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Rollins Investor Day September 20, 2016

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Page 1: Rollins Investor Day/media/Files/R/Rollins-V2/... · – Termite Control 19% • Fastest growing segments are Bed Bug and Mosquito Control • Franchising strategy - Select proven

Rollins Investor DaySeptember 20, 2016

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Cautionary Statement About Forward-Looking StatementsCertain information provided during today's presentation will include forward-looking statementswithin the meaning of the Private Securities Litigation Reform Act of 1995. Forward-lookingstatements include statements within the meaning of the Private Securities Litigation Reform Act of1995. Forward-looking statements include statements regarding our expectations, beliefs,intentions, plans, objectives, goals, strategies, future events or performance and underlyingassumptions and other statements which are other than statements of historical facts. Thesestatements may be identified, without limitation, by the use of forward-looking terminology such as"may", "will", "anticipates", "expects", "believes", "intends", "should" or comparable terms or thenegative thereof. All forward-looking statements included in this presentation are based oninformation available to us on the date hereof. Such statements speak only as of the date hereofand we assume no obligation to update such forward-looking statements for any reason, or toupdate the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. These statementsinvolve risks and uncertainties that could cause actual results to differ materially from thosedescribed today. Such risk factors are described in SEC reports including the Company's Form 10-Kfor the period ending December 31, 2015.

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Rollins Investor DaySeptember 20, 2016

Table of Contents1. “Overview”2. “Rollins, Inc.”3. “Foundation for a Well Run Service Company”4. “Talent Management”5. “A Technological Journey”6. “Orkin USA”7. “HomeTeam”8. “Marketing”9. “Emerging Opportunities”10.“Key Financial Drivers”

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OverviewEddie Northen

VP, Chief Financial Officer and Treasurer

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“We are just a sleepy pest control company ….”

----Harry Cynkus, former CFO Rollins, Inc.

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“We were in a lot of really poor businesses before we found a good business.”

----O Wayne Rollins

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Financial Metrics

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$0.25 $0.35 $0.45 $0.55 $0.65 $0.75

 $50,000 $65,000 $80,000 $95,000

 $110,000 $125,000 $140,000 $155,000

Revenue (000’s)

Margin

Net Income (000’s)

Earnings Per Share

6.0%7.0%8.0%9.0%

10.0%11.0%

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Increased Efficiencies

Key Financial Drivers

Leaders

Customer Centric

Conservative Financials

Continuous Improvement

Single Industry Focus

Employee Satisfaction

Customer Experience

Training

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Speakers (in presentation order)

Gary Rollins – Chief Executive Officer, Vice ChairmanJohn Wilson – President and Chief Operating Officer

Gene Iarocci – President of Orkin North AmericaLee W. Crump – Chief Information Officer

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Freeman Elliott – President of Orkin U.S.Jerry Gahlhoff – President, Specialty Brands

Kevin Smith – Chief Marketing OfficerSteve Leavitt – President, Emerging Opportunities Group

Eddie Northen – VP, Chief Financial Officer and Treasurer

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Rollins, Inc.Gary Rollins

CEO, Vice Chairman

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Rollins Welcome

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Rollins, Inc. 10-year stock performance (with dividends reinvested)vs. S&P 500 Index

12/31/2005 – 12/31/2015

Source: FactSet, Bloomberg

10-Year Performance w/ dividendsReinvested (12/31/2004 – 12/31/2014): Total Annualized

Rollins Inc. 392.6% 17.3%S&P 500 Index 109.3% 7.7%

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '1550

100

150

200

250

300

350

400

450

169.89

424.44Rollins, Inc. (ROL-USA) [Delayed] S&P 500 (SP50-USA) [Delayed]

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10-Year Performance w/ dividendsReinvested (12/31/2005 – 12/31/2015): Total Annualized

Rollins Inc. 392.6% 17.3%Russell 2000 Index 110.7% 7.7%

Rollins, Inc. 10-year stock performance (with dividends reinvested) vs. Russell 2000 Index12/31/2005 – 12/31/2015

Source: FactSet, Bloomberg

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '1540

50

60

70

8090100

200

300

400

184.89

424.44Rollins, Inc. (ROL-USA) [Delayed] Russell 2000 (RUT-RUX) [Delayed]

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Rollins Culture

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“If someone asked you what Rollins’ most important

assets are, you would probably answer our People and

our Customers. That’s a ‘no brainer’.

I would add our Culture as a close number three.

You see, we believe that a strong, positive and

enduring culture is critical to a company’s success”

Gary W. Rollins

CEO, Vice Chairman

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Three Legged Stool

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Our People

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Conservative but …

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Hard Working

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Ethical and Honest

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Customer is Always Right

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Net Promoter Score

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Image and Reputation

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Partnerships, Associations and Relationships

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Dedicated to Continuous Improvement

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Constantly Evolving

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Providing Essential Services

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Foundation for a Well Run Service Company

John WilsonPresident and Chief Operating Officer

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Employee Retention

• Hire “A” Players – Select Well

• Train them for Success

• Survey them regularly for job satisfaction

• Recognize and reward top performers

• Move poor selections off the team quickly

Goal – 80% or better

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Undercover Boss – Bob Knox

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Customer Retention

• Give the Customer a voice – Listen 360

• Not all customers are the same

• Guarantee Satisfaction

• Customize the Service Experience

• Make it easy to do business with us – Auto Pay

Goal – 85% or better

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Revenue Growth• Improving Customer Retention

• Marketing – Digital, Yellow Pages, Brand Building Efforts

• Pricing Opportunities

• Share of Wallet Opportunities

• Mergers and Acquisitions

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Earnings GrowthEmployee Retention

– Loyal team members– Loyal customers

Customer Retention– Loyal customers– Sustainable growth

Revenue Growth, Earnings Growth– Sustainable growth– Long term earnings growth

Employer of Choice:

Pest Provider of Choice:

Investment of Choice:

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Talent ManagementGene Iarocci

President of Orkin North America

Employee

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Sourcing The Best• Continuously Recruit

• Always Seeking New Talent• Engage Prior to Need• Build Bench Strength for Future Needs

• Hire Hard• Insure a Cultural Fit• Clearly Define Accomplishments/Expectations• Hire the Best Available in Market• Provide Competitive Compensation

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Organizational Vitality

• On-Boarding and Training

– Ride Along/Field and Company Orientations

– Award Winning Learning Center

– Structured Curriculums

– On-the-Job Field Reinforcement

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Single Family Home

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Restaurant

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Commercial Kitchen

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Broadcast Studio

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Succession Planning• Leadership Development

– Career Opportunity Plans– Challenging Cross Fertilization – Field & Corporate Assignments– Company Wide Major Project Management

• High Potential Identification– Advanced Leadership Programs– Future Leaders

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A Technological JourneyLee W. Crump

Chief Information Officer, GVP

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Our Four Technology Pillars• Our IT strategy

– Fully aligned with the business strategy with a focus on our employees and customers, providing tools for our Technicians and Sales People

• Retain our Employees

• Retain and Attract New Customers

• Increase Revenues, Profit and Margins49

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Major Investments in Technology

• Primary strategic initiative is our new Branch Operations Support System (BOSS) for our Orkin Brand

– Five years development and implementation

– Rolled out over 400 locations and 7,500 employees over 22 months and completed at Orkin in August 2016

– Foundational for our future plans and future divisions

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BOSS Key Functionality• For our Technicians

– iPhones (6,200+) to provide a paperless service delivery capability

– All customer information for technicians planned stops readily available

– Service posted and credit cards charged at completion of service

– New starts, schedule changes, and re-service requests received real-time

– Bait station and rodent trap bar code scanning51

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For our Office Team

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BOSS Key Functionality• At the Branch Office

– 360 View of all customer services and locations

– Key metric dashboards w/ drill-down capability for our managers

– Branch month-end close measured in minutes vs. hours; August closed one day sooner with all our Orkin branches now live on BOSS

– Additional time available for more customer service, less time on paperwork

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Boss Key Functionality• VRM (Virtual Route Management and Scheduling)

– Enhanced routing and scheduling utilizing Google Maps and our proprietary features

– Routing and Scheduling functionality being delivered in staged enhancements

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Boss Key Functionality• VRM (Virtual Route Management and Scheduling)

A thank you email from a Branch Manager after our July release:From: Norman E. Haskins IIIDate: July 15,2016 at 10:42:56 AM EDTTo: Orlando WinderSubject: Route Optimizer Tool

Ahhhh….cool!The new updates they did to the Route Optimizer are nice. You can now search on an address on the map and it will drop a pin on the location amongst the other stops on a route. That’s just one of the upgrades.

But, also I have optimized all the routes, particularly with Lucas on Route 9. He runs both PC and Mosquito. The second week of this month he came into my office smiling. He said: “Man, my route is so tight now its taking me less time to get my work done.”

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Our Future IT Focus• Where to from here?

– Continued monthly BOSS enhancements

– Ongoing Routing and Scheduling Enhancements

– Commercial Customer Web Portal

– Customer touch-point contact preferences (voice, email, text)

– Continued focus on network and systems security

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Orkin USAFreeman Elliott

President of Orkin U.S.

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Orkin USA

• Over 400 company-owned locations nationwide

• Over 50 franchises

• Over 7,500 employees

• Over $1 billion in revenues

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Revenue Mix• Orkin USA revenue mix consists of

– Residential Pest Control 43%– Commercial Pest Control 38%– Termite Control 19%

• Fastest growing segments are Bed Bug and Mosquito Control

• Franchising strategy - Select proven Pest company managers in markets that can be developed in early stage for our eventual acquisition

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BOSS Operational Benefits

• Enhanced customer communication

• Auto-Posting

• Virtual Route Manager (VRM)

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Routing & Scheduling (VRM)• Ability to reduce mileage and drive time, thus

increasing productivity

• Provides an organizational tool that enables an efficient means to reach our customers

• Enhances customer and employee experience

• Allows for seasonal and routine “on demand” optimization

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Routing and Scheduling

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Routing and SchedulingBefore Optimization52 Miles, 2 Hours, 15 Minutes

After Optimization29 Miles, 1 Hour, 18 Minutes

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Break(Presentations to resume at 10:40 a.m.)

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HomeTeamJerry Gahlhoff

President, Specialty Brands

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What is Taexx®?

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Customers Benefit From HomeTeam’s Business Model

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A Day in the Life of a HomeTeam Technician

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HomeTeam’s Competitive Advantage

Service footprint overlays well with the Top 15 National Homebuilders

• Established relationships with leading homebuilders

• A model that enhances customer service delivery

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MarketingKevin Smith

Chief Marketing Officer

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Measurement – Cornerstone of Marketing Success

• Rollins Marketing - 8 Centers of Excellence – Pricing & Analytics, Branding, Sales Enablement, Media &

Content Deployment, Marketing Technology, Innovation,Customer Acquisition, PR & Communications

• Performance Management Emphasis

• Core Customer Acquisition Metrics – Cost per Lead, Sold, Started(CPLSS) – Customer Lifetime Value (CLTV)

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Paid Search Management and TrackingDatabase

CampaignManagement

KeywordTracking Code

Call Center

Landing Page

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Performance Management

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Resource Allocation

$0.00

$500.00

$1,000.00

Band 1 Band 2 Band 3 Band 4 Band 5

Recurring Residential Pest Control Customer Lifetime Value (CLTV)

CLTV

Segments$0.00

$500.00

$1,000.00

$1,500.00

Band 1 Band 2 Band 3 Band 4 Band 5

Customer Lifetime Value by Season Started

Oct‐ Apr start CLTV May ‐Sept starts CLTV

Segments

CLTV

$

Demand Creation National Media

Direct Traffic

Non Branded PaidSearchLocal Media

Branded Paid Search

Other Programs74

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Residential Sales - HomeSuite

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Commercial Sales - BizSuite

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SCOUT – Employee Engagement

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Emerging OpportunitiesSteve Leavitt

President, Emerging Opportunity Group

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Our Emerging Opportunities• Industrial Fumigant Company

• Wildlife Control– Trutech– Critter Control

• International– Orkin Canada– Rollins Australia– Rollins United Kingdom

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What is Wildlife?Wildlife

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Removal

Monitor Exclusion

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96 Critter Control Franchises13 Franchises purchased back YTD33 Trutech markets

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Nationwide Coverage

Co. Owned Trutech and Critter Control

Critter Control Franchise

Co. Owned dba Critter Control

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International

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• Largest Provider in Canada• 40% Market Share• 100% Canadian Coverage• 59,000+ Commercial Customers• 600+ Licensed Technicians

ABOUT ORKIN CANADA

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Australia / United Kingdom

• Third largest provider in Australia • National Footprint

• Safeguard first operation in England• Potential to grow commercial/residential pest

control

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Key Financial DriversEddie Northen

VP, Chief Financial Officer and Treasurer

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Rollins Revenue Growth

$500,000 $700,000 $900,000

$1,100,000 $1,300,000 $1,500,000

1999 - Acquired Orkin Canada

2004 - Acquired Western Pest Services; Named Top

100 Training Company

2014 - Rollins first venture in AU with acquisition of AllPest

2016 - Rollins first venture in UK with acquisition of

Safeguard Pest Control

2001 – Orkin’s 100th

Anniversary

2.0M Customers

(000’s)

2009 – Formalized pricing process

2008 - Acquired HomeTeam Pest Defense

86

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Key Financial Drivers2000 - 2005

Formalize Sales Group

US M&A

Operational Efficiencies

87

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Key Financial Drivers2006 – 2010

Customer Retention

Employee Retention

Organization Growth

Cost Reductions

Employee Training

HomeTeam

Pricing

88

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Key Financial Drivers2011 - 2016

Cost ReductionsCustomer

Experience

Wildlife VRMBed Bug

BOSS

HomeTeam

US M&A

InternationalM&A

Pricing Analytics

InternationalFranchise

89

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Revenue and Earnings per Share Growth

$0.25

$0.35

$0.45

$0.55

$0.65

$0.75

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

Revenue (000’s) Earnings per Share

6.3% CAGR

12.2%CAGR

CAGR = Compound Annual Growth Rate90

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Capital Expenditure Trend

1.0%

1.5%

2.0%

2.5%

3.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD06.2016

BOSSEast and West

Coast Call Centers, GPS in

Canada

% o

f Rev

enue

91

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Capital Allocation at Rollins

Grow the Business

Increase the Dividend

Repurchase Shares

92

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Acquisition Investing Activities

Rollins AU andPermatreat

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD06.2016

HomeTeam Pest Defense and Crane Pest Control

% o

f Rev

enue

93

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Committed to Shareholder Distributions

-

1,000

2,000

3,000

4,000

5,000

6,000

0.000.050.100.150.200.250.300.350.400.45

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Shares Repurchased (000’s) Dividends Paid per Share

94

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Key Financial DriversLooking Forward

Cost Reductions

Wildlife

HomeTeam

Customer Experience

Build Operational Capabilities

InternationalFranchise

USM&A

InternationalM&A

BOSS

VRM

95

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Q & A