Rollins, Inc. (NYSE:ROL) Q1 2024 Earnings Call Transcript

Operator: Our next question is from Ollie Davies with Redburn Atlantic.

Ollie Davies: Just 2 for me. So firstly, can you just talk about the level of price increases you’re putting through? And if you’re seeing any pushback on the residential side, just given the level of volume growth in the first quarter. And then secondly, in terms of — probably one for Ken just in terms of the SG&A. I mean, obviously, the admin expenses, I guess some of that is coming from the modernization that you did last year. So how sustainable are they going forward through this year and I guess, your ability to reinvest that?

Kenneth Krause: So looking at your questions, thank you for your questions. The first question with respect to pricing, it’s interesting. When we step back and we look at this business, I think recently, you’ve heard me start to talk about this as a CPI-plus type of business. So we think this service is certainly an essential service and should command CPI-plus level pricing. So 3% to 4% this year is certainly — it’s something we passed along and we’re seeing it stick. We just feel like the service is just too valuable, not to price it at those levels. And then secondly, when you look at the SG&A levels across the business, it’s good to see the improvements that we’re seeing in our cost structure. I think in the quarter, we talked about a 20 basis point improvement in SG&A as a percentage of sales.

But when you unpack that, you see that we spent roughly 50 basis points more on growth-oriented investments but 70 basis points less of back office costs. And I think that’s representative of the work we’re doing to improve the effectiveness and the productivity of our business. We feel like there’s more to come but we certainly are happy with the progress we’re making there.

Operator: And our next question is from Ashish Sabadra with RBC Capital Markets.

Unidentified Analyst: Sorry, David [ph] again. Apologies if I missed this one but what was the exit growth for residential? I believe the 10% was for the entire company but what was it for resi?

Kenneth Krause: Yes, it was 10.8% to put a fine point on it for the entire company. And for residential, it was 8%.

Jerry Gahlhoff: For February and March.

Kenneth Krause: Yes, for February and March. Yes.

Operator: We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing comments.

Jerry Gahlhoff: Thank you, everyone, for joining us today. We appreciate your interest in our company and look forward to speaking with you all at our upcoming investor conference. Thanks, again.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.