a really important metric for us, and it's something that we continue to look at across the business. Looking at the acquisitions, we've been consistent in acquiring businesses over a very long period of time, and our focus remains quite clearly on growing through acquisition. We enjoy a very fragmented industry with 20,000+ competitors across our space, and it gives us an uncanny ability to continue to be acquisitive. We don't compete on price. We're not gonna come in and buy businesses and be the highest bidder often. But the how we compete is when we develop relationships, and we've got tremendous relationships in our industry, but when we develop those relationships, what we do is we go in and we take care of the brand. As you saw earlier, we focus on keeping a lot of these brands in place. We also focus on the people, and that really resonates with sellers in our space. When somebody grows a business and they've spent their entire life focused on the business, they wanna obviously maximize value, but they also wanna make sure that when they drive down I-85 in Atlanta, they can still see Northwest on the billboard, or they can still see Clark across Southern California or across California. They can still see those brands, nd they also can still feel comfortable walking through their community, knowing that the people that they employed are still being taken care of by a company like Rollins. And so that's a really important part of the equation. When we go and we acquire businesses, we certainly are gonna get returns. Our focus is certainly gonna be about returns and how do we improve the business, but we also take care of the people. The interesting part on the returns is oftentimes when we buy these brands, we provide growth capital. So, for example, Northwest or Clark or some of the other acquisitions we've made, not only do we buy a platform, and we focus on improving that platform, but we oftentimes reallocate a significant amount of M&A dollars into that platform to allow them to grow that platform out. So it's a really, it's an interesting way to really realize synergies across some of these acquisitions. Looking at the cash flow profile, I haven't spoke a lot about cash flow yet, but I'll tell you, the cash flow profile is tremendous. You know, we've continued to compound free cash flow in the double-digit 10%-15% range over a very long period of time. So what that's enabled is a very balanced approach to capital allocation. You can see here from 2010 to 2022 a really nice balance between dividends and M&A. So we've deployed, during that time period, deployed about $1.3 billion of growth capital for M&A, and we've also returned cash to shareholders through a growing dividend. We've returned almost $1.5 billion during that time period to shareholders. And more recently, during 2023, we've invested roughly $350 million, this is through the third quarter, of course, invested about $350 million dollars in M&A. We've paid dividends of about $192 million. That's a 30% increase year-over-year, and as I said earlier, we just recently announced another 15%, and we also have repurchased our shares. We invested in a share repurchase back in September of about $300 million. That was part of our secondary offering that we executed, which was about $1.6 billion in early September. And so we felt very comfortable about deploying capital to buy back our shares because we see the value, the long-term value in that investment. Looking at some of the changes, oftentimes, if you've listened to us over the last 12 or 14 months, you'll hear a lot about modernization. Modernization of the team, modernization of the strategy, modernization of our capital structure. And also, when we look at this team, it's an interesting slide in that it's... A couple takeaways here. One takeaway is there was certainly a transition at the top. You know, back in January, Gary Rollins stepped down as CEO, and Jerry Gahlhoff stepped in. But that's about the smoothest CEO transition that I've had a front-row seat in, and that Jerry is a long-term veteran of pest control. He's a trained entomologist. Before I joined him, before I joined Rollins, I didn't even know that there was such a thing. And, but he is a trained entomologist. He knows the industry. He grew up in the industry. And he's been with Rollins since the HomeTeam acquisition. So he’s got an incredible amount of relationships across this space, and that’s really helping us grow. I joined a little over a year ago, and I’m accompanied by a number of other veterans in the pest control industry with Pat Chrzanowski, who heads up our Orkin business, and then Steve Leavitt, who heads up a lot of the brands businesses. But we’ve also continued to make strategic hires. Lyndsey Burton, who’s here with me today, heads up IR, joined us from Home Depot recently. Tracy Hornfeck, a new Chief Accounting Officer, and Renee Pearson, who heads up some of the chief or some of the technology efforts in our business, reporting to Thomas Tesch. So you’re seeing a really nice transition. You're seeing a nice transition and integration of a lot of legacy knowledge with a lot of new ideas, and that's really catalyzing a lot of modernization across the business. In closing, when we look at the opportunities in the business, you know, there's four or five key areas I just wanted to highlight. One is we continue to see strong secular tailwinds in our business, in our markets. It's great to see that. Those range from relocation from some of these more colder regions of the country into Florida, Georgia, the Carolinas. That's good for our business. Secondly, the global warming continues to have an impact on our business. You may not, you know, may not see that today when you walk out in the streets of Chicago, but global warming, certainly over the long term, is certainly having an impact on our business with the evolution in pest and what we're seeing in that space. Then, when we look at our above-market growth, we continue to execute. We continue to focus on this industry. We're not distracted with other industries or other markets. We're focused on this business because we see growth potential in this business. Continuing to make creative M&A and creative acquisitions. As I said earlier, we've spent a significant amount of growth capital this year. We're gonna continue to focus on deploying growth capital in the years to come. The long-term margin opportunity and the expansion, even though we've expanded margins so greatly over the last 14 or 15 years, we really do see an opportunity to move the needle on margins, whether it be through pricing on the gross margin line, whether it be through leveraging our supply chain and our cost structure on providing the cost of services... or in our back office. You know, a big part of the strategy here is aimed at our back office. We just executed our first restructuring program in 20 or so years in our back office. And so what we're doing is we're focused on the back office to try to make it a more effective provider of shared services for our brands. 'Cause if we're able to do that, we're gonna, we should be able to see improved margins, improved cost structure, more synergies from some of our acquisitions, without impacting the customer. It's really important to not disrupt that customer relationship in our business. And so the focus here is not really improving, or the cost structure associated with branches, but it's really, right now, about improving the cost structure in a lot of our back office. And then free cash flow. We got a great business that has really very much capital light. Only about 7% of sales is spent in working capital. A really small portion is invested in CapEx. Doesn't mean that we won't invest in CapEx. We certainly have invested in systems, and we're gonna continue to invest in systems, but the business does not require a lot of CapEx investment. So as a result, we've been very consistently compounding cash flow at a very healthy rate, while converting net income to cash flow at well north of 100%. With that, Justin, I'll open it up for any questions you might have. No, that was great. I mean, the free cash flow one, I think the most interesting slide you had in there is, like, from 2010 to 2022, the amount that you returned to shareholders, and then- Yeah ... almost a third of that you've done just this year alone. Yeah. Which is, it's impressive, and, and obviously you guys have a strong balance sheet too, which enables that. Yeah, the balance sheet is certainly healthy, and, and, you know, if you look at this year, for example, and, and you look at the, the modernization journey, the capital structure and the changes we've made with the revolver, with the shelf facility, with the secondary, with the dividend, have all certainly been welcome changes. And, and we enjoy a balance sheet. I didn't mention it earlier, but I mean, we have with all of that capital that's been deployed this year, we still have a debt-to-EBITDA ratio that's well below one turn. Yeah. We continue to see opportunities to continue to modernize that capital structure. Yeah. No, it's great for this environment for sure. I should have mentioned the session four at rwbaird.com if you have any questions. There were a couple in here, so I'm gonna go through those. We can also just raise hands, but I know that this is easier. First question was just about the competitive environment. Ecolab has been very successful in this business as well, a little bit different approach, and then Rentokil with their acquisition of Terminix, and just kind of how both of those play in the market, any changes? Yeah, there's certainly... It's a very competitive market. Market continues to evolve. It's a very attractive market. But what I would say is, all of those competitors, for the most part, are very rational, and so you're not seeing folks compete on price, you're seeing people compete on, on the value proposition that we're providing customers. So it's a really good industry with a really strong cast of competitors. And we're really not seeing a significant change with respect to those customers, with the exception of maybe, you know, we're all aware of the Rentokil-Terminix merger, and that's a big merger. And I don't envy the work that they're doing over there. That's a really challenging job, and so anytime you have a big acquisition like that, it certainly can be disruptive. But I certainly... You know, I gotta hand it to all of the competitors out there. They're doing an excellent job and really being very rational and competing in a very fair manner. Okay, this next question was talking about retention rates and particularly on, on the door-to-door sales effort. What do you do to make sure that your retention stays high on, on that? Because sometimes that can have a lot of turnover. Yeah. I mean, the first thing you do is buy a good business. You know, when you look at the Fox acquisition, for example, you know, when we looked at the Fox acquisition, before I joined, Jerry spent some time on the road, and when he spent time on the road, what he tried to do is identify all the players in that door-to-door business. And not all the players are the same. You know, some are really good players and have great business models, and others have a tremendous amount of churn, you know? And so what we tried to do is go in and buy a business that we felt would not be dilutive to our churn, would be accretive to our overall margins, and allow us to continue to grow significantly in that business. And so on the Fox side, we think we were very successful in acquiring a business with those attributes. And, you know, really, in our industry, and it applies to Fox, it applies to door-to-door, if you take care of your customer, they're gonna take care of you. And so customer service is paramount, and if you're built on a culture of customer service, you're gonna be successful. And that's exactly what Fox is. And so we feel like, you know, with that investment, we bought a business that had a culture that was very similar to ours, with a very attractive financial profile, and churn was not gonna be a huge headwind to us. Great. Maybe the next question would just be talking about, you've mentioned your organic growth rate has improved the last couple of years. I know there's drivers on the volume side, because people, the hybrid model has kind of stayed, people are at home. But also pricing for everyone, it's been obviously a contributor. I guess, maybe talk about the elasticity of pricing, sustainability of it, or and just the volume price mix. Yeah, you know, this year, when we look at that specific question, we've consistently talked about a 4% price increase. And so earlier this year, Jerry and I met with the business, and we decided. We pulled that price increase forward. We were more aggressive with respect to the timing and the consistency by which we spread it across our business. We required all of our brands to really try to keep it at or above those levels, and we feel like we were successful. So this year, you're seeing a really nice balance on the organic side between price and cost. And I'll tell you, since COVID, I think the company has been more proactive on pricing. You know, we've done a lot of studies. In fact, I've got a book on my credenza in my office that was a McKinsey report on the Orkin acquisition back in the 1960s. Mm. Something they talked about is the elasticity in price in this business and the opportunity to get price in this business. Well, I can tell you, fast-forward 60 years, we still have that opportunity to get price in this business, and so we're gonna continue to look at that. As we think about 2024, we have meetings coming up where we're assessing the consumer, we're assessing the metrics we're seeing, the cancellations, the callbacks, all the various metrics we have, to make sure that we're being smart on pricing. But I'll tell you, I'm gonna be as proactive and as aggressive as we can be to be able to hold that line at the pricing we're seeing currently. So, so stay tuned on that, but know that we're proactive, we're looking at the data, and we enjoy a market that has a lot of pricing opportunities. Okay, fair enough. I've got maybe two more here, and then we'll just do a show of hands unless we go into the breakout. You talked about a new chief technology officer. You guys are capital light, but you spent a lot of money kind of optimizing your systems. Mm-hmm. How much of a route logistics business are you? Maybe talk about the margin improvement you've had from your telematics and your BOSS system- Mm-hmm ... and some of these other things that you- Yeah, it's, I mean, it's a route-based business. So it's all about how do we, how do we get the most dense routes? Mm-hmm. And so, for example, our HomeTeam business oftentimes will capture an entire neighborhood. So a technician will go into that neighborhood and spend the entire day. And so that route density is really important, one, and two, the ability to communicate with our customers, to say, "Hey, we're gonna be there between 10 and noon," and then effectively showing up between 10 and noon. That's when we lose business. It's not if, it's not that a pest will come back, because they will come back. But if we say we're gonna show up at a certain time, we better show up, or else we're not gonna enjoy that business longer term. And so that route technology helps us do that, helps us do both of those very effectively, and we're continuing to look at that. We've got internally developed route-based software. We also have vendor-provided route-based software. We're continuing to evaluate the route-based software that we'll be using in the future. I don't see a major use of capital in the next, say, 12 months with respect to that, but it certainly is something that's on the horizon as we think about the next 2, 3, or even 5 years. Okay. All right, last question that came in here was just asking about Fox Pest Control and maybe just the integration efforts. And it looked like it kind of slipped into a net income loss past quarter, and just question about that. Not sure about the net income loss, but looking at the Fox business, it's as I said earlier, it continues to perform very well. We continue to see very attractive returns. We're very. It's certainly exceeding some of our internal expectations. As I said earlier, it's performing at the high end of what we guided to, and actually above the high end of what we guided to, when we made the deal and completed the deal back in April. But it's going well. So the integration's going well. It's hitting the return thresholds that we set for it. And we also see opportunities to leverage that business with some of our other businesses. So the business I just spoke about, HomeTeam, you know, if you understand that business, it's a business that's built on tubes that are installed in a home when it's built, and those tubes will stay in that home for the life of the home. And we'll provide pest control in those tubes, but when a customer leaves, and a new homeowner moves in, oftentimes they don't realize that they have those tubes in the wall. So if we can redeploy Fox door-to-door services, we can realize some growth opportunities from some of those legacy tubes, and we've got a tremendous amount of legacy tubes out there. We haven't commenced a significant amount of effort there yet. Our focus the first six or nine months was just getting the business, keeping it on the rails, and making sure that it's performing. But now, as we go into year two, certainly gonna continue to evaluate opportunities to leverage and create synergies across the portfolio of brands. Great. We have one minute left, so, I'm gonna open it to the audience, but there is a breakout session as well, so maybe some questions like that, we could address there. But the breakout will be in the Oak Room, but we've got one question over here. Hi, Bennett. Thanks. Can you just elaborate on the back office investment and relate that to a lot of things you're talking about? Mm-hmm ... route density- Mm-hmm ... new CTO? Like, it's surprising to hear a business that has grown through roll-ups hasn't invested in back office in 20 years. Yeah. Mm-hmm. Anything you can give us there? Yeah, I mean, I wouldn't say they haven't invested in the back office, but they haven't done a restructuring program like we did in late August. The focus there, you know, coming in from the outside, the focus there is modernizing and creating a culture or an environment in the back office that is able to implement some of the new ideas that many others are seeing today. Whether it be artificial intelligence around invoice processing, robotics, things like that, or whether it be just modernizing how we speak to investors. And so there's certainly tremendous opportunities to do that back office, to focus on that back office, and improve the back office. The real opportunity there is, and I've said it a few times, is if we can be successful at hiring the right people, putting the right technologies in the back office, we can then create more synergies from all these acquisitions that we're acquiring. Instead of having accountants, and HR, and IT, and legal that's spread across the business, the focus is: How do we create a center of excellence, a shared service model, to support those acquisitions? That's really, that's really the focus for us right now. Great. Well, I think we're at our time limit, so- Yep ... Ken, thank you so much- Thank you ... for being here. Lyndsey?