Dear Shareholders,
As we look at what's ahead for Rollins in 2023 and beyond, we honor the legacy of Gary W. Rollins and his remarkable 56-year career thus far at Rollins. We reflect on his positive impact and outstanding contributions to our company and industry and look forward to his continued role as Chairman of the Board of Directors.
The Crown Leadership Lifetime Achievement Award is a testament to his talent and dedication. β Dan Moreland, publisher, PCT magazine
Career of Distinction
Preceded by his father (O. Wayne Rollins), uncle (John W. Rollins) and brother (Randall Rollins), Gary followed in working for the family business. From his start as a service technician at Orkin to becoming Chairman and CEO of Rollins, Gary has been instrumental in helping our organization and the pest control industry thrive through his unwavering commitment to serving our employees, customers, shareholders and communities.
Gary's immense achievements on behalf of our company and industry are reflected through numerous awards over his career:
- 1998 β Pest Control Technology (PCT) Crown Leadership Award
- 2003 β National Pest Management Association (NPMA) Pinnacle Award β NPMA's most coveted and prestigious accolade which honors an individual who has contributed not only to the success of the association but to the industry as a whole over a lifetime
- 2012 β Induction into Pest Management Professional (PMP) Hall of Fame
- 2020 β Atlanta Business Chronicle's Most Admired CEO
- 2021 β PCT and Syngenta Crown Leadership Lifetime Achievement Award β Determined by previous Crown Leadership Award recipients, this award is one of the most prestigious industry awards
A Culture Built on Character
The character of our people has been why we have consistently succeeded in growing our business, garnering the reputation as a leader in a highly competitive industry, while cultivating a great place to work. Our strong and distinctive culture has been centered around the principles of customer-driven service, exemplary ethical standards and the highest level of professionalism. Through Gary's steadfast leadership in demonstrating and inspiring these values, he has shaped our culture and our commitment to continuously improve our business.
Gary has been instrumental in establishing Rollins as a company where people can build a long-term career. There are countless examples of employees who have moved from entry level positions to the most senior levels in the company. Living out our guiding principles is recognized and rewarded.
We believe that a strong, positive and enduring culture is critical to a company's success. β Gary W. Rollins
A Tribute to Gary W. Rollins
Doing the Right Thing for Customers
Gary's persistent emphasis on doing the right thing for customers has been a core value that has guided us for decades and has become a hallmark of our company. Gary's focus on doing the right thing for customers was never more apparent than in his active role in working with industry leaders to eliminate the use of chlordane, a termiticide, in 1988. While chlordane was highly effective, it was later discovered to pose certain risks. Gary spearheaded efforts between the makers of chlordane and the Environmental Protection Agency (EPA) to voluntarily withdraw the product from the market.
Once chlordane was removed, effective alternatives were not immediately available, resulting in an unexpected increase in termite claims. Rollins invested over $100 million into a program to proactively reinspect and retreat the homes of all termite customers, including the vast majority who were not directly impacted. Gary yet again demonstrated the importance of doing the right thing for customers, no matter what.
A Career Timeline
- 1966 - Started working for Orkin as utility service technician in Chattanooga, TN, while attending college
- 1967 - Joined Orkin as full-time Sales Team member, before becoming manager of the Atlanta Buckhead branch and the Marietta, GA, branch
- 1978 - President and COO of Orkin
- 2001 - CEO of Rollins, Inc.
- 2013 - Vice Chairman of Rollins, Inc.
- 2020 - Chairman of Rollins, Inc.
Customers are the most important people in every business. They are not an interruption to work; they are the sole purpose of it. β Gary W. Rollins
Legacy of Community Impact
From the millions of dollars of college scholarships to the various philanthropic endeavors involving educational, health care and other community efforts, the generosity shown by the Rollins family is legendary.
Gary has upheld his strong family legacy of philanthropy. Under his guidance and passion for giving, Rollins employees have supported the United Way of Greater Atlanta since 1985. Over the course of our 41-year history with United Way, Rollins has raised over $21 million through employee donations and company matches that have supported local communities and others in need. Gary has been instrumental in instilling a culture of serving our community and has established Rollins as a community leader.
It is a mark of good citizenship to protect the people and environment in which we live. β Gary W. Rollins
Rollins' evolution will allow us to continue our Company's tradition of success well into the future. β The Art of Change: The Story of Rollins
A Winning Tradition
By any financial measure, Rollins is a success story. Since our founding in 1948 by two brothers with $25,000, we have grown to just under $2.7 billion in total revenues with over 17,500 employees globally and a market capitalization approaching $18 billion at the end of 2022.
Gary's longstanding focus on excellent financial performance drives a winning tradition of steady growth and profitability at Rollins. Under Gary's leadership as CEO over the past 20 years, Rollins has experienced dramatic growth that has significantly increased our company's value and global footprint. Gary and his team have guided Rollins as we have evolved from supporting Orkin, one of the world's largest pest control companies, to becoming the parent of the world's leading portfolio of pest control brands.
Today, through our growing family of brands, we serve 2.8 million commercial and residential customers in over 70 countries.
βOur employees, our customers and our company represent three legs on a stool. For this stool to sit properly, the legs have to be even. If you take care of employees, they'll take care of the customer and both of them will take care of the company.β β Gary W. Rollins
Dear Shareholders, As we mark 59 years in the pest management industry, and 55 years as a publicly held company on the NYSE, we are proud of the outstanding legacy of Rollins and our family of brands. With such a long track record of success and tremendous growth, our results have positioned us well for the future. We upheld strong momentum in 2022, and we are committed to building upon our success in 2023 and beyond.
I am honored to share this letter with you as I begin my first year as CEO, following the distinguished tenure of Gary W. Rollins. I am pleased to lead this company and to have the opportunity to build upon our solid foundation of doing the right thing for team members, customers, communities, and shareholders. Every day, I feel inspired while working side by side with our diverse group of 17,500 team members who are dedicated, focused, and committed to upholding our values and making sure that people, our customers and employees, remain the number one priority in everything that we do.
When it comes to customers and the communities we serve, we are working to earn trust and create peace of mind by protecting our customers where they live, work and play. Equally important, when it comes to our team members, our aim is to continue to focus on being the employer of choice. Quite simply, when I think about serving our many stakeholders, I am reminded of a frequent comment that Gary has shared over the years, βIt is not enough to be the best, we must always strive to be better.β
Reflecting Upon 2022
When I look back on 2022 and think about the mission of Rollins, we enjoyed many successes and accomplishments while also positioning ourselves for the future. We closed out 2022 with record revenues of $2.7 billion.
During 2022, we welcomed 31 acquisitions into our Company and recognized growth of 11.2% in total revenues. This level of revenue resulted in adjusted earnings per share growth of 8.7% to $0.75 per diluted share. Demand from our customers remained strong throughout the year across our major service offerings. In addition to seeing healthy growth in our residential and commercial markets, we saw accelerated growth in our termite and ancillary offerings. The emphasis we continue to place on driving additional value-added services for our customers paid off and provides me with a sense of confidence going forward. The 15.4% percent growth we delivered in termite and ancillary work was impressive and is very much reflective of the engagement level of our team members. Our teams have leveraged our strong customer base through optimal cross-selling practices, proactively offering complementary value-added services.
To Our Shareholders, Employees, and Valued Customers
Our balanced approach to growth also means finding quality, profitable businesses that are poised to help us maximize revenue and operational synergies. Over the past five years, we have acquired 169 businesses, and invested over $900 million in these acquisitions. These businesses range in value and are located in the U.S. and around the globe. During 2022, Rollins U.K. completed key acquisitions that expanded our footprint to Wales, Scotland, and Northwest England, providing resources that will improve our ability to serve customers throughout the U.K.
Not only do we continue to grow through acquisitions, but we also have made considerable investments in driving innovative new service offerings for our customers. For instance, by introducing green pest control solutions to clients, we have created options for clients who have evolving environmental and sustainability priorities. Additionally, we have enabled a new Tactical Planner toolset that improves drive time and better organizes our routes with reduced territory overlap. This helps to define tighter geographic grids ensuring we are most efficient in reaching and servicing our customers. It was also exciting to see the successful enhanced development of the InSite Portal Platform application. This Platform expands on the integrated experience for customers that use Enterprise Facility Management partners, allowing for better, more seamless interaction with our customers. These steps demonstrate our enduring commitment to continuous improvement for our customer base.
Today our top focus is aimed at driving the growth of our business with a healthy balance of acquisitions and organic investments. Quite simply, we strive to achieve the highest level of customer service and we know that to be successful on that front we must make the necessary investments in our culture and our team members.
Investing in Our Team Members and Culture
Our culture continued to evolve in 2022 and I look forward to implementing opportunities that will drive more sustainable improvement in this very important area of our business in the years to come. The engagement of our team members is reflective of the inclusive culture we continue to cultivate across our diverse team of over 17,500 associates. We previously introduced and implemented a five-pronged Workplace Inclusion initiative that is augmenting employee engagement. To date, we have created an Inclusion Advisory Council, have designated a management-level leadership position to address inclusion and outlined a strategic plan that will be further executed in 2023. These initiatives are aiding in our ability to attract, retain and develop the most talented and diverse employee base in the industry.
Along with our focus on engagement, the health and financial well-being of our team members is and will always remain a top priority. We never stop looking for ways to provide quality healthcare and improved retirement options. We launched Everside Health during 2022. This is an onsite health care service that provides our teams with 24/7 access to dedicated health care providers near home or work. This resource provides our team members with very convenient access to high-quality care helping them balance their work life with the needs of their families.
Dear Shareholders, Additionally, our Employee Stock Purchase Plan (ESPP) was enhanced to provide our team members with the opportunity to purchase Rollins common stock at a discount in 2022. Since inception in July 2022, over 10% of our workforce are participating and we expect the numbers to continue to climb in years to come.
In reflecting on all of these efforts, we were pleased to learn in early 2023 that Rollins was recognized for the first time nationally as a Top Workplace by Energage. Energage is an employer research firm specializing in studying and highlighting organizations from across multiple markets and industries. Rollins was also selected as a Top Workplace in Atlanta for the seventh year in a row from a list of impressive candidates that include top public companies. This recognition relies upon the direct input of our team members and is reflective of the engagement of our entire workforce. We are proud of the recognition but also realize we have more work to do as we continue to make the necessary investments in our team members that will ensure we remain an employer of choice.
We focused on evolving our leadership team and made significant investments in structuring a team that brings experience, capabilities, and a proven track record of success to lead us into the future. We made several changes in 2022 and more recently in early 2023. Kenneth Krause joined Rollins as Executive Vice President, Chief Financial Officer, and Treasurer, bringing more than two decades of leadership experience that has spanned finance, corporate communications, corporate development, and strategy for large, globally diversified publicly traded companies. Recently, Thomas Tesh was promoted to Chief Administrative and Information Officer, with additional responsibilities to leverage technology, process improvement and cross-functional relationships to evolve Rollins to be a more efficient parent company to our family of brands. Finally, with the retirement of Freeman Elliott after a distinguished career over the past 31 years, in December 2022, Pat Chrzanowski was named the new President of Orkin. Pat progressed through the ranks of Orkin over the past 16 years and brings a wealth of knowledge and operational experience to this leadership position. I am excited about these leadership changes and the impact each will have on our business in the coming years.
Moving Forward Together
As we ended 2022, we continue to face expected challenges, but I see βa year like no otherβ taking on a new meaning for 2023 at Rollins. We are proud of our accomplishments and look forward to driving even greater success in the many years to come. The future is bright and I have a growing confidence as we continue to evaluate exciting new growth opportunities. Our strong financial position provides us with significant flexibility that will enable us to aggressively pursue our goals. Together, we are working to become even stronger, deliver on our promises and be an exceptional service provider.
I want to recognize and thank our Board of Directors, Executive Team and all of our associates around the world for their efforts and contributions to our success in 2022. Furthermore, I want to thank our customers for trusting Rollins and our global family of brands to provide the service that they demand and come to expect each time we show up at their door. And to our shareholders, thank you for your confidence and commitment to the long term.
Finally, I would like to thank Gary Rollins for his leadership over the past five-plus decades. Mr. Rollins has led this company through revolutionary times in the pest management industry, while providing mentorship and counsel to many along the way. I'm proud to follow in his footsteps and continue our winning tradition at Rollins.
Jerry Gahlhoff
President and Chief Executive Officer
Dear Shareholders, To Our Valued Customers, Employees, and Shareholders
2022 marked another strong year of revenue and profitability, a testament to our company's ability to execute and remain focused on serving our customers. I am very proud of our solid performance and remain confident that we are well positioned to expand on our track record of strategic growth and profitability moving forward.
I have always believed that our company culture is the backbone of our success and in reflecting on my career to date at Rollins, I am reminded of the phrase that βthe more things change, the more they remain the sameβ.
Since I started working for our company over 56 years ago, there have been countless changes that have impacted our business: technology, the economy, regulations, competition, our environment, and even a global pandemic, just to name a few. However, despite all of the changes we've experienced over the decades β whether they were good, bad or somewhere in between β our longstanding culture of delivering excellent service to our customers and keeping them at the center of all that we do, has been our cornerstone.
Our culture of success is rooted in the quality of our employees and their drive and commitment to always keep our customers first. This customer-focused mindset is embraced by our new CEO, Jerry Gahlhoff. Jerry is uniquely positioned to sustain and build on our long-established winning tradition and culture with his deep industry and technical knowledge, exceptional leadership ability and operational and service excellence. I have tremendous confidence in Jerry and look forward to watching as he positions the company to accelerate growth and continue to improve what we do.
I am excited about our future and am honored to continue serving as Executive Chairman of our Board of Directors.
Sincerely,
Gary W. Rollins
Chairman
I am very proud of our solid performance and remain confident that we are well positioned to expand on our track record of strategic growth moving forward. β Gary W. Rollins
Gary W. Rollins
Executive Chairman of the Board
John F. Wilson
Vice Chairman and Assistant to the Executive Chairman of the Board
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