Good morning, ladies and gentlemen, thank you for standing by. Welcome to the Rollins Incorporated Fourth Quarter and Full Year 2011 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, January 25, 2012. I would now like to turn the conference over to Marilyn Meek. Please go ahead.

Thank you. By now you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive one, please contact our office at (212) 827-3746 and we will send you a release and make sure you are on the company’s distribution list. There will be a replay of the call which will begin one hour after the call and run for one week. The replay can be accessed by dialing 1 (800) 406-7325 with the passcode 4502890. Additionally the call is being webcast at www.viavid.com and a replay will be available for 90 days. On the line with me today are Gary Rollins, President and Chief Executive Officer; and Harry Cynkus, Senior Vice President, Chief Financial Officer and Treasurer. Management will make some opening remarks and then we will open up the line for your questions. Gary, would you like to begin.

Yes, thank you, Marilyn, and good morning. We appreciate all of you for joining us for our fourth quarter and year-end 2011 conference call. Harry will read our forward-looking statement and disclaimer and then we will begin.

Our earnings release discusses our business outlook and contains certain forward-looking statements. These particular forward-looking statements and all other statements that have been made on this call, excluding historical facts, are subject to a number of risks and uncertainties and actual results may differ materially from any statements we make today. Please refer to today’s press release and our SEC filings, including the risk factors section of our Form 10-K for the year ended December 31, 2010, for more information on the risk factors that could cause actual results to differ.

Thanks, Harry. We were extremely pleased to have reported record revenues and profit for both our fourth quarter and the full year. Revenue for the fourth quarter rose 3.3% to $289.1 million and net income increased 11.3% to $21.4 million. Revenues for the full year were $1.205 billion and net income grew to $100.9 million for the year. I would like to bring to your attention that this is our first $100 million profit year, a real milestone. For the quarter, residential pest control was up 5%, commercial pest control rose 2.7%, excluding fumigation, and termite was up 2.9%. Demand for our bed bug services continued to grow, and companywide this business grew better than 30% over the previous year. Our data indicates that we are growing this area faster than the industry. We would expect these sales to expand further this year, in both residential and commercial bed bug services. We have several new initiatives that we feel will raise bed bug revenue to a higher level. As discussed previously, this business also offers us an opportunity for recurring revenue growth through our inspection and remedial services. At the same time, bed bugs provide us with the opportunity to introduce our conventional residential and commercial pest control services to those homeowners and businesses who were not previously customers. We are pleased with what we accomplished in 2011, as I think we should be, but that was almost a month ago. We are ready and into 2012. Our company culture is based on continuous improvement, and this year will be no different. We are as committed to that principle today as Otto Orkin was when he said, "We must never be satisfied with less than the best if we are to secure our share of tomorrows market." This year we…

Thank you, Gary. Good morning. We appreciate you for joining us on the call, Gary shared an important message that this year is everyone’s responsibility to improve customer service. I recently read an article that stated that the corporation isn’t a sturdy species, and only a tiny fraction reach the age of 40. And here our Orkin brand is beginning its 111th year. An accomplishment in its own right. Particularly given that the average large firm does not live as long as an ordinary American. Fortunately, we are not dependent on innovation and forced to cannibalize our big revenue generators to build our business. We just need to work relentlessly on our service. We are not a technology company like Apple or Intel worrying about the next technological breakthrough. We are not a drug company worrying about what drug is coming off of patent. We just need to take care of service. Although we have had our successes we can’t get complacent, we can't get arrogant, we just need to excel in caring for our customers. With that, let me share our results. Today, we reported fourth quarter revenues of $289.1 million, representing 3.3% revenue growth. Net income increased 12.4% to $21.6 million or $0.15 per diluted share, compared to $19.2 million or $0.13 per diluted share for the same period in 2010. As you have come to expect real profits, real cash, with a great quarter for cash generation with net cash provided from operations for the quarter coming in at $40 million, up over 25%. Year-to-date revenues $1.2 billion, a 6% increase. Net income for the full year has increased 11.9% to $100.7 million, while EBITDA fell just short of $200 million coming in at $199.1 million. Having previously hit the billion dollar milestone with revenue, now this…

Thank you, Harry. We are now ready to open the call for any questions that you might have.

[Operator Instructions] Our first question comes from the line of Eric Hollowaty with Stephens Inc.

Couple here. You guys did what appears to be a great job of leveraging SG&A in the quarter and as well for the year which appears to be down around 50 basis points to 32.3%. is it fair to assume that that might be a maximum level to expect going forward as a percentage of sales, or how should we think about the opportunities of SG&A reduction and were the initiatives that you described in terms of some of the back office improvements and such, directly related to the leverage that you were able to achieve in the fourth quarter, specifically?

Eric, I think if you look at overtime we have a long history of focus on cost control and productivity improvement. I don’t think by any stretch of the imagination that we haven’t -- we have reached any maximum level as yet. I think some of the actions that we have talked about the replacing of all the telephony equipment with the call centers, some of the software changes, process improvements, there’s certainly opportunities to continue to become more efficient. So I think we have better days ahead.

That’s great, Harry. And I wanted to follow-up, if I could, one aspect of your business I think a lot of investors forget about is the HomeTeam business that you acquired a few years ago which services the new housing build market. Could you just talk about the relative performance of that business from a margin standpoint for the rest of your portfolio and are you starting to see some signs of life there in terms of resumption of growth?

Let me take that one. Yes, we are. We are seeing some signs of life in the new construction area. We have been fortunate that we have added some new builders, national builders to our collection of customers. Our installs are up, which is the validation of that. And HomeTeam has done a very good job during the, I guess the deepest of the trough, of really going back to their customer and selling them other pest control services. And I think it’s noteworthy that they have continued to improve their margins and improve their profits all through the down cycle as far as construction is concerned.

[Operator Instructions] Our next question comes from the line of Clint Fendley with Davenport & Company.

I wonder if, Gary, just on your comments in the prepared remarks, you talked about raising the bedbug activity to higher levels. I wondered how you might go about accomplishing that. I know in the past you have seemed to be limited by supply of trained dogs etcetera. I mean how do you think you can drive what's been a phenomenal growth story, even higher than it’s been here recently.

Well, I think one of the ways to do that is to develop programs that generates more recurring revenue. And I think that residential customers in particular that have a bedbug infestation, also have a certain amount of anxiety that it’s going to return. And I think if you think about it, the bedbugs got there somehow, typically through travel. People are not likely to change their lifestyle or their travel, or their work style as a result of having a bedbug problem. So we are working on developing creative ways to handle ongoing inspections. There is new monitoring products that are coming out routinely that we are testing. So we really need to and are focusing on taking kind of a onetime sales situation although it’s a nice one, but converting these customers into recurring customers. And cross-selling, frankly, it’s certainly not unusual for these customers once they have the experience of the service that we render and the quality of our people, to have us take care of their general pest control problems. So I think we are going to do more cross-marketing, and we are going to accelerate the recurring revenue aspect of bedbugs.

And just wondering where you’ll see the biggest opportunity, on the commercial side or the residential side here?

Well, the residential is growing faster, it’s a small number so it’s a little bit easier for it to go. I don’t really see a limitation. More and more the hotel, lodging industry is very concerned and highly motivated to have bedbug protection and I think that again, with inspection, the old deal that an ounce of prevention is worth a pound of cure. They don’t want an incident. And so I think that lends itself again to the recurring revenue opportunity that we would go in and we inspect a certain number of rooms each month. And so I really think that percentage wise that we have got comparable opportunities as far as growing both areas of the business.

And at this time, there are no further questions in queue. I would like to turn the call back over to management for closing remarks.

Well, thank you. We appreciate you joining us today and please know that we will continue to work hard to grow and improve our business, and we look forward to speaking with you again next quarter. Thanks, again.

Ladies and gentlemen, that does conclude our conference for today. If you would like to listen to a replay of today’s conference, please dial (303) 590-3030 or (800) 406-7325 and enter the access code 4502890. We would like to thank you for your participation, and you may now disconnect.