Q4 2023 Rollins Inc Earnings Call

Operator: Good day, ladies and gentlemen. Thank you for standing.

Good day, ladies and gentlemen, thank you for standing by welcome to Rollins, Inc. Fourth quarter and full year 2023 earnings call. During today's presentation. All parties will be in a listen only mode. Following the presentation. The conference will be opened for questions. If you have a question. Please press star followed by the one on your Touchtone phone if you'd like to.

Operator: Welcome to Rollins Inc.'s fourth quarter and full year 2023 earnings call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open to questions. If you have a question, please press star followed by the one on your touchtone phone. If you'd like to withdraw your question, please press star followed by the two. And if you are using speaker equipment, please lift the handset before making your selection.

Withdraw your question. Please press star followed by the two and if you are using speaker equipment. Please lift the handset before making your selection. This conference is being recorded today Thursday February 15th 2024, I'd now like to hand, the call over to Lindsay Burton Vice President of Investor Relations. Please go ahead.

Operator: This conference is being recorded today, Thursday, February 15th, 2020. I'd now like to hand the call over to Lindsey Burton, Vice President of Investor Relations. Please go ahead.

Lindsey Burton: Thank you and good morning, everyone. In addition to the earnings release that we issued yesterday, the company has also prepared a supporting slide presentation. The earnings release and presentation are available on our website at www.rollins.com. We have included certain non-GAAP financial measures as part of our discussion this morning. The non-GAAP reconciliations are available in the appendix of today's presentation, as well as in our earnings release.

Thank you and good morning, everyone. And addition to the earnings release that we issued yesterday. The company has also prepared a supporting slide presentation.

Lindsay Burton: The earnings release and presentation are available on our website at Www Dot Rollins dotcom.

Lindsay Burton: We have included certain non-GAAP financial measures as part of our discussion. This morning. The non-GAAP reconciliations are available in the appendix of today's presentation as well as in our earnings release.

Lindsey Burton: The company's earnings release discusses the 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 statement we make today. Please refer to yesterday's press release and the company's SEC filings, including the risk factor section of our Form 10-K for the year ended December 31, 2023, which will be filed later today. On the line with me today and speaking are Jerry Galof, President and Chief Executive Officer, and Ken Krause, Executive Vice President, Chief Financial Officer, and Treasurer. Management will make some opening remarks, and then we'll open the line for your questions. Jerry, would you like to begin? Thank you, Lindsay. Good morning, everyone.

Lindsay Burton: The company's earnings release discusses our business outlook and contains certain forward looking statements.

Lindsay Burton: These particular forward looking statements and all other statements made on this call. Excluding historical facts are subject to a number of risks and uncertainties and actual results may differ materially from any statement, we make today.

Lindsay Burton: Please refer to yesterday's press release, and the company's SEC filings, including the risk factors section of our Form 10-K for the year ended December 31st 2023, which will be filed later today.

Lindsay Burton: On the line with me today I'm seeking are Jerry <unk>, President and Chief Executive Officer, and Ken Krause Executive Vice President Chief Financial Officer, and Treasurer management will make some opening remarks and then we'll open the line for your questions. Jerry would you like to begin thank you Lindsay and good morning, everyone.

Jerry Galof: Fiscal 2023 was an outstanding year for Rollins as we achieved the milestone of $3.1 billion in revenue. Demand from our customers remains strong throughout the year across all major service offerings. While full-year revenue increased 14% versus last year, we grew earnings per share by over 18% and adjusted earnings per share by 20%, reflecting consistent execution of our operating strategies and a commitment to continuous improvement in our business. We finish the year with a strong fourth quarter and observe sustained strength in the pest control markets we serve. We also continue to drive share gains in our markets by leveraging a multi-brand, multi-channel approach at scale to differentiate ourselves competitively. Digital marketing, cross-selling, service bundling, and door-to-door sales methods help us reach new customers and enhance engagement with existing customers to support organic growth.

Jerry: Fiscal 2023 was an outstanding year for Rollins as we achieved the milestone of $3 1 billion in revenue.

Jerry: Demand from our customers remained strong throughout the year across all major service offerings.

Jerry: While full year revenue increased 14% versus last year, we grew earnings per share by over 18% and adjusted earnings per share by 20%.

Jerry: Collecting consistent execution of our operating strategies and a commitment to continuous improvement in our business.

Jerry: We finished the year with a strong fourth quarter and observed sustained strength in the pest control markets we serve.

Jerry: We also continue to drive share gains in our markets by leveraging a multi brand multichannel approach at scale to differentiate ourselves competitively.

Jerry: Digital marketing cross selling service bundling and door to door sales methods help us reach new customers.

Jerry: And enhance engagement with existing customers to support organic growth.

Jerry Galof: We have also strategically allocated resources to the commercial side of our business to capitalize on opportunities within Key Vertical. Most notably, we have grown our sales force and invested in training and tools to enable their success. Our service quality is high, and our offerings are customized, which helps new sales professionals gain confidence and become successful quickly. Additionally, we're leveraging the scale of our Orkin brand across North America to effectively serve commercial customers coast to coast in both the US and Canada.

Jerry: We have also strategically allocated resources to the commercial side of our business to capitalize on opportunities within key verticals.

Jerry: Most notably we have grown our sales force and invested in training and tools to enable their success.

Jerry: Our service quality is high and our offerings are customized which helps new sales professionals gain confidence and become successfully successful quickly.

Jerry: Additionally, we are leveraging the scale of our Orkin brand across North America to effectively serve commercial customers coast to coast in both the U S and Canada.

Jerry Galof: While we're still early with respect to our efforts in this area, we see good results, as demonstrated by approximately 11% commercial revenue growth for the year. Investments to drive organic growth are complemented by strategic M&A. And in 2023, we welcomed 24 new businesses into our company through acquisition. This included the addition of Fox Pest Control, which was the second largest acquisition in our company's history. Our synergistic approach to integration has gone well, with the FOX team exceeding the financial targets we outlined last April. Additionally, during the fourth quarter, we divested certain non-core businesses, most notably our lawn care business, which includes insect fertilization and weed control for turf grass.

Jerry: While we're still early with respect to our efforts in this area. We see good results as demonstrated by approximately 11% commercial revenue growth for the year.

Jerry: Investments to drive organic growth, our complimented by strategic M&A.

And in 2023 we welcomed 24, new businesses into our company through acquisition.

Jerry: This includes the addition of Fox Pest control, which was the second largest acquisition in our company's history.

Jerry: Our synergistic approach to integration has gone well with the Fox team exceeding the financial targets, we outlined last April.

Jerry: Additionally, during the fourth quarter, we divested certain non core businesses, most notably our lawn care business, which includes insect fertilization and weed control for turf grass, we recognized a pretax gain on sale of that transaction of approximately $15 million.

Jerry Galof: We recognize a pre-tax gain on the sale of that transaction of approximately $15 million. The decision to divest this asset aligns with our strategy to focus on profitable growth in core pest control operations. Operationally, we remain committed to developing exceptional talent and investing in our teams. The hiring environment improved in 2023, as we put a lot of energy into onboarding the right people in both support functions, as well as the customer-facing side of our business. Effective sales and service staffing levels helped us capitalize on continued demand and deliver solid results for the year. 2023 was also an important year with respect to continuous improvement, and safety was a key area of focus for us. During the year, we implemented an app that monitors driving behaviors once our vehicle is in motion. The app detects unsafe driving maneuvers associated with acceleration, braking, and speed, then converts data collected into a driver safety score.

Jerry: The decision to divest this asset aligns with our strategy to focus on profitable growth and core pest control operations.

Operationally, we remain committed to developing exceptional talent and investing in our teams the hiring environment improved in 2023, as we put a lot of energy into Onboarding, the right people and both support functions as well as the customer facing side of our business.

Jerry: <unk> sales and service staffing levels help us capitalize on continued demand and deliver solid results for the year.

Jerry: 2023 was also an important year with respect to continuous improvement in safety was a key area of focus for us.

Jerry: During the year, we implemented and that an app that monitors driving behaviors. Once our vehicle is in motion. The app the checks unsafe unsafe driving manures maneuvers associated with acceleration braking and speed then converts data collected into a driver safety score I'm pleased to report that by year end our average drivers.

Jerry Galof: I'm pleased to report that by year-end, our average driver safety score for drivers that we monitor increased over 30% from the beginning of the year. But we aren't stopping there. Improving a safety culture isn't something that is done overnight, but we are proud of the progress we have made and have set ambitious goals for ourselves to encourage safe behaviors throughout our organization. We believe these efforts will improve our ability to serve customers, help mitigate potentially negative financial impacts on our business, and, most importantly, ensure our people return home safe every day. Our continuous improvement efforts also center on initiatives to modernize our back office and support function.

Jerry: Safety score for drivers that we monitor increased over 30% from the beginning of the year.

Jerry: But we aren't stopping there.

Jerry: Improving our safety culture isn't something that is done overnight.

Jerry: But we are proud of the progress we have made and have set ambitious goals for ourselves to encourage safe behaviors throughout our organization.

Jerry: We believe these efforts will improve our ability to serve customers helped mitigate potentially negative financial impacts on our business and most importantly, ensure our people return home safe every day.

Jerry: Our continuous improvement efforts also center on initiatives to modernize our back office and support functions. This is a work in progress, but we took some important steps to upgrade talent and systems. During the year. These efforts are aimed at further enabling our growth priorities and increasing productivity as we work to become a better more effective provider.

Jerry Galof: This is a work in progress, but we took some important steps to upgrade talent and systems during the year. These efforts are aimed at further enabling our growth priorities and increasing productivity as we work to become a better, more effective provider of shared services for our brand. In closing, our performance in 2023 demonstrates the strength of our business model and the engagement level of our team. Our family of pest control brands is driving profitable growth, and we're focused on continuous improvement throughout the business.

Jerry: Of shared services for our brands.

Jerry: In closing our performance in 2023 demonstrates the strength of our business model and the engagement level of our team.

Jerry: Our family of Pest control brands are driving profitable growth and we're focused on continuous improvement throughout the business, we remain committed to providing our customers with the best customer experience and investing meaningfully in our team to drive growth both organically as well as through disciplined acquisitions.

Jerry Galof: We remain committed to providing our customers with the best customer experience and investing meaningfully in our team to drive growth, both organically as well as through disciplined acquisition. We're pleased with where our business stands today and the momentum we carry into 2024. And I want to thank each of our 19,000 plus associates around the world for their efforts and contribution to our success in 2023. I'll now turn the call over to Ken. Thank you, Jerry. And good morning, everyone.

Jerry: We're pleased with where our business stands today and the momentum we carry into 2024 and I want to thank each of our 19000 plus associates around the world for their efforts and contribution to our success in 2023.

Jerry: I'll now turn the call over to Ken.

Kenneth D. Krause: Thank you Jerry and good morning, everyone. Our results for the quarter and the year reflect continued strong execution by the team.

Kenneth D. Krause: Our results for the quarter and the year reflect continued strong execution by the. Let me begin with a few highlights for 2023. First, we delivered robust revenue growth of 14% for the year with double-digit growth across each of our service offerings. It was encouraging to see organic growth of 8% for the year, while acquisitions continue to be a meaningful part of our growth profile, accounting for approximately 6% of our total revenue growth. Second, we made good progress on profitability improvement in 2023. Four-year gross margins were healthy as we were positive on the price-cost equation and saw improvement across several key cost categories. Adjusted Operating Margin finished the year at 19.7%, improving 140 basis points driven by leverage across the P&L.

Kenneth D. Krause: Let me begin with a few highlights for 2023 first we delivered robust revenue growth of 14% for the year with double digit growth across each of our service offerings.

Kenneth D. Krause: It was encouraging to see organic growth of 8% for the year, while acquisitions continued to be a meaningful part of our growth profile accounting for approximately 6% of our total revenue growth.

Kenneth D. Krause: We made good progress on profitability improvement in 2023 full year gross margins were healthy as we were positive on the price cost equation and saw improvement across several key cost categories. Adjusted operating margin finished the year at 19, 7% improving 140 basis.

Kenneth D. Krause: Points driven by leverage across the P&L. This translated into GAAP EPS of <unk> 89 per share up over 18% for the year and adjusted earnings per share of 90 cents.

Kenneth D. Krause: This translated into GAAP EPS of $0.89 per share, up over 18% for the year, and Adjusted Earnings Per Share of $0.90, up 20% for the year. On an as-reported basis, we generated incremental margins of almost 30% per year, and on an adjusted basis, incremental margins were almost 28%. And last but not least, we delivered operating cash flow of $528 million and free cash flow of $495 million, both up over 13% versus last year. Our strong cash flow performance enabled us to execute a balanced capital allocation strategy, deploying nearly $1 billion of capital in 2023, with a focus on investing for growth while returning cash to shareholders through a growing dividend and share repurchase. Turning to our fourth quarter performance, the team delivered a strong quarter Currencies had a negligible impact on quarterly revenue growth.

Kenneth D. Krause: Up 20% for the year.

Kenneth D. Krause: On an as reported basis, we generated incremental margins of almost 30% for the year and we're on it and on an adjusted basis incremental margins were almost 28% for the year.

Kenneth D. Krause: And last but not least we delivered operating cash flow of $528 million and free cash flow of $495 million, both up over 13% versus last year, our strong cash flow performance enabled us to execute a balanced capital allocation strategy deploying nearly $1 billion of cash.

Kenneth D. Krause: <unk> in 2023 with a focus on investing for growth, while returning cash to shareholders through a growing dividend and share repurchases.

Kenneth D. Krause: Turning to our fourth quarter performance the team delivered a strong quarter with revenue up 14% to $754 million currencies had a negligible impact on quarterly revenue growth. We saw good balance of growth between organic and inorganic activity as organic revenue was up over <unk>.

Kenneth D. Krause: We saw a good balance of growth between organic and inorganic activities as organic revenue was up over 7%, with acquisitions accounting for the other 7% of growth. Jerry mentioned that we divested certain non-core businesses in the quarter, most notably our lawn care business. The purchase price for the transaction was $18 million.

Kenneth D. Krause: 7% with acquisitions accounting for the other 7% of growth.

Kenneth D. Krause: Gary mentioned that we divested certain non core businesses in the quarter, most notably our long lawn care business. The purchase price for the transaction was $18 million, we received $15 million in proceeds during 2023 and recorded a pretax gain of $15 million on the cell.

Kenneth D. Krause: We received $15 million in proceeds during 2023 and recorded a pre-tax gain of $15 million on the sale. However, this business doesn't provide the growth or profitability profile of our core pest control business. Going forward, we don't anticipate any significant divestitures associated with portfolio rationalization in the foreseeable future. In the fourth quarter, residential revenues increased approximately 18 percent, commercial pest control rose nearly 11 percent, and termite and ancillary revenues were up over 13 percent. Organic growth was healthy across the portfolio, with growth of nearly 5 percent in residential, approximately 9 percent in commercial, and over 11 percent in termite and ancillary. We normally see a step down in revenue as well as growth in Q4, along with Q1 due to seasonality. Comparing Q4 this year to last year, we saw an acceleration in organic growth across all service lines.

Kenneth D. Krause: This business doesn't provide the growth and profitability profile of our core pest control business going forward, we don't anticipate any significant divestitures associated with portfolio rationalization in the foreseeable future.

Kenneth D. Krause: In the fourth quarter residential revenues increased approximately 18% commercial pest control rose nearly 11% and termite and ancillary was up over 13% organic.

Kenneth D. Krause: Organic growth was healthy across the portfolio with growth of nearly 5% in residential approximately 9% and commercial and over 11% and termite and ancillary we normally see a step down in revenue as well as growth in Q4, along with Q1 due to seasonality comparing.

Kenneth D. Krause: Q4, this year to last year, we saw an acceleration in organic growth across all service lines.

Kenneth D. Krause: Gross margin improves 40 basis points to 50.9% in the quarter. While Fox accreted gross margins for the quarter by about 30 basis points, we saw 10 basis points of improvement in organic margins as leverage from people costs and fleet offset pressure for materials and supplies and higher insurance-related costs. Gross profit also went down in Q4 and Q1, primarily due to lower volume levels associated with the seasonality of our business, as I previously discussed.

Kenneth D. Krause: Gross margin improved 40 basis points to 59% in the quarter, while stocks was accretive to gross margins for the quarter by about 30 basis points. We saw 10 basis points of improvement in organic margin as leveraged from people costs and fleet offset pressure from materials and supplies and higher insurance related costs gross.

Kenneth D. Krause: Profit also steps down in Q4, and Q1, primarily due to lower volume levels associated with the seasonality of our business I previously discussed.

Kenneth D. Krause: With that said, I'm pleased with the fourth quarter performance as we saw improvement year over year and recorded our highest Q4 gross margin level in the last several decades. Quarterly, SG&A costs as a percentage of revenue increased by ten basis points versus last year. However, excluding the earn-out adjustment for the FOX acquisition, SG&A costs as a percentage of revenue decreased by ten basis points in the quarter.

Kenneth D. Krause: With that said I'm pleased with the fourth quarter performance as we saw improvement year over year and recorded our highest Q4 gross margin level in the last several decades.

Kenneth D. Krause: Quarterly SG&A cost as a percentage of revenue increased by 10 basis points versus last year, excluding the earn out adjustment for the Fox acquisition SG&A cost as a percentage of revenue decreased by 10 basis points in the quarter, we saw nice leverage on people costs, which offset increased advertising and selling expense associated.

Kenneth D. Krause: We saw nice leverage on people costs, which offset increased advertising and selling expenses associated with the growth initiatives that Jerry discussed previously. Fourth quarter GAAP operating income was $139 million, up 16% year over year. Adjusted operating income was $144 million, up over 20% versus the prior year on 14% total revenue growth. Quarterly EBITDA was $181 million, up 24% versus last year, and EBITDA margin was a healthy 24%, up 190 basis points versus last year. Fourth quarter adjusted EBITDA was $167 million, up 14%, and representing a 22.1% margin, flat versus last year. While we saw nice leverage with respect to both gross profit and SG&A, adjusted EBITDA margins were negatively impacted by about 40 basis points in the quarter due to lower non-operating gains on property and vehicle sales that were included in other income when compared to the fourth quarter of last year. This impacted incremental EBITDA margins in the quarter as well. The effective tax rate was 25.8% for both the quarter and the full year period.

Kenneth D. Krause: With the growth initiatives that Jerry discussed previously.

Kenneth D. Krause: Fourth quarter GAAP operating income was $139 million up 16% year over year.

Kenneth D. Krause: Adjusted operating income was $144 million up over 20% versus the prior year on 14% total revenue growth.

Kenneth D. Krause: Quarterly EBITDA was $181 million up 24% versus last year, and EBITDA margin was a healthy 24% up 190 basis points versus last year.

Kenneth D. Krause: Fourth quarter, adjusted EBITDA was $167 million up 14% and representing a 22, 1% margin flat versus last year, while we saw nice leverage with respect to both gross profit and SG&A adjusted EBITDA margins were negatively impacted by about 40 basis points in the quarter.

Kenneth D. Krause: Due to lower non operational gains on property in vehicle sales that were included in other income when compared to the fourth quarter of last year.

Kenneth D. Krause: This impacted incremental EBIT margins in the quarter as well the.

Kenneth D. Krause: The effective tax rate was 25, 8% for both the quarter and the full year period and for 2024, we're expecting an effective rate tax rate of approximately 26%.

Kenneth D. Krause: And for 2024, we're expecting an effective tax rate of approximately 26%. Quarterly gap net income was approximately $109 million or $0.22 per share, an increase of nearly 30% from $0.17 per share in the same period a year ago. For the fourth quarter, we had non-GAAP pre-tax adjustments associated with the FOX acquisition-related items that I mentioned earlier, totaling approximately $5 million of pre-tax expense in the quarter. We also recognized a $15 million pre-tax benefit associated with a gain on the sale of our non-core business. Taking into account these adjustments, adjusted net income for the quarter was $101 million, or $0.21 per share, increasing over 23% from the same period a year ago. Turning to cash flow and the balance sheet. Operating cash flow increased 24% in the quarter to $153 million.

Kenneth D. Krause: Quarterly GAAP net income was approximately 109 million or <unk> 22 per share an increase of nearly 30% from 17 per share in the same period a year ago.

Kenneth D. Krause: For the fourth quarter, we had non-GAAP pre tax adjustments associated with the Fox acquisition related items that I mentioned earlier totaling approximately $5 million of pre tax expense in the quarter. We also recognized a $15 million pre tax benefit associated with a gain on the sale of our non core business.

Kenneth D. Krause: Taking into account these adjustments adjusted net income for the quarter was $101 million or 21 per share increasing over 23% from the same period a year ago.

Kenneth D. Krause: Turning to cash flow and the balance sheet operating cash flow increased 24% in the quarter to $153 million we.

Kenneth D. Krause: We generated $142 million of free cash flow on $109 million of gap earnings, a 22% increase versus last year. Cash flow conversion, the percent of income that was converted into operating cash flow, was well above 100% for the quarter. Debt remains low, and debt to EBITDA is well below one times on a gross and net level. We continue to fund our dividend in the quarter. Going back to the fourth quarter of 2022, we have increased our dividends by 45%, and we remain committed to funding a growing dividend as cash flow improves. As we look to 2024, we remain encouraged by the strength of our markets and the execution by our team. We are focused on delivering another year of robust growth and healthy incremental market, further complemented by a strategic and disciplined approach to M&A. From a pricing perspective, we remain focused on effectively pricing the value of our services to remain positive on the price-cost equation, and we have begun to raise prices for 2024 in the first quarter at a rate that is consistent with 2023 levels.

Kenneth D. Krause: We generated $142 million of free cash flow on $109 million of GAAP earnings of 22% increase versus last year.

Kenneth D. Krause: Cash flow conversion as a percent of income that was converted into operating cash flow was well above 100% for the quarter.

Kenneth D. Krause: Debt remains low and debt to EBITDA is well below one times on a gross and net level.

Kenneth D. Krause: We continued to fund our dividend in the quarter going back to the fourth quarter of 2022, we have increased our dividend, 45% and we remain committed to funding a growing dividend as cash flow improves.

Kenneth D. Krause: As we look to 2024, we remain encouraged by the strength of our markets and the execution by our team. We are focused on delivering another year of robust growth and healthy incremental margins further complemented by a strategic and disciplined approach to M&A from.

Kenneth D. Krause: From a pricing perspective, we remain focused on effectively pricing the value of our services to remain positive on the price cost equation and we have begun to raise prices for 2024 in the first quarter at a rate that is consistent with 2023 levels. We also continue to be active in managing our rate cards.

Kenneth D. Krause: We also continue to be active in managing our rate card. Our focus remains on driving consistent growth, delivering healthy incremental margins, and compounding cash flow that will enable a balanced capital allocation strategy focused on investing in growth initiatives in our core markets. Before I turn the call back to Jerry, I wanted to announce that we will be holding an investor and analyst conference on the morning of May 17th in New York City, where we will share more about our strategic priorities and how we are positioning ourselves for continued success in the future. We're looking forward to sharing more details in the coming weeks and months. But for now, please hold the date.

Kenneth D. Krause: Our focus remains on driving consistent growth delivering healthy incremental margins and compounding cash flow that will enable a balanced capital allocation strategy focused on investing in growth initiatives in our core market.

Speaker Change: Before I turn the call back to Jerry I wanted to announce that we will be holding an investor and analyst to analyst conference on the morning of May 17 in New York City, where we will share more about our strategic priorities and how we are positioning ourselves for continued success in the future. We're looking forward to sharing more details on the come.

Speaker Change: Weeks and months, but for now please hold the date.

Jerry Galof: With that, I'll turn the call back over to Jerry. Thank you, Ken. We're happy to take any questions at this time. Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone. A confirmation tone will indicate your line is in question. Give me a press start, too, if you'd like to remove your question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

Gerry: With that I'll turn the call back over to Gerry Thank.

Gary W. Rollins: Thank you Ken we're happy to take any questions at this time.

Gary W. Rollins: Thank you we will now be conducting a question and answer session.

Speaker Change: Ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, and they'd be necessary to pick up your handset before question Mr. Keith.

Operator: In the interest of time, we ask the participants to limit themselves to one question and one poll. One moment, please, while we poll for questions. Our first question is from Tim Mulrooney with William Blair. Please proceed with your question. Jerry, Ken, good morning.

Keith: In the interest of time, we ask that participants limit themselves to one question and one follow up.

Keith: One moment, please while we poll for questions.

Keith: Our first question is from Tim Mulrooney with William Blair. Please proceed with your question.

Tim Mulrooney: Jerry Ken Good morning.

Tim Mulrooney: Good morning.

Tim Mulrooney: A couple of questions here.

Tim Mulrooney: Organic growth, Ken as you highlighted it decelerated from 7% to 5%.

Tim Mulrooney: Morning. Good morning. A couple questions here on the resi-organic growth highlighted that it decelerated from 7% to 5% from the third to the fourth quarter. But you're right, as I look at results historically, I do see a slight deceleration seasonally from the third quarter to the fourth quarter typically. So could you just talk about what those seasonal factors are, like one-time revenue or whatever else? And if that's the case, could you also talk about, you know, how your recurring, your residential recurring revenue stream looked like in the fourth quarter? Certainly, Tim, I'll start and then turn it over to Jerry for additional comments, Gary, as well.

Tim Mulrooney: Third to fourth quarter, but you're right as I look at results historically I do see.

Tim Mulrooney: Slight deceleration seasonally from the third quarter to the fourth quarter typically so could you just talk about what those seasonal factors are like one time revenue or whatever else and if that's the case could you also talk about.

Tim Mulrooney: How you're.

Tim Mulrooney: Current year residential recurring revenue stream looked like in the in the fourth quarter.

Speaker Change: Certainly Tim I'll start and then turn it over to Jerry for additional comments area as well, but when we look at the business.

Kenneth D. Krause: But when we look at the business, the business, as you so well indicate, has a high degree of recurring revenue. And so, as a result, there is a consistent base to the revenue that we enjoy and we benefit from. The one thing that does have an impact on our business from time to time is what we call a one-time type of service.

Speaker Change: The business as you so well so well indicate has a high degree of recurring revenue and so as a result, there is a consistent base to the revenue that we that we enjoy and we benefit from the one thing that does have an impact on our business from time to time as what we call one time type of service.

Speaker Change: And when we look at the quarter and the fourth quarter, we did see a DSL and the deceleration in the rate of growth in those areas of our business, that's probably the largest area.

Kenneth D. Krause: And when we look at the quarter, in the fourth quarter, we did see a deceleration and a deceleration in the rate of growth in those areas of our business. That's probably the largest area of impact on revenue growth in the quarter. We were really encouraged, quite frankly, by the level of growth that we continue to see from the recurring business. It was a healthy level of growth for us, despite being stacked up against last October, you may recall, was more beneficial because hurricane season was pretty tough in September. And so some of that business pushed into the fourth quarter of last year. There are always puts and takes, of course, in this business with weather.

Speaker Change: Impact on the revenue growth in the quarter.

Speaker Change: We were really encouraged quite frankly with the level of growth that we continue to see from the recurring business. It was a healthy level of growth for us despite being stacked up against last October you may recall was.

Speaker Change: It was more beneficial because hurricane season was pretty tough in September and so some of that business pushed into the fourth quarter of last year. There is always puts and takes of course in this business with weather.

Jerry Galof: But we continue to be pretty encouraged with respect to our growth, especially in the residential sector. And I would add, Ken, you know, if I think about residential pest control, your every other month and your quarterly service frequency offerings on your recurring base, that's your bread and butter. That is, that is the healthiest indicator of what's going on in our business as we are growing our business, increasing our volumes, and are we ending the year from a positive standpoint in customers, in net customers, net new customers to start the year? And we certainly did that. And that quarterly and EOM pest control is your bread and butter. And the one time is that gravy on top.

Speaker Change: But we continue to be pretty encouraged with respect to our our growth, especially in the resi sector.

Speaker Change: And I would add Ken.

Kenneth D. Krause: Think about.

Kenneth D. Krause: Residential pest control. Your every other month in your quarterly service frequency offerings of your recurring base, that's your bread and butter that is.

Kenneth D. Krause: That is the healthiest indicator of what's going on in our business as we are growing our business increasing our volumes in every ending the year.

Kenneth D. Krause: From a positive standpoint and customer.

Kenneth D. Krause: And net customers net new customers to start the year and we certainly did that and.

Kenneth D. Krause: That that quarterly in AUM has control is your bread and butter and the one time is that gravy on top and sometimes you don't always get that gravy and that's what that's what's really caused the slowdown in addition to the divestiture of the lawn care that was about another $1 million on the on the residential side that also.

Jerry Galof: And sometimes you don't always get that gravy. And that's what, that's really caused the slowdown. In addition to the divestiture of the lawn care business, that was about another million dollars on the residential side that also impacted that number in the quarter as well.

Speaker Change: Impacted that number in the quarter as well Tim.

Tim Mulrooney: Got it okay. So there was a little less crazy in the fourth quarter.

Tim Mulrooney: Okay, so there was a little less gravy in the fourth quarter, which implies that your recurring revenue in that business is above your stated organic growth in the fourth quarter. Am I correct? Absolutely. Our recurring quarterly every other month service definitely outpaced our, our, organic overall number. Got it.

Tim Mulrooney: Implies that your recurring revenue in that business is above your stated organic growth in the fourth quarter correct.

Tim Mulrooney: Absolutely our recurring or recurring.

Tim Mulrooney: Quarterly every other month service definitely outpaced our are organic.

Tim Mulrooney: Organic overall number.

Kenneth D. Krause: The other one for me, and thank you for that, is on digital leads. You mentioned last quarter, or the previous quarter, that digital marketing leads were, I think, I think the language is flat to down slightly. Correct me if I'm wrong about that. But I was just curious.

Speaker Change: Got it.

Speaker Change: The other one for me and thank you for that.

Speaker Change: Digital lead you mentioned last quarter last quarter that digital marketing thing it's worth.

Speaker Change: I think I think the language is flat to down slightly correct me, if I'm wrong about that.

Speaker Change: I was just curious.

Kenneth D. Krause: You know, if that trend carried through the fourth quarter or if it moved up or down at all. So, as we look at the digital queries we saw in the fourth quarter, we saw modest increases in the quarter versus the prior year. So, it did result in some healthy increases in leads, starts, and sales, both from a digital perspective as well as just overall in our business. We did see a lift there. It was certainly better than flat.

Speaker Change: Turning to the fourth quarter.

Speaker Change: Or if it moves up or down at all.

Speaker Change: Yes so.

Speaker Change: We look at the digital queries, we saw in the fourth quarter. The digital queries, we saw modest increases in the quarter versus versus the prior year.

Speaker Change: But we did so it did result in some healthy increases in lead starts and sales.

Speaker Change: Both from a digital as well as just overall in our business, we did see a lift there.

Speaker Change: It was certainly better than flat.

Tim Mulrooney: It wasn't stellar performance, but it was an improvement year over year. So, we believe we continue to benefit from a diversified approach where we're not overly reliant on all the digital space, and that's a key part of the formula for our organic growth. Yeah, it's interesting, Jerry, just adding on to that. When we look at the business in the fourth quarter, as well as throughout the year, what really proves the point that we're continuing to see good cross-sell, and, you know, we always talk about additional ways we access the customer. And one area is cross-selling, and the termite and ancillary business is really representative of that. We continue to see really robust levels of demand on the ancillary side of our business, which is driven a lot by that cross-sell activity that the team continues to execute. Got it. Thank you, Jerry and Ken. And, you know, when my kids turn 16, I might try to hitch you up for one of those driver monitoring systems. It's a good idea. You should probably get on it yourself, too.

Speaker Change: It wasn't stellar performance, but it was an improvement year over year. So we believe we continue to benefit from a diversified approach that we're not overly reliant on all the digital space and Thats a key part of the formula in our organic growth, yes, it's interesting Jerry just adding onto that when we look at the business.

Speaker Change: In the fourth quarter and as well as throughout the year.

Jerry: It really proves the point that we're continuing to see good good cross sell and we always talk about additional ways. We access the customer in one area is the cross sell and termite and ancillary business is really representative of that we continue to see really robust levels of demand on the ancillary side of our business, which has driven a lot by.

Jerry: That cross sell activity that the team continues to execute upon.

Jerry: Okay.

Speaker Change: Got it thank you Jerry and 10.

Speaker Change: My Kids turned 16 I'd like to try to hit you up to one of those driver monitoring systems.

Speaker Change: It's a good idea you should probably get on it yourself too.

Tim Mulrooney: Thank you. Thank you. Our next question is from Jason Haas with Bank of America. Please proceed with your question. Hey, good morning.

Speaker Change: Yes.

Speaker Change: Thank you thank.

Speaker Change: Thank you.

Speaker Change: Our next question is from Jason Haas with Bank of America. Please proceed with your question.

Jason Haas: Hey, good morning, and thanks for taking my questions. I'm curious can you remind us what what level of price increase you would put in last year and I know, it's early in the year, but I'm curious if you're seeing any more sensitivity.

Jason Haas: And thanks for taking my questions. I'm curious if you could remind us what level of price increase you put in last year. And I know it's early in the year, but I'm curious if you're seeing any more sensitivity from customers to the price increase you're putting in this year versus last. So, as we had talked about previously, Jason, we passed along a three to four percent price increase in the prior year. We followed that on again this year with a similar price increase here in the first quarter ahead of our heavier market season, which starts here later in the first quarter.

Jason Haas: So the price increases you're putting in this year versus last.

Speaker Change: So as we had talked about previously Jason we had passed along the 3% to 4% price increase in the prior year, we followed that on again this year with a similar price increase here in the first quarter ahead of our heavier pest.

Speaker Change: Market season, which starts here later in the first quarter.

Kenneth D. Krause: So we're pretty, you know, in terms of what we're seeing on the customer side; we monitor that, we assess that, we look at churn, we look at cancellations, we look at rollbacks, we look at a number of different metrics, and we feel like the level that we're passing along is at a very healthy level and is representative of, you know, the value of our service.

Speaker Change: We're pretty in terms of what we're seeing on the customer side.

Speaker Change: We monitor that we assessed that we look at churn we'd look at cancellations. We look at rollbacks, we look at a number of different metrics and we feel like the level that we're passing along at a very healthy level and is representative of the value of our services.

Speaker Change: Okay.

Jason Haas: That's great to hear. And then, as a follow-up question, I'm curious if you could just talk about competitive dynamics in the industry. I'm curious how your growth rates in 4Q compared to the industry, if you feel like you're still gaining share, and just, you know, if you see any opportunities for further share gains in the year ahead.

Got it that's great to hear.

Speaker Change: And then.

Speaker Change: Good question.

Speaker Change: I'm curious if you could just talk about competitive dynamics in the industry I'm curious how your growth rates in <unk> compared to the industry. If you feel like you're still gaining share.

Speaker Change: You have you seen any opportunities for further share gains in the year ahead.

Kenneth D. Krause: We, I mean, we continue to have a highly fragmented market in this industry that remains very competitive. I wouldn't necessarily characterize any significant shifts or changes in that, in that competitiveness. It's always been that way.

Speaker Change: We continue to have a highly fragmented market and this in this industry that remains very competitive.

Speaker Change: Wouldn't necessarily characterize any significant shifts or changes in that and that competitiveness is always been that way and while there are some ebbs and flows in here here and there.

Kenneth D. Krause: And while there are some ebbs and flows here, here, and there, we just keep doing what we do, focusing on our business, and trying to win at what we do. So when we look at our growth, Jason, in the quarter, organic growth, which was north of 7%, and we think about how that fares relative to how we've discussed the business and also how we've performed, we're pretty happy with the level of growth that we're seeing come through the business. And we also continue to have a high degree of optimism, and we're encouraged about the future growth that we continue to see in this business. So, you know, we really look at how we're performing relative to our expectations, and we continue to perform at a level that we're pretty pleased with. I got it.

Speaker Change: We just keep doing what we do.

Speaker Change: Focusing on our business and trying to win at what we do so when we look at our growth Jason in the quarter organic growth, which was north of 7% and we think about how that fares relative to how we've discussed the business and also how we performed but we're pretty happy with.

Speaker Change: With the level of growth that we're seeing come through the business and we also continue to have a high degree of optimism and we're encouraged about the future growth that we continue to see in this business. So.

Speaker Change: We really look at how we're performing relative to our expectations and we continue to perform at a level that that we're pretty pleased with.

Speaker Change: Got it that's great. Thank you.

Jason Haas: That's great. Thank you. Our next question is from George Tong with Goldman Sachs. Please proceed with your question. Hi, thanks. Good morning.

Speaker Change: Our next question is from George Tong with Goldman Sachs. Please proceed with your question.

Joan Tong: Hi, Thanks, Good morning, following up on the residential business can you talk about what our recurring revenue growth trends were how did it perform relative to earlier quarters and what you see as the key drivers of growth acceleration going forward.

Joan Tong: Following up on the residential business, can you talk about what the recurring revenue growth trends were? How did they perform relative to earlier quarters? And what you see as the key drivers of growth acceleration going forward?

Joan Tong: Certainly George when we look at the growth rates and we look at.

Kenneth D. Krause: When we look at the growth rates and we look at the recurring revenue growth relative to prior quarters, the business continues to perform pretty well. It continues to hold in there. I mean, Q4 always sees a step down in just generally the growth year over year, but it's above what we saw a year ago, and it continues to be at a healthy level. So there's nothing that's indicating that there's a significant deceleration in the growth rates or a change in growth profile in the growth rates that we're seeing coming through our business. I got it.

Joan Tong: Recurring revenue growth relative to prior quarters.

Joan Tong: The business continues to perform pretty well it continues to hold in there I mean Q4 always sees a step down and just generally the growth year over year.

Joan Tong: But but if it's above what we saw a year ago and it continues to be at a healthy level. So theres nothing thats, indicating that they that there is a significant D cell and the growth rates are a difference or a change in growth profile and the and the growth rates that we're seeing coming that's coming through our business.

Speaker Change: Got it and you talked about earlier, we're making good progress with bundling cross selling and door to door sales can you talk a little bit about your priorities for 2024 with.

Kenneth D. Krause: And you talked about earlier making good progress with bundling, cross-selling, and door-to-door sales. Can you talk a little bit about your priorities for 2024 with respect to these areas and how you expect that to drive volume performance? Certainly, when you step back and you look at the business, George, you know, we look at it across a number of different priorities. We, and when we think about our expectations going forward, you know, we talked earlier about our pricing. We're focused certainly on getting the value of our services through strategic pricing management. We again raised prices, and we'll continue to raise prices and manage our rate cards effectively. So, that's one side of the equation.

Speaker Change: With respect to these areas and how you expect that to drive volume performance.

Speaker Change: Certainly when you step back and you look at the business George.

Speaker Change: We look at it across a number of different priorities.

Speaker Change: And when you think about our expectations going forward.

Speaker Change: We talked earlier about our pricing we're focused certainly on getting the value of our services through through strategic pricing management, and and we again raised prices and we will continue to raise prices and manage our rate cards effectively. So that's one side of the equation and so so that rate that growth rate associated with pricing at this.

Kenneth D. Krause: And so, that rate, that growth rate associated with pricing is, at this point, expected to be in line with what we saw a year ago, at 3% to 4%. And then, secondly, when we look at the growth profile across the business, we remain encouraged by our position in our market. We continue to have confidence in our ability to deliver a healthy level of growth going forward that's in line with what we've seen here over the last couple of years. You know, we've all enjoyed the benefit, and you've seen the benefit, of our growth rate accelerating post-COVID.

Speaker Change: Point expected to be in line with what we saw a year ago at 3% to 4% and then secondly, when we look at growth profile across the business. We remain encouraged by our position in our market. We continue to have confidence in our ability to deliver a healthy level of growth going forward. That's in line with what we've seen here over the.

Speaker Change: Last couple of years, we've all enjoyed the benefit and you've seen the benefit of our growth rate accelerating post COVID-19. We continue to operate at a pretty healthy level of growth in our business from an organic perspective, and then of course, we saw really robust uptick in growth associated with M&A in the last.

Kenneth D. Krause: We continue to operate at a pretty healthy level of growth in our business from an organic perspective. And then, of course, we saw a really robust uptick in growth associated with M&A in the last year. When we look at the initiatives across the business, cross-sell is certainly really important.

Speaker Change: Year, when we look at the initiatives across the business. The cross sell is certainly really important.

Kenneth D. Krause: We're going after those customers that may have one service but are trying to add additional services like Mosquito and Tix and other services like that. Continuing to focus on the termite and ancillary businesses is very important. And then last, but certainly not least, is the commercial side. Jerry spoke about the commercial business in detail.

Speaker Change: Going after those customers that may have one service, but trying to add additional services like mosquito and tax and other services like that.

Speaker Change: Continuing to focusing on the termite and ancillary businesses is very important and then last but certainly not least is the commercial side Jerry spoke about the commercial business.

Jerry Galof: We talked about it in the third quarter as well. We continue to place a disproportionate focus on the commercial business and drive growth there. So all of those initiatives are coming together to give us optimism as we think about our growth rates going forward. George, I'll add, this is Jerry. When we think about one of the ways I just love our business model is the diversity that we get from our brand strategy. Each of our brands has various different ways to acquire customers, whether it be, say, Northwest and Home Team that rely heavily on the home building market, or Fox doing door-to-door.

Speaker Change: In detail, we talked about it in the third quarter as well we continue to place a disproportionate focus on the commercial business and driving growth. There. So so all of those all of those initiatives are coming together to give us optimism as we think about our growth rates going forward.

Speaker Change: George.

Jerry: Ed This is Jerry.

Speaker Change: When we think about.

Jerry: One of the ways I just love our business model is the diversity that we get from our brand strategy each of our brands has.

Jerry: Various different ways to acquire customers, whether it be say northwest and home team that rely heavily on the homebuilding market or Fox doing door to door and now for example, we have home team doing.

Jerry Galof: And now, for example, we have Home Team doing door-to-door and expanding that offering in their business by things they learn from the Fox team. These are all things that we can deploy across and, due to the diversity of our brands and what each one brings to the table, we think, continue to help us with this solid growth profile for the future. Very helpful. Thank you. Thank you, George.

Jerry: Door to door and expanding that offering in their business.

Jerry: Buy things they learned from the Fox team. These are all things that we we can deploy across and due to the diversity of our brands.

Jerry: And what each one brings to the table that we think continues.

Jerry: Continues to help us.

Jerry: With this solid growth profile for the future.

Speaker Change: Very helpful.

Speaker Change: Thank you.

Speaker Change: Thank you George.

Speaker Change: Thank you. Our next question is from Michael Hoffman with Stifel. Please proceed with your question.

Joan Tong: Thank you. Our next question is from Michael Hoffman with Stiefel. Please proceed with your question. So the challenge is, how creative can I be to ask four questions in two?

Michael Hoffman: So the challenge as to how creative can I be to ask four questions in two.

Michael Hoffman: Good morning, everybody. Good morning. So things that would help the model, Ken, are specifics that I think you can share, like the three to four and one Q pricing. What is the dollar amount of the M&A rollover from 23? So everybody just gets that right. What do you think about the cadence of it?

Michael Hoffman: Good morning.

Michael Hoffman: Good morning.

Michael Hoffman: So things that would help them model, Ken or specifics that I think you can share like the three to four in <unk> pricing what is the dollar amount of the M&A rollover from 'twenty three so everybody just get that right and how do you think about the cadence of it in.

Kenneth D. Krause: calendar year, so we just don't get that. Certainly, when we look at M&A, we continue to be focused on M&A. We continue to focus on executing that discipline strategy. We see roughly 2% carryover coming into 2024 from M&A. A large part of that, of course, is here in the first quarter with Fox.

Michael Hoffman: The calendar year, so we just don't get that Raul.

Speaker Change: Certainly when we look at M&A, we continue to be focused on M&A.

Michael Hoffman: Continue to focus on executing that disciplined strategy.

Michael Hoffman: We see roughly 2% carryover coming into 2024 from M&A.

Michael Hoffman: A large part of that of course is here in the first quarter with Fox, We acquired Fox last April so we still have one quarter of benefit.

Kenneth D. Krause: We acquired Fox last April, so we still have one quarter of benefit. When we look at the pipeline, we see a healthy pipeline. We were very active to close out the year and then also to start 2024. January activity and deals that we closed are up, so we continue to chart towards that 2% plus level of growth, 2% to 3% plus level of growth associated with M&A as we go forward. But the carryover is around 2%.

Michael Hoffman: When we look at the pipeline, we see we see a healthy pipeline we were very active the close out the year and then also to start 2024 at January activity and deals that we closed are up so we continue to chart towards that that 2% plus level of growth.

Michael Hoffman: 2% to 3% plus level of growth associated with M&A as we go forward, but the carryover.

Michael Hoffman: Is around 2%.

Michael Hoffman: Okay. And then... You shared with us that incremental margins on an adjusted basis were 28-29, well both on an adjusted and adjusted 28-29 percent. What is the target for this year and how does non-operating, influence that, and maybe can you isolate what those gains were in 22 and 23 so we can think about, Here's my creative... Absolutely, certainly.

Speaker Change: Okay and then.

Speaker Change: It's shared with us that incremental margins on adjusted basis for 2029, well both on an as adjusted and adjusted 2008 and 29% what is the target for this year and how does nonoperating.

Speaker Change: James.

Speaker Change: Influence that and maybe can you isolate what those gains were in 'twenty. Two 'twenty three so we can understand how to think about them in 'twenty four.

Speaker Change: My competitive question with me.

Kenneth D. Krause: When we look at the incremental margin profile, there's no reason, I mean, you know, we continue to see and have a confidence level in delivering 30% incremental margins. If you look at the incremental margin over the last several years, we've seen it step up. Our focus has been, we've been laser focused on incremental margins and driving improvements in the margin profile. And so when we think about that level, that's the range at 30%.

Speaker Change: Certainly when we look at the incremental margin profile. There's no reason I mean, we continue to see and have a confidence level and delivering 30% incremental margins. If you look at the incremental margin. The last several years, we've seen a step up our focus has been we've been laser focused on incremental margins and driving improvements on the margin.

Speaker Change: Profile and so when we think about that level.

That's the range at 30%, we've seen quarters as high as 35% to 40%. So it will jump around from quarter to quarter and youre going to see that but generally when we step back and we finished the year at 28% to 30%. We're pretty pleased that means were getting 70 basis points as we did of improvement in EBITDA margins.

Kenneth D. Krause: You know, we've seen quarters as high as 35 to 40%, so it'll jump around from quarter to quarter, and you'll see that. But generally, when we step back, and we finish a year at 28 to 30%, we're pretty pleased. That means we're getting, you know, 70 basis points of improvement and even a margin. The gains on asset sales will come through. They came through, you know, in Q3, or, I'm sorry, Q4 here, and we saw roughly $3 million of lower asset sales that came through other income, about 40 basis points on the margin line and the EBITDA margin line. And that'll come through from time to time, and we'll try to isolate that as we go forward for you. OK.

Speaker Change: The gains on asset sales will come through they came through in Q3, I'm, sorry, Q4 here and we saw roughly $3 million lower asset sales that came through other income was about 40 basis points on the margin line and the EBITDA margin line and.

Speaker Change: And that will come through from time to time, and we'll try to isolate that as we go forward for you.

Speaker Change: Okay.

Ashish Sabadra: Thank you. Our next question is from Ashish Sabadra with RBC Capital Markets. Please proceed with your question.

Speaker Change: Thank you.

Speaker Change: Our next question is from Ashish <unk> with RBC capital markets. Please proceed with your question.

Jerry Galof: Thanks for taking my question. Maybe I can ask a clarifying question on Res-E. Obviously, good to hear the recurring revenues within Res-E continue to do really well, and the digital inquiries are also pretty stable. Just the question there is, have you seen any change, particularly from competitors pushing harder on the marketing spend? Is that changing anything? Did that change anything in the fourth quarter?

ashish: Thanks for taking my question, maybe if I can ask a clarifying question.

ashish: Obviously, good to hear the recurring revenues within NSE, continuing to do really well and the digital and quieting down pretty stable.

Speaker Change: Just a question that is.

ashish: Have you seen any change, particularly from competition pushing harder on the marketing.

ashish: Is that changing anything.

ashish: Seeing anything in the fourth quarter.

Jerry Galof: But maybe, importantly, going into 2024, how should we think about the demand environment? You talked about a pretty solid demand environment. I was wondering if you could provide any color on cicadas and the two groups of cicadas emerging in 2024. What would that mean for demand? Ashish, this is Jerry.

ashish: But maybe importantly going into 2024.

ashish: Should we think about the demand environment, you talked about a pretty solid demand environment. I was wondering if you could provide any color on that.

ashish: The tubes of Chicago.

ashish: Our emerging in 24, what would that mean for the demand environment.

ashish: Ashish.

Jerry: This is Jerry.

Jerry Galof: I'll kind of try to take the first part of that statement. You know, I asked our marketing team what was going on in the fourth quarter from a digital spend standpoint. It was a time when we'd like to invest a little earlier in the year in some of the marketing, and it did appear anecdotally that there was a pretty significant uptick in competitive spend in the fourth quarter at a time when we were lagging.

Jerry: Kind of try to take the first part of that statement.

Jerry: I asked our marketing team what was going on in the fourth quarter from a digital spend standpoint. It was a time when we'd like to invest a little earlier in the year.

Jerry: And some of the marketing and it did appear.

Jerry: Anecdotally that there was there was a pretty significant.

Jerry: <unk> uptick in some competitive spend in the fourth quarter at a time when we were backing.

Jerry: Winding down some of our marketing spend that there was some pretty significant investment in the market during the fourth quarter. So we certainly saw.

Jerry Galof: We're winding down some of our market spend, and there was some pretty significant investment in the market during the fourth quarter. So we certainly saw the competitive environment pick up in that regard, where there was more spend. Now, how that equated to sales and starts and new customers or one-time work on the residential side, we don't really know. So that's, on your first question, that's... Yeah, and the second part of your question, I think, was around cicadas and new pests.

Jerry: The competitive environment pick up in that regard, where there was more spend into their know how that equated.

Jerry: Sales and starts of new customers are onetime work on the residential side, we don't really know but.

Speaker Change: So on your first question Thats, yes.

Speaker Change: Second part of your question I think was around Takeda is in new past and we continue to monitor new past activity.

Kenneth D. Krause: And we continue to monitor new pest activity. Cicadas are, you know, one of many pests that we continue to monitor. Jerry, I don't know if you want to add, but I'm certainly not an expert when it comes to cicadas. You're probably much better positioned to answer that. Yeah, well, you know, cicadas typically are not a household pest control problem. They are a nuisance, though, because when they come out in large numbers, as they did a couple of years ago, they wreaked havoc from a noise standpoint. I know I had a house in the mountains that you couldn't sleep at night, and it was very annoying.

Speaker Change: Cicadas R.

Speaker Change: One of many paths that we continue to monitor.

Jerry I don't know if you want to add I'm certainly not the expert when it comes to the cadence that you are probably much better positioned to answer that.

Jerry: So Kate as typically are not a household pest control problems. They are a nuisance because when they come out in the volumes as they did a couple of years ago. They wreak havoc from a noise standpoint.

Jerry: I have a Allison the mountains that you Couldnt sleep at night.

Jerry: And it was very annoying, but.

Jerry Galof: But they tend to just go away over time. But it probably will create some awareness about, you know, pests in general and things that bother humans. But it's not as though... Our pest control companies are going to be out there attempting to eradicate cicadas. So, you know, that's seemingly an impossible feat.

Jerry: Yes.

Jerry: They tend to just go away over time, but it probably will create some awareness.

Jerry: No.

Jerry: I'll pass in general and things that bother humans.

Jerry: But.

Jerry: It's not as though.

Jerry: Our pest control companies are going to be out there attempting to eradicate Takeda is so.

Jerry: Seemingly an impossible feat, we're really just out there waiting for them to die off and go away and start the whole process over again, so they don't probably create some buzz in the marketplace and that's always good for business.

Jerry Galof: We're really just out there waiting for them to die off and go away and start the whole process over again. So it'll probably create some buzz in the marketplace, and that's always good for business. That's a very helpful color.

Speaker Change: That's very helpful color and maybe if I can ask a question on the back office modernization Ken.

Ashish Sabadra: And maybe if I can ask a question on the back office modernization, Ken, if you can just help us understand where you are on that process, and how we should think about that contribution to incrementally bid down margins in 24 but also. Yeah, we continue to be very early on in our journey with respect to modernization, making good progress. We've added a number of new team members across our back office, and we've made some significant changes. But we're pretty excited about what's to come. You know, with that said, when we look at the SG&A performance over time, we've continued to see that improve. Going back a couple years, it was almost 31%.

Speaker Change: Ken if you can just help us understand where you are on that process and how should we think about that contribution to incremental EBITDA margins in 2004, but also mcdonnell thanks, yes.

Kenneth D. Krause: Yes, we continue to be very early on in our journey with respect to modernization, making good progress.

McDonnell: We've added a number of new team members across.

McDonnell: Our back office, we've made some significant changes.

McDonnell: But we're pretty excited about what's to come with that said when we look at the SG&A performance over time, we've continued to see that improve going back a couple of years. It was almost 31% it's come down under 29% here in the quarter.

Kenneth D. Krause: It's come down under 29% here in the quarter. So we continue to leverage that despite having investments and growth initiatives associated with the commercial business as well as other parts of our business. And so we're early on in the journey; we feel like there are opportunities as we go forward to continue to improve the business. Thanks.

McDonnell: So we continue to leverage that in despite having investments in growth initiatives associated with the commercial business as well as other parts of our business and so so we're early on in the journey, we feel like there's opportunities as we go forward to continue to improve the business.

Speaker Change: Thanks, very helpful. And then really strong momentum in commercial and in ancillary services. So congrats on that thank.

Kenneth D. Krause: Very helpful and really strong momentum in commercial and ancillary services, so congratulations. Thank you. Our next question is from Josh Chan with UBS. Please proceed with your question. Hi, good morning.

Speaker Change: Thank you.

Speaker Change: Our next question is from Josh Chan with UBS. Please proceed with your question.

Joshua K. Chan: Hi, good morning, Thanks for taking my questions.

Joshua K. Chan: Thanks for taking my questions. Bridging from the prior question on SG&A, I think you've done a really good job improving gross margin over the last several years. I guess from an SG&A perspective, is there an expectation that leverage there can increase a little bit over time as some of your initiatives get more traction? Yeah, I think there's an opportunity to improve upon SG&A performance.

Speaker Change: Maybe.

Joshua K. Chan: Bridging from the prior question on SG&A, I guess, you've done a really good job improving gross margin over the last several years.

Joshua K. Chan: I guess from an SG&A perspective is there an expectation that that leverage there can increase a little bit over time as some of your initiatives get more traction.

Speaker Change: Yes, I think there is an opportunity to improve upon the SG&A performance.

Kenneth D. Krause: And we've said that for some time, and we continue to see improvement in SG&A. You know, with that said, we do have a disproportionate investment in securing customers through advertising and door-to-door and other activities. But with that said, our focus is to continue to improve upon the administrative side of the back office without sacrificing the investments for growth.

Speaker Change: And we've said that for some time and we continue to see improvement in SG&A.

Speaker Change: With that said, we do have a disproportionate investment in securing customers through advertising in door to door and other activities, but with that said our focus is to continue to improve upon the administrative side of the back office and without sacrificing the investments for growth and so.

Kenneth D. Krause: And so we're hopeful to see improvement as we go forward, just like we've seen the last couple of years here. And the last, you know, a year or so, we continue to see improvement despite the investments we're making. But we feel like we're well positioned on that front. Thank you.

Speaker Change: We're hopeful to see improvement as we go forward just like we've seen in the last couple of years here in the last year or so we continue to see improvement. Despite the investments, we're making but we feel like we're well positioned on that front.

Speaker Change: Okay. Thank you that makes a lot of sense.

Joshua K. Chan: And on the residential side, you mentioned that the one-time service slowed down a little in Q4 and may be a little slower in Q1 as well. Is there anything to interpret from that from perhaps a macro perspective or any other reasons that would drive that to be a little slower for the upcoming quarter as well? Yeah, really, what we saw was a slowdown in some of the residential bed bug one-time work and also on the wildlife side, which often involves some rat and rodent type of work, a slowdown there. Those are the main drivers of that, whether that's seasonal, whether it's something to do with the weather or change in demand; we're not completely certain of any of that. But bedbugs, for example, being down has always been something that has fluctuated from quarter to quarter and year to year on some of the ups and downs, and it was just more significantly down for us in recent months.

And on the residential side, you mentioned that the one time service slowed down a little in Q4 and may be a little slower in Q1 as well is is there any thing to interpret from that from a perhaps a macro perspective or any other reasons that would drive that to be a little slower for the upcoming quarter as well.

Speaker Change: Yes.

Speaker Change: Really what we saw was a slowdown in <unk>.

Speaker Change: Some of the residential bedbug onetime work and also on the wildlife side, which often often involves some.

Speaker Change: Rack type of Wrotten wrote and type of work a slowdown there those are the main drivers of that whether that seasonal whether it's.

Speaker Change: Something to change in the weather or change in demand or we're not.

Speaker Change: Completely certain note any of that but bed bugs for example, being down has always been something that has fluctuated from quarter to quarter and year to year on some of the ups and downs and it was just more so more significantly down for us in the recent in recent months when we look at that question, Josh because we.

Jerry Galof: When we look at that question, Josh, because we deal with consumers, homeowners, and when we look at the business and we assess it, you know, more of a macro level, we look across our business. We look not only at the residential pest control that Jerry just spoke about, but we also look at the termite and ancillary business, and that ancillary business is normally some high-ticket items. And if that continues to grow at the pace it's growing, it's indicative that the consumer is pretty healthy. With that said, we were proactive at the end of last year at tightening credit down in a number of different areas just to ensure that we don't run into any issues from a credit perspective. And so in our acceptance corp, we raised the minimum level for credit, just trying to be proactive in today's market. But from a demand perspective, we're certainly not seeing any major deterioration in growth profile with our customers. Great. Thank you both for the really good color and good luck in 2024.

Speaker Change: Looked at that as well because we deal with consumers homeowners and when we look at the business and we assess.

Speaker Change: More of a macro level, we look at we look across our business. We look not only in the residential pest control that Jerry just spoke about but we also look at the termite and ancillary and that ancillary businesses is normally some high ticket items and if that continues to grow the pace its growing its indicative that the consumer is pretty <unk>.

Speaker Change: With that said we were proactive in the end of last year and tightening credit down in a number of different areas just to ensure that we don't run into any issues from a credit perspective, and so in our acceptance Corp. We raised the minimum level for credit.

Speaker Change: Just trying to be proactive in todays market, but from a demand perspective, we're certainly not seeing any major deterioration in growth profile with our customers.

Speaker Change: Great. Thank you both for the really good color and good luck in 2024.

Kenneth D. Krause: Thank you. Our next question is from Tony Kaplan with Morgan Stanley. Please proceed with your question. Thanks so much.

Speaker Change: Thank you.

Speaker Change: Our next question is from Toni Kaplan with Morgan Stanley. Please proceed with your question.

Toni Kaplan: Thanks, so much.

Tony Kaplan: I was hoping you could give us an update on labor, namely your salespeople. We're seeing higher employee retention right now versus normal. And I know you mentioned deploying some sales tools, and I was wondering if you could talk about other initiatives as well. Yeah, so the labor side of it is we have been very good at hiring onboard and trading our sales teams, especially on the, really, commercial and residential side. And we're talking specifically a little bit more about the commercial side. But one of the things that you learn on the commercial side, where you typically have a longer sales cycle, it takes longer from the time you have a lead or create a creative lead to get a deal closed, you really, you really have to get those salespeople productive in selling and finding success early on. And that's what helps you with keeping people in the long term. The more they're successful, the more they win, the longer they stay, and the more money they earn, you know; they go to our President's Club events, those types of things.

Toni Kaplan: I was hoping you could give us an update on labor, namely your salespeople are you seeing.

Toni Kaplan: Higher employee retention rate now versus normal and I know you mentioned deploying some some sales tools and I'm wondering if you could talk about other initiatives as well.

Speaker Change: Yes, so the labor side of it as we have been.

Speaker Change: Very good at hiring Onboarding and training our sales teams, especially on the well really on the commercial and residential side.

Speaker Change: We're talking specifically, there's a little bit more about the commercial side, but one of the things that you learn with on the commercial side, where you typically have a longer sales cycle. It takes longer from the time. So you have a lead or create a creative lead to get a deal closed you really.

Speaker Change: Do you really have to.

Speaker Change: Get those salespeople productive in selling and finding success early on and Thats. What helps you with keeping people in the long term to more of their successful the more they are winning.

Speaker Change: The longer they stay in the more money they earn.

Speaker Change: Our President's club events those types of things and I'm really proud of our of the sales team that we've built both on the commercial and residential side. This is a team of very high performing people.

Jerry Galof: And I'm really proud of the sales team that we built, both on the commercial and residential side. It's a team of very high-performing people that, you know, we've enabled that through how we hire, how we train, how we invest in them, how we give them those tools to be successful. And that's ultimately what drives retention. That's what makes them want to stay.

Speaker Change: That we've enabled that through.

Speaker Change: Through how we hire how we train our we invest in them given those tools to be successful and thats ultimately what drives retention. That's what makes them want to stay so we have a lot of momentum in that space.

Jerry Galof: So we have a lot of momentum in that space that I just feel really good about as we head into 2024. Terrific. I wanted to ask you a question about the big picture around footprint.

Speaker Change: That I just feel really good about as we head into 2024.

Speaker Change: Terrific.

Speaker Change: To ask.

Speaker Change: Picture around footprint are.

Jerry Galof: Are you happy with the current coverage and portfolio of geographies that you're in, or are there other geographies that you'd like to gain further density in? I would say we are pretty happy. You know, we have very broad geographic coverage under the Orkin brand in North America. And when you look in the U.S., mainly the area that we don't have...

Speaker Change: Are you happy with the current coverage and portfolio of geographies that you're in or are there other geographies that you'd like to gain further density.

Speaker Change: Yeah.

Speaker Change: I would say we are pretty happy we have very broad geographic coverage under the the Orkin brand in North America.

Speaker Change: And when you look in the U S mainly the area that we don't have.

Tony Kaplan: The second bite at the apple brand strategy is fully built is really probably in the Midwest, where we have some opportunity where we would like to continue to add and invest in M&A. And then when you think about international, we're very happy with our Australian operations growing and healthy, and we're going to continue to build out Australia, the United Kingdom, and Singapore, where we currently operate. But we really haven't put a lot of effort or energy behind expanding outside of those areas.

Speaker Change: And the second bite at the Apple brand strategy is fully built is really probably in the Midwest, where we have some opportunity where we would we would like to continue to add and invest in M&A and then when you think about international we're very happy with our with our Australian operations are growing.

Speaker Change: And healthy and we're going to continue to bill.

Speaker Change: Build out Australia, the United Kingdom, and Singapore, where we currently operate but we really haven't put.

Speaker Change: A lot of effort energy behind expanding outside of those areas, we like where we are.

Jerry Galof: We like where we are, and we're going to continue to build and focus on those countries where we've expanded internationally. Terrific, thank you. Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone on the gator line will indicate that your question is ready.

Speaker Change: And we're going to continue to build and build and focus on those countries, where we've expanded internationally.

Speaker Change: Terrific. Thank you.

Speaker Change: Thank you.

Speaker Change: As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Operator: Our next question is from Stephanie Moore with Jeffries. Please proceed with your question. Hi, good morning. Thank you. Good morning.

Speaker Change: Our next question is from Stephen anymore with Jefferies. Please proceed with your question.

Stephen: Hi, good morning, Thank you.

Stephen: Good morning.

Stephanie Moore: I was hoping you'd touch a little bit on, you know, maybe what you're seeing on the unit cost inflation side, some key areas. You talked a little bit about labor, but maybe just across the board, labor, materials, equipment, the likes, and kind of expectations for 2024 versus what you saw and experienced in 2023. When we look across the cost structure, we look at our people costs, we look at our materials supplies, and we look at our fleet. Those are the three major drivers of cost in addition to insurance and claims, which sometimes can be less controllable, not completely controllable as much as some of the other areas.

Stephen: I was hoping you could touch a little bit on maybe what you're seeing in the unit cost inflation side.

Stephen: Key areas, you talk a little bit about labor, but maybe just across the board labor material equipment.

Stephen: And kind of expectations for 2024 versus what you saw.

Speaker Change: Great. Thanks.

Speaker Change: When we look across the cost structure, we look at our people costs, we looked at our materials supplies.

Speaker Change: We look at our fleet those are the three major drivers of cost in addition to.

Speaker Change: In addition to insurance and claims which sometimes.

Speaker Change: Can be less controllable not completely controllable.

Speaker Change: Controllable as much as some of the other areas, but we're pretty pleased with the leverage we saw on the organic side of our business across those three cost cost categories.

Kenneth D. Krause: But we're pretty pleased with the leverage we saw on the organic side of our business across those three cost categories. We continue to benefit from lower gas prices, slightly lower gas prices, and lower oil prices. That's definitely beneficial on the fleet side of our business. You know, the interest rate environment certainly is less favorable from a leasing perspective, but we continue to focus on pricing the value of our services so that our gross margins will continue to improve and step higher. We were pleased with the 50 basis points we saw this past year on the gross margin side of our organic gross margin.

Speaker Change: We continue to benefit from lower gas prices slightly lower gas prices lower oil prices, that's definitely beneficial on the fleet side of our business.

Speaker Change: The interest rate environment, certainly is less favorable from a leasing perspective, but.

Speaker Change: But we continue to focus on pricing the value of our services. So that our gross margins will continue to.

Speaker Change: Improve and step higher we were pleased with the 50 basis points. We saw this past year.

Speaker Change: On the gross margin side of our organic side of gross margin.

Jerry Galof: And we're continuing to focus on leveraging our cost structure in a similar fashion going forward. Stephanie, I would add, you know, that we do have some concerns about truck prices rising. Some of these fleet vehicles, our costs are going up. As Kim mentioned, there's always the wild card of fuel prices and fluctuations we have there.

Speaker Change: We're continuing to focus on leveraging our cost structure in a similar fashion going forward.

Speaker Change: And Stephanie I would add.

Speaker Change: So.

We do have some concerns about truck prices rising.

Speaker Change: Some of the fleet vehicles, our costs are going up as Ken mentioned, there is always the wildcard as fuel prices and fluctuations we have there.

Stephanie Moore: On the MNF side, we just completed a RFP on our insecticides and termiticides, trying to ensure our pricing is in line with that and trying to generate some savings or at least offset, as much as we can, some of the price increases that are being passed along to us from some of our suppliers. So those are all things that are top of mind for us that, you know, we'll keep focused on through the year. Great No, that's helpful.

Speaker Change: On the M&A side.

Speaker Change: We just completed a RFP.

Speaker Change: On our insecticides in tomato sides trying to.

Speaker Change: Ensure our pricing is in line on that and trying to generate some savings or at least offset the.

Speaker Change: As much as we can some of the price increases that are being passed along to us from some of our suppliers. So.

Speaker Change: Those are all things that are top of mind for us.

Speaker Change: We will keep focused on through the year.

Speaker Change: Okay.

Speaker Change: Great No. That's helpful. And then I guess, just as a follow up I'm just trying to piece together the idea similar price increases in 2024 versus 2023.

Kenneth D. Krause: And then, I mean, I guess this is a follow-up, you know, I'm just trying to kind of piece together the idea of similar price increases in 2024 versus 2023, but it sounds like, you know, there's, you know, all walls. Supposedly coming down here in 2024. So I guess what you're saying is probably still a little too early to tell us the inflationary side will have that material step down in 2024. Is that kind of the right way to interpret that?

Speaker Change: Sounds like.

Speaker Change: Well all while inflation is supposedly coming down here in 2024, So I guess, what youre, saying is it's probably still a little too early to tell us the inflationary side, we'll have that material of stepped out of 'twenty 'twenty four is that kind of the right way to interpret that.

Stephanie Moore: That's, yeah, that's what I'm hitting on is there's still some unknowns; there may be still some costs that we don't know. And, you know, when you look at the inflation data, that demonstrates that it's not necessarily slowing as fast as we all would probably like it to. So we're still we're still cautiously optimistic there. And then just lastly, on M&A and kind of M&A activity, any changes in terms of the pipeline or willingness of sellers that you've seen as of late? I don't think there's any significant change.

Speaker Change: That's yes, that's what I'm hearing that there's still some unknowns and where there may be still some some costs that we don't know.

Speaker Change: You look at the inflation data.

Speaker Change: That demonstrates that it's not necessarily slowing as fast as we all would probably like it too so.

Speaker Change: So we're still we're cautiously optimistic there.

Speaker Change: Great and then just lastly on M&A and kind of M&A activity any changes in terms of pipeline or willingness of sellers.

Speaker Change: As of late.

Speaker Change: I don't think there is any significant change there is still a good deal flow out there.

Jerry Galof: There's still a good deal flow out there. We're, you know, there are good businesses that are out there for sale. And while, you know, on a quarter-to-quarter basis, there's some ebbs and flows to that kind of volume that we get to see or look at, but there are still plenty of good businesses out there that are potentially worth acquiring. So, we've gotten off to a good start already in January, and I feel good about our pipeline. We're actually a little ahead of where we were last year in that regard. But last year, if you keep in mind, in January and February, we announced the Fox deal.

<unk>.

Speaker Change: Good businesses that are out there for sale.

Speaker Change: And while from a quarter to quarter basis, there's some ebbs and flows to that kind of volume that we get to see or look at but there's still plenty of plenty of good businesses out there.

Speaker Change: That that are potentially worth acquiring.

Speaker Change: <unk>.

Speaker Change: We've gotten off to a good start already in January I feel good about our pipeline, we're actually a little ahead of where we were last year in that regard, but last year keep in mind in January February we announced the Fox deal in April we were we are heads down working on the Fox deal. So we've put a lot of stuff aside.

Jerry Galof: And in April, we were heads down working on the Fox deal. So, we put a lot of stuff aside to focus on that. So, now we're, you know, back to business as usual and looking at normal deal flow. Great.

Speaker Change: To focus on that so now we are.

Speaker Change: Back to the kind of business as usual and looking at normal deal flow.

Speaker Change: Great. Thank you guys so much.

Stephanie Moore: Thank you, guys so much. Thank you. Our next question is from John Mazzoni with Wells Fargo. Please proceed with your question.

Speaker Change: Yes.

Speaker Change: Thank you. Our next question is from John <unk> with Wells Fargo. Please proceed with your question.

John: Good morning.

John: Good morning quickly.

John F. Wilson: Good morning, to donate. So maybe quickly just to touch on the price-cost spread and Tim Horton. Thank you. Appreciate it in the driver safety score and that KPI. Could you just help us understand how that can lower insurance related costs going forward? And what's the typical timing or delay?

John: Yes, so maybe quickly just to touch on the price cost spread.

John: Improvements in the driver safety score Kpis could you just help us understand how that can flow through to kind of lower insurance related costs going forward and whats the typical timing of delay.

Kenneth D. Krause: I mean, this is probably not going to be a kind of near-term item, but could we expect it in the back half of the year, or would it be something that has a longer, variable lag? It's a hard thing to predict, John, when you look at that trend line, because it does take quite a while to work its way through. For the last 12 months or so, year over year, insurance and claims costs have been negative for us, despite not having large payouts or large claims that we settled like we did a year or so ago.

John: This is probably not going to be any kind of near term item, but could we expect in the back half of the year or would it be something that has.

John: Longer variable like thanks.

John: It's a hard thing to predict John when you look at that trend line because it does take quite a while to work its way through.

John: The last 12 months or so year over year insurance and claims costs were negative for us.

John: Despite not having.

John: Large payouts large claims that we settled like we did a year or so ago.

Kenneth D. Krause: But with that said, we're hopeful that it will improve. You know, when we look at safety, it's not just about the financials, either. It's about our people. And so when we think about our people-first culture, we want people to be safe. We want them to return home each and every night.

John: But with that said we are hopeful that it will improve when we look at when we look at safety is not just about the financials either it's about our people and so when we think about our people first culture, but we want people to be safe, we want them to return home each and every night and that's really the focus here is how do we make sure our drivers are safe.

Kenneth D. Krause: And that's really the focus here, is how do we make sure our drivers are safe, and the communities that they continue to work in remain very safe, and they can get home each and every day. So we're focused on the people side. By doing the right thing, ultimately, the financials will improve.

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John: And the communities that they continue.

John: The work and remain very safe and they can give home each and everyday so we're focused on the people side.

John: By doing the right thing.

John: Ultimately the financials will improve and thats the focus here as we think about the future of the next several years that we will continue to see improvements on safety people will be safe.

Kenneth D. Krause: And that's the focus here, is we think about the future, the next several years, that we'll continue to see improvements in safety, people will be safe, and we'll see the benefits of that coming through our financials. Great caller, thank you. And then maybe just the last one is around kind of a preview of Investor Day.

John: And we will see the benefits of that coming through our financial statements.

Speaker Change: Great color. Thank you and then maybe just the last one is around kind of a preview of the investor day anything that we could look forward to.

John F. Wilson: Anything that we could look forward to, maybe around technology or capital allocation, or should we just stay? Yeah, I would say stay tuned. But we're really excited to get back to New York and to spend time with our investment community, talking about our growth prospects, our strategic priorities for the future, and talking about how we will continue to expect investment and growth initiatives. We're just really excited to spend the day talking about the future of this great company. It was great.

Speaker Change: Maybe around technology or capital allocation or should we just stay tuned.

Yes, I would say stay tuned, but we're really excited to get back to New York and to spend time with our investment community.

Speaker Change: Talking about our growth prospects, our strategic priorities for the future.

Speaker Change: Talking about how we will continue to expect the investments in growth initiatives. We're just really excited to spend the day talking about the future of this great company.

Speaker Change: Sounds great looking forward Smith.

John F. Wilson: I am looking forward to it. Thank you, John. Thanks, John.

Speaker Change: Thank you John Thanks, John.

Speaker Change: Thank you. This concludes the Q&A portion of the call I will now hand, the call back to management for any closing comments.

Management: Thank you. This concludes the Q&A portion of the call. I will now hand the call back to management for any closing comments. Thank you, everyone, for joining us today. We appreciate your interest in our company, and we look forward to speaking with you on our first quarter earnings call in a few months. Thank you. Transcription by CastingWords. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Thank you everyone for joining us today, we appreciate your interest in our company and we look forward to speaking with you on our first quarter earnings call in a few months.

Speaker Change: Thank you.

Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.