Rollins Inc (ROL) 2023 Q2 法說會逐字稿

Greetings. Welcome to the Rollins, Inc. Second Quarter 2023 Earnings Conference Call. (Operator Instructions) Please note this conference is being recorded. I will now turn the conference over to your host, Joe Calabrese. You may begin.

問候。歡迎參加 Rollins, Inc. 2023 年第二季度收益電話會議。 （操作員說明）請注意，本次會議正在錄製中。現在我將把會議交給主持人喬·卡拉布雷斯 (Joe Calabrese)。你可以開始了。

By now, you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive one, please contact our office at (212) 827-3746, and we'll send your release and make sure you're on the company's distribution list. Additionally, the call is being webcast at www.rollins.com, and a replay will be available for 180 days. The company is also offering investors a supporting slide presentation, which can be found on Rollins' website at www.rollins.com.

到現在為止，你們應該都收到了新聞稿的副本。但是，如果有人丟失了一份副本並希望收到一份，請致電 (212) 827-3746 聯繫我們的辦公室，我們將發送您的授權書並確保您在公司的分發名單上。此外，該電話會議將在 www.rollins.com 上進行網絡直播，並可在 180 天內重播。該公司還為投資者提供支持幻燈片演示，您可以在羅林斯的網站 www.rollins.com 上找到該演示文稿。

We will be following that slide presentation on our call this morning and encourage you to do that with us. 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 press release. Presentation and press release are available on our Investor Relations website. The company's earnings release discusses the business outlook and contains certain forward-looking statements.

我們將在今天早上的電話會議上關注該幻燈片演示，並鼓勵您與我們一起這樣做。作為今天上午討論的一部分，我們納入了某些非公認會計準則財務指標。非公認會計原則調節表可在今天演示文稿的附錄以及我們的新聞稿中找到。演示文稿和新聞稿可在我們的投資者關係網站上獲取。該公司的收益報告討論了業務前景並包含某些前瞻性陳述。

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 Factors section of our Form 10-K for the year ended December 31, 2022. More information and the risk factors that could cause actual results to differ.

這些特定的前瞻性陳述以及本次電話會議中所做的所有其他陳述（不包括歷史事實）都受到許多風險和不確定性的影響，實際結果可能與我們今天所做的任何陳述存在重大差異。請參閱昨天的新聞稿和公司向 SEC 提交的文件，包括截至 2022 年 12 月 31 日的年度 10-K 表格的風險因素部分。更多信息以及可能導致實際結果有所不同的風險因素。

On the line with me today and speaking are Jerry Gahlhoff Jr., President and Chief Executive Officer; John Wilson, Vice Chairman; and Kenneth 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. John, would you like to begin?

今天和我一起發言的是總裁兼首席執行官 Jerry Gahlhoff Jr.；約翰·威爾遜，副主席；執行副總裁、首席財務官兼財務主管 Kenneth Krause。管理層將發表一些開場白，然後我們將開通您的提問熱線。約翰，你想開始嗎？

Yes. Thank you, Joe, and good morning. We appreciate all of you joining us today for our second quarter 2023 earnings call. We posted very strong revenue and earnings growth for both our second quarter and first 6 months of 2023. We continued to deliver solid performance across most -- all of our brands and achieved healthy levels of customer growth. Before I turn the call over to Jerry, I want to comment briefly on the results of our recent acquisition of Fox Pest Control.

是的。謝謝你，喬，早上好。感謝大家今天參加我們的 2023 年第二季度財報電話會議。我們在 2023 年第二季度和前 6 個月都實現了非常強勁的收入和盈利增長。我們的大多數品牌（所有品牌）繼續保持穩健的業績，並實現了健康的客戶增長水平。在將電話轉給 Jerry 之前，我想簡要評論一下我們最近收購 Fox Pest Control 的結果。

We closed on the Fox acquisition in April, just prior to the ramp-up of their selling season, and they have performed exceptionally well as they achieved solid growth in the first quarter of our ownership. In addition, we have been pleased with their earnings contribution as they achieved over $2 million of GAAP earnings in the first quarter of ownership. This is inclusive of a $1 million charge associated with our earn-out of the deal. Our transition with Fox has gone quite well, and we're excited to have their great team and the Fox brand as part of Rollins.

我們於四月份完成了對福克斯的收購，就在他們的銷售季節即將到來之前，他們的表現非常出色，因為他們在我們所有權的第一季度實現了穩健的增長。此外，我們對他們的盈利貢獻感到滿意，因為他們在所有權第一季度實現了超過 200 萬美元的 GAAP 收益。其中包括與我們的交易收益相關的 100 萬美元費用。我們與福克斯的過渡進展順利，我們很高興他們的優秀團隊和福克斯品牌成為羅林斯的一部分。

Now let me turn the call over to Jerry, who will provide more details on our quarter.

現在讓我把電話轉給傑里，他將提供有關我們季度的更多詳細信息。

Thank you, John. Good morning, everyone. I'm pleased to report that Rollins delivered another good quarter of growth and profitability, reflecting consistent execution of our operating strategies and continuous improvement in our business. Our financial performance for the second quarter was highlighted by an increase in revenue of approximately 15% to $821 million. I'm very pleased to report that we continue to see organic growth of approximately 8%. Further, this reflects a solid performance across all major service lines. Commercial pest control rose approximately 11%, residential increased over 18%, and termite was up approximately 14% this quarter.

謝謝你，約翰。大家，早安。我很高興地向大家報告，羅林斯又實現了良好的季度增長和盈利能力，反映出我們運營戰略的一貫執行和業務的持續改進。我們第二季度的財務業績突出的是收入增長約 15% 至 8.21 億美元。我很高興地報告，我們繼續看到約 8% 的有機增長。此外，這反映了所有主要服務線的穩健表現。本季度商業害蟲防治增長約 11%，住宅害蟲防治增長超過 18%，白蟻防治增長約 14%。

Revenue performance in the quarter was healthy, although a little uneven due to pest seasonality. On a month-to-month basis, organic growth was very robust at 10% in May before slowing a bit in June. We're back on a good trajectory now in July, in line with what we saw in May. Importantly, our frontline team member staffing levels are better than we've seen in several years, and that is providing us with an opportunity to capitalize on demand for our services.

本季度的收入表現健康，但由於蟲害季節性而略有不平衡。從環比來看，5 月份的有機增長非常強勁，達到 10%，但 6 月份略有放緩。 7 月我們又回到了良好的軌道，與 5 月的情況一致。重要的是，我們的一線團隊成員的人員配置水平比我們幾年來所見的要好，這為我們提供了按需利用服務的機會。

I'm also quite pleased with the progress we're making this far with the Fox Pest Control acquisition, the second largest acquisition in the history of our company. Taking a closer look, the integration of Fox has gone smoothly over the past few months. The Fox teams are executing and doing very well. The transaction was accretive to our second quarter earnings. This continues to be an exciting, highly complementary addition and we believe the revenue growth achieved this quarter is reflective of the team's focus on execution. The team at Fox was not distracted by the shift in ownership to Rollins and was focused on their customers and growing their business.

我對迄今為止收購 Fox Pest Control 所取得的進展也感到非常滿意，這是我們公司歷史上第二大收購。仔細一看，幾個月來福克斯的整合進展順利。福克斯團隊正在執行並且做得非常好。該交易增加了我們第二季度的收益。這仍然是一個令人興奮的、高度互補的補充，我們相信本季度實現的收入增長反映了團隊對執行的關注。福克斯的團隊並沒有因所有權轉移給羅林斯而分心，而是專注於客戶和發展業務。

Making for a smooth transition is a key tenet of our acquisition integration strategy, and our collective teams were diligent about not disrupting these efforts of our frontline team members post close. I'd like to express my thanks to the Fox team and all our teammates that have worked hard to make this happen, and we're very excited about the growth opportunities ahead for the Fox brand.

實現平穩過渡是我們收購整合戰略的關鍵原則，我們的集體團隊在交易結束後努力不干擾一線團隊成員的努力。我要向福克斯團隊和所有為實現這一目標而努力工作的隊友表示感謝，我們對福克斯品牌未來的增長機會感到非常興奮。

Next, we continue to have an enhanced capital structure and a robust acquisition pipeline as we're actively evaluating acquisition opportunities, both domestically and internationally. As I've highlighted in the past, Acquisitions are an important component in helping us expand our market position while also complementing efforts to accelerate recurring organic growth. We remain disciplined in evaluating M&A opportunities and feel very good about our continued ability to invest in strategic acquisitions while delivering strong organic growth across the business.

接下來，我們將繼續擁有增強的資本結構和強勁的收購渠道，因為我們正在積極評估國內和國際的收購機會。正如我過去強調的那樣，收購是幫助我們擴大市場地位的重要組成部分，同時也補充了加速經常性有機增長的努力。我們在評估併購機會方面保持嚴格，並對我們持續投資戰略收購的能力感到非常滿意，同時在整個業務中實現強勁的有機增長。

Another important part of our culture is our dedication to continuous improvement. As you've heard us discuss previously, we're constantly looking to improve our service levels and operating efficiencies. As a result, we continue to see opportunities for margin expansion as we move forward and execute our strategy. We are currently evaluating several streamlining efforts. Kim will provide more detail and address the margins in the quarter shortly. In addition to the unrelenting focus on productivity and improving our margin profile, we're also more strongly focused on safety.

我們文化的另一個重要部分是我們致力於持續改進。正如您之前聽到我們討論的那樣，我們不斷尋求提高我們的服務水平和運營效率。因此，隨著我們前進和執行我們的戰略，我們繼續看到利潤擴張的機會。我們目前正在評估幾項精簡工作。金將很快提供更多細節並解決本季度的利潤問題。除了不懈地關註生產力和改善我們的利潤狀況外，我們還更加關注安全。

Our experience was disappointing in this area in Q2 as we continue to see higher settlements associated primarily with auto accidents. This was a $0.01 per share drag on earnings this quarter versus a year ago. We have ramped up efforts to significantly reduce automobile accidents moving forward. Our drivers now utilize an app that begins monitoring driving behaviors once our vehicle is in motion. This app detects unsafe driving maneuvers, such as acceleration, braking, distractions and speed and then converts these data into an industry-accepted FICO driving score from 100 to 850, with 850 being the best.

第二季度我們在這一領域的經歷令人失望，因為我們繼續看到主要與車禍相關的更高的和解金額。與去年同期相比，本季度每股收益下降了 0.01 美元。我們已加大力度，大幅減少未來的汽車事故。我們的司機現在使用一個應用程序，一旦我們的車輛行駛，該應用程序就開始監控駕駛行為。該應用程序可檢測不安全的駕駛操作，例如加速、制動、分心和速度，然後將這些數據轉換為行業認可的 FICO 駕駛分數（從 100 到 850），其中 850 為最佳分數。

The data indicate that drivers with scores below 710 are 30% more likely to have a collision than those with higher scores. We're working hard in the field to increase driver safety awareness and get these scores up by coaching and training those with lower scores while recognizing and rewarding those that score the highest. We believe these efforts will help us keep people safe and mitigate negative potential financial impact to our business.

數據表明，分數低於 710 的駕駛員發生碰撞的可能性比分數較高的駕駛員高出 30%。我們正在該領域努力提高駕駛員的安全意識，並通過輔導和培訓得分較低的人同時表彰和獎勵得分最高的人來提高得分。我們相信這些努力將幫助我們保障人員安全並減輕對我們業務的潛在負面財務影響。

On the investment side, we proactively increased customer acquisition-related efforts during the second quarter and strategically invested more heavily on advertising spend when compared with the same quarter a year ago and sequentially versus the first quarter of 2023. While these costs were a $0.01 drag on second quarter earnings, we saw meaningful opportunities to go after and acquire new customers during the start of the busier spring and summer seasons.

在投資方面，我們在第二季度積極加大了與客戶獲取相關的工作，並與去年同期相比以及與 2023 年第一季度相比，戰略性地加大了廣告支出的投資力度。雖然這些成本僅拖累了 0.01 美元在第二季度的收益中，我們看到了在繁忙的春季和夏季開始期間尋找和獲取新客戶的有意義的機會。

Given that approximately 80% of our business is recurring, I want to emphasize that the opportunity for us to attract potential new customers is very important and it's a strategic investment over the long term. To date, we're extremely pleased with our targeted marketing and advertising efforts, which we believe is reflected in our strong organic growth performance for the quarter, and we expect this momentum to continue into the third quarter of 2023.

鑑於我們大約 80% 的業務是重複性的，我想強調的是，我們吸引潛在新客戶的機會非常重要，這是一項長期的戰略投資。迄今為止，我們對我們有針對性的營銷和廣告工作感到非常滿意，我們相信這反映在我們本季度強勁的有機增長業績中，我們預計這種勢頭將持續到 2023 年第三季度。

Next, we continue to focus on modernizing our business, our capital structure and our organization. As you may recall, in February, we enhanced our capital structure by refinancing our revolver, increasing it from $175 million in 2 banks up to $1 billion in 8 banks, providing us with investment-grade flexibility. More recently, our approximately $1.5 billion universal shelf facility was declared effective by the SEC. This facility provides additional financial capital and flexibility to the company, and Ken will share some additional details on this in a moment. Operationally, we're committed to developing great talent and investing in our teams.

接下來，我們繼續專注於業務、資本結構和組織的現代化。您可能還記得，2月份，我們通過對左輪手槍進行再融資來增強我們的資本結構，將其從2家銀行的1.75億美元增加到8家銀行的10億美元，為我們提供了投資級靈活性。最近，美國證券交易委員會 (SEC) 宣布我們價值約 15 億美元的通用貨架設施生效。該設施為公司提供了額外的財務資本和靈活性，肯稍後將分享有關此的一些其他詳細信息。在運營方面，我們致力於培養優秀人才並對我們的團隊進行投資。

Hiring has been healthy, and we've put a lot of energy into onboarding the right people in both the support functions and the customer-facing side of our business. As we look ahead to the improvement opportunity in front of us, we're focused on upgrading and realigning key areas in our home office support functions. You've heard us talk about opportunities in this area, and we are evaluating several initiatives as we start the second half of 2023.

招聘工作進展順利，我們投入了大量精力在支持職能和麵向客戶的業務方面招募合適的人員。當我們展望面前的改進機會時，我們專注於升級和重新調整家庭辦公室支持功能的關鍵領域。您已經聽過我們談論這一領域的機遇，我們正在評估 2023 年下半年開始的多項舉措。

We believe that driving this type of change will provide opportunities to accelerate our growth goals and enable our home office to become a better, more efficient provider of shared services to our frontline operations. Our modernization efforts are progressing well, but we're not done yet, and we look forward to sharing additional developments on this front later. In closing, before I turn the call over to Ken, we're pleased about where our business stands today. We're well positioned for the remainder of the year and remain focused on robust organic growth, delivering healthy incremental margins and continuing to attract, hire and retain top talent across the business. I'll now turn the call over to Ken.

我們相信，推動此類變革將為加速我們的增長目標提供機會，並使我們的總部成為為一線運營提供更好、更高效的共享服務的提供商。我們的現代化工作進展順利，但我們還沒有完成，我們期待稍後分享這方面的更多進展。最後，在我把電話轉給肯之前，我們對我們今天的業務狀況感到高興。我們在今年剩餘時間里處於有利地位，並將繼續專注於強勁的有機增長，提供健康的增量利潤，並繼續吸引、僱用和留住整個業務的頂尖人才。我現在將把電話轉給肯。

Thanks, Jerry, and good morning, everyone. The second quarter reflects strong execution by the Rollins team. Let me begin with a few highlights. First, we delivered strong revenue growth of approximately 15% year-over-year. We saw good growth across each of our service offerings. Organic revenue was up approximately 8% in the quarter and to finish the first half. Acquisitions drove the other 7% of the total revenue growth in the quarter. The integration of the Fox acquisition is progressing well, and we have a growing sense of optimism around this recent investment.

謝謝杰瑞，大家早上好。第二季度體現了羅林斯團隊的強大執行力。讓我首先介紹幾個亮點。首先，我們實現了約 15% 的強勁收入同比增長。我們的每項服務都取得了良好的增長。本季度至上半年的有機收入增長了約 8%。收購推動了本季度總收入增長的另外 7%。收購福克斯的整合進展順利，我們對最近的這項投資越來越樂觀。

Second, our gross margins were healthy, exceeding 53% this quarter. We were positive on the price/cost equation and saw good performance across several key cost categories. An adjusted EBITDA margin of 22.3% was pressured primarily by higher insurance premiums and casualty loss developments on 4 legacy auto cases. Our GAAP earnings were $0.22 per share and excluding certain expenses related to the Fox acquisition, adjusted earnings were $0.23 per share. And last but not least, we delivered approximately 16% improvement in operating cash flow while free cash flow was up approximately 18% versus the same period a year ago.

其次，我們的毛利率保持健康，本季度超過 53%。我們對價格/成本等式持積極態度，並在幾個關鍵成本類別上看到了良好的表現。調整後 EBITDA 利潤率為 22.3%，主要受到保險費上漲和 4 個傳統汽車案件傷亡損失進展的壓力。我們的 GAAP 收益為每股 0.22 美元，不包括與收購 Fox 相關的某些費用，調整後收益為每股 0.23 美元。最後但並非最不重要的一點是，我們的運營現金流量改善了約 16%，而自由現金流量較去年同期增長了約 18%。

Let's look at the quarterly results in a little bit more detail. Quarterly revenue was $821 million, up 15% on a reported basis. Currencies reduced revenue growth by 30 basis points as the Canadian dollar and the Australian dollar weakened relative to the U.S. dollar.

讓我們更詳細地看一下季度業績。根據報告，季度收入為 8.21 億美元，增長 15%。由於加元和澳元相對於美元走弱，貨幣因素導致收入增長下降了 30 個基點。

Turning to profitability. We realized a 40-basis point improvement in gross profit margin, where we saw good performance on gross profit as pricing more than offset inflationary pressures. We continue to see the benefit of a more consistent pricing discipline across all our brands this year. Looking at our 4 major buckets of service costs, people, fleet, materials and supplies and insurance and claims, we saw improvements in margins associated with materials and supplies as well as fleet costs, while insurance and claims were a headwind.

轉向盈利能力。我們的毛利率提高了 40 個基點，毛利潤表現良好，因為定價足以抵消通脹壓力。今年我們繼續看到我們所有品牌更加一致的定價規則的好處。看看我們的四大服務成本：人員、車隊、材料和供應以及保險和索賠，我們發現與材料和供應以及車隊成本相關的利潤率有所改善，而保險和索賠是一個阻力。

People costs were also somewhat favorable to margins even as we added a significant level of pest control and termite control technicians to support strong demand trends. As Jerry said earlier, staffing levels for our frontline team members are the best they've been in years. This timing sets up well as we see strong customer demand to start the third quarter. SG&A costs as a percentage of revenue increased by 30 basis points in the quarter.

即使我們增加了大量的害蟲防治和白蟻防治技術人員來支持強勁的需求趨勢，人力成本也對利潤率有利。正如傑瑞之前所說，我們一線團隊成員的人員配備水平是多年來最好的。這個時機安排得很好，因為我們看到第三季度開始的客戶需求強勁。本季度 SG&A 成本佔收入的百分比增加了 30 個基點。

Peeling back the SG&A layers a bit more, people cost, advertising and selling costs, along with insurance and claims make up the bulk of our SG&A spend. We saw headwinds to margins from higher insurance and automobile-related claim costs, as previously mentioned, there were settlement developments on a few auto claims cases this quarter, and we're seeing higher costs in general for auto insurance and related claims due to inflationary pressures. We continue to invest heavily in advertising efforts in the quarter, and that has helped us go after and capture healthy levels of growth.

再進一步剝離 SG&A 層，人員成本、廣告和銷售成本以及保險和索賠構成了我們 SG&A 支出的大部分。我們看到了保險和汽車相關索賠成本上升對利潤率的不利影響，正如前面提到的，本季度一些汽車索賠案件的和解取得了進展，而且我們看到由於通貨膨脹，汽車保險和相關索賠的成本總體上升壓力。本季度我們繼續大力投資廣告工作，這幫助我們追求並實現健康的增長水平。

As I mentioned earlier, we had non-GAAP adjustments this quarter for Fox acquisition-related items. These totaled approximately $5 million on a pretax basis and were related to purchase accounting amortization and the fair value of contingent consideration on this material acquisition. GAAP operating income was $155 million, up almost 15% year-over-year. Adjusted operating income was $160 million, up almost 19% versus the prior year. EBITDA was $182 million, up over 14% year-over-year and EBITDA margin was a healthy 22.2%. Our adjusted EBITDA was $183 million, up over 15% and representing a 22.3% margin.

正如我之前提到的，本季度我們對福克斯收購相關項目進行了非公認會計準則調整。按稅前計算，這些費用總計約為 500 萬美元，與購買會計攤銷和本次重大收購的或有對價的公允價值有關。 GAAP 營業收入為 1.55 億美元，同比增長近 15%。調整後營業收入為 1.6 億美元，比上年增長近 19%。 EBITDA 為 1.82 億美元，同比增長超過 14%，EBITDA 利潤率為 22.2%。我們調整後的 EBITDA 為 1.83 億美元，增長超過 15%，利潤率為 22.3%。

And for the first half, EBITDA margins were just under 22%. It is good to see EBITDA compounding at 16% in the first half. As I have consistently indicated, I'd like to look at the business using incremental margins or meaning what percentage of every additional dollar of revenue growth is converted to EBITDA. On an as-reported basis, we generated incremental margins in line with our overall EBITDA margin. However, excluding the headwinds I mentioned from insurance and auto claim developments and the additional costs associated with the earn-out on our recent acquisition incremental margins were accretive to our margin profile.

上半年，EBITDA 利潤率略低於 22%。上半年 EBITDA 複合增長率達到 16%，這是一件好事。正如我一直指出的那樣，我想用增量利潤來考察業務，或者說每增加一美元的收入增長中有多少百分比會轉化為 EBITDA。根據報告，我們產生的利潤率增量與我們的整體 EBITDA 利潤率一致。然而，排除我提到的保險和汽車索賠發展的不利因素，以及與我們最近收購增量利潤相關的額外成本，這些都增加了我們的利潤狀況。

Quarterly GAAP net income was $110 million or $0.22 per share, increasing from $0.21 per share in the same period a year ago. Adjusted net income was $114 million or $0.23 per share. The effective tax rate was 27% in the quarter, up 200 basis points versus the prior year, driven by higher foreign income taxes. We expect the rate to normalize at approximately 26% over the second half of this year.

季度 GAAP 淨利潤為 1.1 億美元，即每股 0.22 美元，高於去年同期的每股 0.21 美元。調整後淨利潤為 1.14 億美元，即每股 0.23 美元。由於外國所得稅上漲，本季度有效稅率為 27%，比上年上升 200 個基點。我們預計今年下半年該比率將恢復正常，約為 26%。

Turning to cash flow and the balance sheet. Quarterly free cash flow remained very strong. We generated $141 million of free cash flow on $110 million of earnings. Quarterly free cash flow increased by almost 18% and is compounding at just under 18% in the first 6 months of this year. Cash flow conversion, the percent of income that was converted to cash, was also a bright spot coming in well above 100%. We made acquisitions totaling $312 million, and we paid $64 million in dividends. That remains negligible and debt-to-EBITDA is well below 1x on a gross level.

轉向現金流和資產負債表。季度自由現金流仍然非常強勁。我們通過 1.1 億美元的收益創造了 1.41 億美元的自由現金流。季度自由現金流增長了近 18%，今年前 6 個月的複合增長率略低於 18%。現金流轉換（即收入轉換為現金的百分比）也是一個亮點，遠高於 100%。我們進行了總計 3.12 億美元的收購，並支付了 6400 萬美元的股息。這仍然可以忽略不計，而且債務與 EBITDA 的比率遠低於總水平的 1 倍。

We continue to be active in pursuing additional tuck-in acquisitions and remain very well positioned to continue to maintain a balanced capital allocation strategy. As Jerry mentioned previously, we are excited about the strategic growth opportunities that Fox provides. So far, the Fox team and business have exceeded our expectations from a growth perspective and we see continued opportunity and momentum in their door-to-door model.

我們繼續積極尋求額外的收購，並保持良好的地位，繼續維持平衡的資本配置策略。正如傑里之前提到的，我們對福克斯提供的戰略增長機會感到興奮。到目前為止，從增長的角度來看，福克斯團隊和業務已經超出了我們的預期，我們在他們的上門模式中看到了持續的機會和動力。

A quick update on financial details. In April, we shared our expectations that Fox would add between $90 million and $100 million of revenue and $18 million to $22 million of EBITDA to our 2023 results. We now expect to deliver financial performance at the high end of both of those ranges. We continue to make progress on a number of general financial housekeeping items that will help position us best as we continue to grow our business.

財務詳細信息的快速更新。今年 4 月，我們預計福克斯將在 2023 年業績中增加 9000 萬至 1 億美元的收入，以及 1800 萬至 2200 萬美元的 EBITDA。我們現在期望實現這兩個範圍的高端財務業績。我們繼續在一些一般財務管理項目上取得進展，這將有助於我們在業務不斷發展的過程中處於最佳位置。

Of note, we filed a shelf with the SEC on June 3. This filing allows for up to $1.5 billion of primary securities. And while we have no immediate need for this capital, it provides flexibility for long-term fixed rate financing and other options that complement the bank revolver that we put in place earlier this year. Additionally, the shelf allows the company to work proactively with the family should they decide to divest a portion of their holdings at some point in the future.

值得注意的是，我們於 6 月 3 日向 SEC 提交了擱置申請。該申請允許最多 15 億美元的主要證券。雖然我們沒有立即需要這筆資金，但它為長期固定利率融資和其他選擇提供了靈活性，以補充我們今年早些時候推出的銀行左輪手槍。此外，如果家族決定在未來某個時候剝離部分持股，公司可以主動與家族合作。

In summary, our performance this quarter continues to demonstrate the strength of our business model and the engagement level of our team. We remain focused on providing our customers with the best customer experience and driving growth organically and through disciplined acquisitions.

總之，我們本季度的業績繼續證明了我們業務模式的優勢和團隊的敬業度。我們仍然專注於為客戶提供最佳的客戶體驗，並通過嚴格的收購來推動有機增長。

With that, I'll turn the call back over to Jerry.

這樣，我會將電話轉回給傑里。

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

謝謝你，肯。我們很樂意此時回答任何問題。

(Operator Instructions) Our first question comes from the line of Josh Chan with UBS.

（操作員說明）我們的第一個問題來自 UBS 的 Josh Chan。

I wanted to ask about the comments that you made regarding the trends in May and June and July. Kenneth, what do you make of the fluctuation? And I guess, based on that, how do you see the trends going forward?

我想問一下您對五月、六月和七月趨勢的評論。肯尼斯，你對這種波動有何看法？我想，基於此，您如何看待未來的趨勢？

Yes. This is Jerry. The quarter was a little different than we've seen in the past. If you'll recall, back in April at our call with everyone, we talked about April was off to a really strong start, and it was, and April finished strong. May was good as well. And then we saw a pretty significant shift in and some of the demand, especially in the back half of June where it just slid. We've since gotten some of the data from Google on Google search query data that showed there was a pretty significant decline in the back half of June, and that's really what drove the volume down overall in the quarter.

是的。這是傑瑞。本季度與我們過去看到的有所不同。如果您還記得，早在四月份我們與大家的電話會議上，我們就談到四月份有一個非常強勁的開局，而且確實如此，四月份的收尾也很強勁。五月也不錯。然後我們看到一些需求發生了相當顯著的變化，特別是在六月下旬，需求剛剛下滑。此後，我們從谷歌獲得了一些有關谷歌搜索查詢數據的數據，這些數據顯示 6 月下半月出現了相當顯著的下降，這確實是導致本季度整體交易量下降的原因。

But then right when we got near the end of June, very beginning of July, get close to the 4th of July, it really popped. It just came back again. I think the temperatures rose considerably and the number of unique visitors to our website, just in the first couple of weeks in July improved by over 18% year-over-year. So it was it was a little weird. Normally, you see that kind of seasonality earlier in the quarter, not later, but it was a little different than we've ever seen in the past.

但當我們臨近 6 月底、7 月初、接近 7 月 4 日時，它真的突然爆發了。它剛剛又回來了。我認為氣溫大幅上升，僅在 7 月份的前幾週，我們網站的獨立訪問者數量就同比增加了 18% 以上。所以這有點奇怪。通常情況下，你會在本季度早些時候而不是晚些時候看到這種季節性，但這與我們過去看到的有點不同。

Okay. That's really helpful color, and that makes sense. And then I guess my follow-up, you also mentioned advertising increasing. Certainly, it makes sense to invest in that given your business model. I was just wondering what causes you to ramp up or down the advertising spend. I'm curious what you saw in Q2 that made you decide to do more advertising versus less?

好的。這是非常有用的顏色，而且很有意義。然後我想我的後續行動，你也提到了廣告的增加。當然，考慮到您的商業模式，對此進行投資是有意義的。我只是想知道是什麼原因導致您增加或減少廣告支出。我很好奇您在第二季度看到的是什麼讓您決定做更多的廣告而不是更少的廣告？

Well, when we started, we had good signs in April that the environment was good. And plus, we were staffed for it. So when you're better staffed and you've got the people to service the customers and get the new customers coming in the door, that's when it's there to take there to take advantage of it. And in our business, and if you look at the fiscal year, selling recurring revenue, the earlier in the year, you get it the more revenue you get. And so we just thought the conditions were right. And I think that's worked out well for us as evidenced by the organic growth levels that we saw in the quarter.

嗯，當我們開始的時候，我們在四月份就有了良好的跡象，表明環境很好。另外，我們還配備了相關人員。因此，當您配備了更好的人員並且有人員為客戶提供服務並吸引新客戶上門時，就可以利用它了。在我們的業務中，如果你看一下財政年度，銷售經常性收入，一年中越早，你獲得的收入就越多。所以我們只是認為條件合適。我認為這對我們來說效果很好，本季度的有機增長水平就證明了這一點。

That's great commentary, Jerry. Josh. Just one additional item with respect to advertising. If you go back and you look at our results, say, for the fourth quarter of last year, we were conscientious in disclosing that advertising was down. And so what you saw was during the winter season, during the fourth quarter, advertising was certainly lower because demand levels are generally lower. But as you go throughout the year, you generally will see a ramping of the advertising in Q2 and Q3. And before it starts to recede a bit in Q4. So I think we'll continue to follow that same trajectory when we think about demand season for our business.

這是很棒的評論，傑瑞。喬什。只是關於廣告的一項附加項目。如果你回頭看看我們的業績，比如說去年第四季度，我們就很認真地披露了廣告業務的下降。所以你看到的是在冬季，第四季度，廣告肯定會減少，因為需求水平普遍較低。但隨著全年的發展，您通常會看到第二季度和第三季度的廣告量增加。在第四季度開始略有回落之前。因此，我認為，當我們考慮業務的需求季節時，我們將繼續遵循同樣的軌跡。

Our next question comes from the line of Luke McFadden with William Blair.

我們的下一個問題來自盧克·麥克法登和威廉·布萊爾的對話。

This is Luke McFadden on for Tim Mulrooney. I'm curious, with inflation beginning to ease, is your above-average pricing adding any effect on new customer growth or retention? In other words, are you seeing any pushback or pricing from customer -- on pricing from customers? And how should investors think about pricing more broadly as you head into the second half of this year.

我是盧克·麥克法登 (Luke McFadden) 替補蒂姆·莫魯尼 (Tim Mulrooney)。我很好奇，隨著通貨膨脹開始緩解，你們高於平均水平的定價是否會對新客戶的增長或保留產生任何影響？換句話說，您是否看到客戶對定價有任何阻力或定價？進入今年下半年，投資者應該如何更廣泛地考慮定價。

I would say we've had a little more pushback than we've had in prior years, but nothing that's insurmountable. It's still early to truly judge as we go through the year and get further into the year, we'll look closer at our rollback data and exclusion data, this really get an effect of what happened and whether or not customers canceled over. We'll have all our metrics as we move through the year.

我想說，我們遇到的阻力比前幾年要多一些，但沒有什麼是不可克服的。現在真正做出判斷還為時尚早，隨著我們度過這一年並進一步進入這一年，我們將仔細查看我們的回滾數據和排除數據，這確實會影響所發生的情況以及客戶是否取消。隨著這一年的推移，我們將獲得所有指標。

I would say it hasn't, it hasn't been a significant issue for us thus far this year. Now the questions as you move through the year, we watch that further depending on the economic environment. We have to moderate that. Ken will -- our plan is to evaluate pricing towards the latter part of this year once all the data and we'll go from there as we think about a futuristic...

我想說還沒有，今年到目前為止這對我們來說還不是一個重大問題。現在，隨著這一年的發展，我們將根據經濟環境進一步觀察這些問題。我們必須對此進行調節。肯將——我們的計劃是在獲得所有數據後評估今年下半年的定價，我們將從那裡開始思考未來的......

Yes, that's correct. But I do I also want to add that we continue to believe that our services are essential. We do believe that there's definitely value in our pricing model. But we are conscientious of price and what impact that has in our customer base. And so we'll continue to monitor that. We'll continue to monitor economic trends, but we won't lose sight of the essential value of our services. So Stay tuned on that. But that's, I think, how we think about it, Josh.

對，那是正確的。但我還想補充一點，我們仍然相信我們的服務至關重要。我們確實相信我們的定價模型絕對有價值。但我們非常重視價格及其對客戶群的影響。因此我們將繼續監控這一情況。我們將繼續監控經濟趨勢，但我們不會忽視我們服務的基本價值。所以請繼續關注。但我想，這就是我們的想法，喬什。

That was Luke.

那是盧克。

Great. And if I can follow up just with one more maybe on gross margins here. It looks like gross margins were up 40 basis points year-over-year in the second quarter. We know Fox has pretty high gross margins, just given the nature of that business. How much of that gross margin expansion do you think could be attributed to the contribution from Fox? And can you touch on the other factors just helping to drive that gross margin expansion in the second quarter? I know you mentioned it in your prepared remarks, but -- any further commentary there would be helpful.

偉大的。如果我可以再跟進一項，也許是關於毛利率。第二季度毛利率同比增長 40 個基點。考慮到該業務的性質，我們知道福克斯的毛利率相當高。您認為毛利率的增長有多少可以歸因於福克斯的貢獻？您能否談談有助於推動第二季度毛利率擴張的其他因素？我知道你在準備好的發言中提到過這一點，但是——任何進一步的評論都會有所幫助。

Yes. It's Ken, Luke, and I'll take that question. You're exactly right. The Fox acquisition is a very valuable acquisition and the gross margin reflects the value on their business model. It is accretive to the overall margin profile of Rollins. But it only contributed about $39 million of revenue in the quarter. So it's not that meaningful. It did have a positive impact on the gross margin, but we also saw a positive impact across our organic business, primarily through better leveraging of fleet costs, better leveraging of people costs and materials and supplies.

是的。我是肯、盧克，我來回答這個問題。你說得完全正確。收購福克斯是一次非常有價值的收購，毛利率反映了其商業模式的價值。這增加了羅林斯的整體利潤狀況。但該季度僅貢獻了約 3900 萬美元的收入。所以意義不大。它確實對毛利率產生了積極影響，但我們也看到了對我們有機業務的積極影響，主要是通過更好地利用車隊成本、更好地利用人力成本以及材料和供應。

It's interesting, when I step back and I look at the fleet cost, you would expect fleet costs to improve with gasoline prices. But the thing I think people are missing at times is the fact that used car prices aren't as attractive. So when we turn in lease vehicles or when we sell lease vehicles, we're not seeing as much of a gain as we did last year at this time. So we're seeing good improvement in our organic business despite that headwind. And we also are seeing improvement associated with the Fox acquisition coming through our gross profit margin.

有趣的是，當我退後一步看看車隊成本時，您會預計車隊成本會隨著汽油價格的上漲而提高。但我認為人們有時會忽略這樣一個事實：二手車價格並不那麼有吸引力。因此，當我們上交租賃車輛或出售租賃車輛時，我們並沒有看到像去年此時那樣多的收益。因此，儘管存在逆風，我們的有機業務仍然取得了良好的進展。我們還看到與福克斯收購相關的毛利率有所改善。

Our next question comes from the line of Stephanie Moore with Jefferies.

我們的下一個問題來自斯蒂芬妮·摩爾和杰弗里斯的對話。

This is Harold Antor on for Stephanie Moore. So you talked about productivity initiatives. So I just want to get an idea of what investments that you're making [out] of the company becoming a little bit more productive.

我是哈羅德·安托 (Harold Antor) 為斯蒂芬妮·摩爾 (Stephanie Moore) 配音。所以你談到了生產力計劃。所以我只是想了解一下你對公司進行了哪些投資，從而變得更有成效。

Yes. I would add -- or I would say to that point, we, like most other companies have a list of a number of opportunities that we continue to evaluate across the restructuring area. We're looking at all areas of the business. And as Jerry had talked about as well as myself, continuous improvement is a big focus of our company. And so when we look at, for example, our home office, we are continuing to look at ways we can enhance and improve the home office, but we're also looking more broadly across the business. So can't give you one specific initiative, but it's really across all of our footprint that we're really evaluating opportunities to improve the business from a productivity perspective.

是的。我想補充一點，或者我想說的是，與大多數其他公司一樣，我們有一系列機會，我們將繼續在重組領域進行評估。我們正在關注業務的所有領域。正如傑里和我本人所說，持續改進是我們公司的一大重點。因此，當我們審視我們的家庭辦公室時，我們會繼續尋找增強和改進家庭辦公室的方法，但我們也會更廣泛地關注整個業務。因此，無法向您提供一項具體舉措，但我們確實在從生產力的角度評估改善業務的機會，這確實貫穿了我們的所有業務。

And then just on the residential deceleration. It looks like resi slowed down. And sequentially on year-over-year. So if you could give us any puts and takes on resi growth, resi organic growth? And how should we think about resi organic growth looking forward to the back half of the year?

然後就到住宅區減速。雷西似乎放慢了速度。並且逐年連續。那麼，您能否給我們提供有關 Resi 增長、Resi 有機增長的任何看跌期權和承擔信息？展望今年下半年，我們應該如何看待資源有機增長？

Yes. When we look back at the quarter and compare it to other recent quarters, we look at it as though June was a bit of an anomaly. June was a really weird month that affected that. I mean we were -- in April and May, organic growth was in that double-digit range, that we were expecting. And then in June kind of threw us for a loop with what went on there. So we've started the quarter out back on track with more in line with what we expected, and we don't see any signs.

是的。當我們回顧本季度並將其與最近的其他季度進行比較時，我們認為 6 月份有點反常。六月是一個非常奇怪的月份，影響了這一點。我的意思是，四月和五月，有機增長處於我們預期的兩位數範圍內。然後六月份發生的事情讓我們大吃一驚。因此，我們在本季度開始時就回到了正軌，更加符合我們的預期，但我們沒有看到任何跡象。

Of course, you don't have a crystal ball, but certainly, we'll make every attempt to continue to drive higher levels on the organic residential growth side.

當然，你沒有水晶球，但我們肯定會盡一切努力繼續推動有機住宅增長方面的更高水平。

Our next question comes from the line of Jason Haas with Bank of America.

我們的下一個問題來自美國銀行的賈森·哈斯 (Jason Haas)。

Just following up on that monthly sales cadence. It sounds like maybe it was some cold spring weather maybe push them sales out into July. I'm curious, in prior years where you've had a cold spring, do you see the business shift into July and maybe even further into August and September? Just trying to think about that 10% organic growth number you started in July, and if there's anything to be cognizant of in terms of the compares, whether they get easier and harder through the quarter in August and September?

只是跟進每月的銷售節奏。聽起來可能是一些寒冷的春天天氣可能會將他們的銷售推遲到七月。我很好奇，前幾年你們經歷了寒冷的春天，你們是否認為生意會轉移到七月，甚至可能進一步轉移到八月和九月？試想一下您在 7 月開始的 10% 有機增長數字，如果在比較方面有什麼需要注意的地方，那麼在 8 月和 9 月的季度中，它們是否變得更容易和更困難？

Again, you think about seasonality, and sorry to say this last quarter was different because normally, when we talk about cooler spring, cooler early summer, that's usually happening in March and April. And usually, it hits. So this quarter, it was just -- it was really different than one I'd say we've seen in many, many years. Now is that to say there's some pent-up demand. We certainly have seen that in July, where once temperatures got to -- I don't know, a few weeks ago, we were in California, Ken, and when we arrived that day, in the middle of the day, it was like 75 degrees. But then by the weekend, it was 110 degrees in Northern California and the phones were ringing off the hook. So it was very -- So we had some very unseasonably cool weather in June, which is kind of an anomaly. So I don't know what else to say...

再說一遍，你會想到季節性，很遺憾地說上個季度有所不同，因為通常情況下，當我們談論涼爽的春季和涼爽的初夏時，通常發生在三月和四月。通常，它會擊中。所以這個季度，它與我想說的我們很多年以來所看到的確實不同。這就是說存在一些被壓抑的需求。我們當然已經在七月看到了這一點，一旦氣溫達到--我不知道，幾週前，我們在加利福尼亞州，肯，當我們那天中午到達時，就像75度。但到了周末，北加州的氣溫達到了 110 度，電話鈴聲響起。因此，六月份我們經歷了一些反常的涼爽天氣，這有點反常。所以我不知道還能說什麼...

Yes. It's just adding on there. Weather always has an impact across the business. What really helps us to is those warm evenings when evening stay above a certain level, the low temperature doesn't get too low. And so when you see that, you certainly have a benefit in the business. And so it certainly does continue to have a nice positive impact on the business.

是的。它只是在那裡添加。天氣總是對整個業務產生影響。真正對我們有幫助的是那些溫暖的夜晚，當夜晚保持在一定水平以上時，低溫不會變得太低。因此，當您看到這一點時，您肯定會在業務中受益。因此，它確實繼續對業務產生積極的影響。

As we think about comparables, I don't see anything year-over-year that has a huge impact on comparables from a weather or from a revenue performance perspective. Jason. But we feel, as we said in our prepared comments, we feel very good about how we're positioned to deliver a strong second half in 2023.

當我們考慮可比數據時，我認為從天氣或收入績效的角度來看，沒有任何同比情況對可比數據產生巨大影響。傑森.但正如我們在準備好的評論中所說，我們對如何在 2023 年下半年實現強勁的業績感到非常滿意。

That's great. And then for a follow-up, I was going to ask on the incremental EBITDA margins. I know you said previously, and we're seeing it play out that the plan was to invest more in some customer acquisition costs. So you're a little bit below the 30% target this quarter. Is that a fair framework? I think you're in the low 20% range or so this quarter. Is that a fair assumption to use for the near term? Or do you think in the next few quarters, you can get back to that 30% level that you target?

那太棒了。接下來，我要詢問增量 EBITDA 利潤率。我知道你之前說過，我們看到該計劃是在一些客戶獲取成本上投入更多資金。因此，本季度的目標略低於 30%。這是一個公平的框架嗎？我認為本季度您處於 20% 左右的低水平範圍內。對於近期來說，這是一個合理的假設嗎？或者您認為在接下來的幾個季度中，您可以回到您的目標 30% 的水平嗎？

So it's interesting, Jason. If you look at the LTM number as of June 30, the LTM incremental margin is 29.3%. So it's almost 30%. That's up strongly from the prior year. And so when we look over a long period of time a 12-month period, we're certainly trending at those levels that we talked about. This one quarter, what we saw in the second quarter, you might see it a bit in the third quarter, is you're investing. It's time to invest. It's time to go after and acquire those customers that you're going to keep for years to come.

所以這很有趣，傑森。如果查看截至 6 月 30 日的 LTM 數據，LTM 增量利潤率為 29.3%。所以幾乎是30%。這比上一年大幅上升。因此，當我們觀察很長一段時間（12 個月）時，我們肯定會看到我們所討論的趨勢水平。這個季度，我們在第二季度看到的，你可能在第三季度看到的，是你在投資。是時候投資了。是時候去爭取並贏得那些你將在未來幾年保留的客戶了。

And so you see [even our] incrementals may be weighed down a little bit by that. But the fact that the incrementals were accretive to our actual margin profile that provides me a sense of optimism. We're in an investment period, and we're actually still seeing incrementals that are accretive to our EBITDA margin. That's a good thing to see. And so we're hopeful that, that will continue as we go into the third quarter. But our goal long term is that 30% incremental margin profile.

所以你會看到，[甚至我們]的增量可能會因此而受到一點壓力。但事實是增量增加了我們的實際利潤狀況，這讓我感到樂觀。我們正處於投資期，實際上我們仍然看到增量可以增加我們的 EBITDA 利潤率。這是一件好事。因此，我們希望這種情況在進入第三季度時能夠繼續下去。但我們的長期目標是增加 30% 的利潤率。

There's no reason this business shouldn't get to those levels based upon the pricing that we get based upon the essential nature of our services, based upon our customer experience that our service technicians and our associates are providing our customers. And so we feel good about that incremental margin target longer term.

根據我們根據服務的基本性質、根據我們的服務技術人員和我們的員工為客戶提供的客戶體驗而獲得的定價，這項業務沒有理由不達到這些水平。因此，我們對長期增量利潤目標感到滿意。

(Operator Instructions) Our next question comes from the line of John Mazzoni with Wells Fargo Securities.

（操作員指令）我們的下一個問題來自富國銀行證券公司的約翰·馬佐尼 (John Mazzoni)。

Maybe just following up on this insurance issue. I think you believe you mentioned 4 claims in the quarter and about a 40-basis point drag. Could you maybe just quantify if there's any other kind of legacy settlements in the pipeline that could hit in the future quarters? And also, how should we think about higher insurance costs as we move through the year? Should they maybe step down as the driver safety improves? Or are higher insurance costs more of a function of just the environment we're currently in?

也許只是跟進這個保險問題。我認為您相信您提到了本季度的 4 項索賠以及大約 40 個基點的拖累。您能否量化一下是否還有其他類型的遺留和解方案正在醞釀中，可能會在未來幾個季度發生？此外，隨著時間的推移，我們應該如何考慮更高的保險費用？隨著駕駛員安全的改善，他們是否應該下台？或者更高的保險成本更多地是我們當前所處環境的結果？

Yes. First and foremost, what I would say is our accruals at June 30 are complete and accurate. And so when we look at the liability associated, for example, with auto claims, we feel like it's complete. We do know that things change. And so as facts, as circumstances change, estimates change. And that's what we would do as we move forward. you really started to see this tick up last year in the third quarter. We had around $10 million of claims that came through that settlements came through.

是的。首先，我要說的是，我們 6 月 30 日的應計費用是完整且準確的。因此，當我們查看與汽車索賠相關的責任時，我們感覺它已經完成了。我們確實知道事情會發生變化。因此，隨著事實、情況的變化，估計也會發生變化。這就是我們前進時要做的事情。去年第三季度你確實開始看到這種情況的上升。我們收到了大約 1000 萬美元的索賠，並達成了和解。

And it's interesting when you look at what happened during COVID, claims have certainly -- they've certainly trended down quite a bit, courts closed a bit, settlement activity went down. And then coming out of COVID, you start to ramp. We're hopeful that we'll see that turn down as we go into the future. But you're just not sure what's going to happen on that front. What you can do, however, is focus on the controllables. And what Jerry had talked about in his comments, was focusing on putting systems and processes and the focus behind behavioral-based safety into the business that will mitigate these exposures as we move forward. And so we're doing just that. And we're hopeful that, that activity will have a positive impact on our experience in this -- our unfortunate experience in this area.

有趣的是，當你看看新冠疫情期間發生的事情時，索賠確實呈下降趨勢，法院關閉了一些，和解活動也有所下降。走出新冠疫情后，你就開始進步了。我們希望在未來我們能看到這種轉變。但你只是不確定這方面會發生什麼。然而，你能做的就是專注於可控因素。傑里在評論中談到的重點是將系統和流程以及基於行為的安全背後的重點納入業務，這將在我們前進的過程中減輕這些風險。所以我們就是這麼做的。我們希望這項活動將對我們在這方面的經歷產生積極的影響——我們在這一領域的不幸經歷。

Got it. Great color. And maybe also just following up on this investment period. Could you just quantify the kind of return on ad spend or maybe even at a high level, just your kind of customer acquisition cost at kind of either digital or linear. We've seen kind of a lower TV upfront market and potentially others pulling back. So could that be potential upside if you can get these kind of ad dollars and your customer acquisition costs down.

知道了。顏色很棒。也許也只是跟進這個投資期。您能否量化廣告支出的回報率，甚至可以在較高的水平上量化您的數字或線性客戶獲取成本。我們看到電視預付費市場有所下降，其他市場也可能出現收縮。因此，如果您能夠獲得這些廣告收入並降低客戶獲取成本，這可能會帶來潛在的好處。

What I would say and I would ask Jerry to comment, too, was if I look at our organic growth profile and I compare it to our overall market growth, our organic growth, as we said in our prepared commentary, is roughly 8%. The markets, what we expect the markets to be growing at are much below 8%. So when we think about the organic growth profile and we think about the share that we are gaining in our markets, we feel good about the return levels knowing that incremental margins can be around that 30% and a customer might stay with us for 3, 5 or even 7 years. So we feel really good about the returns that we're getting on those ad dollars.

我想說的是，我也想請傑里發表評論，如果我看看我們的有機增長概況，並將其與我們的整體市場增長進行比較，我們的有機增長，正如我們在準備好的評論中所說，大約是 8%。我們預計市場的增長率遠低於 8%。因此，當我們考慮有機增長狀況並考慮我們在市場中獲得的份額時，我們對回報水平感到滿意，因為我們知道增量利潤可以在 30% 左右，並且客戶可能會在我們這里呆 3 年， 5年甚至7年。因此，我們對這些廣告收入所獲得的回報感到非常滿意。

Yes. I mean just factor in the lifetime value of a customer and what that customer means to us over the long term as a worthy spends. And we do a very good job of monitoring cost of customer acquisition, cost to lead, and we're very comfortable with what we're spending to generate that long-term recurring revenue stream.

是的。我的意思是只考慮客戶的終生價值以及該客戶從長遠來看對我們來說是值得的支出。我們在監控客戶獲取成本和領導成本方面做得非常好，而且我們對產生長期經常性收入流的支出感到非常滿意。

And our next question comes from the line of Aadit Shrestha with Stifel.

我們的下一個問題來自 Aadit Shrestha 和 Stifel 的對話。

This is Aadit Shrestha from Stifel filling in for Michael Hoffman today. So just going to your cash flow, you had a very strong free cash flow conversion in 2Q. Were there any specific factors that influence this in the period? And would you expect the conversion to be like lower in the second half?

我是來自 Stifel 的 Aadit Shrestha，今天接替邁克爾·霍夫曼 (Michael Hoffman)。因此，就現金流而言，第二季度的自由現金流轉換非常強勁。期間有什麼具體因素影響這一情況嗎？您預計下半年的轉化率會降低嗎？

When we look at the cash flow conversion, we're really happy with the performance that we saw in Q2, but also the first half of the year. Our focus is to continue to drive compounding of free cash flow in that mid-teen range. And the fact that we saw free cash flow compound at roughly 17%, 18% in the quarter, it provides us a sense of optimism heading into the future. I don't know that we're ready to increase our expectations in the 18% or 20% compounding of cash flow. But if we can continue to see compounding of cash flow in that 14% to 15% or so percent, which is in line with what we've compounded cash flow at over the last 20 or so years.

當我們查看現金流轉換時，我們對第二季度以及上半年的表現非常滿意。我們的重點是繼續推動自由現金流在中位數範圍內的複利。事實上，我們看到本季度的自由現金流複合約為 17%、18%，這讓我們對未來感到樂觀。我不知道我們是否準備好提高現金流複利 18% 或 20% 的預期。但如果我們能夠繼續看到 14% 到 15% 左右的現金流複合，這與我們過去 20 年左右的複合現金流是一致的。

I think we would be happy with that performance. Nothing really jumps off the page at me in terms of what's driving cash flow improvement in the quarter. I know the FOX business has a bit of a different business model when you look at the door-to-door side. And so payables stepped up a little bit with respect to that business model, that actually had a positive impact on cash flow. But overall, we feel good about cash flow and we feel good about the generation of cash that we're seeing.

我想我們會對這樣的表現感到滿意。就推動本季度現金流改善的因素而言，我並沒有真正想到什麼。我知道，當你觀察挨家挨戶方面時，福克斯的業務有一些不同的商業模式。因此，就該業務模式而言，應付賬款有所增加，這實際上對現金流產生了積極影響。但總的來說，我們對現金流感覺良好，對我們所看到的現金產生感覺良好。

And just as a follow-up. Your largest customer mentioned that the deal valuations have come down as private equity is spending less for deals. Are you seeing a similar trend? And does this drive like an outsized year of deals, excluding the Fox acquisition?

並且只是作為後續行動。你們最大的客戶提到，由於私募股權公司在交易上的支出減少，交易估值已經下降。您是否看到類似的趨勢？除了收購福克斯之外，這是否會推動今年交易規模的擴大？

Sure. I completely heard or understood the question. Were you asking more about the PE space and what we're seeing from a...

當然。我完全聽到或理解了這個問題。您是否想了解更多有關私募股權領域的信息以及我們從……中看到的情況？

Just overall sort of what multiples are being paid for acquisitions are lower now. That's what they're seeing. And if you're seeing a sort of similar type of trend. And would this sort of mean you do more M&A than usual?

現在收購所支付的總體倍數較低。這就是他們所看到的。如果您看到一種類似的趨勢。這是否意味著您會比平常進行更多的併購？

I wouldn't necessarily say it's come down significantly. I've seen some PE deals that have transacted at pretty high valuations early this year. I would say there's also been maybe some PE deals out there that haven't made it to closing. So it seems to be it's still a pretty rich environment. It may have softened a little bit, Ken. We measure that pretty closely and kind of watch all of our transactions. I don't necessarily think it means we're going to go more aggressive or try to bite off more than we can choose. We will always remain disciplined about picking the right -- the right acquisitions, the companies with the right culture, the people that care about the business and have the right type of fit for Rollins. And that no matter what the valuation is, that's the biggest thing we look. That's where we start. Ken, what would you add?

我不一定會說它已經大幅下降。今年年初，我看到一些私募股權交易的估值相當高。我想說可能還有一些私募股權交易尚未完成。所以看起來它仍然是一個相當富裕的環境。它可能已經軟化了一點，肯。我們非常仔細地衡量這一點，並觀察我們所有的交易。我並不一定認為這意味著我們會變得更加激進，或者試圖咬住超出我們選擇範圍的東西。我們將始終嚴格挑選正確的企業——正確的收購、具有正確文化的公司、關心業務並適合羅林斯的人才。無論估值是多少，這都是我們關注的最重要的事情。這就是我們開始的地方。肯，你會添加什麼？

Yes. The only thing I would add is, I mean, we can speak about our experience. And our experience is we've been investing at very healthy multiples, not necessarily aggressive levels we are getting deals at fair values. But it's interesting. The one thing that certainly has an impact on the M&A markets is interest rates. And as interest rates tick up, ultimately, some buyers value businesses at a much lower level. You just can't get there with certain levels of interest rates.

是的。我唯一要補充的是，我的意思是，我們可以談論我們的經驗。我們的經驗是，我們一直以非常健康的倍數進行投資，不一定是激進的水平，我們以公允價值獲得交易。但這很有趣。對併購市場肯定有影響的一件事是利率。隨著利率上升，最終，一些買家對企業的估值要低得多。你只是無法以一定的利率水平實現這一目標。

So that certainly has potentially an impact on the M&A environment. But what Jerry said is spot on. We're going to continue to focus on buying good businesses, paying fair values and businesses that align with our culture and our focus and value their team members, value their brands. That's the kind of business we want to bring into the fold, and we feel like we got that with Fox.

因此，這肯定會對併購環境產生潛在影響。但傑瑞說的很對。我們將繼續專注於購買優秀的企業，支付公平的價值和符合我們的文化和我們的重點的企業，並重視他們的團隊成員，重視他們的品牌。這就是我們想要開展的業務，我們覺得福克斯已經做到了這一點。

And our next question comes from the line of Ollie Davies with Redburn Partners.

我們的下一個問題來自 Redburn Partners 的 Ollie Davies。

On the residential side, can you just talk about the split of organic growth between kind of cross-selling into the existing customer base and your ability to add new customers, given the macro environment?

在住宅方面，考慮到宏觀環境，您能否談談現有客戶群的交叉銷售與增加新客戶的能力之間的有機增長之間的區別？

The focus on cross-sell, the focus on ancillary is a key part of the strategy. We don't necessarily provide the detailed growth levels for ancillary or for cross-sell or multiple services with any one customer. But what I can tell you is we're seeing really good growth from a number of different services. Like, for example, you might have an individual that signs up for pest control and they're adding mosquito because mosquito demand is incredibly strong or you might see a termite customer or another pest control customer that is signing up for cross space work or insulation work. And so we're still seeing continued good demand for those ancillary and additional services across the business.

注重交叉銷售、注重輔助是該戰略的關鍵部分。我們不一定向任何一位客戶提供輔助服務、交叉銷售或多項服務的詳細增長水平。但我可以告訴你的是，我們看到許多不同的服務都實現了良好的增長。例如，您可能有一個人報名參加害蟲防治，他們正在添加蚊子，因為蚊子的需求非常強勁，或者您可能會看到白蟻客戶或其他害蟲防治客戶正在報名參加跨空間工作或隔熱工作。因此，我們仍然看到整個企業對這些輔助和附加服務的持續良好需求。

Great. And then as a follow-up, on the commercial, obviously remains very strong. What are the sort of typical types of commercial venues that you're adding at the moment? And do you think this can continue, given, I guess, the kind of historical volume growth that Commercial delivered before the pandemic?

偉大的。然後作為後續行動，在廣告上，顯然仍然非常強大。您目前添加的商業場所有哪些典型類型？我想，鑑於商業在大流行之前實現的歷史銷量增長，您認為這種情況可以繼續下去嗎？

We haven't seen any slowdown in our ability to sell and bring on new commercial customers. We are more focused on certain verticals that we really like to sell into -- logistics, health care, hospitality, things along those lines where we try to be pretty fairly disciplined about the customers that we're really proactively targeting. But we have a very effective sales force. We've continued to invest in that sales force and ramp up those sales efforts, and we feel very positively about the future of the commercial business.

我們的銷售和吸引新商業客戶的能力沒有出現任何放緩。我們更專注於我們真正喜歡銷售的某些垂直領域——物流、醫療保健、酒店業，在這些領域，我們試圖對我們真正積極主動瞄準的客戶保持相當嚴格的紀律。但我們擁有一支非常有效的銷售隊伍。我們繼續投資於銷售隊伍並加大銷售力度，我們對商業業務的未來感到非常積極。

And we have reached the end of the question-and-answer session. And I'll now turn the call back over to management for closing remarks.

我們的問答環節已經結束了。現在，我將把電話轉回給管理層，讓其作結束語。

Thank you, everyone, for joining us today. We appreciate your interest in our company, and we look forward to updating you on the third quarter earnings call in October. Thanks again.

謝謝大家今天加入我們。感謝您對我們公司的興趣，我們期待在 10 月份的第三季度財報電話會議上向您通報最新情況。再次感謝。

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

今天的會議到此結束，大家可以掛斷電話了。感謝您的參與。