Hello, I am Heather Balsky, BofA's Business and Information Services Analyst, and I'm pleased to be here with Ken Krause, Rollins CFO. Ken, it's great to have you here. Great to be here. My understanding is you have some slides and overview for us, so why don't we kick off there? Sure, sure, will do. It's great to be here, great to attend the conference, and represent Rollins. Thank you for your interest and continued interest in Rollins. We operate in the pest control industry, about a $20 billion global industry, that's focused on pest control. We focus on protecting our customers' health, their properties, and their brands. Broad focus across resi, commercial, and termite and ancillary. It's been a great run with the business. Before I start, I talk about the safe harbor. We're all aware of the safe harbor. We're also aware of the non-GAAP reconciliations that we'll talk about here. But overall, it's been a great. 2023 was a great year. Finished strong, had strong 14% or 15% growth for the full year on revenue. Earnings grew at 20+% and cash flow continued to compound at roughly 14%. So we continued to be positioned really well, did a number of acquisitions in 2023, and continued to be acquisitive as we go into 2024. Q4 was a strong finish. Again, 14% revenue growth in Q4, which was in line with our full year growth. Earnings per share were growing above 20%, and cash flow was compounding at north of 20% as well. So really good finish to the year. When I dissect and unpack the Q4 finish, really, the focus there was a lot of conversation around resi. I'll tell you, the resi sector continues to be really strong. You know, the fourth quarter was slower. We posted about a 4.7% revenue growth in residential growth in the quarter. We talked about the impact of less one-time business, and that definitely impacted us. If we exclude that, we would've been growing at north of 5% in the resi sector, which we feel is very healthy in a very slow winter quarter for pest control. So we continue to be positioned well and look at 2024 with optimism. We're excited to enter 2024. We're seeing great growth prospects from an M&A and an organic perspective, and we're focused on executing our strategy as we go forward. 2024, diving a little bit closer into and deeper into 2024. From an organic growth perspective, we continue to be bullish. The last several years, we've posted revenue growth organically of roughly 8%. We talked about in our year-end call that we were raising prices this year at roughly 3%-4%. We still see opportunities to bring on additional acquisitions, continued opportunity to drive volume growth. So we're excited about the overall growth profile of the business. We're investing in growth initiatives. We're investing in a number of initiatives around advertising, cross-sell, different ways to reach the customer. We realize the value of our customer, and we wanna spend and invest disproportionately in the growth initiatives to drive growth for our business. We're also continuing to look at margin opportunities, not only in our direct cost of services. We're doing a lot of work around materials and supplies and fleet and those sorts of costs, but we're also heavily focused in the back office. Our hope is to free up spend that we can both reinvest in growth, but also help drive improved incremental margins as we go forward. Our staffing, we're certainly a people business. 50% of every dollar we earn is invested in our people, and we've invested in our people pretty consistently over a long period of time. You know, it's interesting, I was reminded earlier today, Lindsay and I were talking and reminded of what we did with the Tax Reform Act back in 2017 now. The company reinvested a large percentage of that savings because we're primarily a U.S.-domiciled company that pay the full effective rate in the U.S. So when tax reform came through, we saw considerable savings. We reinvested that in higher 401(k) match and higher investment in our people to drive engagement levels in our business. So we continue to be focused on our people. Our staffing's strong here to start the year. As you probably know, there is some seasonality in the business. When you look at Q1 and Q4, they normally are our low points when it comes to revenue. In Q1, we do spend a lot of money trying to ramp up for busy season, and so we spend disproportionately to bring on people, and we're doing that right now. We're bringing some people on, we're investing, but we're seeing great growth. We're seeing tremendous growth here as we start the year. We're excited about it. We feel like we can continue to provide the consistent level of growth that we've seen coming through this, through this business for a long period of time. Going into cash flow. Cash flow continues to be strong, finished last year with a very healthy level of cash generation. Debt to EBITDA is up a bit from where it was historically, about 0.5 turn. Still certainly below a lot of other investment-grade companies. So it provides us opportunities, ample opportunities to continue to invest in growth initiatives, continue to share in those growth initiatives through the form of our growing dividend. We've raised the dividend since I started by almost 45%. We've started to certainly focus on the regular dividend and moved away from what we call the special dividend, to provide our investors with a more reliable return of capital. We've also invested in share repurchases. A year ago, or in 2023, in the third quarter, we invested $300 million in a share repurchase program as part of a secondary offering. And we continue to be opportunistic. We continue to look at ways to be opportunistic with capital deployment across the business. Key takeaways here. A lot of change at the top last couple of years. Jerry Gahlhoff became CEO in January of 2023. I became CFO in September of 2022. Our focus is modernizing. It's a great business. We don't want to disrupt the business. We want to continue to capitalize on all the strong secular tailwinds in our business, but we also want to continue to modernize and invest in our business. So we're making significant steps towards that. We took our first action on restructuring in probably two decades now, back in August, where we took out a significant amount of employees. We have then reinvested some of those dollars back into sales initiatives, but we've also reinvested into our people. Lyndsey's with me today. She joins me from Home Depot. She was with Home Depot for a number of years as the head of investor relations. I've also added people on our chief accounting staff and tax and treasury. We've hired new folks in technology, so it's a really exciting time to be joining Rollins at a time where we're seeing a significant amount of change, but an incredibly healthy business environment. I'll turn it over to Heather, maybe if we want to walk through any questions you might have. Yeah, thank you. I appreciate it, and that was a really helpful overview. So thank you. You know, I wanted to talk about, you know, go through some bigger picture questions to kind of help, you know, with investors to understand the business. You know, let's start with, you know, what do you think differentiates Rollins offerings in the market? And you know, what are the advantages you're getting from your scale? Certainly. Thank you for the question. When I think about Rollins and I think about our strategy, there's two things that really stand out for me relative to our overall market. The first is the breadth of our brand portfolio. We all know the Orkin brand. It's well-known, and it's certainly a bellwether on the national stage. But what we also have are a number of brands that are specialty brands, niche brands. Brands like Northwest, that are based in Atlanta, Georgia, that have operations all throughout the Southeast, or Clark Pest Control that we acquired a few years ago out in California. HomeTeam, going back to 2008. What a great business model that is. Or even recently, Fox. So we've got the complement of that national brand, but also that local brand, because we know that there's some consumers out there that wanna do business with that local partner, and that makes a difference for us. The second thing that really stands out for us is we're not a company that's solely focused on digital advertising. We know digital is important. It's really valuable. But what we also do is we have a number of other business models and approaches to marketing that help us reach the customer. For example, HomeTeam. HomeTeam is certainly, and, as I said earlier, incredibly valuable business, but that business relationship is spawned when a home is constructed. You put in Taexx tubes in the walls, and that creates a relationship with a customer over the lifetime of that home. And whether that customer stays there or a new customer comes in, we have that real estate for the life of that home. And so that's an incredibly important part of our approach to market. Cross-sell is another important approach. You know, our technicians are compensated on cross-sell, and we're focused on expanding the depth of the relationship. Oftentimes, customers might have one service. Well, there's an opportunity to lift that to two or even three services, and that cross-sell is a really important part. Last area I'd emphasize is door knocking. We bought Fox a year ago, and I'll tell you, not all door-knocking businesses are of the same value as Fox. Fox was a great acquisition. We got a team of great associates, and an incredible business model, and so we're excited about that. So you have the digital, you have the door knocking, you have the cross-sell, and then you have certain business models that just have this strong relationship with the customer that we benefit from. And so I think it's a complement of all those things I just discussed that really make us different and help us leverage our brands in the market. That's really helpful. So, so you talked about sort of, you know, what differentiates your business and what's driving your business. How do you... There's secular tailwinds, too. You know, how do you size up the magnitude of growth drivers for the industry? Things like climate change, regulation, pest resiliency, southern migration. Certainly. All very important. All very important areas that drive accelerated growth. When you look at this business and you think about the fact that there's so many people that are moving into southern climates. Southern climates certainly are perfect sort of climates for pest control. We also see northern climates as very opportunistic for us. And so what plays into that is do it yourself. You know, people do not want to do it themselves in this industry. They want to pay somebody to do it for them. And so you've got that tailwind coming through. You've got warmer climates. You know, I was in my hometown last weekend in Pittsburgh and talking to a few folks and they were talking about the lack of snowfall this year. They weren't complaining, but they were certainly talking about how much warmer the climate's been the last year, and that's a consistent theme. Oftentimes, when it's warmer, it's a better sort of setup for pest control. So I think you've got warmer climates, you've got southern migration, you've got do-it-yourself, to name three of many secular tailwinds that come together to give me confidence in our ability to see a market that continues to remain very healthy. Not to mention, you know, the other part of this is the penetration rate. There's a, you know, oftentimes there's a lot of data that people look at that say that the penetration rate in the residential consumer is relatively low. So only a fraction of the consumers, the homeowners, are actually using pest control today. So that provides an even more significant lift, I think, as we think about the future opportunities in the, in the business. That's really helpful, and it's interesting, too. Okay, well, so on the penetration side, you know, what are the opportunities to grow through new customer acquisition and on the cross-sell side? How are you thinking about that? Yeah, it's, you know, there's a couple of things we're focused on. Something that we've been very proactively discussing is our commercial segment of our business. Commercial grew at a strong double-digit clip last year. We are disproportionately investing in commercial. There's less churn in commercial. It's more profitable. The routes can be more dense, and it's a very attractive area. So commercial investment is certainly getting a lot of focus. We're looking at how we can redeploy some of the assets at Fox to drive growth in our business. You know, door-to-door knocking still has a place in our toolbox, and we're looking at how we can continue to deploy that door-knocking sort of service over into other areas of our business to drive accelerated growth, to name a couple. And so we continue to focus across the spectrum. We also look at the cross-sell opportunity. There's a lot of customers out there that might have termite control but don't have pest control, or might have pest control but no termite control, or may not have our mosquito offering. And we know mosquitoes continue to be a generator of demand for our services. And so we're continuing to look at how we can create a broader share of the wallet with our customers as we go forward. That makes a lot of sense. And you touched on this, and I know it's a topic of interest, digital marketing. When it comes to new customers, how does digital marketing factor into all of this? And how much of your new customers are coming from the digital side versus other channels? Digital is really important to a lot of folks. It's important to our industry, but it's also important to a number of other industries. It's oftentimes the most effective way to access a large, broad category of consumers, and so it's important for us. But I'll tell you, I think it's maybe a little bit less important than it is relative to others because we have such a broad array of ways that we tap into the customer. And so what we're trying to do is leverage digital, we're leveraging door knocking, we're leveraging business models, we're leveraging cross-sell. And so it's not just one initiative that's solely focused on digital. Digital is important. It's probably the largest segment of all of our ways and manners that we access a customer, but it's not the only way, and that's an important thing to remember as you evaluate the company and take time to consider Rollins. So as we go forward, it'll continue to be important for us. But again, we're trying to design a business model that's not overly reliant upon one way of accessing our customer base. You know, shifting a little bit to environment, you know, what does sales cycles look like today versus maybe, say, a year ago? And, you know, what have been the key changes? Yeah, it's. I would say we haven't seen a huge disruption on the sales channels or the sales cycle. It's a pretty similar approach that we've been following. The one thing that we continue to look at in our sales cycle is how do we increase the effectiveness of our sales folks? And so what do I mean by that is, how do we use data to try to identify areas that we can disproportionately invest in? And so, for example, in our commercial area, commercial setting, we're evaluating data around the country that identifies maybe pockets that are under-penetrated that have an opportunity. So how do we then use that to point our sales folks into those areas or point our ad dollars, point our selling, efforts into those areas to realize a higher return rate, a higher hit rate? So those are the things that we continue to do on the sales side. Helpful. What about, what about pricing? What does the environment look like today, and does the macro play into that at all? Yeah, you know, it's interesting. Last couple of years, we've consistently seen a 3%-4% price increase coming through our business. We feel like that's a very healthy level. When you look at this business, two or three things I would just emphasize. You know, consumer prices are going up at around only roughly 3%. We saw a print last week, I think, or earlier this week, of approximately 3%, CPI. I view pest control, and I think a lot of folks that are in this industry view this as a CPI plus sort of industry. There's a real value in our service. It's not a commoditized service. And so, so as a result, I'd like to be at or above that CPI level as we go forward. It's something that I'm kind of measuring ourself against. You know, when I look at the business, you know, it's essential.... We're helping protect your health, we're helping protect your property, and we're helping protect your brand. It's hard to find something that's as important than that in your business or in your home or in your community. And in addition, the amount of money you spend on our service is relatively low. You know, if you're spending, you know, $500 for an annual service, for an annual year, a 3% price increase is roughly $15, which might be charged over a 7-month period or over a 4-quarter period. So the impact is very small for the value that we're providing our service. That's what we're trying to do is: we're trying to align the value with the cost of the service to ensure that we're being paid for the value that we're providing our customers. That'll be the focus going forward. Our focus is to continue to maintain this price profile that we have, and we've been able to develop over the last couple of years, and not stepping back to where we were in, say, 2018 or 2019. Yeah, I want to ask a question here, because you talked about service and how important the services you provide are to your customer. How do you, how do you think about service as an organization and, and the importance of that? Yeah, well, you know, it's interesting. There's a couple of things that we've talked about internally, and one is we're a people-first company, and we're focused on a service-based attitude. It's almost like servant leadership. We've all heard of the term. I was at HomeTeam earlier this week down in Dallas, and that's a company that's been based upon a servant leadership model. And so I think it comes down to service in our business comes down to not only servicing our customers, but also servicing our employees. Our home office in Atlanta, Georgia, our back office, is focused on servicing the front line. The front line of service is focused on servicing our customers. So it's really all about service and all about people. All about investing in people, focused on engaging with our people, helping them develop a lifestyle that they can continue to take care of their families and their communities. And so it really is. It's an interesting cycle, but we're all about the mission that we have at Rollins is all based upon service. That's helpful. Competitive landscape. Can you talk about the competitive landscape today broadly, and kind of a little bit more micro-focused? Did it get more competitive in 4Q, and how has that trended, you know, into this year? It's a healthy market when it comes to competition. I think we all know the value of our services. And as a result, it becomes a fairly rational market. And so we continue to execute and compete in what we call a rational market. There's been some disruption in the market with some major transformational mergers that have occurred. But I'll tell you, it hasn't really disrupted what we do. Our focus is, again, servicing our customer, taking care of our employees, and our employees will take care of our customers. That's really the focus. It's highly fragmented. We still have roughly 20,000 or so competitors in the industry, so that spawns a number of M&A opportunities for us and gives us a level of optimism about our ability to continue to grow. There are opportunities, whether it be at the very large level, billion-dollar plus sort of acquisitions, or whether it be at several hundred million or even sub-hundred million. We've fortunately competed in a market that we can be very strategic and very intentional when it comes to M&A. We don't have to get every deal that we look at. There are enough deals out there for us to remain disciplined and patient when it comes to deploying capital for M&A. That's really helpful. And when you think about growth and where it comes from, especially in a largely fragmented industry, you know, is it, are you taking share from competitors? You know, is it, is it larger competitors? Is it, is it through smaller competitors? And then, or is it, is it sort of the white space of do it yourself, shifting to do it for me? I think it's a combination of both. I mean, I think part of the reason why people talk about this market growing at a mid-single-digit clip is because you've got the secular tailwinds of do it yourself and other things that are certainly coming in. But I feel like we also continue to compete very well and are very successful relative to our competition. And it goes back to the items I just started the conversation with today, was our multi-brand approach, our multi-channel approach. I think all of that is certainly helping us outpace the market in terms of our overall growth rate. And we feel like we're positioned very well to continue to do that. Putting, you know, kind of moving beyond revenue, thinking about margins, you know, kind of what puts you in the position to, in a very fragmented industry, to maintain the operating margins and return on invested capital that you have? You know, that's a good question. You know, when we look at the business, on a couple of fronts, you know, you talk about margins, you talk about return on invested capital. From a margin perspective, we're focused on continuous improvement. And so last year, we executed our first restructuring program in a number of years. It's always a difficult decision, but in the end, it was the right decision. And because what we're doing with those dollars is we're reinvesting those dollars in our business. We're bringing a lot of new people into our business. That's driving even more positive change in our business. But what we're also doing is we're redeploying some of that into marketing and sales and advertising. You know, I think in Q4 alone, SG&A was relatively flat, maybe down 10 basis points or so. But what we saw was, you know, north of 50 basis points of investment in marketing and advertising and door-to-door, things like that, that'll help continue to spawn growth in our business. It's an attractive market. This business should have incremental margins, and it has had incremental margins of roughly 30%. We're looking at how we can continue with pricing and productivity measures to lift that incremental margin of the business longer term. When you look at return on invested capital, that's a near and dear metric to my heart. When I look at acquisitions, there's a number of different attributes and metrics that I look at acquisitions through, whether it be growth initiatives or growth metrics, margin metrics, earnings per share metrics, cash flow metrics, and last but not least, it's return on invested capital. So our focus is to get a return on invested capital in excess of our cost of capital by year three. And so we've been successful at doing that, and we're gonna continue to focus on doing that. That's great. So you talked about incremental EBITDA margins in the 30-ish% range, you know, so, you know, what does that mean for you long term? How to think about where margins can go? Yeah, I think, you know, it's interesting. If I look at 2023 by itself on a standalone basis, we had a 3%-4% price increase, and margins were up roughly 75 basis points. I think 50 of that was organic and 25% or so of that was inorganic activities. And so we're hopeful that we'll continue to see improvement in margins each and every year. You know, 30% incremental is a, is a great incremental margin. But I think also with changes in our back office, changes in productivity, focus on productivity, the pricing, hopefully, as we think about the future, that 30% can, can step up higher. And it's interesting, when I look at Q3 of last year, our incremental margin profile was 35%+. It was a really clean quarter. There, you know, which is oftentimes really hard to find in a large growing business. But what you had was very little one-off items that were coming through positively or even negatively. And so what you saw in Q3 of last year was a 35% or so margin, incremental margin, which showed what the business was capable of doing. And so that gives me... That was one quarter, granted. One quarter is not a good indicator of long-term potential necessarily, but it gives me optimism about our ability to see that incremental margin step higher as we go forward. That's helpful. And, you know, it's a specialized industry, you know, how, you know, what does the labor market look like today? What are you seeing in terms of labor inflation, how that impacts margins? And, yeah, like, how, how's hiring? Yeah, hiring's good, you know, staffing's strong. As I started the conversation today, I said, we're, we're investing in staffing, spending a little bit more in Q1, getting ready for busy season, because we feel like it's gonna be a strong, busy season. You know, we started the year. January was tough from a weather perspective. We talked about that on our call and on our K. February, we saw good progress. We saw good momentum in the business, acceleration of organic growth. So it was a healthy February, which gives us a sense of optimism as we get ready for March, April, May, which are peak months for us. They start to get into peak pest season, and so it's important to have staffing. I can tell you, we're hiring. We're certainly seeing a lot of new people come into the business, because we know it's important to be staffed up for busy season. And so we're seeing a healthy environment when it comes to staffing. Our focus, it's interesting, one focus of ours is retention and trying to focus on making sure that we step up our efforts around pest control techs, for example. Techs that may join us, and in that first six months, that's the at-risk period. When people join you, and they're here for a short period of time, oftentimes they might question: Is this the right industry? Is this the right focus? Is this what I really want to do? What we're trying to do is disproportionately focus on that group of employees, because we know once they get to six months or a year, they oftentimes stay with us for a very long period of time. And so that's the focus as we think about the hiring efforts at Rollins. That's great. So, you talked about M&A, and you talked about acquiring Fox. You know, just for this purposes, can you talk about what attracted you to the asset, you know, how the integration is going with Fox, and, you know, the value it's bringing to your business? Yeah. You know, the opportunity was identified. Jerry Gahlhoff had spent quite some time evaluating these types of businesses and went out and evaluated a number of different businesses, and Fox rose to the top. It rose to the top because of the brand awareness, the brand reputation, the culture. It fit really well with how we do business. Not all businesses do fit, but Fox certainly fit. And so we were very happily and pleasantly to see that we were successful in the acquisition of Fox last April. That business has certainly performed way ahead of what we thought it would do. Continues to grow, continues to be very successful. You know, Brady Camp and the team are doing a great job on the integration front. We feel like that business should be accretive to our organic growth profile as we go forward. And that's an important measure for us. We want to buy businesses. They're gonna accelerate our organic growth, and we feel like Fox can do that for us. It's a really good business model, and I'd like to find three or four more Fox Pest Controls to acquire. And so how does your M&A pipeline look like today compared to last year? You've got a few of those in the pipeline? It's a healthy pipeline. You know, when I look at the pipeline, there are three or four stages to the pipeline. One stage is early developing relationship. Second stage is you're getting much closer, and you're really having discussions around how you might put the businesses together. Then you enter into that LOI stage and diligence. So where we are today, relative to maybe where we were a year ago, I would say it's very healthy. A year ago, we were tied up with Fox. This year, we have a lot of smaller bolt-ons, incremental deals that we're bringing on that will hopefully provide us an opportunity to add 2%-3% of revenue growth from acquisitions. And so it's a healthy environment. Our head of business development is very active. Our business leaders are very active when it comes to M&A, and we feel like we're gonna continue to be able to add some value here in 2024 from M&A. That's helpful. And I think to just close this out here, you know, big picture, there's a lot of things it sounds like you're excited about. Can you just kind of summarize for us, you know, what you're really kind of looking forward to over the next few years? Sure. You know, it's great to be with the company and, and it's an exciting time to join. The last year or so, we've made significant progress at modernizing our capital structure, hiring really strong people, and making this really strong business even better. When I think about the next 3-5 years, in my mind, it's how do you continue to capitalize on those efforts? How do you continue to hire people that are gonna drive positive change, that are gonna help you implement the right systems and processes, help you implement systems around safety? You know, we've talked about safety a number of times, around how we, how we invest in safety. That's one of the areas, quite frankly, that keeps me up at night. You know, I wanna make sure that our employees are getting home safe each and every day, and as productive as possible. And so we're investing in that area as well. But for me, it's about how do we just continue to modernize? How do we continue to invest in this business? How do you continue to grow? It's all about having a growth mindset, and it provides a sense of excitement for the future. Well, that's great, and thank you. Thank you so much for spending the time with us. We appreciate it. Thank you. All right. Thanks, everyone.