Rollins Inc.: Investor Day Takeaways: Long Runway and Leading Strategy

Research evidence excerpt

Rollins Inc.: Investor Day Takeaways: Long Runway and Leading Strategy

Current Prior Current

to continue its industry leading revenue and EBITDA growth and outperformance vs.

Q1 0.22 - 0.24a - 0.25

peers. Q2 0.30 - 0.34 - 0.38

Q3 0.35 - 0.38 - 0.43

Medium-term financial targets unchanged. ROL left its medium-term financial Q4 0.25 - 0.29 - 0.33

framework unchanged as expected (see: here), at above market revenue growth, 30- e = Morgan Stanley Research estimates, a = Actual Company reported data

35% incremental margin, and +100% FCF conversion. ROL has fallen short of its

incremental margin target in recent years with increased investment in growth

opportunities and volatile fleet/insurance costs. ROL noted that it expected to see

increased incremental margin into 2027, and highlighted a number of cost saving

opportunities. Delivering on its incremental margin targets is the biggest near-term

opportunity for upside in the stock.

Brand strategy leading to cross-collaboration. A major differentiator in ROL’s

approach is its multi-brand operating model, which allows successful sales practices

and customer acquisition strategies to scale across the organization. The company is

increasingly leveraging shared learnings between brands to improve cross-sell

execution and accelerate growth. Early success stories can already be seen, as

HomeTeam adopting Fox and Saela’s proven door-to-door playbook drove a 90%

increase in Q1 termite sales, as well as a wildlife service collaboration between two

brands that produced a 45% increase in pilot revenue growth. ROL is also using

outbound cross-selling initiatives supported by multiple brands and expanding

centralized capabilities such as RAC (Rollins Acceptance Company) financing Morgan Stanley does and seeks to do business with