Rollins, Inc.

Q2 results missed expectations (key negative): - Total revenue +7.9% YoY, but organic +5.7%, below expectations. - The miss was driven mainly by slower growth in parts of residential pest control, especially brands relying more on consumer-initiated demand (notably Orkin). - Lead environment worsened as the quarter progressed, with improvement only toward late June / early July.

Diversification worked—but Orkin drag mattered (mixed / good + bad): - Growth by segment (reported): - Residential +6.6% (organic +3.6%) - Commercial pest control +8.6% (organic +7.2%) - Termite & ancillary +10.5% (organic +8.9%) - Management said customer retention remains strong and pricing response has been favorable—so the issue is primarily top-of-funnel demand/lead flow, not churn or price resistance. - Examples of relative strength: Home Team double-digit residential growth and Fox high-teens organic growth via door-to-door models. - Onetime/“occasional” pest categories were the weak spot (e.g., rodent and carpenter ant down, and mosquito calls significantly down YoY), implying weaker pest pressure/season timing rather than customer refusal.

Margins pressured by volume + cost headwinds (negative, with some mitigants): - Gross margin 52.8%, down 100 bps YoY. - Headwinds described: - Service salary deleverage + medical-related costs = ~70 bps pressure - Fleet/fuel = ~20 bps pressure - Fuel was ~1.8% of sales in Q2, expected to stay below 2% for 2026 (fuel costs up, but mitigated by routing efficiency). - Higher medical costs remain a theme; they also discussed the need to drive lower-cost medical options (telehealth/clinics).