Unidentified Analyst: [Indiscernible] on for Stephanie Moore. I just wanted to touch on commercial organic growth that’s been pretty strong over the last few quarters. And I know you mentioned leveraging analytics and things like that but I was just curious if there’s anything else to call out? And if you could kind of talk about the sustainability of growth there?
Jerry Gahlhoff: I know it sounds like a broken record and we’ve said this now for a few years. We just continue to invest in our sales staff, getting them ramped up and being successful. That B2B sales process is a relationship type of sale. It’s got a long selling cycle and you got to be patient, you got to invest. You got to invest in training and sales tools and supporting those new account managers when they’re brought up to get them ramped up and brought to speed just as fast as possible. That is the more you add in the sales force and the more investments you make to make them successful. We just continue to see that opportunity there. So I wouldn’t say there’s anything magical about it other than being committed to continue to add incrementally to our sales force.
Kenneth Krause: It’s interesting. When I step back and I look at the financials and I look at the trend in spend across different categories of SG&A, Jerry is spot on, sales salaries continues to be an area that we continue to invest disproportionately in. We’re saving money in some of the back office costs and admin areas but we continue to invest pretty heavily on the front end of our business and taking a very offensive perspective on our business.
Unidentified Analyst: Just on the resi side, have you guys seen any slowdown? Anything that’s meaningful related to the new business wins or a sort of meaningful pickup in customer churn and maybe lower household income areas? And then just anything you could share around how April is kind of shaping up so far?
Jerry Gahlhoff: We haven’t seen any significant change from a retention issue one way or the other. So that remains pretty solid and any color on April…
Kenneth Krause: It would be very difficult to grow our business at the rate we’re growing if we saw chiding [ph] in customer churn. And so customer churn, although it is not chiding [ph], it still remains an opportunity for us to continue to improve. When we look at April, we continue to see healthy levels of demand. We’re starting April strongly. But again, we continue to think about a 7% to 8% sort of organic growth rate across the business as we think about the future.
Operator: Our next question is from Ashish Sabadra with RBC Capital Markets.
Unidentified Analyst: This is David Patron [ph] for Ashish. In terms of capital allocation, now that you’ve lapped the Fox acquisition, how should we think about I guess, your M&A pipeline in terms of larger deals or smaller deals going forward, especially given this robust free cash flow that you keep generating?
Kenneth Krause: When we look at the pipeline, it’s very healthy. It’s very balanced. There’s opportunities across the spectrum with respect to M&A. Something that we have consistently said, however, for 2024, is that we do think that 2% to 3% of revenue growth is probably a realistic expectation of contribution from M&A. We continue to look at deals. We continue to evaluate deals. And in fact, in Q1, we spent roughly $45 million to $50 million on M&A and that was up considerably year-over-year. Of course, last year, we were preparing for Fox. But I think it just shows that there continues to be a very healthy pipeline of M&A in a very fragmented market that we continue to compete in.
Operator: [Operator Instructions] Our next question is from Josh Chan with UBS.
Josh Chan: So I guess you mentioned that 7% to 8% is sustainable growth rate. And given how strong commercial and termite is, does that imply that you expect residential to kind of remain in this 4% range going forward? Just curious how you’re thinking about how the different businesses contribute to that 7% to 8%.
Kenneth Krause: It’s interesting when you start to put a fine point on that but we do think that probably commercial and termite and ancillary will probably grow a little bit faster than the overall average and resi might grow a little bit slower. You just have puts and takes across the portfolio. It doesn’t mean that we’re not bullish in residential but I just think that, that’s generally how the growth profile has unfolded over time for us.
Jerry Gahlhoff: Yes, I agree with you, Ken. I think it’s hard to predict that. I mean, there’s going to be movement in any of those categories potentially based on a number of factors and where it all comes out in that 7% to 8% total.
Josh Chan: Yes. Okay. That helps — that color there. And then, on your decision to accelerate investment during the off season. Sometimes you focus on the peak season to invest, sometimes you invest ahead of the season. So could you just talk about the rationale for investing ahead of the season this year, what you’re seeing and what opportunities you expect to realize?
Kenneth Krause: Yes. As we had talked about, I mean, the business started to grow pretty nicely on a year-over-year basis, organic basis in February and into the March. And so we saw that and we saw an opportunity to pull forward some investments. It doesn’t mean that we’re going to invest any lighter in Q2. In fact, we’re going to continue to invest in Q2 and drive further growth. The market opportunity is there and you’ve got to invest when that market opportunity is there. This is a very short cycle business. And when you see weather patterns that improve or demand trends that might change, you have to be ready to invest. And so I think that’s just — it’s just reflective of our investment and our interest in investing in growth across our portfolio.
Jerry Gahlhoff: We had a lot more carrying costs from people side in late fourth quarter and certainly in the first quarter than I think we’ve ever had. The reality is it’s certainly harder to find people and then with the level of intensity that we put and the time and energy that we put into training and development upfront, that takes time to have people ready. And so our strategy has been to get ahead of that.
