Pest industry 2013


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A snapshot report on current trends, concerns, and opportunities in the pest industry.

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  • I would make the map dominate the slide, and reduce the text to: Fire ants are adapting to colder weather and becoming problems for crops, wildlife, and people in the northern region of the US.
  • *Too complex a statement; too much financial jargon. Replace it with “Strong companies are growing through acquisitions.”** Replace with “Note: Consolidation is occurring at all levels: national & regional.”Also, add location info (name the states where the targets are)
  • This might be 2 slides. The first 2 items are conclusions that have already been explained. The 3rd is new. What is its importance? What were these buyers? Do they come from a sector that could develop into a serious player or absorb part of our industry, such as home maintenance or sanitation, or are they just venture capitalists? If venture capitalists, does this mean that outsiders are seeing the potential value in our industry, or does it mean that they are jumping in for quick profits and will sell out quickly, leaving the industry weaker (yet perhaps give us acquisition targets then?) Unless item 3 has a concrete purpose, I’d delete it. It may interest you, but I doubt anyone else will be intrigued, especially since Royal isn’t acquiring other businesses.
  • More TMI. “Outlook is Positive” Your audience will like this slide. Let them take it in and reach their own conclusions. Also, put the source directly on the slide, as a footnote at the bottom or something like that.
  • 1st point doesn’t follow well from the previous slide. That has 3 trends in the type of work we do; this jumps back to an overall industry trend. Also, what’s the purpose of stating it? Is the point that it means more competition? If so, say “competition from new specialty companies (I assume you mean bed bug dog companies and the like?)Item 2: Do you really have support for residential fumigation for bed bugs? Could your statistics be referring to increased termite fumes in the warmer states? If the former, footnote this one also, as that is significant. Is the 2nd sentence of this bullet point a separate bullet point? What’s behind that conclusion—global warming nonsense? [Oops, pardon the characterization.]
  • Give the title for which LEED is the acronym—they won’t know it. Add a statement that Royal is right on track on this one.2nd bullet: What I added is in artful, but make that point. Since Royal has committed to go after this sector, perhaps add another statement that we are on top of this one also.
  • Another very good slide for your audience. Let it speak for itself. Perhaps don’t explain it at all; just ask what they see in this. This one needs a visible footnote also.
  • Same treatment as the last 2 slides. Add source footnote.
  • Pest industry 2013

    1. 1. Pest Control Industry 2013 what we are learning from our industry EMWIIIRPS2013
    2. 2. How will the upturn in the US Economy help our industry? ❖ As the US economy continues to recover, the housing market is recovering as well. This alone should increase demand from homeowners for regular inspections and treatments of termites and other pests. EMWIIIRPS2013
    3. 3. What events are increasing the demand for our services? ❖ Hotel and restaurant industry standards and regulations are creating increased demand for pest control services. The recent uptick in bed bug outbreaks has further propelled the demand for professional services. 81 bed bug services in 2011 vs. 225 bed bug services in 2012 -source: Pest Pac EMWIIIRPS2013
    4. 4. What trends could require more visit from pest control companies? ❖ The trend toward organic and environmentally friendly products means more opportunity for the pest control industry. Less toxic pest control products stay in the environment for shorter periods when compared to toxic products and require more frequent application. The shift to these newer products will require commercial and residential customers to request more visits from pest control companies. EMWIIIRPS2013
    5. 5. WHAT ARE THE TOP FACTORS PEOPLE CONSIDER WHEN CHOOSING PEST CONTROL? • Professionalism • Eco-friendly methods/products services offered • Location • Prices There is also projected high demand for professionals who can manage pests without using harmful pesticides. EMWIIIRPS2013
    6. 6. ❖ The HACCP, or Hazard Analysis and Critical Control Point, is a program put forth by the FDA to reduce food contamination. As a result of this and similar programs (AIB, etc.), clients in the food industry will require increased services from pest control companies. We already are seeing this: Keystone Foods Del Monte Hurst Produce Horizon and more EMWIIIRPS2013
    7. 7. Foreign ants have no natural predators. Fire ants are adapting to colder weather and becoming problems for crops, wildlife, and people in the northern region of the US. EMWIIIRPS2013
    8. 8. What technological development s will help our industry grow? ❖ Sophisticated technological developments have increased the accuracy of finding termites, pests, or rodents and are becoming more and more common in the pest control industry. Through the utilization of technology, operators work more efficiently, thereby increasing operating margins. K-9 DETECTION HEAT GENERATORS MONITORING BAITS THERMAL IMAGERS EMWIIIRPS2013
    9. 9. What will make it possible for more operators to bid on federal contracts? ❖ The US Small Business Administration (SBA) increased the small business size standard for the pest control service industry from $7 million to $10 million. Small business size standards determine eligibility for small business assistance and for federal contracts set aside for small business Therefore, more operators will have the ability to bid for federal contracts. . EMWIIIRPS2013
    10. 10. 2012 AND 2013 YEAR TO DATE Mergers & Acquisitions in the Pest Management Industry EMWIIIRPS2013
    11. 11. Closed Date Buyer Target 12/10/12 Rentokil Initial plc Eden Advanced Pest Technologies, Inc..(Wa) 08/06/12 Rentokil Initial plc Modus FM (London) 10/23/12 Rollins, Inc.. (Orkin Brand) Partner's Pest Control of the Valley(Ca) 10/03/12 Rollins, Inc. (Orkin Brand) Hulett Environnemental Services (Central FL) 09/25/12 Rollins, Inc. (Orkin Brand) Tri-County Pest Control South 11/29/12 Arrow Exterminators, Inc.. Terminator Pest Control 11/21/12 Arrow Exterminators, Inc.. Can Eliminate Pest Control(Fl) 11/09/12 Arrow Exterminators, Inc.. Norton Exterminating Consolidation is occurring at all MANY STRONG COMPANIES ARE GROWING THROUGH ACQUISITIONS. levels: national & 10/05/12 Rentokil Initial plc Maykar Pest regional Control(India) (this is a small 09/25/12 Rentokil Initial plc Western sampling) Exterminators(Ca) EMWIIIRPS2013 Many strong companies are growing through acquisitions.
    12. 12. KEY THEMES •Recession Resistant Industry •Acquisitions fuel growth EMWIIIRPS2013
    13. 13. KEY THEMES Continued Interest from Industry “Neophytes”* Venture capitalists are seeing the potential value in our industry. Could they develop into serious players? It remains to be seen. (buyers that are new to the pest control industry. Approximately sixteen percent of transactions completed between 2009 and 2012 involved buyers that were new to the pest control industry.) EMWIIIRPS2013
    14. 14. Market Forecasts EMWIIIRPS2013
    15. 15. THE OUTLOOK FOR THE EXTERMINATING & PEST CONTROL SERVICES INDUSTRY IS POSITIVE. THE FOLLOWING FIVE-YEAR FORECAST TAKES INTO ACCOUNT BOTH SHORT-TERM AND LONG-TERM INDUSTRY TRENDS. Year 2013 2014 2015 2016 2017 Market Size 10310 ($ millions) 10670 11030 11380 11670 Growth Rate 3.50% 3.30% 3.20% 2.60% 4.20% Source: Anything research EMWIIIRPS2013
    16. 16. CONTINUING TRENDS • Bed bugs and stinkbugs • Recovering housing market will create a need for pretreatment termite services and regular inspections. • Consumers will spend on hotels and restaurants again, driving demand from this market. EMWIIIRPS2013
    17. 17. CONTINUING TRENDS • Heightened demand for bed bug extermination has also caused competition from new specialty companies. • Housing sales and residential construction are also expected to rise, increasing demand for termite services. • Increased pest populations across the United States will characterize the next five years, as the bed bug population continues rising. EMWIIIRPS2013
    18. 18. CONTINUING TRENDS • Green practices are growing more common in the industry, driven in part by LEED (Leadership in Energy and Environmental Design.) • Hospitality and food service industries have growing needs for pest management. EMWIIIRPS2013
    19. 19. Pest Income Statement & Profit Margin (Industry Average) EMWIIIRPS2013
    20. 20. INCOME STATEMENT (INDUSTRY AVERAGE) THE DATA COLLECTED IS INDUSTRY-WIDE, COVERING BOTH PUBLIC AND PRIVATE COMPANIES IN THE INDUSTRY. Industry Average Percent of Sales •Total Revenue •Operating Revenue •Cost of Goods Sold •Gross Profit Operating Expenses $899,592 $873,301 $406,348 $466,952 100% 97% 45% 52% $3,215 •Repairs $4,456 •Rent paid on business property $16,118 •Charitable Contributions $210 •Depletion $30 •Domestic production activities deduction $26 0% •Pension, profit sharing plans, stock, annuity EMWIIIRPS2013 0% 2% 0% 0% 0%
    21. 21. INCOME STATEMENT (INDUSTRY AVERAGE) • Advertising • Compensation of officers • Salaries and wages • Employee benefit programs $19,180 2% • Taxes and Licenses $40,976 5% • Bad Debts $1,075 • Depreciation $9,648 1% • Amortization $3,536 0% • Other Operating Expenses $112,345 12% • Total Operating Expenses $427,409 48% • Operating Income $39,543 4% • Non-Operating Income EMWIIIRPS2013 $7,723 1% $24,849 3% $184,021 20% 0% $26,055 3%
    22. 22. INCOME STATEMENT (INDUSTRY AVERAGE) • EBIT (Earnings Before Interest and Taxes) $65,598 7% • Interest Expense 1% • Earnings Before Taxes • Income Tax • Net Profit EMWIIIRPS2013 $8,469 $57,129 6% $5,729 1% $51,400 6%
    23. 23. PEST CONTROL SERVICES ACROSS THE UNITED STATES 2008 – 2012 Income Statement (figures in 1000's) YEAR 2008 2009 2010 2011 Revenue Sales 1796 1806 1796 1801 Cost of Sales Cost of Goods Sold 967.924 970.73 965.101 968.794 Gross Margin Gross Margin 828.076 835.27 830.899 832.206 Expenses Advertising 8.748 8.573 8.527 8.564 Salaries and Wages 303.756 306.359 305.756 305.803 Employee Benefit Program 37.491 37.552 37.209 37.422 Pension and Annuity Plans 3.844 3.833 3.8 3.816 Compensation of Officers 56.811 55.626 55.084 55.449 Bad Debt 2.989 3.005 2.977 2.994 Rent Paid 33.32 33.249 33.2 33.247 Repairs 7.952 7.887 7.806 7.846 Depreciation Depletion Amortization 21.474 21.304 21.114 21.237 Interest Paid 10.999 11.057 11.043 11.056 Miscellaneous Expenses 183.245 183.387 183.026 183.208 Total Expenses 670.629 671.832 669.542 670.642 EMWIIIRPS2013 2012 1800 967.791 832.209 8.555 305.849 37.37 3.814 55.375 2.991 33.233 7.842 21.209 11.051 183.176 670.465
    24. 24. PEST CONTROL SERVICES ACROSS THE UNITED STATES 2008 – 2012 continued EBITDA 189.92 195.799 193.514 193.857 194.004 Net Income Operating Profit EMWIIIRPS2013 157.447 163.438 161.357 161.564 161.744
    25. 25. OPERATING PROFIT MARGIN 2008-2012 Industry Average 9.1 9.05 9 8.95 8.9 8.85 8.8 8.75 8.7 8.65 8.6 Bed Bugs 2008 EMWIIIRPS2013 2009 2010 2011 2012
    26. 26. SALARY FOR SALES Sales Salary Statistics Sales Salaries (national 2012): Quartile $29,520 Average (Median) $39,110 Source: EMWIIIRPS2013 Upper Quartile $50,980
    27. 27. SALARY FOR SALES Average Orkin Pest Control Salesperson Salaries $44k Average Clark Pest Control Commercial Sales Associate Salaries $43k Average Truly Nolen Pest Control Specialist Salaries $33k Source: EMWIIIRPS2013
    28. 28. SALARY FOR SALES Average Ehrlich Commercial B2B sales Base Pay: $40,000 - $45,000 /Year Source: Ehrlich/Rentokil web site under Careers Average Pest Control Sales in De: $36,000 Source: Average Pest Control Sales in Philadelphia: $40,000 Source: EMWIIIRPS2013
    29. 29. Questions? Conclusions? How can this information helpful to you? EMWIIIRPS2013
    30. 30. SOURCES • Anything research • Rkj pest control M/A review • Heart pest management • Ad-ology report • Prime Industries reports • Pest PAC • IBISWorld • EMWIIIRPS2013