Ladies and gentlemen, thank you for standing by and welcome to the Rollins Inc First Quarter 2013 Earnings Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) Today conference is being recorded April 24, 2013. 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 pass code 4612026. 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’ll 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 joining us for our first quarter of 2013 conference call. Harry will read our forward-looking statement and disclaimer and then we’ll begin.

Our earnings release discusses our business outlook and contains certain forward-looking statements. These particular forward-looking statements and all of the statements that have been made in this call, excluding historical facts, are subject to a number of risk and uncertainty and actual risks may differ materially from any statement 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, 2012 for more information and the risk factors that could cause actual results to differ. Let me now turn the call over to Gary, our CEO and recently promoted Vice Chairman of the Board.

Thank you, Harry. Mother nature was a fickle lady during our first quarter. Last year 2012, she gave us the warmest three months in the U.S. for over 100 year, which contributed to recorded revenues and profits. This year, she handed us the coldest with the greatest snowfall quarter in two decades. In spite of those obstacles however, we continue to grow our revenues and this was accomplished primarily through the recurring revenue that we build over the course of last year. For Rollins’ that type of revenue is the gift that keeps on giving. Revenue for the quarter increased 3.5% to almost $300 million and net income was $23.2 million just slightly above last year’s net income of $23.1 million. The impact of the weather was felt and leads all across our service lines particular termite and residential pest. While pest control was down double-digits from last year’s record, what I find encouraging is our residential pest leads were up nearly 15% over 2011, which was a more typical first quarter. The good news is that spring is here and with the weather now warming up, the pest removing and the phones ringing. Weather aside, our sales and marketing efforts continued to be an important and powerful influence in creating greater awareness for our family of brands, while contributing to the growth of the company. Orkin’s new marketing programs and advertising further establishes Orkin as the pest control expert. You may be aware that Otto Orkin working and founded working in 1901 when he was just 14. One of his first jobs was to rid a family’s barn of rats and even back then he took a scientific approach to accomplish those. From the barn addict he studied how the rats moved, what they eat and how they functioned…

Thank you, Gary. Bye, bye winter skies, hello yellow sun and pollen filled days, spring is here that’s what people say don’t discuss me call the Orkin call center. It was long time coming this year and after glowing last year I can now sympathize with last year’s winter clothing retailers. The numbers are as pretty as last year’s first quarter but one of the strengths of our business is that 2012’s recurring revenue came through for us. Looking at the numbers, the company reported first quarter revenues of $299.7 million, an increase of 3.5% over the prior year first quarter revenue of $289.5 million. We experienced that growth across all of our family of brands but one which was up 2.1%. Overall, net income increased 4.1% to $23.2 million compared to $23.1 million with EPS flat to last year $0.16 per diluted share. Fortunately, unlike retail, our many other businesses we are not reliant on what business walks in the door each quarter. Our business model can be better described as subscription liked model, while we never like to lose the customer, unfortunately it does happen. Sometimes it move, sometime it’s related to service, sometimes for price and then in case of our residential customers because we’ve done our job well, no pass. In order to grow those customers need to be replaced, around 6% of our residential customer base and 3% of our commercial customer base each quarter. Fortunately, we added recurrent customers throughout last year still began our base. Unfortunately, this quarter was spring coming later, our anticipated leads didn’t occur as planned and our demand slowed. With typical first quarter weather in the contribution of the marketing group we expect to see the internet light up in the phones to ring off the hook. Last March,…

Thank you, Harry and by the way I didn’t know you’re an inspiring Polish. We’re now ready to open the call for any questions that you might have.

Thank you. (Operator Instructions) And our first question comes from the line of Joe Box with KeyBanc Capital Markets. Please go ahead. Andy Davis – KeyBanc Capital Markets: Hey, good morning, guys. This is actually Andy Davis filling in for Joe.

Good morning, Andy. Andy Davis – KeyBanc Capital Markets: Good morning. So, obviously you guys called up the weather impact on the year-over-year numbers and here you went through kind of the growth to the company. Just looking that maybe get a little more granularity on what didn’t materialize that you guys are expected kind of where that was. And maybe if you can just discuss a little bit more how they picked up since the lower December you called out last quarter and maybe the cadence on new customers start to get a date, any color there would help?

First, you broke up there Andy and on the question, I’m not quite sure the last part of question? Andy Davis – KeyBanc Capital Markets: Just basically how going forward how leads have trended since the lower December and then maybe the cadence of new customers start that you’ve seen if any in the quarter?

Well I think Gary and I both alluded to leads were down into the first quarter 20 plus percent, last year the weather got real hot starting in February, the tulips were out and the pest were moving about. So, while the – I don’t think it’s a trend of less interest because I think the takeaway, the interesting thing when you compare the leads this year to 2011 first quarter with weather was not as, still not as bad as this years but certainly far from what we saw in 2012, the leads were up 15% over what they were two years ago. So, I think on our top of mind the awareness, our marketing activities, our digital strategy are working, everything is in place to the weather is now back, we have spring, we got a new advertising campaign. So, we’re excited as to our potential to import.

Yeah, Jim let me add to that. For those who have followed the company a long time, we don’t talk about the weather. The only reason we talked about the weather last year was because it was so phenomenon, I mean it was the best weather in 100 years. We had 26% increase in leaves, I mean it was just unbelievable. And the only reason we brought it up this year as we did we knew we’re going to repeat that kind of lift but we didn’t expect the worst weather in two decades. So, going forward we don’t want to talk about the weather, we want to talk about our business. So, you’re not going hear anymore about the weather. Andy Davis – KeyBanc Capital Markets: Sure. And I’m ultimately just trying to determine whether this was more of a delay due to that weather, if there is anything else in there that could impact results going forward?

No, we feel pretty good. April so far we’ve recovered from the drop and we’ve got a couple weeks left. So we think that we’re going to have a good April and the spring drives you a little bit crazy because it moved around typically 30 days one way or another. So we’re – we got the people hired, we got them equipped. As John Wilson told me yesterday, they’re well rested because they didn’t have a lot to do the first quarter. So we think that we’ve got the plans in place to have a good year. Andy Davis – KeyBanc Capital Markets: Sure, that’s good color there. And then maybe just switching over to the cost side. I know last quarter Harry, you gave us kind of a specific breakout, of the different impacts. Looking at this quarter, can you maybe just one, sort of specifically talk about the productivity headwind in the quarter and how that compared to I believe 30 basis points last quarter? And then two, maybe did the other headwind that they as you had expected particularly the insurance adjustments we had?

Yeah and I don’t have that in front of me the, our – we staff up in the spring that came late, so our productivity suffered. I’d have to go back and look – I think the deterioration in service.

It’s and probably in the neighborhood of 20 to 30 basis points and administration and well and CSP. And on the insurance with three months certainly doesn’t make a year, the number of claims is running below last year. We haven’t seen the severity that we had last year. So at this three months into the year, we’re keeping our fingers crossed, we’re pushing out a lot of initiatives and raising consciousness in the field and trying to make it more and more part of safety, consciousness at top of mind. So we’re seeing some early favorable results but it doesn’t take too many bad accidents to set your back.

We’re also going to add, we have three divisions now that’s almost safety program, and the first one was the southeast and as a result of the success that we have there, we roll it out to two more and I would expect by the end of the year that we will have the whole, all of working on it and I think western is on it as well. So, we’re not just hoping, we have programs in place or other wins that we think will make a difference. Andy Davis – KeyBanc Capital Markets: Sure. And I guess just to put that plainly, I mean with, I think your incremental margin for this quarter were actually a bit negative. Basically to trying to part out if you think that the revenue impact from the spring hitting in 2Q will fully the leverage back up or if you think it will take more time for that to play out in some of this metric?

The revenue comes, the labors in place that will take care of itself. We’ll have our difficult price increased program goes in place in June. We’ve been working with Boston Consulting Group and the commercial side of business that we hope to see a little positive impact from that as well. So, I think that the first quarter was a full convenient. I think we would expect a return to our strength this quarter. Andy Davis – KeyBanc Capital Markets: Okay and I’m sorry.

No, very good, thank you. Andy Davis – KeyBanc Capital Markets: Yeah.

One last question. Andy Davis – KeyBanc Capital Markets: I did, I was going to actually use your segue there with the Boston Consulting study. I know that was underway last quarter and should start bit early maybe but any initial takeaways you guys can share in any anticipated difference in pricing as we sort of near that June July timeframe?

Well, we’re at the final stretch now. We have tested some of the things that they’ve suggested well, in February and March. So we’re just now getting some of those results back and analyzing that. So it’s really too early to say with any assurances here is what the impact will be but we haven’t done a project with BCG that hasn’t been successful. So I don’t want to go out and let me say it’s going to add X, Y or Z, but they will pretty well run on that, they’re keeping will get a nice return on that professional services cost that we’re incurring. Andy Davis – KeyBanc Capital Markets: Sure, sure, that’s fair and I guess just nothing then that we should anticipate at this time for sort of the middle of year?

No.

No. Andy Davis – KeyBanc Capital Markets: Okay, great. Well, that is all for me. Thanks guys.

Thanks.

Thank you. Our next question comes from the line of Clint Fendley with Davenport. Please go ahead. Clint Fendley – Davenport: Thank you. Good morning, Gary and Harry.

Good morning.

Good morning Clint. Clint Fendley – Davenport: Also enjoyed the poetry there Harry, thank you.

That was encouraging.

I don’t give up my days up. Clint Fendley – Davenport: I wondered if you guys can maybe share the pricing and volume trends that you experienced during the quarter. And I am wondering, you talked about your prepayment plan if there is any incentive to maybe move the customers over to that because of a better pricing, maybe that you are seeing on the prepayment side?

We always encourage our customers to either prepay or leave their credit card with us and we went from which I think seven, eight years ago with no credit card numbers and to auto-pay we’re today in excess I believe of 40% of our customers.

This is typically the residential pest control customer. And my day sales outstanding on my residential customers in Orkin, is right around 14 to 15 days because a lot of them pay me upon service. And customers who pay by credit card tend to stay and take a few extra services. So we continue try to encourage people to either pay in advance or pay with their credit card. Pricing trends, we saw like I said on a, what is still I think characterized by a lot of industries in the first quarter seeing consumer resistance and what not. We haven’t seen that in terms of pricing. We got a few percentage price realization average prices is going up, I think some of that is better sales presentations from the home inspectors, home sweeps as the problems we had. We are selling more combination jobs, like we’re doing termite treatments in conjunction with moisture control or insulations or the average job price is going up nicely in termite. We would hope that this commercial project that we’re doing BCG will raise commercial prices. Did not see any in our testing price increases, did not see any elasticity problems. We’ll have a more sophisticated price increase program this year, so you know we I mean we’re the leaders we make no bones about it. I mean we charge more than the rest of the industry but we’re worth it. Clint Fendley – Davenport: Any color just on how April was shaping up so far and obviously we’ve seen everything get off to a slow start this year. Last year we had sort of a pull forward into Q1 could we see the reverse in Q2?

No I think no, April started off a little slow and certainly picked up momentum. I don’t think the phone is ringing off the hook out quite get out in December I saw my land got snowed out two days ago and I think they’re digging, yesterday was 23 degrees, 27 degrees for baseball game. And I think the match got snowed out in Minneapolis as well. So spring hasn’t come everywhere, but when I checked yesterday we’re running – we made up the early deficit and starting to run ahead. So we’ll keep our fingers going I think the new advertising campaign is kicking in. We’re getting a lot of play and getting good feedback on that. And I hope John Wilson.

John Wilson is going to help us on this too I think that’s one of the most heavily viewed shows on the reality show on television. Could be so, we haven’t seen any customer..

We will Orkin diamond permanently displayed throughout the whole one hour or so. Clint Fendley – Davenport: I’ll definitely have to watch for that. Harry on the tax rate should we be back to roughly the 37% in Q2?

Yeah. Clint Fendley – Davenport: Okay. And then last question it’s a little bit of different kind of question but I’ve seen a few new reports here that at least on the East Coast from the Carolina’s kind of up through New York is a, the return of the cicadas which I guess happens every 17 years and creates kind of an invasion above, is there anything you guys or any services you have provided in the past for that or is it pretty much you just have to grin and bear it until the things go away, just wondering if there is any kind of one-time above from that?

Well, it certainly going to make people more insect-aware. I mean it can hurt but we don’t do any agricultural pest control. Clint Fendley – Davenport: Okay.

The fact that you’ve got that many bugs in the air certainly came earlier. Clint Fendley – Davenport: Sounds like we’re about to get the pay back for the slow start that we’ve seen. Anyway, thanks, guys.

Thank you.

Thank you. (Operator Instructions) And our next question comes from the line of Jamie Clement with Sidoti & Company. Please go ahead. Jamie Clement – Sidoti & Company: Hi. Gary, Harry, good morning.

Good morning.

Good morning. Jamie Clement – Sidoti & Company: I’m not sure whether this kind of thing is trackable or not but as you look back at the first quarter of 2012 and the tremendous lead generation that had and obviously lead closure, has there been any difference in terms of retention rate a year later with that group versus what you’ve just seen over the last peak hour over number of years? In other words, if abnormal weather phenomenon caused more customers to sign up, have they stuck with you?

Yeah, our retention, we watch our retention very closely. I mean those we will have lacked, those that we sold in the first quarter. So, our retention continues to improve and is – I mentioned or Harry mentioned about the customer service surveys, I mean we really have been working on improving our survey, I mean our service and measurement, our service. So I think that we’ve got programs in place, but the great thing is we have 400 locations, so when you get a big surge of lead like that it’s not like it all falls in Florida or North Georgia or whatever. So we’ve got a lot of people, a lot of branches that can assimilate that business. And so those customers got as good a first service as customers that were sold throughout the year.

But the answer – it’s not unusual to see a pickup in lost customers in that first year when you have influx of new customers because those are the most difficult to retain. Jamie Clement – Sidoti & Company: Right.

Those are ones who want to become lifetime customers. We did see a small, our retention numbers on the residential side, were up a little. We didn’t quite retain as much it wasn’t any significant difference. On the commercial side, we saw our best retention and might have been its on regular termite.

And in termite we saw a great retention. But even pest control Harry was like 10 upon one.

Yeah it was, I mean it was.

Yeah I think that’s not significant – I wouldn’t view that as a specifically meaningful number at all. Jamie Clement – Sidoti & Company: And just a follow-up kind of seasonality and just, if you guys can just if you all can give us a reminder, my recollection is that typically, you all have strong March or a strong April. Rarely the two are strong at the same time and rarely the two are strong at the same time, and rarely are the two are weak at the same time, is that a fair assessment of history here?

That’s correct. Jamie Clement – Sidoti & Company: Okay. And then so from a lead generation perspective, you would expect – I would assume you would expect that the metrics to improve, whether it’s not by the end of the week certainly as you move into early May, is that...

When the season really starts breaking the momentum picks up and typically May is better than April and June is better than May. I mean it just rolls through the spring rolls into the summer and then waves off in the following winter. Jamie Clement – Sidoti & Company: Okay. Thank you all very much for your time and final question Gary, acquisition pipeline, I know it’s always hard to pry good companies away from owners but some of those owners aren’t necessarily getting any younger and maybe thinking about a state planning in that sort of thing. So can you give us kind of an update on view of the marketplace?

One of the things, we’re having a big meeting on the 1st of May here where we bringing our leaders in and talking about acquisitions and measuring how well we’ve done with the acquisitions that we have completed. One of the things that we’re doing this year that is first for us is that we’re putting incentives, offering incentives to our region managers and branch managers to identify acquisition candidates and participate in the coating process and we’ve never done that before. So we’re hopeful that that will be beneficial. And for most pest control companies, I mean this first quarter was a disaster. Jamie Clement – Sidoti & Company: Right.

So, we’re always going to look at that – with mixed emotions we hate it for ourselves, but sometimes that’s a turning point of people that may or may be now is the time for me to hang it up or call Orkin or whatever. So it will be interesting to see what the outcome is going to be in this first quarter as it relates to our acquisition activity. Jamie Clement – Sidoti & Company: Yeah, just a follow-up and I’m sorry to keep asking follow-ups here. But obviously you know who the top 50 firms are and I’m just – I’m wondering whether your success with GPS tracking and some of the way you managed your technicians and that sort of things has may be filtered down to what has been may be smaller company five or six years ago, but generally speaking the industry has done pretty well. So based on your comment about in sending some of your branch managers and that kind of things are there businesses that or may be outside of the top 50 that you think would be more – you’d be more likely to be interested in today than may be you would have been five or six years ago?

I think so, one of the things that we’re doing better, is that we’re looking at strategic areas of the country. And certainly a small acquisition might be extremely important in an area where we have a branch that say, doing $1 million and to add another $1 million really changes the branch margins dramatically. Jamie Clement – Sidoti & Company: Okay.

In those areas in the country that we’re more interested in than others based on our penetration and based on the potential. So I think we’ve been more, are being more selective as to where to fish and I think that that’s going to be a beneficial as far as the year is concerned. Jamie Clement – Sidoti & Company: And I guess my perception is that there are a lot of folks in the industry that are trying to borrow pages at your play book that may have prevented historically you being interested in smaller acquisitions, where now they’re running such a way where the culture might be more consistent with yours?

Well, I think we’ve got the best track record of ending with major quality I mean.... Jamie Clement – Sidoti & Company: Yeah, no doubt.

We hold on to the employees, we hold on to the customers. Jamie Clement – Sidoti & Company: Right.

And I think we are the acquirer of choice. Jamie Clement – Sidoti & Company: I would not disagree. Thank you all for your time as always.

Thank you.

Thank you. I am showing no further questions in the queue at this time. I’d like to turn the conference back to manager for any final remarks.

Okay, well, thank you for joining us today. We look forward to the second quarter call and we’ll continue to work hard to continue to grow and improve our business. Thanks again.

Ladies and gentlemen, this concludes our conference for today. If you’d like to listen to a replay of today’s call you may do so by dialing 1800-406-7325 or 303-590-3030 and entering the access code of 4612026 followed by the pound sign. Thank you for your participation. You may now disconnect.