William Blair – Pest Control Buzz

July 2023 Summary:

The total U.S. pest control index increased 12% year-over-year in July, showing an acceleration from the softer result observed in June (of 6%). July’s results are slightly above the long-term historical average index growth rate of 11%.

A sequential improvement in July was largely anticipated as temperatures rose across the country and is in line with commentary provided by Rollins (ROL $39.34; Outperform) and Rentokil. However, we view these results as somewhat underwhelming relative to expectations, since July 2023 was one of the warmest months in U.S. recorded history.

Higher temperatures have carried into August, which may support stronger customer activity in the fiscal third quarter. However, July’s results were not strong enough to warrant upward revisions to our organic revenue growth estimates at this time. Our model calls for midsingle-digit organic growth for Rollins in the third quarter, down from high-single-digit organic growth in the first half of the year.

July 2023 Results by Segment:

The Residential Pest Index increased  14% year-over-year

The Commercial Pest Index increased 16% year-over-year

The Termite Index increased 5% year-over-year

The Bed Bug Index decreased 3% year-over-year

The Mosquito Index increased 6% year-over-year

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