Rollins, Inc. (ROL) Q4 2021 Earnings Report, Transcript and Summary

Greetings, and welcome to Rollins Inc. Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Joe Calabrese. Please go ahead.

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're 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 (877) 660-6853 with the pass code 13725733. Additionally, the call is being webcast at www.rollins.com, and a replay will be available for 90 days. The company is also offering investors and supporting slide presentation, which can be found on Roland's website at www.rollins.com. We'll be following that slide presentation on a call this morning, and we encourage you to view that with us. On the line with me today and speaking are Gary Rollins, Rollins' Chairman and Chief Executive Officer; John Wilson, Vice Chairman, Jerry Gahlhoff Jr. President and Chief Operating Officer and Julie Bimmerman, Interim Chief Financial Officer, Vice President and Treasurer. Management will make some opening remarks. And then we'll open the line for your questions, Gary, would you like to begin? On the line with me today and speaking are John Wilson, Vice Chairman; Jerry Gahlhoff, Jr., President and Chief Operating Officer; and Julie Bimmerman, Interim Chief Financial Officer, Vice President and Treasurer. Management will make some opening remarks, and then we'll open the line for your questions. Gary, would you like to begin?

Yes. Thank you, Joe, and good morning. We appreciate all of you joining us for our fourth quarter and yearend 2021 investor call. Julie 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 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, 2020, for more information and the risk factors that could cause actual results to differ.

Thank you, Julie. First of all, I regret missing last quarter's call discussion. Nonetheless, my knee replacement therapy has been going well and it's great to be on the call with you this morning. I'm pleased to report that we experienced a very successful year, both financially and operationally, especially with our revenue and EPS growth. As we began 2022, we believe that Rollins is poised to deliver on our short term and long term objectives. We look forward to sharing our progress with you as the New Year unfolds. As we previously disclosed, the company is in discussion with the staff at the US Security and Exchange Commission to resolve our SEC investigation. During the fourth quarter, we increased the accrual related to this matter to $8 million for a potential settlement. Given that the investigation is ongoing and out of respect for the process, we cannot answer any questions during our Q&A, but we are focused on resolving this inquiry in the very near future. With that, let me turn the call over to John who will provide some of our business updates. John?

Thank you and good morning, everyone. As Gary mentioned, we are extremely pleased with our 2021 performance and very proud of the hardworking men and women of our company that propelled us to achieve record levels of revenue growth across each of our brands. I'm also pleased to note that we again realized a very strong performance in our termite service line, posting year-over-year double-digit growth of 14.3%. While our termite business has been growing by double-digit for several years in a row now, termite damage claims as well as any related litigation have declined year by year reaching our lowest level in recent history during 2021. To be more specific, termite damage claims received have declined from a high of 9,349 to the low of 380 new claims received this past year. While at the same time, revenue from termite has tripled. The genesis of this great story started with a serious commitment to address a problem that had been building for several years, obviously resolve a loan wouldn't clean up a problem that large. Success came from a series of changes initiated by our leadership team to our culture, our training, our treatment protocols and our quality assurance processes. We significantly improved and expanded training of our field service and sales team members and our managers made that training mandatory before you could be allowed to service our customers. We held hundreds of regional training meetings and a multitude of termite-specific training modules were developed. We revised our treatment protocols to solve situations we were experiencing due in part to evolving new construction practices in various markets. These revised treatment protocols in many cases, exceeded state treating requirements. Additionally, we created a nationwide quality assurance team that took control of the claims process requiring our branch offices to report each claim immediately. This insured a quick response to our customers when most needed. This QA group also went to the field and inspected our team's work and verified that things were being done according to our new treating requirements. Finally, and maybe most important, the most difficult change was to our culture. As an example, any location, failing quality assurance team inspections had to make a trip to visit the division president of the company. Those that failed to adjust and adhere to the new practices by the time a follow up QA visit occurred, didn't receive a return trip. Change came quickly due to those practices. Fast forward to today and all our newly acquired companies are brought under these standards as quickly as possible. We believe these service level commitments are important to meet or exceed the expectations our customers have for us. Operationally, our service offering is led by a very strong and dedicated termite services group and a very experienced technical service team. I'm proud to work for a company that has made these commitments to protect our customers, our brands, and our reputation. Now let me turn the call over to Jerry who will provide more details on our business.

Thank you, John. Good morning, everybody. This morning, I'm going to focus on items that directly impacted our operations in the fourth quarter and then Julie will address the non-GAAP adjustments, most notably the SEC accrual that impacted the year. 2021 was a strong and productive year for Rollins' family of pest control brands. Q4 revenues increased 11.9% to $600.3 million compared to $536.3 million the previous year. Net income rose to $65.3 million or $0.13 per diluted share compared to $62.6 million or $0.13 per diluted share for the same period in 2020. Our revenues for the full year were $2.424 billion, an increase of 12% compared to $2.161 billion for the same period last year. Net income for the full year increased 34.5% to $350.7 million or $0.71 per diluted share compared to $260.8 million or $0.53 per diluted share for the comparable period last year. Again, Julie will review our full year GAAP and non-GAAP results shortly. All our business lines experienced solid growth with residential pest control up 11.9% and termite realizing growth of 13.6%. Additionally, commercial pest control delivered an impressive 11.4% growth over the fourth quarter of last year. Julie will give you a more detailed breakdown on organic revenue growth by service line in a few moments. Before I move on from revenue and address expenses, I want to emphasize how proud we are of the growth rates we achieved in the fourth quarter and for the year. During the year coincidentally, Orkin reached their 120 anniversary and celebrated by putting up one of their best performances in years. All our brands grew and contributed greatly to our operating results. On the expense side, payroll, materials and supplies and fleet are three largest expense areas and I'll give you some additional color on how each of these items impacted margin in Q4. Let's start with labor. Remarkably, we've been able to achieve above average revenue growth rates while keeping our service payroll expense margins below last year in Q4. On a year to date basis, that expense margin is flat to 2020. Our administrative payroll margins also improved over 2020 as we continue to improve productivity. However, we did experience a slight increase in our sales payroll margin. The sales payroll expense trend is reflective of the planned investment we made in upstaffing our residential and commercial sales teams over the last 12 months. This investment yielded the high levels of growth I mentioned a few minutes ago. If there's an area I do not mind giving up margin to, it's sales payroll so long as we are growing revenue faster than the sales payroll expense. I'm proud of our team's ability to manage payroll expense despite recruiting challenges caused by labor shortages. Last week, we held our virtual will Rollins leadership meeting with over 175 of our top leaders. Most of our topics were about best practices in recruiting and retaining our people. This is a huge focus item for us in 2022. Let's move to materials and supplies costs, or M&S. Our M&S cost were a slight headwind in the quarter, particularly for our termite and ancillary service offerings where we've had more supply chain issues in the latter part of the year. Our, procurement team is working hard in this area by seeking alternate products while our operations team has analyzed the impact of these increases in adjusting our rate card pricing upward, where needed to counteract the rise in materials cost. Probably most impactful to us in Q4 is fleet expense, particularly fuel. Compared to Q4 of 2020 our fuel cost were up 56.5% in Q4 of 2021. That equated to over $4.5 million in increased fuel costs for the quarter. In addition, increases in fleet repair costs for items like tires and basic maintenance, also rose double digits. As we've discussed in the past, we're making significant progress with our BOSS operating systems routing and scheduling technologies, which help us mitigate some of these fuel cost increases. Since reducing miles driven between services saves not only fuel, but also time. This technology contributed in an either even bigger way to helping us manage our service payroll expense by enabling us to reach our customers in a more efficient and productive manner. We began to feel the first significant impacts of the fuel increases in Q2 of 2021. So we anticipate that fleet costs will continue to be a significant headwind for us in the first quarter of this year. Related to expenses is one other item I'd like to mention. Most are familiar with the cybersecurity attacks experience by solar winds and colonial pipeline and others that recently put a spotlight on cybersecurity threats. Due to concerns about these types of cybersecurity issues, in Q4, we fast tracked our multiyear strategy to enhance our protections against cybersecurity threats by accelerating a $3 million expenditure. We have a dedicated cyber team implementing enhanced cybersecurity controls for domestic and international operations to protect our employees, our customers and our brands. Shifting briefly to the acquisition landscape, we continue to successfully execute our acquisition strategy of identifying and acquiring high quality companies with shared culture and values. Last year ended strong with over 70% of our trailing 12 months revenue acquired occurring in the fourth quarter. We're very pleased to welcome these companies and their teams to the Rollins family of brands and looking ahead, we expect that strategic acquisitions will continue to be an important component in our initiatives to further grow our business. I'll now turn the call over to Julie. Julie?

Thank you, Jerry. We delivered an outstanding fourth quarter highlighted by significant growth across many key financial metrics. As we previously discussed in our third quarter conference calls, we assess the performance metrics we report to ensure they best articulate Rollins' business. To that end, we discuss several additional measure measurements we present each quarter, including EBITDA, free cash and total organic revenue growth. In addition, we're now including organic revenue growth by revenue type, specifically residential, commercial and termite. We believe this will bring further transparency to our revenue growth measurements. Also, we are including a slide deck on our website, which presents the numbers we discuss within the earnings call presentation. To view the deck, please go to rollins.com, click on news and events, then presentation. We realized we are going over a lot of information today and believe this will give you a resource to review what everything that we have covered. So now on to the numbers, our fourth quarter revenues of $600 million was an increase of 11.9% actual exchange rate growth, 8.9% organic. For the constant exchange rate, the total revenue growth percentage is calculated to 11% with an 8.1% organic. For the full year 2021, revenues of $2.4 billion with an increase of 12.2% over full year 2020, 9.5% organic. The constant exchange rate, total revenue growth for 2021 equaled 11.4%, 8.7% organic. As mentioned previously, residential commercial and termite all grew double digits this quarter over the same quarter last year. What Jerry did not tell you was that all three also grew double digits for the full year 2021 over 2020. For the fourth quarter growth over last year, residential grew 11.9%, 8.4% organic. Commercial grew 11.4%, 9.3% organic. Lastly, we have termite which grew 13.6% with 10.1% organic. For the full year 2021 over 2020, residential grew 12.9%, 10% organic, commercial grew 10.2%, 7.4% organic and we closed that with termite at 14.3% growth, 11.9% organic. Now to our income, for the fourth quarter and year to date, we are presenting adjusted EBITDA for comparison purposes due to the one time super vesting of our late chairman's stock grants in the third quarter of 2020. The impact of our gain on sale of several of our Clark properties in the first six months of 2021 and our recorded accrual related to the potential settlement of the SEC matter in the third and fourth quarters of 2021. Fourth quarter adjusted 2021 EBITDA was $122.2 million or 11.2% over 2020. Fourth quarter 2021 adjusted EPS was $0.14 per diluted share or 7.7% improvement over 2020. For the full year 2021, our adjusted EBITDA with $546.4 million or 20.1% over last year. Year to date 2021 adjusted EPS was $0.68 per diluted share or 25.9% over 2020. For fourth quarter 2021, gross margin increased 50.4% or one tenth of a point over last year. That was after overcoming our strong headwinds of fleet expenses, specifically fuel in the amount of 4.5 million and termite M&F for $2.7 million. Sales, general and administrative fourth quarter 2021 margins increased 1.6 over last year. This was driven by the increase in sales salaries mentioned by Jerry, along with the increased SEC accrual. Without these two items, our SG&A fourth quarter margin presented an improvement over fourth quarter 2020. Related to the SEC potential settlement, we recorded an accrual of $5 million in Q4. This was in addition to the $3 million we previously accrued in the third quarter. These amounts are not tax deductible for state or federal taxes. The company continues to cooperate with SEC and working towards a final resolution. During the year we completed significant remediation efforts including the addition of a chief accounting officer, SEC attorney and SEC external reporting director. Also, we reevaluated and strengthened our internal controls over financial reporting while improving processes, procedures and related supporting documentation, including those related to management's judgment and estimates. Now for a few notes regarding our cash flow, our dividends full year 2021 for $208.7 million or an increase of 30% over 2020 while cash used for acquisitions declined 5.8% to $139 million for 2021. We ended the current period with a $105.3 in cash of which $78.1 million was held by our foreign subsidiary. As you've probably noted over time, our foreign cash held has increased with the exception of used for acquisitions. We're in the process of restructuring our foreign entities to make cash from foreign operations, more readily available. This should be completed later in 2022. Now to free cash flow, for the fourth quarter of 2021, our free cash was $88.9 million or a decrease of 0.8% over last year. The decline was due to a capital expenditure increase from upgrading our data center facility as part of our cybersecurity initiative. Full year free cash flow was $395 million or decrease of $41 million. This decline was primarily due to the $30 million 2020 Cares Act taxes paid in 2021 and a $32 million gain from the sale of the Clark properties, the latter of which is an operating cash reconciling item. Last, I am happy to share that yesterday our board of directors approved a regular cash dividend of $0.10 per share that will be paid on March 10, 2022 to shareholders of record at the close of business, February 10, 2022. This represents the 25% increase of the March 2021 regular cash dividend paid out. The dividend increase reflects our strong performance in 2021 and that accentuates our financial strength, our solid capital position and the board's confidence and our outlook for continued growth. Gary, I'll turn it back to you.

Thank you, Julie. We're happy to take any questions at this time.

Thank you. The floor is now open for questions. [Operator instructions] Our first question is coming from Tim Mulrooney of William Blair. Please go ahead.

John. Thanks for that excellent history of your termite service.

You're welcome.

A couple questions on organic growth. So, the first one, on your commercial pests organic growth, it picked up in the fourth quarter, despite a more difficult comparison with last year. Can you talk a little bit more about your commercial pest business, what's maybe helping drive that acceleration? All else equal, we kind of expected your commercial business to continue to normalize back towards your historical range, but instead it picked up a little bit here. So just curious, what's going on?

This is Jerry, Tim. A lot of the commercial sales growth is a result of the investment that we've made in the staffing. We saw an opportunity to capitalize on the rebound and we began upstaffing in that amongst our commercial sales team over a year ago during when things were still rough, we were investing in the business and getting people up to speed and ramped up so that we would be ready for the rebound and we've just basically been able to capitalize on that.

Yeah, Tim, and this is John. I might add that our commercial sales success was driven by both categories. And when I say both, I mean, local sales efforts, that's our local branches with feed on the street, adding accounts, but also our national accounts and I'm going off of memory. So forgive me if I'm off a little bit, but our national account sales effort for December was up some 50% or close to it. That indicates a lot of business being let out forbid to start the new year. But we were up in that one little month for by 50%. So pretty pleased with that.

That's really helpful color. Thanks guys. And I apologize for this next question, but there's a lot of numbers and perhaps misinformation being thrown around right now. So I just want to clarify. You guys revised your organic growth estimates. For the first half of 2021, you gave us that excellent table in your press release and you revised it to exclude all acquisitions, not just the significant acquisitions and by our math, it looks like the difference between the old definition of organic growth and the new definition is about 1% for the first half of 2021, the only periods in which we have both numbers. Is that also how you see it, that those bolt-ons added about one percentage point to revenue growth and do you think that that's a typical thing?

I'd say that yes, I'd agree to your numbers and what you're saying on that front. A lot of it, as far as typical, it honestly depends on the, how many acquisitions are closing. When are they closing? What are the sizes of the acquisitions closing? So know it is not always, the 1% there's many times when it is lower. The only time when we see anything that would be high would be a large acquisition, like, Clark.

Yeah, I would add that it, maybe it was typical for this year, Tim, but it's not always like that. So, we just -- we just never know. I think the benefit is -- kind of it with all extracted. Now it gives us a clearer picture.

Thank you. Our next question is coming from Mario Cortellacci of Jefferies. Please go ahead.

Hi. Really appreciate the time. I guess my question is just around your labor availability. And forgive me if I misheard it at the beginning of the call, but I know you added some color around maybe your completions, but maybe you can just talk to how the labor availability is impacting the business and how you guys are working through it. Is this just something where you're, you're obviously paying these people more, but maybe you can also talk about the impact, the higher wages for the service of the business could potentially have on 2022 margins?

So Mario, let me take a stab at it first. And maybe Jerry will have something to add. So you'll recall in previous quarters as this was maybe a building issue. We talked about most of our pay plans are productivity driven. So the more work they produce, the more they earn. And so while we're certainly turning over more than our norm our people are still pretty well paid and we are getting the more placed. And so getting to the lion share of our work, we have very little of it that's fallen through the cracks. So no doubt, it's a tough environment. Our people, I've used the term turnover, a lot of rocks before our people are having to turn over a lot of rocks to find new people. But as we talked about in our leadership meeting, that Jerry referenced week, the best course of action is not to lose them in the first place, right? Keep them engaged, keep them happy and not lose them. And then you're not bearing that cost of replacing them. So we are seeing some inflation pressure on a few of our jobs, and most notably our termite service technicians, those are, are typically hourly and we've had to up our pay rates in some markets, but, but we're still getting people and we're getting to, to the line, share of our work.

I would add as you look, as we look forward to 2022, we're really emphasizing to our managers about how much more time they need to spend on recruiting efforts as it's, if it may be that we have to spend as a hiring manager, you may have to spend two hours of your day, every day, focused on recruiting and hiring and on-boarding efforts. It's really an adjustment of how our managers have to spend our time in this changing environment. And that's a big part of what we look at and that's our -- that's a big part of our solution to how we handle this in the coming year.

Yeah. And I think you guys have done a good job with managing cost and seeing margin expansion through different points in the cycle. But I guess just for 2022 and I understand that you guys don't guide, but just thinking about 2022, do you guys think you can continue the same type of historical performance with margin expansion?

That's certainly our expectation.

Got it. And then just the,

I'm sorry, go ahead. I was just to say that, this is Jerry. I said, that's what -- that's what we strive to do; Always looking to get better.

Okay. And then just the last one from me you guys have obviously heard about the large deal going on in the space whether it gets completed or it doesn't get completed, but if it go through and I guess just maybe how are you guys thinking about the impact, the competition within the space? I don't know if execution on their side creates opportunity for you, does a larger player impact your ability to win new business. Obviously you guys have invested in your Salesforce heavily over the past year, but and that probably sets you up better, but any thoughts around kind of the competitive dynamics and how they shift if the deal goes through?

Well we we've been competing with, both concerns. We think that there's going to be a lot of work to be done on with a merger of that size, which really provides opportunity. As the term oil really has typically generated turnover as far as customers are concerned. And certainly employees are concerned many will enjoy the new relationships, but others will not. So we look at it as it, an opportunity, but that doesn't really take our eye off of our business. Cause in the end that's really what matters.

Yeah. Mr. Rollins at the end of the, we haven't spent a lot of time talking about it, have we? It's -- it is not been high on our radar screen. We focus on what we do and getting the results that we get, and that's where we put our efforts.

And it works.

That's right.

Thank you. Our next question is coming from Ashish Sabra of RBC Markets, please go ahead.

Thanks for taking my question. There was a reference to a rate card increase for the termite business. I was wondering if you could talk about how the pricing is trending and is there an opportunity to flex higher than your traditional 1% to 2% as we go into 2022? Thanks.

The beauty of -- this is Jerry. The beauty of a rate card increases that unlike just a price increase to a recurring customer is that we can adjust that with a lot of flexibility in fairly real time. So if we saw a material increase in cost by X percent, we can, and pretty quickly in our rate card, moving forward, just increase our entire rate card to cover those that increase in expenses or whatever we deem necessary. And we can use the same, not only in materials and supplies, but also if we're experiencing some labor challenges or whatever, we can make those adjustments and usually make those adjustments within a week or so of us doing the analysis and figuring that out. So it's a little bit different than our recurring, like say as control or some sort of contract based revenue, price increase. It's a different model.

That's really helpful color. Maybe if I can just ask a quick follow up on that point itself. Can you just talk about which all businesses have cards? I, you, you obviously mentioned the termite but there what are other businesses where you may also have a similar rate card?

Everything has a right card.

If we acquire a business that doesn't, we put one in pretty quickly. We want to bring structure and kind of logic to our pricing and everything we do,

John that's how, yeah, this is Gary, if I could add over the years, we've gotten fairly sophisticated in our rate cards and our price increases and so forth. It sounds like it's pretty simple, but we look at where the customer is currently, what they're currently charging when they've last had an increase the market, the competition and so forth. So, I think John made a great point. That's probably the first thing that we really address when we do make an acquisition. Typically competitors are, are slow to raise their rates. And we were historically, I mean, we had the same situation, but as we increased rates over the years and added the sophistication and data we've been and good at it. And it's really a margin contributor when we buy a Company

That's very helpful color. And if I could ask my second question around as you talked about the, in some of the inflationary or the employee turnover is is affecting everyone in the industry, obviously Orkin's given your brand a strong brand presence. You've been able to manage it much better versus maybe the long tail and given how fragmented the best control industry is, it potentially might be affecting the private players or the smaller players a lot more than Orkin's. And so my question there was how that help Orkin's, does that help you in terms of your growth potential, but also does it -- has that been a positive tailor from a M&A perspective? Does it open up more opportunities for M&A as some of these private or smaller players are unable to handle these inflationary pressures? Thanks.

This is Jerry. There's no doubt that the Orkin brand and the brand presence, the amount of marketing you see on television, on various social media, how they go to market, has helped their employment brand as well, to make them that Employer of Choice in our industry. And certainly they -- I'm not saying they have an easier, easy time, but they have maybe a little bit of an easier time because they do have such a strong brand and such strong brand recognition from an employment standpoint. There's certainly that, that type of tailwind that they get, there's no doubt, compared to say a, a small Mom-and-Pop Company, something along those lines. We, we definitely have some advantages there.

That's helpful. And then just, if you could talk about the M&A, how is that helpful helping you from an M&A perspective you are of the ability to acquire some of these smaller private companies, which may be struggling with this inflation of the environment?

Yeah. So this, this is John. What I would say to that is that may be certainly a factor in their decision making kind of process to sell or not sell. I think what we saw last year, more than anything was concern over taxes and what was going to happen with that. So, I would think that that say that was a bigger factor.

That's very helpful color. Thank you.

[Operator Instructions] Our next question is coming from Michael Hoffman of Stifel. Please go ahead.

Hi everybody. Thank you for taking the questions this morning. So, mine comes back to growth and will you share and help us understand what composes the underlying organic growth and in a perfect world to be by line of business, but can you give us a sense of how we should think about breaking up the growth and between price, new customer ads, cross selling and where I'm going with that is you, the underlying industry growth, every on all the rate the trade groups, what have you say it's 5% roughly. So you've been growing substantially organically, substantially greater than that. Now for several years, you're not little as a Company. I'm trying to understand where's that sustainability of that, is it at the high-end a 100% or does it start easing back towards more like 50% and why?

So, Michael, this is John. Let me kind of take a stab at what you're asking and then we'll go from there. So I'll start with the termite business. And we had kind of been in a long slow slide in terms of our termite customer base had been going down for many years. Part of that was by design. As we experienced some of the termite claims issues, that I mentioned that the -- during my piece, we moved the mix of, of business. So, we were up over 20% when that started. And I think we're now at around 17 for termite, but our termite customer base has started increasing. The last two years, we're adding to our customer base. And so that's, driving a big piece of it there as new customers, as it is in all of our segments. We're adding we added I forget the number exactly from 2020, but some, 60,000 new customers for our residential pest control group just in, or, and alone. And, the same has happening for commercial. So the lion share is, is of new with new customer additions. Keeping them just the [indiscernible] longer, always helps as well. And then we're still kind of historically at that 1% or so that we can point to and say, it's price. Anything to add Jerry, I don't…

I would say if you're looking at the, the difference, what the difference is, it's really when you're improved your customer retention rate, and you are adding customers at a higher rates than you had historically, then you get the kind of growth that we get. Those are the main drivers.

Okay, fair enough. And, I get the investment in people and training and what you've done to make this a better run business. How long can you sustain that wide of a gap to the underlying market growth?

We're going to keep trying, we're going to keep working on it.

Hey, Michael, we, our plan for 2022 is built on doing better than what we did in '21. So, we don't, we don't know, I guess it's probably the easy answer, but it's certainly our intention to keep chipping at it.

Okay. And then Gary, you did make an in, I think it was Gary made an inference that you thought taxes drove M&A, so taxes have been put to bed. I think it would appear that we've pretty much got gridlocks. So do you expect the pace to slow or does the challenges around labor and inflation and what have you create an incremental catalyst and therefore the M&A outlook remains as promising is it was in '21?

Yeah, Michael. So that was me, that John didn’t mentioned that. And you're right. I mean, as the year wore on it got less and less maybe certain that that tax law would change. Hopefully, hopefully we're at gridlock with it. I and that, and on that subject but, but it may well happen that, that some of the other challenges, whether it's just the day to day running the business and the costs, different things, that's inflation, that's going on and buying products or whatever. They'll all add up to a continued acquisition market. We think that's kind of the case.

And we started the year out with acquisition potential deals in the hopper. So that's a good sign as well.

Thank you. At this time, I would like to turn the floor back over to management for closing comments.

Well, thank you. We appreciate your support and interest in Rollins. Before we close, I'd like to share that Dr. Tom Lawley has decided to retire from service on our board at the end of his current firm, on behalf of our board and our entire team and myself, we'd like to recognize and thank Dr. Lawley for everything that he's done for our organization over the last 16 years. I don't believe he's ever missed a meeting. And his contribution's mirror is distinction distinguished service with Emory. Tom, you will be missed. Rollins is excited about our opportunities for growth in 2022. And we look forward to sharing our progress during our first quarter conference call in April. Thank you again,

Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.