Rollins (ROL) The 44th Annual William Blair Growth Stock Conference summary

Historical Performance and Growth Trends

• Organic growth has accelerated beyond the historical 4%-5% range, maintaining higher levels even four years post-pandemic.

• Revenue compounded at 7% and earnings/adjusted EBITDA at 14% over two decades, with total shareholder return averaging 21%.

• Growth has remained robust through various economic cycles, including the financial crisis, industrial slowdown, and COVID-19.

• Free cash flow compounded at 13% over five years, reaching $496M in 2023, with significant reinvestment in M&A and shareholder returns.

• Recent years have seen a structural step up in organic growth, supported by both organic and M&A activities.

Strategic Focus, Direction, and Capital Allocation

• Strategy centers on organic growth, accretive M&A, and continuous improvement, with a unique compensation structure for frontline employees.

• About 40%-50% of free cash flow reinvested in M&A, totaling $1.2 billion in recent years, with 47% allocated to M&A, 39% to dividends, and 14% to share repurchases.

• Dividend policy shifted in late 2022 to regular dividends, increasing payouts by 45% since then.

• $300 million in share repurchases executed in 2023, with a 40% IRR on recent deployments and 16.9MM shares authorized.

• Ongoing focus on cost efficiency, especially in SG&A, with restructuring, new talent, and centralization of select back-office functions since 2022.

Commercial and Residential Business Initiatives

• Commercial pest business has seen 10% organic growth, outpacing historical trends due to increased focus and investment.

• Dedicated leadership and resources have been allocated to commercial, separating it from residential operations.

• Data analytics are used to target high-opportunity markets in commercial.

• Residential business benefits from branch managers focusing solely on residential, with cross-selling opportunities across nine service lines.

• Mosquito and insulation services, along with expanded offerings like bed bug, wildlife control, and flea/tick, are highlighted as high-growth, high-potential areas.