Rollins at Piper Sandler Conference: Modernization and Growth Strategies

On Wednesday, 10 September 2025, Rollins Inc. (NYSE:ROL) participated in the Piper Sandler 4th Annual Growth Frontiers Conference. The discussion, led by CFO Ken Krause and VP of Investor Relations Lyndsey Burton, centered on Rollins’ strategic initiatives, including modernization efforts and growth targets. While the company showcased its resilience and market strength, challenges in maintaining pricing strategies were also acknowledged.

Key Takeaways

• Rollins aims for 7% to 8% organic growth, with an additional 2% to 3% from M&A activities.
• The company has increased its dividend by 70% and achieved investment-grade issuer status.
• Modernization efforts focus on improving back-office processes and talent acquisition.
• Rollins targets double-digit revenue growth and EPS growth higher than revenue growth.
• The pest control market is driven by environmental changes and a shift towards "do-it-for-me" consumer behavior.

Financial Results

Rollins reported strong financial performance, emphasizing its strategic pricing and growth targets:

• Organic growth is targeted at 7% to 8%, with M&A contributing an additional 2% to 3% annually.
• The company has increased its dividend by 70% over the past three years.
• Cash flow is compounding at over 15%, with a target of 15% to 20% range.
• Rollins aims for double-digit revenue growth, with EPS growth exceeding revenue growth.
• The company maintains a strong cash flow conversion rate of over 120%.

Operational Updates

Rollins’ modernization journey is a key focus, as the company seeks to enhance its operations and market presence:

• The appointment of the first non-family CEO, Jerry Gahlhoff, marks a significant step in modernization.
• Acquisitions of Fox Pest Control and Saela Pest Control align with the strategy to diversify geographically and enhance service offerings.
• Rollins employs a multi-brand strategy with brands like Orkin and Clark Pest Control to target diverse customer segments.
• The company has centralized back-office support functions to improve efficiency.

Future Outlook

Rollins is optimistic about its future growth prospects, focusing on several strategic areas:

• Revenue growth is expected to be in the double digits, with EPS growth surpassing revenue growth.
• Cash flow is projected to grow and compound in the 15% to 20% range.
• Rollins plans to achieve pricing above inflation rates, with evaluations for next year’s pricing environment underway.
• Margin expansion is anticipated through modernization and back-office consolidation.

Q&A Highlights

During the Q&A session, Rollins addressed key strategic considerations:

• Emphasis on service-oriented businesses over sales-focused ones to enhance customer retention.
• Geographic diversification remains a priority in acquisition strategies.
• The multi-brand strategy successfully caters to varying customer preferences and geographic areas.
• Environmental changes and consumer behavior shifts continue to drive industry growth.

In conclusion, Rollins’ participation in the conference highlighted its robust market position and strategic initiatives. For further details, readers are invited to refer to the full transcript.

Full transcript - Piper Sandler 4th Annual Growth Frontiers Conference:

Peter Keith, Senior Research Analyst, Piper Sandler: Okay. All right. Good morning, everyone. Welcome to the Piper Sandler Growth Frontiers Conference. My name is Peter Keith, Senior Research Analyst, covering consumer broad lines and hard lines. I’m very pleased to have Rollins with us today. This is, to be honest, one of the fireside chats I’ve been looking forward to the most with the conference. We just picked up coverage of Rollins back in, I guess it was early July.

Ken Krause, CFO, Rollins: Mm-hmm.

Peter Keith, Senior Research Analyst, Piper Sandler: We think it’s a great consumer services company that warrants a lot more attention. We’re going to dig into the story today. It’s obviously their first time at our Nashville conference. Welcome, Rollins team. With me on stage is Ken Krause, the CFO, and then my longtime friend, Lyndsey Burton, as well, a VP of Investor Relations.

Ken Krause, CFO, Rollins: Yep.

Peter Keith, Senior Research Analyst, Piper Sandler: Many of you may know her from the Home Depot days. Welcome to our Growth Frontiers Conference.

Ken Krause, CFO, Rollins: Oh, great to be here. Thanks for having me.

Peter Keith, Senior Research Analyst, Piper Sandler: Let’s just, since it’s your first time here, ask an open-ended question to Ken. Maybe just give us a quick overview of the overall business model and the services you guys provide.

Ken Krause, CFO, Rollins: Certainly. Yeah. Very diversified service offering across commercial, B2B as well as B2C with the residential homeowner. We compete and we play in a $20 billion global market, all focused on pest control. Pure play pest control company with some additional services around the house, like insulation work, encapsulation work, exclusion work. We like to say that we have nine shots on goal with the homeowner to do business. We’ve been operating through economic cycles. We’ve seen growth through just about every economic cycle, whether it be the great financial crisis back in 2008, 2009, the industrial slowdown in 2015, or more recently with COVID. We’ve continued to execute and successfully grow our business, continuing to see really good demand, very resilient business, an essential service with a significant amount of pricing opportunity.

Peter Keith, Senior Research Analyst, Piper Sandler: Great. The business has been, Rollins has been around for a long time, and it’s been very successful over the long term. I guess one of the things that gets me excited about the outlook is this company modernization effort. I joke with my team, after a time, I’ve learned how to say modernization without sounding like a, it’s a tricky word. Ken, let’s just maybe talk to you first, and then I want to move it over to Lyndsey. You started in 2022.

Ken Krause, CFO, Rollins: Yeah.

Peter Keith, Senior Research Analyst, Piper Sandler: Your CEO and partner, Jerry, basically started the beginning of 2023.

Ken Krause, CFO, Rollins: Mm-hmm.

Peter Keith, Senior Research Analyst, Piper Sandler: Just take us to the origination of the modernization philosophy and then some of the key elements that you guys are implementing.

Ken Krause, CFO, Rollins: Certainly. I joined the company in 2022 as CFO. I was a CFO at MSA Safety for about seven years prior to that. We followed a very similar modernization journey where we went from more of a closely held, slow-to-change sort of company to a much more dynamic company. When I saw the opportunity come across, I first looked at the market. I certainly can’t fix a market, but what I joined was an incredibly strong market with an opportunity to tweak things and become more modern, more transparent, and access a number of different things that would enable us to reach our full potential as a business. In 2022, I joined. Jerry became CEO in 2023. He was the first non-family member CEO. He followed in the footsteps of Gary Rollins and Randall Rollins, and as you know, Jerry Gahlhoff, his last name’s not Rollins.

He’s the first non-family member CEO. I saw an opportunity to join an incredibly strong business, but an opportunity to make a big impact, to modernize a number of things in the back office as well as in the capital markets. Over the last three years, my focus has been and our focus as a team has been really modernizing a lot of our external-facing areas as well as our talent. When we go through the number of things we’ve done, we’ve increased the dividend by 70% over that period of time. We’ve priced in a special dividend, and we’ve grown that. Cash flow continues to compound at 15+%. It gives us the opportunity to provide investors with that reliable source of capital returns through the dividend. We then changed our auditor. We then put a revolver in place, a multi-bank revolver.

We then did a shelf offering and sold the family down to under 50% control. Did about a $1.5 billion offering. I used about $250 million to buy back stock as part of that offering, at $34 a share. Today, we’re roughly 57. We entered the bond market earlier this year. We became an investment-grade issuer, with our inaugural bond offering in February of this year. We’ve changed the talent footprint. Of course, Lyndsey’s here with me. Phenomenal resource on the IR side. Will Harkins is our new Chief Accounting Officer. I have a Treasurer, Brady Camp, and Andrew Light is our Tax Director. All those folks are new. We were actually reflecting yesterday, three or four years ago, none of us really knew each other. It’s really exciting to be a part of this team and working with these really talented people to make an impact.

As we think about the modernization journey and entering the next phase, it’s really about internal process improvement. When we look at the business, there’s tremendous opportunities to do more around centralization and improving our back-office support functions. We already have an incredible return on capital. We’re very acquisitive, and we see a really healthy margin profile. We really do think this modernization journey should help us, help enable even more growth, but also improvements in margin and cash flow performance as we think about the future and the centralization efforts we’re doing around the back office.

Peter Keith, Senior Research Analyst, Piper Sandler: Okay. Lyndsey, maybe share your perspective from an investor relations effort, your thinking around transparency and just making the stock more investable and easier to invest in.

Lyndsey Burton, VP of Investor Relations, Rollins: Yeah. I mean, I think the fact that I exist in this company is probably evidence of the modernization journey. We historically were not as involved in terms of showing up at different conferences and engaging more broadly with the Wall Street community. That’s been a change. We’ve picked up a lot of great new coverage, new sell-side analysts, and have held kind of an investor day and started to give some sort of guardrails in terms of how we think things should look from a financial perspective. We’re not going to be a quarterly guider. We’ll never be a business that tries to give things down to the basis points. Just making sure that everybody’s operating from the same set of facts from a directional perspective has been important to me, important to Ken and Jerry and the rest of the management team.

That has been a focus of mine over the last two years since I joined.

Peter Keith, Senior Research Analyst, Piper Sandler: Okay. Great. Yes, the disclosures and the transparency seem to get better almost every quarter in a way. There’s more and more information that we can dissect and look at. Thank you for that.

Ken Krause, CFO, Rollins: We’re working on it.

Peter Keith, Senior Research Analyst, Piper Sandler: One part I think that’s intriguing is your new approach to pricing. Maybe, Ken, you want to dig into that.

Ken Krause, CFO, Rollins: Sure.

Peter Keith, Senior Research Analyst, Piper Sandler: That seems to be something that you’ve changed in a way that can enhance growth and even the margin profile.

Ken Krause, CFO, Rollins: Certainly. You know, when you look at the business and you evaluate the pricing opportunities, a couple of things come to mind. One, this is very much an essential service. It’s about protecting property. It’s about protecting health, and our consumers value it. We don’t see a large amount of do-it-yourself efforts in this space. People want to pay somebody to take care of the pest and provide an environment that’s conducive with their lifestyle. When you look at it, it’s very essential. It’s also a really small ticket purchase item for our consumers. An annual pest control contract might be $500 or $600. It might range higher than that depending on the location you’re in and the pest you’re treating, but generally, $500, $600. When we look at it, small purchase item for our consumers, highly valued purchase item, very resilient.

It’s not something you can do once and forget about it. You’ve got to repeatedly treat the issue. When you look at this, what we’ve evaluated is the pricing opportunity and elasticity in the pricing, evaluating it through how our consumers value the service. When we think about, a couple of that with the inflationary environment, over the last couple of years, you’ve seen CPI inflect higher. What I’ve tried to do is I’ve tried to position the business to get a CPI plus pricing realization. When we look at this business, this is highly valued. It’s an incredibly small purchase item for our consumers, and we should be getting pricing that’s above the rate of consumer price inflation in the economy. The last couple of years, we’ve been passing along 3% to 4% price increase, very durable, with very little impact from a customer churn perspective.

We are continuing to focus on getting pricing that’s in excess of CPI. If CPI regresses back to a more historical trend of 2% to 3%, we really do believe that 3% to 4% is still a realistic goal for us as we think about the future. That’s helped our growth. If you go back the last 15 or 20 years, prior to 2020, what you saw was growth that was maybe a 4% to 5% sort of growth profile, but more recently, what we’ve seen is 7% to 8% organic growth. Some of that is just execution and commercial and some of those other opportunities around the home. A part of it also is the pricing realization that we’re getting in the business, and we’re continuing to focus on that.

We actually just met earlier this week to start to evaluate the pricing environment for next year, and we’ll share more of that as we go throughout the latter half of this year. We feel pretty good about our ability to get pricing that’s above the rate of inflation in the economy.

Peter Keith, Senior Research Analyst, Piper Sandler: Okay. Great. I guess it’s not, if I understand correctly, it’s not just national pricing moving up. It’s more strategic.

Ken Krause, CFO, Rollins: Exactly.

Peter Keith, Senior Research Analyst, Piper Sandler: You look at it by region, by type of service.

Ken Krause, CFO, Rollins: Yeah. It’s cleared on the ZIP plus 4 level, and we’re looking at it based upon the consumer and where they reside in the overall economy. We might set an overall target of 3% to 4%. Some areas might be getting 5%, 6%, or 7%. Others might be getting 1%, 2%, or 3% depending on the environment where they reside. We continue to take a broad view, but we also take a local view when we execute the pricing clear down to the branch level.

Peter Keith, Senior Research Analyst, Piper Sandler: Okay. Great. Lyndsey, you talked about just providing some growth framework. Let’s talk about top line, that sort of the top line, annual growth target, and then some of the building blocks to get there, which would include some M&A as well.

Lyndsey Burton, VP of Investor Relations, Rollins: Yeah. I think we kind of look and have targeted for the last few years and talked about kind of from an organic growth perspective, it being in that neighborhood of 7% to 8%. That is where we’ve been. It’s been pretty consistent, and we feel like in the near term here, that’s the appropriate range for organic. In any given year, from an M&A perspective, what we’ve kind of anchored people to is to think of getting an additional 2% to 3% of growth from M&A. It’s a very fragmented market. We have a very robust pipeline, with a number of different opportunities of varying sizes and probably stages of potentially transacting. The right way to think about that would be kind of 2% to 3% of growth coming through the M&A line. This year, we’ve talked about that being a little higher.

We did a transaction in April of Saela Pest Control, which was a great business, very complementary to our portfolio, provided us kind of a nice, what we call second bite at the apple, brand, in certain pockets of the country, Pacific Northwest, through Colorado, Midwest. That was a great transaction for us. We’ve said kind of 3% to 4% is probably what we would be in the range for this year from M&A. When the calendar turns, the right way in general to think, in the out years, it’s kind of that 2% to 3% range.

Peter Keith, Senior Research Analyst, Piper Sandler: Okay. To both of you, maybe let’s just stick on Saela and think about it as the elements of Saela that you liked that ultimately caused you to buy the company. I mean, I think we’re talking to Jerry. You’ve been familiar with them for a long time.

Ken Krause, CFO, Rollins: Yeah.

Peter Keith, Senior Research Analyst, Piper Sandler: What did you like about it? How’s the integration going so far? How should we think about the accretion angle on your overall business?

Ken Krause, CFO, Rollins: You know, it’s interesting. When you look at Saela, I was remiss, I’d be remiss if I didn’t mention it. Earlier, when we talked about modernization, I think the Fox Pest Control acquisition from two years ago and then the Saela Pest Control acquisition more recently is also reflective of some of the modernization efforts we’re taking, where we’re looking at the business more broadly. Prior to the Fox Pest Control acquisition, a lot of folks looked at door knocking, and they looked at it through a skeptical lens. It really wasn’t of the same level as maybe some of the other businesses. There was a lot of concern about churn of customers and really, how long do customers stay with you? Is it really valuable? Is it too expensive?

What we did is we did a study across the industry, and we identified that this is an incredibly large and fast-growing sector of pest control. We entered that market with the Fox Pest Control acquisition from two years ago. That business is doing exceptionally well. It’s got gross margins that are accretive to our overall margin profile because you’ve got dense routes. It’s also got a tremendous growth trajectory from an organic perspective. That caused us to have more confidence in our ability to do Saela Pest Control. We did Saela Pest Control in April of this year, and we’re off to a really fast start with that business. We said on our call in Q2 that it was growing double digit organically. We also talked about the fact that even on a GAAP basis, we saw neutral to slight accretion in the first quarter of owning it.

That’s really hard to do when you’re financing these things at 4% or 5% today, and you have deal amortization at its highest, the largest amount of deal amortization coming through in that first quarter. It did exceptional. In fact, the margins were approaching 30% from an EBITDA margin perspective. Really good business. You know, it’s interesting. When you look at these businesses, I oftentimes refer to the contrast between a sales company and a service company. If you’re buying these businesses and you’re focused on sales and these businesses are just out selling pest control services, that’s not the type of business that we’re interested in. We’re interested in businesses like Saela Pest Control and Fox Pest Control that are really providing service to the customer. What we’ve learned is if you provide the service, you earn the right to keep the customer for a long period of time.

We bought those businesses with a very strong focus on service. There is also a strong focus on geographic diversification. When you think about the Fox Pest Control brand, what you see there is northeast exposure and midwest exposure. What you saw with Saela Pest Control was more of the Pacific Northwest, more of the mountain west, a little bit of the midwest, but it was very complementary to the Fox portfolio. When we look at these acquisitions, we’re looking at geographic diversification. We’re also looking at how they’re accessing the channel. Our brand strategy really is enabled by the multifaceted approach to accessing customers. We’re not reliant solely on digital or door-to-door or cross-sell. We really have a nice, diversified way in which we access customers through different channels and different geographies.

Peter Keith, Senior Research Analyst, Piper Sandler: Maybe let’s just stick on the Pacific Northwest because you guys have the Orkin brand. That’s your biggest national brand that most people are familiar with. You were the Pacific Northwest with Orkin. Just talk about you bring in Saela.

Ken Krause, CFO, Rollins: Yep.

Peter Keith, Senior Research Analyst, Piper Sandler: It’s this multi-branded approach. You talk about multiple bites at the apple. Explain how that works because you would think that now you bought something that could cannibalize your own business.

Ken Krause, CFO, Rollins: Mm-hmm.

Peter Keith, Senior Research Analyst, Piper Sandler: Perhaps that’s not the case.

Ken Krause, CFO, Rollins: It’s not. It very much isn’t. In fact, we’ve learned that through the Northwest acquisition from 2017. That’s our Southeast brand. We bought that business based in Atlanta, Georgia, and we’ve grown that business from roughly $50 million to approaching $200 million over the last seven years by buying a platform and bolting on. What we’ve learned is the Northwest brand is going to market completely different than the Orkin brand, and so they’re very complementary. They might look like they cannibalize each other, but they’re very complementary in the manner in which they access the market, access customers. Certainly, at times, there are customers that prefer to do business with the smaller neighborhood, smaller community-oriented brand as opposed to a large national brand. They like to do business with somebody that they’re more relatable to.

They might see them in the local grocery store, they might see them in the community, and they want to support their local community. That gives us that opportunity to provide that customer with that additional choice that they’re looking for when they’re acquiring pest control. We have brands like Clark Pest Control in California with Orkin. We’ve got now brands like Saela Pest Control in the Pacific Northwest with Orkin. We’ve got Northwest Exterminating in the Southeast, which is kind of hard to explain at times and understand, but it was founded in Northwestern Georgia, and that’s where the name came from. Northwest is complementary to Orkin. Then HomeTeam Pest Defense, Inc., which is all across the Sunbelt region and very complementary also to Orkin as well as some of our other brands.

It’s a very orchestrated effort with going to market. There are rules of the game, but we see a real benefit in having that multi-brand strategy, and our customers are showing how they prefer that as well.

Peter Keith, Senior Research Analyst, Piper Sandler: Okay. Pests have been around for a long time. It seems like there’s more and more.

Ken Krause, CFO, Rollins: Yeah.

Peter Keith, Senior Research Analyst, Piper Sandler: Can you talk about how you think about if there’s an industry CAGR? It seems like there could be a couple different drivers to the overall industry and maybe how those drivers are trending.

Ken Krause, CFO, Rollins: Certainly. Yeah. I mean, when you look at the market, you look at our organic growth at 7% to 8%. That’s certainly not all market growth. There’s pricing that I talked about earlier, there’s market growth, there’s a little bit of share gain. Overall, we’re seeing this market growing at roughly 2% to 3% over the long term, but there’s opportunities to see that inflect even higher. A couple of those things that are really impacting that are generally the warming of the environment. Pests continue to evolve. You see different pests every year. Just a few years ago, I was back in my hometown of Pittsburgh, Pennsylvania, and we saw lanternflies. I’d never seen a lanternfly in my life, and quite frankly, I didn’t even know what it was. Imagine seeing that at your home.

You’re calling the pest control service, they come out, do the treatment, but then they also open up opportunities to do other treatments for the homeowner. There’s a lot of migration to the south, a warming environment, pest evolution, and then also just the penetration rate in the residential homeowner. We estimate that roughly only 15% of homeowners use pest control, and we see an opportunity for that to inflect higher as we think about the future and in turn drive a higher underlying market growth in this really attractive industry.

Lyndsey Burton, VP of Investor Relations, Rollins: I also think about just the dynamics of kind of the do-it-for-me, the rise of the do-it-for-me consumer, right? That speaks to the world that I came from. If you think about baby boomers who own the majority of the houses today, when they stepped into homeownership, they didn’t have a phone to say, "How do I solve my ant problem?" They just went and solved it themselves. Obviously, as professional pest control has become more mainstream, with more awareness around it, you see that adoption rate continuing to grow. As Ken mentioned, it’s still relatively underpenetrated if you look at other similar essential service-based businesses. Then you have millennials stepping into homeownership who have a natural desire, particularly with something that doesn’t have a—I always talk about it. Pest control doesn’t really have a therapeutic DIY element to it.

Nobody, maybe Jerry Gahlhoff, our CEO, is jazzed about spending his Saturday administering pest control at his home. There’s not a whole lot of people that find that as a hobby or some sort of way to relax. I do think that dynamic also is playing to the industry’s favor as well.

Peter Keith, Senior Research Analyst, Piper Sandler: Okay.

Ken Krause, CFO, Rollins: Mhmm.

Peter Keith, Senior Research Analyst, Piper Sandler: That’s a good perspective. In the interest of time, let’s just hit on a couple of financial questions to wrap it up. You guys do have a very attractive margin profile.

Ken Krause, CFO, Rollins: Mhmm.

Peter Keith, Senior Research Analyst, Piper Sandler: What you speak to is an incremental EBITDA margin of 25% to 30%.

Ken Krause, CFO, Rollins: Yep.

Peter Keith, Senior Research Analyst, Piper Sandler: I think over time, you see that going to 30% to 35%.

Ken Krause, CFO, Rollins: Mhmm.

Peter Keith, Senior Research Analyst, Piper Sandler: Maybe talk about what are the margin levers that you could see.

Ken Krause, CFO, Rollins: Certainly.

Peter Keith, Senior Research Analyst, Piper Sandler: You could pull in the coming years to get it that higher.

Ken Krause, CFO, Rollins: Certainly. There’s a number of things. When you look at this business, and you unpack that 25% to 30% incremental margin, you have to start first at the gross level. At the gross level, our incremental gross margin is roughly 55% to 60%. If you take the midpoint of that range at 57% or 58%, what you see is an opportunity to drive even more incremental margin. When you start at the gross margin, 57%, 58%, then you look at SG&A, and right now we report roughly 30% of sales as SG&A. Roughly 90% of that is more variable-oriented, 10% is fixed. If you look at that and you unpack that, roughly 27% of SG&A or of sales is spent in SG&A from a variable cost model. 57% minus 27% gets you to that 30% sort of target of incremental margin for us. We hit that number.

We will hit that number unless we’re making significant investments in our sales programs or we’re seeing volatility in claims. Generally, setting those aside, we will provide and we will perform at that 25% to 30% range. What we see is an opportunity through some of the modernization where we’re implementing back office consolidation, shared services, centralizing certain things, pulling it back in that would enable us to continue to inflect that incremental margin higher as we think about the future.

Peter Keith, Senior Research Analyst, Piper Sandler: Okay. Great. Maybe just to round out the last question, Lyndsey, I’ll give it to you. We’ll just talk about that growth framework, this long-term compounding. When you look at that top line growth, you think about the margin expansion, build us up to the annual EPS growth that you guys are targeting.

Lyndsey Burton, VP of Investor Relations, Rollins: Yeah. I mean, very simply, at the end of the day, I think if we can grow all in revenue, and you talk about this all the time, it’s the measure of your ultimate success. If you can grow that double digits, grow EPS higher than that, and compound cash flow in the 15% to 20% range, that’s, you know, that’s the algorithm that we feel that we can drive, and it’s pretty attractive.

Ken Krause, CFO, Rollins: Yeah. I mean, I spent a lot of time talking about incremental margins, but we’re really a growth company. You know, when we think about this business, we’re a growth company. What we like to provide our investors with is that steady double-digit rate of growth, which is two-thirds or three-quarters organic, and one-third to a quarter M&A. I see tremendous opportunities to continue to provide that M&A growth, and then turn that growth into double-digit earnings growth. We enjoy a very favorable cash flow position. We have negative working capital. As a result, when we look at the cash flow conversion, we’re seeing 120% plus conversion of income into cash flow. That enables us to grow cash flow and compound it at 15% to 20% like we’ve been doing for a long time.

That’s the algorithm, and that’s kind of how I view the business and judge the financial success of the organization.

Peter Keith, Senior Research Analyst, Piper Sandler: Okay. That’s great. We’ll wrap it up there. Thanks for spending some time with us today and keep up the great work.

Ken Krause, CFO, Rollins: Thank you. Great to be here. Thank you.

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