Rollins Inc Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ronan Kennedy, CPA - Barclays Services Corp - Analyst : This is Ronan Kennedy on for Manav. Can you please talk about the investments in Commercial and further elaborate on the timing of an impact to the demand drivers? I think you had alluded to double-digit recurring in Orkin. And then anything to note on competitive dynamics within the Commercial space, please?

Question: Ronan Kennedy, CPA - Barclays Services Corp - Analyst : And that's a good segue to my second question. Just to unpack the incremental margin a little further, please, I think 31% ex insurance, auto, and medical. You just touched on it now. Can you just dive a little deeper on whether it's pricing or productivity, where you are seeing the greatest leverage across SG&A categories? And how we should think about how that will trend in the trajectory over the coming quarters, please?

Question: Ronan Kennedy, CPA - Barclays Services Corp - Analyst : Thanks very much. Appreciate it.

Question: Yehuda Silverman - Morgan Stanley - Analyst : This is Yehuda Silverman on the line for Toni Kaplan. Just had a question about how conversations with customers have been going regarding pricing heading into next year. Have some customers been more or less willing to accept any price increases? And do you see typically an increase more or less in one segment versus another? Thanks.

Question: Yehuda Silverman - Morgan Stanley - Analyst : Got it. And just a quick follow-up on like lead conversion. I was curious, how you're focusing on targeting this younger demographic of customer base and just an update on if you've been able to convert leads faster than a typical season or if it's going as expected with this newer staff you brought on? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 12:30PM, ROL.N - Q3 2025 Rollins Inc Earnings Call

Question: Yehuda Silverman - Morgan Stanley - Analyst : Thank you.

Question: George Tong - Morgan Stanley - Analyst : As you look at exit rates and comps from the prior year, can you discuss which segments have the most opportunity for organic growth acceleration in 4Q and what the primary drivers are?

Question: George Tong - Morgan Stanley - Analyst : Got it. That's helpful. And then you mentioned several areas of the business that surprised the upside in the quarter relative to expectations. Were there any parts of the business that perhaps surprised to the downside compared to what you were expecting heading into the quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 12:30PM, ROL.N - Q3 2025 Rollins Inc Earnings Call

Question: George Tong - Morgan Stanley - Analyst : Very helpful. Thank you.

Question: Tomohiko Sano - JPMorgan Chase & Co - Analyst : Could you provide an update on the current competitive landscape in the pest control industry? How have your modernization efforts helped to differentiate Rollins from competitors? And what are your expectations for these initiatives and maintaining or expanding your market position going forward, please?

Question: Tomohiko Sano - JPMorgan Chase & Co - Analyst : Thank you, Jerry and Ken. Congrats on the quarter.

Question: Peter Keith - Piper Sandler Companies - Analyst : Nice results, guys. I wanted to dig into the cash flow, which the accelerating growth is rather impressive. And I was hoping you could just unpack the drivers to that improvement? And are those drivers sustainable?

Question: Peter Keith - Piper Sandler Companies - Analyst : Okay. Very good. And then I wanted to follow up on an earlier question regarding the incremental margin. So it was quite impressive in Q3, particularly with the quantification that was 31% when you adjust for the claims. So it seems like you've had a step-up as you've moved past the growth investments from the last 12 months. I guess the heart of my question is, you've kind of guided for a range of 25% to 30%, and you've stair stepped up above 30%. Is this something you think is now sustainable for at least the foreseeable future? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 12:30PM, ROL.N - Q3 2025 Rollins Inc Earnings Call

Question: Peter Keith - Piper Sandler Companies - Analyst : Okay. Very helpful. Thanks so much.

Question: Stephanie Moore - Jefferies LLC - Analyst : I wanted to touch on the M&A pipeline and the overall environment. If you could talk a little bit about your current pipeline and expectations kind of to end 2025 and into 2026, but also if you could just touch on maybe the competitiveness of the M&A environment, especially as we look at -- I think there's -- within pest, some opportunities, whether it's door-to-door and some other interesting aspects to the industry that have emerged and if you're seeing any increased competition within some of those certain aspects. Thanks.

Question: Stephanie Moore - Jefferies LLC - Analyst : I just had one -- thank you. That's very helpful. I had one question when it comes to just overall investments in customer acquisitions, various forms of marketing expenses. One aspect that I know gets utilized would be search engine optimization and I think just the obvious kind of being at the top of the list when it comes to within search engines. Have you seen any impact to your business just from some of these AI initiatives, where you're starting to see AI kind of take over in the search engine optimization and seeing less clicks or maybe less conversion within the search engine optimizations? I don't know if that was clear or not.

Question: Stephanie Moore - Jefferies LLC - Analyst : Super. And just thank you, guys. Appreciate it.

Question: Madison Callinan - Canaccord Genuity - Analyst : This is Madison Callinan on for Brian. A large competitor of yours in North America appears to be finally finding its footing with a new strategy, but their volumes remain negative. At the same time, this is the smallest gap we've seen in terms of your relative outperformance in a while. I know in earlier question, you mentioned the current competitive intensity in North America, but does this change anything you're doing? If this revival has legs, who would you expect to lose share in that scenario?

Question: Madison Callinan - Canaccord Genuity - Analyst : Great. Thank you.