Rollins (ROL) Barclays 43rd Annual Industrial Select Conference summary

Recent performance and weather impact

• Achieved third consecutive year of double-digit revenue, earnings, and cash flow growth, with 24 years of annual revenue growth and 97 consecutive quarters of revenue growth.

• Achieved 11.0% revenue growth in FY 2025, with 6.9% organic growth and acquisitions contributing 4.1%.

• 75% of business is recurring contracts, 10% ancillary, and 15% one-time; recurring and ancillary segments showed resilience, while one-time business declined due to severe weather in Q4.

• Weather disruptions in the Midwest and Northeast from November through December limited technician access and reduced one-time service calls.

• Despite Q4 challenges, maintains optimism for 7%-8% organic growth, with potential to recover lost one-time business quickly during peak season.

Growth and modernization initiatives

• Pursuing multi-brand collaboration to share best practices and cross-sell services, especially in underpenetrated ancillary offerings.

• Continued investments in workforce and leadership development, improving retention among new teammates.

• Implementing process and technology improvements, including sharing sales expertise and modernizing back-office functions.

• Investing in new financial systems, starting with EPM (Workday), to improve data synthesis and decision-making, with a 12-18 month rollout.

• Exploring ways to reduce customer churn by redirecting departing customers to other brands within the portfolio.

Margin improvement and operational efficiency

• Adjusted EPS rose 13.1% to $1.12; adjusted operating income margin expanded to 20.0%.

• Free cash flow grew 12.1% to $650M, with a conversion rate of 123%; dividend increased over 80% since 2022, remaining ~50% of free cash flow.

• Major cost opportunity in reducing short-term employee turnover, which currently costs tens of millions annually; improved retention could yield significant savings.

• Enhanced procurement and supply chain management across brands to leverage scale, especially for materials and fleet.

• SG&A is 30% of sales, with ongoing efforts to modernize financial systems and corporate functions for greater efficiency.