Thanks, everyone, for coming. We're very happy to have Jerry Gahlhoff and Ken Krause from Rollins. So obviously, we don't cover Rollins, but we have been following you guys for many years, and we cover Rentokil. So I'm sure there are lots of questions on the Rollins story. So maybe if we just start with a few general comments on, you know, where the business is at now. What would you like to highlight? We'll see if there's anything you can say on Q3. I'm sure people will be thrilled, but we can understand if you cannot at this stage. Yeah, maybe just start with that, and then we'll kick off with the Q&A.
Thank you, Sylvia, for having us. I appreciate you being our host. I'll let Ken give some thoughts on the opening part there, make sure we don't say anything wrong.
No pressure. Thanks again for having us. Great to be here. It was great to be here last year, although this trip is going a lot better than last year's, Jerry, huh?
You guys may not realize this. Last year, we were here, Ken was in that same seat-
I was
... and he was not feeling well. I thought for sure he had COVID, and I thought, "Now it means I'm gonna get COVID." That wasn't what it was. He had an infection in his hip related to an old accident. He ended up in the hospital. I left here, went to Switzerland. We were supposed to meet up later on. I went to Switzerland, and I got a call in the middle of the night from his wife telling me Ken was in the hospital. He's up the street in the hospital with an infection and a bad fever, and he... And so I flew back to London, sat in the hospital with him for three days. I can assure you, we knew we got to know each other quite well during those three days.
We did.
And-
Everybody else is getting to know me now, so.
We got him home, and he was good. But yeah, this is a much-
So-
A much better trip.
No, it's great to be here, and it is a much better trip.
We're glad that you came back-
Yeah
... a lot taller.
It's. But no, it's always great to be here. You know, the business continues to do well. We enjoy a tremendous position with our customers. We have a great business model. We've oftentimes spoke about the breadth of our brand portfolio, and how it enables us a unique position in our markets. We continue to benefit from that unique position. You know, back in the first half of the year, which we finished in June and reported in late July, we talked about the range of growth that we had provided to our investors during our Investor Day, and that range of organic growth was 7 to 8%, with a 2 or plus percent or so of M&A contribution over and above that.
For the first six months of the year, we were performing very well. Through the first six months, our organic revenue growth was roughly 7.6%. I think the Q2 was around 7.7% or so, so we continued to improve that growth through the first half, and we continue to do that here in the Q3. We're continuing to perform at those ranges, at the high end of those ranges, in the Q3 here as we finish, you know, through August, continue to be positioned very well.
Admittedly, it's a very short cycle business, so it's hard to say how we'll fare for the quarter, but generally, through the first eight months of the year, we're performing very well at the high end of the ranges that we provided back in May. As a result of the strength we're seeing in our underlying markets, we're investing. Back in June or July, we talked about the fact that our seasons were getting longer, and so as a result, our advertising expense and the experience with our investments in advertising were changing. We didn't have as much in Q2. We expected more in Q3. So we are seeing more advertising expense in Q3.
We're also seeing a higher level of investment in sales people, sales and related efforts to go after and procure more business. If the market's growing, like we see it, then we certainly wanna capture that growth while we can, and so we're investing in resources, advertising, door-to-door, sales salaries, sales people, technicians, feet on the street, to capture the growth. So we continue to invest in this market, and you'll see that. As we go through the Q3 and talk about our results, you'll see the investments we've made this quarter. We expect to continue to drive healthy business levels, healthy performance as we go throughout the remainder of the year.
From where we sit today and based upon what we know today, of course, that could change, but based upon what we see today, we see a very favorable demand environment. The one thing that I would also indicate is we continue to ramp up our efforts on safety, and so we're investing in safety. The mentor system that we talked about consistently, we continue to talk about that. You know, it's interesting, if I go back to Q2 of 2022, we incurred, I wanna say, almost $10 million of claims. Q3 of last year, we had a really good experience, so as a result of having that a good experience, we certainly saw some improved margins. I wanna say it was about a 70 basis point improvement on gross margin alone last year in Q3.
We continue to see good experience there, not necessarily another improvement like we saw this year, but we don't see major increases in claims and major exposures surfacing, so that's a good thing to see. But generally, good demand, performing just where we thought it would be, quite frankly, on the high end of what we thought it would be, and we're investing. We're making investments to go after and continue to grow in these markets.
Perfect, thank you. Well, quite a few questions to follow up on that. So maybe on organic, I guess the range that you've given now for the medium term is above where you were, you know, what your experience was before COVID. So can we maybe unpick that in a couple of ways? So one, I guess pricing seems to be now more of a feature of the market. You're saying CPI plus-
Mm.
Maybe it was CPI minus before. How do you think about that? Is it down to the tools? Is it down to just a habit now with the customers, and then it'll pick up on volume after that?
I'd say we have a pretty good cadence. We've got very strong pricing disciplines throughout our organization. As we've added brands to our portfolio of brands, we continue to bring them into the loop also to leverage price and do a lot of education, a lot of training, a lot of,
Mm
... data. We're pretty good at analyzing the data behind our price increase information and showing our field operations what's possible and what we can continue to do. So that, we see that as a lever we can continue to drive through.
On the volume side, I suppose what seems to have done really well for you is winning new business, you know, that marginal new customer signing up for pest control. Could you maybe remind us of your formula, you know, the how much is attrition is largely a recurring revenue business model, but still, you know, you've got some attrition, and how much is new business wins, and how maybe that's trended pre-COVID, and then your experience after?
So what you're seeing today is really the culmination of what's been a long-term play for us around our brand strategy and curating our brands that we've added to our portfolio over the last 15 years. We have a variety of brands that bring in customers a variety of ways. And that enables us to leverage the organic growth through lots of different channels. I can walk through some examples of that pretty easily. You take Orkin. It's our national brand, national footprint. I call that your easy button of pest control for the consumer in North America.
and then we have our, what we call our second bite at the apple brands, like, say, a Northwest Exterminating or a Clark Pest Control, that have been established in their markets for decades, have good brand recognition, and are seen as the local pest control company or the mom and pop, as you, if you will, of pest control. And there's some people that like to do business with those types of companies that have a more of a local feel. From there, you also have our specialized, or more targeted brands.
Take a HomeTeam Pest Defense that partners with home builders who and they install their proprietary built-in pest control system called Taexx into new home construction through their builder their B2B sales channel, and then they go capture those customers and turn them into recurring revenue streams through a B2C sales force, and that's something that's unique to HomeTeam. And as you probably have seen, there's housing shortages in in North America, and the housing market is really tight and building is booming, and there's a lot going on there, and they're able to capitalize on acquiring customers that way. Just as a Northwest Exterminating does a lot to partner with realtors and to work the real estate space.
Then you take Orkin, who has good brand awareness, gets a lot of organic attention just because of the power of the brand, plus they're the primary brand that plays in the digital space with the through digital and the customer acquisition through, say, you know, web-based. And then, for example, you take our latest large acquisition of Fox Pest Control, that enabled us to begin getting customers in through the door-to-door channel. That's also been a source for accelerating the growth. So when you look at our business overall, it's really our brand portfolio that we've acquired over time when we've made decisions about which brands to leave as standalone operations, and we buy and build those brands and build those platforms. That's been the accelerator, I think, for our growth now that we've matured in that way, and they're all participating and helping us achieve those growth levels.
Both you and Ken also mentioned customer acquisition and, you know, continuing to invest in that. Can you maybe talk a little bit about how that works kind of on the residential side? Do you do any, I guess, marketing, or how does that work on the commercial side? And then maybe just zoom into the residential side. You said Orkin is, you know, that's where the digital spend is going, and the other brands maybe use more traditional means. Maybe just give us a bit of background on how that works.
Yeah, we try not to have our brands step on each other's toes, right? They have kind of their way to acquire customers, and if you go back to our Investor Day materials, you can see some good illustrations of how that is. But everyone has their own individual role to play in that and how they go about that. They've got their, as we call it, their recipe for growth.
Mm.
Everyone plays, you know, their unique role in doing that.
For example, the digital marketing spend, obviously, that's a discussion point.
Mm-hmm
... because of your peers as well. You know, what is that as a proportion of sales, let's say, in Orkin? And how has that trended over the last, you know, five years?
Yeah, we tend to keep that. We target our spend, because, say, take an Orkin brand, they have very consistently spent heavily into brand awareness.
Mm.
And that's what helps us also drive the organic volume that we get that's very inexpensive to acquire customers from. But we tend to manage our margins very closely. We watch that spend very closely. We manage the cost of customer acquisition, we look at lifetime value of the customers. But we tend to target a very similar spend year over year as a % of revenue fairly consistently.
Mm-hmm.
We may move that a tenth of a percentage point here and there, but then we try to allocate those dollars to the right brand and the right opportunity as we go. So I don't know, Ken, you want to give more color on what those percentages may look like?
No, you know, it's just it moves around from quarter to quarter, certainly, based upon the demand levels, but that's kind of what I was alluding to earlier in the webcast, is that Q3 is probably going to be a little bit heavier, so if anything, it might weigh it down on the margin a little bit, but generally, as Jerry indicated, from an annual perspective, it should flatten out, and if you look at some of the work we've done over the last 12 to 24 months, we've done a lot of restructuring and productivity enhancements to fund the growth as well, so that it's not all incremental, it's actually self-funding. Some of the cost takeout we're doing is funding the investments we're making in customer generation activities.
And that's interesting because at your CMD event, clearly you were highlighting the productivity investment.
Mm
... you've put through investments in tech, but at the same time you're also opening more branches.
Mm.
So you're now opening, let's say, commercial-only branches, but also you are opening just more branches in general?
Mm-hmm.
And I guess on the face of it, we get questions on that because we live in a more digital world. Why do you need the physical presence? Can you maybe just talk a little bit about the strategy and how that... It seems to work very well financially, so if you can comment.
Yeah. And I, you know, the logic that... And I get that logic to say, "Hey, look, technicians are leaving from their house, going to their first stop. Do we need fewer branches, not more?" But yet here we are opening more branches-
Mm
... and that may be confusing. I guess I have a bit of a different take on this. I think, if there's anything that we need to be doing as an organization, is we need to be closer to our people. And so being close to the customer, putting our branches closer to where our customers are, also helps us be closer to our people. I still want to see our people on a regular basis. We have in-person training meetings, we have weekly service meetings. There's, you know, operationally, if there's a process or procedure that needs to
change or adjust, the best way to talk about that is face-to-face. It's to get everybody together and talk about it as a team. And so we look at creating smaller, more family-style... We want people to feel like a team. And for us, when it gets really big, you become less familiar with one another. And so putting our branches where our customers are, closer to where our people live, they're not maybe not driving an hour and a half to the other side of town-
Mm
... to pick up materials and supplies, or to come in weekly for our meetings. We want to see them. In fact, you know, we see that as an opportunity. It's something that we missed during the COVID period of time when we couldn't see our people as much. We see that there's a lot of value in that. So yeah, we are opening... But our goal is to... What we've seen, our experience has been, that if we had an $8 or $9 million operation, the mindset of a manager goes from a growth mindset to a maintain mindset. They're saying: "How do I not go backwards?" And growing an $8 million 3%, and it's a challenge.
Growing a $4 million branch 10% or 15% is actually, in some ways, a lot easier, and to me, it's a heck of a lot more fun. And you feel like you're making progress, and your team is there, and you're familiar with one another. And even back in those, the Investor Day presentation, we gave examples, and we have a lot of case studies that we've looked at around what happens when we split branches and split regions. Usually, we could take that $8 million branch, split it into the two fours, and in four years we have two $8 million branches again. All right? Versus taking that $8 million branch and grinding out 2%-3% growth in four years, I don't have two $16 million. I don't have one $16 million operation.
So in our model, the way we operate our business, that's how we've seen that. Now, it doesn't necessarily always mean that we need the size of the branch that we used to have. Maybe our footprint should be smaller, perhaps we need a little more warehouse space and a lot less office space. So we think about our footprint. It's challenged us to think about the footprint that we need quite a bit differently, so we can go into smaller locations or even co-locate with other brands that operate in the same market, that have some space in that part or out in the suburb of, say, Phoenix. Is there another brand that has some space that we can just automatically go in and leverage, and use their facility for storage and meeting space-
Mm
... and things like that? So we are thinking. So it's, I think there's this mindset, sometimes when we talk about it, that we're just going in and renting another facility and starting all over. That's not always the case. Sometimes in an existing facility, like when we open a commercial branch, we can just say, "Okay, this part of the branch is a commercial branch, and this part is a residential branch," and we can have a shared meeting space for when we do have group meetings and team meetings. So there's that element, too. But, yeah, that's, I hear. That's a common question we get, too.
Yeah, I can imagine. Well, it seems that it still requires a lot of involvement from the center, so it's a hyper-local business, but you still need to... Obviously, two brands are not going to come together organically. You need to tell them, you know, "We're going to now co-locate you." So how can you just remind us... you know, what does the team in the center do? What's centralized? What's centralized already, and then what do you have more? I think in the previous meeting, Ken, you were talking about, you know, maybe centralizing some of the spend further, some of the costs. So what, what's in the center, what's decentralized?
Yeah, we like to centralize the things that don't add value to either our teammate relationship or our rela- or the local relationship with customers. So if it's legal and corporate HR, some of the accounting and-
Mm-hmm
... tax, and all that stuff, we don't want any of that kind of stuff to be local. We want to have that all done more centrally. But when we think about our brand portfolio, what we want them to have control of is their local HR, their teammate relations, their relationships with their employees. We want them to have a say over their marketing, because they all have different marketing strategies and that are uniquely different from one another. That needs to be local and specific to the brand. No one in Atlanta is sitting there calling all the shots for every single one of our brands, about how they should be marketing to their customers, or what that messaging should be, or how they go about it.
We supervise that, and we have oversight of what they do to make sure we're not stepping on each other's toes or spending things irresponsibly without being able to measure it. But the customer and the people relationships remain local, and which we're trying to do a better job of taking in the rest of that, the rest of those functions into a centralized position.
Maybe mentioning people, clearly the cost of people and churn have been very important for the industry, and that's been, you know, a big discussion point over the last few years. Where are you now? The labor markets, obviously, got a little bit more slack. Where are you on, on that, on hiring and costs as well?
Yeah, we've experienced that as well in the labor market. But we are experiencing much more favorable conditions in terms of when we post for a job, for an Orkin Pro, for example. We're getting a lot more applicants than we were two years ago. Not all of them are qualified, but we are getting more to choose from, and we still have to be selective in who we pick. So that part has definitely eased up, and I think some of the... You know, think about Orkin and the brand, and the professionalism of our Orkin brand. That draws the right kind of people to our brand as well.
So when someone sees the Orkin, and if any of you have ever seen, I would encourage you, if you haven't seen it, go to YouTube and take a look at some of the Orkin ads that are on there. We talk a lot about our frontline people are the heroes of the story. They're the ones that are out there solving customers' problems. Imagine, if you would, you're a customer with a mouse in your kitchen, and you don't want that mouse to still be there. Well, our people get to be the hero of that story, and that appeals to a lot of people. And so, I think that the branding that shows in our advertising is also helping us from an employment brand standpoint as well.
So that, that's been, that's been a good part. We do still struggle with the, what we call churn of new people. We get, we get ghosted. We go through the hiring process, get all the way to where they're supposed to show up on day one, and this person, you know, and that, I guess that's called catfish, though, not ghost. You get. We get catfished, and we get ghosted. So we get catfished, where they don't show up on day one. That counts as turnover, where they. We went all the way through that process and spent all that time and energy. And then sometimes they get in, they get there for a week, even though they've done a ride-along pre-evaluation, know what the job's gonna be like.
They're there for a week, they start the training, and they go, "Eh, I don't feel like going back tomorrow, and I think I'm... I don't think this is right for me. I'm gonna go do something else." So we still have that problem, and that wasn't. We had some of that five years ago before COVID, and that's still rather prevalent today. That's our biggest challenge, I would say.
Have incentives changed at all? I mean, one thing that you've spoken about a lot this year as well is hiring more salespeople. How do you incentivize salespeople? How do you incentivize technicians, and has that changed at all? Have you had to amend?
The salespeople are still, you know, salespeople. In terms of, you know, highly incentivized towards, you know, what you produce, how you get paid, and I'm really proud of a lot we have really awesome folks, that when we bring people on board, how fast they ramp up, how fast they're making a very good living.
Mm-hmm
... because of the tools that we give them to be equipped, and it's largely commission-based. Years ago, we recognized that there's this ramp-up period of time in B2B sales, and so we made adjustments many years ago in increasing kind of our base rate, to make sure they had a ramp-up time to get to the earnings they needed to get to. Our technicians largely have some sort of a base or hourly rate, plus a commission based on productivity. So they're incentivized to on the work that they do and the quality of the work that they do, they get compensated on that. And brands like Orkin also incentivize on customer retention. For our technicians, you know, they have quarterly bonuses for retention of customers on the routes, things along those lines.
It's that pay plan in so many ways helps us, because as we do price increases, our technicians in the field get raises through that process, and they also get raises when we do our regular merit increases to their base or hourly rate. That's how we've been able to manage when people think, "Oh, well, the labor wages are going up 8%. We weren't having to raise 8% because we have the benefit of the price increase, plus our normal kind of merit pool that kind of netted out to that if we're raising price at a CPI plus type of rate. Would you add anything to that, Ken?
No, I think that's right. I mean, I think the way that we compensate people is a competitive advantage, and it allows us to retain people, but also provide them a significant amount of upside in their compensation. As we grow our business, they're rewarded, and so I think it's a great program that we have.
Yeah. And then maybe on M&A, could you talk a little bit, so you've committed to that 2% per annum on top of the 7%-8%. Could you talk about kind of how long do you have the targets in your, you know, sphere? How long you kind of meet with them, and I guess, wine and dine with the founders? It's still mainly mom-and-pop, as far as I understand. And then outside of... Maybe in the U.S., what are the gaps, and then outside of the U.S., what's the strategy, maybe more medium-term as well?
So the business is the strategy of our business is very much focused in the U.S. and Canada. We do have opportunities that we've been able to execute on here in the U.K., and in Australia, Singapore. But the largest most fragmented market that is both residential and commercial is primarily in the U.S. And so we continue to look at opportunities in the U.S. We look at opportunities through a geographic lens. We look at opportunities through a service lens. We want to buy businesses that are focused on commercial. We want to buy businesses that are also focused on residential services, general pest control, very, very attractive areas. The pipeline's full.
We continue to engage in conversations with a whole host of folks ranging in sizes from very small to larger. You know, our focus is to take the long-term view with our acquisitions, and that has afforded us an opportunity to develop the reputation as an acquirer of choice, and so we've bought a number of businesses that we've kept intact. We keep their people intact. We keep their brands intact. Doesn't happen all the time, but a large brand that we would acquire, a platform that we would acquire that we can invest in, we want to keep it separate, and we want to continue to invest in it, very much like the Northwest brand or other brands that we've acquired over the years. We also look at tuck-ins. You know, tuck-ins are attractive.
We call it a tuck-in when it's a small deal that can be put right into an Orkin branch or a Northwest branch or some branch of one of our brands. So those are very attractive and, you know, multiples are very healthy. It's a great space. It's a great industry. It's a great market, and so there's a lot of interest. We don't like to obviously compete in auctions. We like to compete based upon our reputation for how we'll take care of the business. It's not all about price. If you're looking to maximize price, oftentimes that's not the right. We're not the right party. We'll pay a fair price, but we will also, while paying a fair price, take care of your people and be responsible with the business that we're inheriting, and so that's a unique part of our equation.
I'm pretty deliberate about time that I spend working on building relationships in our industry and ensuring, you know. So sometimes relationships take years to foster. Sometimes it's five or six years, and then something materializes. Sometimes it's six months. So that process, you just have to be patient and know, you know, I always find myself in the relationships that I have with people in our industry. There's just wonderful people in this industry. And I have a lot of friends in this industry, and we're able to learn what works and what's not, and we commiserate some of our challenges and learn from each other about how we're tackling some of those challenges, say, with people or-
Mm-hmm
... you know, those kinds of things. And then through that process, we build relationships, and it, like I said, it could take thirty days. About out of our tuck-ins, I would say out of, say, let's say we did thirty tuck-in acquisitions, fifteen or so are coming through some sort of brokered relationship, and maybe half are organic from our people in the field-
Mm-hmm
... and the relationships that they have with their local companies, and the reputation that they've established over time to drive those types of tuck-in deals to us.
It's unique in that the relationships are long, and they're deep. It's interesting when you look at the deals and the I hate to use the word deal, but the acquisitions that we make and the partnerships that we form. They come over a long-term period, long time period. They come from the field. They don't come from a centralized corporate development function. It's very much relationships are built out in the field that bring the opportunities to us that we can execute upon, and that's the best way of doing it. You want somebody that's championing a deal and an opportunity to partner with somebody. It just makes for a better overall pipeline and more success when you think about post-acquisition stage.
Perfect. Well, maybe we'll pause here to check if there are any questions in the room. Yeah, please go ahead. Yeah.
The increase in marketing and advertising you talked about, is that normal course of business, or is this a sort of offensive push?
Mm-hmm
... while other competitors are sort of tripping on their own shoelaces to grow new clients and still meet those service levels?
It's in line with our strategy. If you go back to our Capital Markets Day, Lindsay's in the audience today. She did a fantastic job at putting together the investor day that we had back in May. And in that investor day, we talked about our commercial opportunities. More feet on the street on the commercial side, building out that that segment of our business, and investing in that segment of business. Certainly, the investments we're making this quarter are reflective of those efforts. They're also reflective of the effort that we talked about in June, where we said that the season's getting longer, and so there's a shift in how we're investing our advertising dollars.
We're spending more advertising in Q3 than we did last year, and we're spending, we spent a little bit less in Q2, than we normally would have seen. And so, so that's just a timing shift, if you will, is what's occurring there. But generally, the increase is, you know, born out of the strategy that we formed and, and the direction we're headed, combined with the favorable market dynamics. It's not necessarily-
Just nothing...
Competitively driven. It's driven by what we're seeing in our end markets and how we feel about our business.
I think if we were looking at it competitively, we're looking at it competitively at the overall market. Because there's lots of strong regional, large regional players that could be in the space, that decide at one time or another that they suddenly want to go spend into the space and drive costs up. And we may withdraw for a short period of time and let them go do that, and put our dollars elsewhere, or hold them, hold them back for a better opportune time when we feel like we're gonna get a better return on our investment. So it's really looking at probably the macro competitive environment that may get factored into some of the timing of the marketing spend.
Any comment on the success of those initiatives, and how do you measure it, and what does success look like?
I think the easiest way of measuring the success is the performance we're seeing in revenue, and that, as I said earlier, we're performing at the high end of the range that we provided through the first six or so months. It is, I want to say, 7.7% improved Q2 versus Q1, and here in Q3, we continue to see similar performance, and so it's been good. I think the performance we're seeing is keeping us at that level of growth that we hope to see for the year, and quite frankly, at the high end of that, at that level.
Another metric it has to do with, if we look at, like, cost per lead, in a what I would call a highly inflationary cost per lead type of environment, we've been able to keep that in check. And that's a big part of timing and being reactive and dynamics and monitoring that every day, every week, knowing what's going on and being aware, so that we can truly optimize. We've got a defined amount of money that we're gonna spend, and how do we optimize that? So when somebody's doing something that's driving price up in a general market, we're pulling back and maybe moving those dollars to where we can be more effective with them. That, keeping those, that inflationary cost of, say, Google search kind of terms in line is key.
Yeah, there's one in the back. Thank you.
Just, sticking with, with cost inflation, back to the war for people, is there a way to contextualize compensation levels for a sales rep or an account rep now versus, say, four or five years ago? And I guess just as a follow-on, the catfish example you mentioned, presumably that's because employment's at four-point-low fours, and when that moderates to, you know, closer to five, we see some of that disappear because of other opportunities? Or what, where do we think they're going, is part of my question?
That term is a new term to me, quite frankly.
Catfish? He had to ask me what catfishing meant the other day.
All joking aside, no, I think that our... the way we compensate people is-
Increased
... is unique, and it results in steady improvements in standard of living of our people, and it's not necessarily driven by a market dynamic. It's driven by how we compensate them. In terms of the loss of people, you know, one thing that we're doing, and Jerry can talk about this, is leadership development. And not only leadership development, but investing in onboarding and training and all the work around that, and so we think that's a really important area. We're a people-based company, and it's important for us to invest in our people.
And we think that if we make the investments that we think we can make, on the training and onboarding, leadership side, we think that'll have a favorable impact on us as we think about the future and the retention of some of those folks. But generally, you're gonna deal with, in this industry, you're probably gonna always deal with challenges around turnover and churn. It's a tough job, and inevitably, people will sign up for something, and they realize they signed up for something that they didn't understand or fully appreciate. Even though we have a ride-along process that they go through before they come on board, it's just a tough job.
And so as a result, you might have a little bit more elevated turnover in that area, but we're taking some steps to try to mitigate that on our business.
... Hi, do you see any positive effects from this, Rentokil Initial merger in winning new customers or hiring technicians or other skilled people?
You know, we really don't focus on the competition, and with respect to Rentokil Initial, I very rarely will say that name, but you know, it's a big process they're going through. It's a lot of challenges, and we certainly don't envy the challenges that they're facing, and they're facing a lot of them. But we're not certainly focused on their challenges and capitalizing on that. We're focused on executing our business, just like we have for the last sixty-plus years. We have a great business. You know, Jerry and I inherited this business and the opportunity to lead all the associates and the team members that we have. We really enjoy coming to work each and every day, we enjoy servicing our customers, and we enjoy investing in our people.
As a result of doing all that, we feel like we will continue to be successful, and so that's really the focus. It has really very little conversation that we have around the competitive challenges that people are facing, but it's about what are we facing? Because we know if we take the eye off the ball that we're playing, we're gonna face some challenges, so let's just execute our strategy.
I would say other people talk about it a hundred times more than we do. And it's because we are more internally focused. There are lots of competitors, and focusing on just one and one opportunity, it would be a little short-sighted on our side. As it relates to people, and you know, being able to get you know bring more talent in the organization, you know, I just have a strong personal preference for, I'd rather train folks to do it, have our brands train our folks to do it their way, and how they provide service, and what that means and what those service standards are.
I'd rather us go out, hire somebody that has people skills, that can communicate, can look at a customer in the eye and speak with empathy about the problem that they're having, and then I'd rather teach them how to control the pests and give them the technical skills that they need to do the job to be effective. That's my personal preference. So as we're looking at applicants, I want to bring in people that have those skill sets, and then teach them our way of doing the way we do business, versus maybe retrain somebody that came from anywhere else in our industry. That's not to say there aren't good people that, that... From time to time, we do hire folks, but I just like the idea of us teaching them the right thing and hire for their strengths and their people skills, and teach the rest.
Last year when you were here, you talked about a great business that you'd come into, but your desire to sort of quicken the pulse a bit, which with Ken in hospital, probably is exactly what he needed. Quickening that pulse, obviously, you have different ways of doing that. What are the sort of focuses at the moment to sort of speed things up and get the business humming even more?
Yeah, so one of our growth accelerators has to do with leveraging the power of our brands and the leadership that we have in our brands that already exist. Think of the knowledge base and the experience of the folks that come from these various backgrounds. Maybe they ran a family-owned business, maybe they worked for the family that owned that business. There's a lot of experience there. So being able to collaborate, creating an environment where they can collaborate, and in the past, my role has been over the last few years, it was very much, "Okay, I gotta put all these folks in a room and get them talking to each other and create that environment.
I gotta kind of force that to happen and make them talk to each other, 'cause they're all running their businesses, and they're all busy, and they're all in their worlds, but there's just so much knowledge and experience that could be leveraged. Now, we're getting to the point, as we kind of shift a culture a little bit, is what I really want them to do is take that initiative and start reaching out and say, "Hey, I noticed in one of our quarterly business reviews that you're doing really well at this.
Can you help me figure that out for our business?" And they're doing that without Ken or I reaching out to them and saying, you know, "You need to talk to this person about that, 'cause they're good at this." They're seeing that we're creating that environment, then, that they can learn and share with one another, share those best practices. We have our own incubator of ideas and best practices and thoughts. And then the other advantage that we have in our brands is that some of these smaller brands are more
nimble and agile to try something without a lot of risk. So you put something into the Orkin system, that's coast to coast, north to south, east to west, that's a big change. But we can go try some of those things in the smaller local brands, test it without a lot of risk, and then go roll it out and make implementation. So we've got again that more of that incubator. Any other ideas, Ken?
The only thing I would... I mean, I think the way that I would describe what you just said is, you know, when I joined, forty-five days in or so, I put together an observation list for Jerry.
Yeah.
I said, "Jerry, the word that I'd use to describe what I see is siloed, very siloed." Nobody really talked to one another. So there's been a conscientious effort of driving more collaboration. So what he's describing is that collaboration that's occurring across brands across the home office. We've had a restructuring a year ago now in the home office. We've brought a lot of new people into the home office. People are talking to each other more often and sharing ideas, and it makes it an energizing place to come to work. So I think that is a really what you've described is really representative of how we've broken down silos, how we've improved collaboration, and how it's driving value across the business.
It's really a potential superpower for us.
One other question. I think we've picked up on a couple of times within your answers is commercial. So you seem to be putting a bit more effort maybe into commercial. I mean, not that you've not in the past, but it seems to be one of the emphasis that you're putting in now. I mean, one of the discussions we had in the previous meeting was how that marketplace actually changed. So you have fewer players now than 10 years ago. Could you maybe talk a little bit about that, kind of how that-
About that shift in the commercial space?
About that shift in the commercial market, and how you're maybe planning to maybe be-
Yeah. So if you go back 10 years ago, in particular in the U.S. market, there were a lot of large regional players that performed a lot of commercial work. They were really good at commercial work. Over the last ten years, a lot of those have either primarily been acquired by folks like us or maybe Rentokil or maybe Anticimex. A lot of those providers have been acquired over time. And a lot of those regional companies, 10 years ago, were part of a network called Copesan. And Copesan was a consortium of all these regional players that got together under this Copesan brand to try to be like a national service provider. They used their network between them, some common CRM pro platforms, to be able to service national accounts.
So it allowed them to compete with Orkin or compete with Terminix Commercial, those kinds of businesses. The Copesan entity sold, I think about five years or so ago, especially as a lot of those large regional commercial, you know, somewhat commercial-focused companies were also selling off. It made it harder for them to keep that network together. Eventually, the Copesan business got sold to Terminix, and that commercial business got rolled into Terminix. And so you see that it's a pretty significant shift in terms of large regionals. You go back to the top 10 or top 15 or so pest control companies 15 years ago, there was a lot of them that checked the box in doing commercial work.
Now, you look at the top ten, top twelve, pest control companies, the majority of them, of those have been replaced by predominantly residential pest control companies. So really, that landscape has shifted where you have Orkin, which is a coast-to-coast, fully scaled, platform for commercial. We have our regional second bite at the apple brands like Western and Waltham, and you've got specialized commercial businesses like IFC that are part of our portfolio, that do commercial work. And then you have, you know,
Rentokil, that's got commercial, as well as Ecolab, that's participating in that place. So that it's just been a pretty significant shift over the last ten years. That it's slowly, it's happened over time, and that... You know, during the COVID, we saw that opportunity, and the mix of the COVID environment plus the competitive shift, I think, has created a really nice opportunity for everyone in this space.
Perfect.
Great.
Okay with that. Thank you very much.
Thank you.
Thanks very much for the questions.
Appreciate it.
Thank you, Sylvia. Nice job.
Thank you.
Thank you.