Rollins, Inc.

Greetings, and welcome to the Rollins Incorporated third quarter 2020 earnings conference call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad as a reminder this conference is being recorded. I would now like to turn the conference over to your host, Joe Calabrese. Please go ahead, sir.

Thank you. 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 will send you a release and make sure you're on the company's distribution list. There will be a replay of the call, which will begin one hour after the call and run for one week. The replay can be accessed by dialing 1-844-512-7000. with the passcode 13710819. Additionally, the call is being webcast at www.viva.com, and a reply will be available for 90 days. On the line with me today and presenting are Gary Rollins, Rollins Chairman and Chief Executive Officer, John Wilson, Rollins Vice Chairman, and Eddie Norman, Senior Vice President, Chief Financial Officer, and Treasurer. Management We'll make some opening remarks, and then we'll open the line for your questions. Gary, would you like to begin?

Yes, Joe, thank you. Good morning. We appreciate all of you joining us for our third quarter 2020 conference call. Before turning the call over to Eddie to read our forward-looking statement and disclaimer, first I want to take a moment to recognize the recent passing of our former chairman and my brother, Randall Rollins. Randall was an extraordinary human being, and his accomplishments and contributions made at the various Rollins public and private companies over the years are unequal. He is missed greatly, not only by our family and his friends, but also by generations of Rollins employees and colleagues who he respected so highly. Many of you reached out with condolences upon receiving the news of his death, And I'd like to thank you for having our family in your thoughts as well as for your kind words. Eddie, would you please read our forward-looking statement and disclaimer?

Yes. Our earnings release discusses our 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 risks may differ materially from any statement we make today. Please refer to today's press release and our SEC filings, including the risk factors section of our Form 10-K for the year ended December 31st, 2019, for more information, and the risk factors that could cause actual results to differ.

John Aucott Thank you, Eddie. Looking at our third quarter performance, we were pleased to report another solid result. and we remain proud of our planned execution across all of our business service lines. Revenue grew 4.9% to $583.7 million, compared to $556.5 million for the same quarter in 2019. Net income rose to $79.6 million, or 24 cents per diluted share, compared to $44.1 million, or 13 cents per diluted share, for the third quarter of last year. Eddie will review the GAAP and non-GAAP results shortly, as they were meaningful adjustments impacting our financials. Revenues for the first nine months of the year were $1.62 billion, an increase of 7.6%, compared to $1.51 billion, for the same period last year. Net income for the first nine months increased to 198.2 million or 60 cents per diluted share compared to 152.6 million or 47 cents per diluted share for the comparable period last year. Again, Andy will review these and our nine-month non-GAAP results in a few minutes. Turning to our business lines results, residential pest control grew 10.5% during the quarter, reflecting the resiliency of this service and its strong demand. As anticipated, our commercial operation revenue was down year over year. As commercial pest control continues to be negatively impacted, by the COVID-19 virus and its related economic toll. However, some businesses reopened during the quarter, and for some of these customers, their economic conditions improved. We've continued to narrow the revenue shortfall gap each month since April. Overall, we were pleased with the steady progress we've achieved under those circumstances. John will provide greater detail on these and our other operational results shortly. Overall, our people and business continues to perform well in what remains a complex environment. We have an unwavering commitment to keep our employees and customers safe. Our team's continued dedication in serving our customers has been outstanding. They are truly our greatest asset, and we're grateful for their efforts. Further, our commitment to safe practices involved our employees and customers as well. We continue to benefit from the high regard, trust, and confidence that our customers have in us. Before turning the call over to John, I also want to acknowledge some recent key advancements that further strengthen our executive leadership. John Wilson, who many of you know through his involvement on our earnings conference calls and investor meetings, was promoted to the company's vice chairman. John joined the company in 1996 and has been an integral part in developing and executing Robin's strategic initiatives over the years. This promotion is truly a testament to his leadership, work ethic, and talent. Additionally, Jerry Galoff was promoted to Rollins President and COO. Since many of you may not be too familiar with Jerry's background, I'd like to take a minute and highlight a few of his many accomplishments. Jerry started his career in the pest control industry in 1991 and came to Rollins in the home team acquisition in 2008. He has successfully managed several areas of the company and has been instrumental in guiding meaningful growth and profitability in these businesses. He most recently led what we refer to as the Rollins Specialty Brands Team, which includes Home Team Pest Defense, Clark Pest Control, Northwest Exterminating, Western Pest, Watham Pest, and OPC Services. as well as our very important Rollins Human Resources Department and Training Department. A seasoned executive and well-respected industry leader, Jerry has a comprehensive understanding of our organization, business, and is extremely well-suited for the COO position. Another little-known fact is that Jerry came from an Orkin household, as his dad was a 26-year employee. We're fortunate to have John and Jerry assume a greater role in our company, its direction, and its future. We look forward to their continued contributions. Let me now turn the call over to John, who will provide more details on the aspect of our third quarter. John?

Thank you, Gary. I am excited and grateful for the opportunity to be here. I wanted to start by providing some context to the current environment. While the coronavirus remains prevalent in many areas, We feel positive about our financial performance this quarter and how we are executing as a company to meet the needs of our residential and commercial customers, both in the U.S. and abroad. Our residential business remains solid. Our call centers are busy, and we are pleased with our results from this service line. We are also encouraged, yet at the same time cautiously optimistic, about the positive trends we have been seeing on the commercial side of our business. As Gary noted, our third quarter commercial results were down year over year. However, the operating environment steadily improved as the third quarter progressed, and we continued to see month-to-month improvements as more businesses reopened and the trust that our brands have built over time have enabled our technicians to provide service when and where needed. Still, we are by no way thinking that this pandemic is over. We remain diligent considering the current operating environment, and with many experts projecting that another wave is possible, there remain many uncertainties. We are executing against our plan and continue to proactively navigate the best path forward. For example, out of concern for the health of our employees as well as our customers, stringent safety practices are ongoing and remain a top priority. To keep our technicians safe, we continue to adhere to the advanced health and safety protocols as recommended by the CDC. By providing a full complement of personal protective equipment for our customer-facing employees, we are continuing to build trust with our customers while also demonstrating it is safe to do business with us. We are also working with our customers to create a safer environment for where they live and work. As we have discussed, Orkin and many of our other brands are now offering a commercial and residential disinfection service, which is effective in quickly and thoroughly eliminating a wide variety of serious pathogens. While it is still early, we are pleased with the very positive reception this new service line has been receiving from existing as well as new customers. During the third quarter, we steadily grew this new offering. Additionally, investors have asked us about the business impact of the devastating wildfires out west, as well as the recent tropical storms and hurricanes that have made landfall in the U.S. While our hearts go out to those that have been adversely affected by these natural disasters, up to now we have not had any significant business disruption. I would also like to take a minute to provide an update on our wildlife brands. which have experienced strong double-digit growth year-to-date. For those of you who aren't too familiar with this business segment, the services we provide include live trapping and removal of wildlife, exclusion of wildlife from businesses and other buildings, and the repair and remediation of damages caused by wildlife. There is not a more urgent call for help than that customer who has a wild animal loose in their home or business. Although a small part of our total business, we have firmly established our position as the leading wildlife control provider in North America, and looking ahead, we believe that this is a real opportunity to continue to grow this business. Lastly, I wanted to circle back to the promotion of Jerry to president and chief operating officer. Not only does he have a strong foundation in the pest business, he does have a degree in entomology after all, He is that rarest of individuals who knows both bugs and the bug business inside out. He works very hard at improving himself each day, and I've watched him over the last 13 years improve every operation he has touched. I am excited to have Jerry in this new role. I'll now turn the call over to Eddie.

Thank you, John. Thank you, John. I believe that every reference that could be made regarding how long the last quarter has been has already been used, so I'm going to spare my attempt. I would like to pass along my thanks to your outreach regarding our late chairman. Your words of reflection and support were truly appreciated. In 2016, we held our first ever Investor Day in New York City, and our team had a chance to get to know many of you on that day. The primary reason for holding that event was to share the depth and breadth of our senior management team. I've had discussions with many of you over the years about the eventual passing of the baton, and the elevation of Gary, John, and Jerry show this in action. Each of them have been well prepared for years to take their perspective and vision to lead Rollins for years to come. We're fortunate as an organization, and as investors, I believe that you will be pleased with what the future holds. The obstacles that impacted Q2 began to subside, and our operations and non-operations groups have made tremendous adjustments to the new life that we are all leading. Today, I'll share some details on our Q3 actual results and some additional insight to what we know today that will impact the future. For the quarter, our residential pest control and termite service lines showed growth, and keys to the quarter included improvements in commercial revenue growth rates compared to the second quarter, impairment charges related to our personal protective equipment, also known as PP&E, and the successful continued cost management implemented to drive margin improvements year over year. As Gary referenced, I will be reporting both GAAP and non-GAAP financials that were impacted by vesting of shares this year and the impact of the pension plan moving off of our Rollins books in Q3 of 2019. Looking at the numbers, the third quarter revenues of $583.7 million was an increase of 4.9% over the prior year's third quarter revenue of $556.5 million. Our gap income before income taxes was $108.9 million, or 136% above 2019. Net income was $79.6 million, up 80.6 percent compared to 2019. Our gap earnings per share were 24 cents per diluted share. On a non-gap basis, our income before taxes was $115.6 million this year compared to $96 million last year, a 20.4 percent increase. Our 2020 income before taxes was impacted by $6.7 million the divesting of our late chairman's Rollins shares. Additionally, 2019 was reduced by $49.9 million for our divesting of the pension plan off of our Rollins books. Both the divesting of shares and pension divesting were non-cash items. Our non-GAAP net income was $86.3 million this year, compared to $70.6 million in Q3 of 2019, a 22.1% increase. Looking at the first nine months' revenue of $1.625 billion, that was an increase of 7.6% over the prior year's third quarter revenue of $1.509 billion. Our gap income before income taxes was $267.8 million, or 41.6% above 2019. Net income was $198.2 million, up 29.9% compared to 2019. Our GAAP earnings per share were $0.60 per diluted share. Our non-GAAP financials taking the share vesting and pension plan into consideration were income before taxes of $274.5 million, up 14.8%, and net income was $204.9 million this year compared to $179.2 million in 2019, a 14.4% increase. Our non-GAAP earnings per share were for the nine months were 63 cents compared to 55 cents, which is a 14.5 percent increase. As we stated on our Q1 and Q2 calls, we began aggressively purchasing personal protective equipment in March and April. While these were costly, they were critical to keeping our operations running safely. As the cost of these materials have moved lower from the peak, we took a $2 million one-time charge to revalue our inventory. With the pricing moving lower, we anticipate spending $1 million per quarter down from the $2 million that we shared on previous calls. At this time, we would anticipate having this additional expense through Q2 of 2021. Let's take a look through the Rollins revenue by service lines for the third quarter. Our total revenue increased 4.9%. That included 1.4% from acquisitions, and the remaining 3.5% was from pricing, which was a small portion of that, but mostly from organic and new customer growth. In total, residential pest control, which made up 47% of our revenue, was up 10.5%. Commercial exhumation pest control, which made up 34% of our revenue, was down 1.9%. And termite and ancillary services, which made up approximately 18% of our revenue, was up 6.2%. Again, total revenue less acquisitions was up 3.5%, and from that, residential was up 9%. Commercial exhumation decreased 3.7%, and termite ancillary grew by 5.9%. Our residential business continues to perform well, and the business on the commercial side has seen steady improvement each month since April. While we continue to manage our costs appropriately, it's difficult to know how the revenue levels will look as we move through the pandemic, with restrictions continuing to change throughout the world. In total, gross margin increased to 52.8 percent from 51.7 percent in the prior year's quarter. The quarter was positively impacted by lower service and administrative salary expenses, as well as lower fuel expense and continued improvements from our routing and scheduling efficiencies. Additionally, materials and supplies were up, as I referenced, related to the inventory revaluation of our personal protective equipment. Depreciation and amortization expenses for the quarter increased $714,000 to $22.4 million, an increase of 3.3%. Depreciation increased $1 million due to acquisitions, vehicles acquired, and equipment purchases, while amortization of intangible assets decreased $286,000 due to the full amortization of customer contracts from several acquisitions, including Home Team and tuck-ins related to Orkin. Sales, general, and administrative expenses for the third quarter increased $838,000, or five-tenths of a percent, to $168 million, or 28.8 percent of revenues, down from 30 percent last year. The quarter produced savings in salaries and benefits lower fuel, and bad debt through better collection efforts. As for our cash position for the nine-month period ended September 30, 2020, we spent $79.9 million on acquisitions compared to $431.2 million the same period last year, which included the acquisition of Clark Cost Control. We paid $91.7 million on dividends and had $17.7 million of capital expenditures which was slightly lower compared to 2019. We ended the period with $95.4 million in cash, of which $62.9 million is held by our foreign subsidiaries. Before I close, I would like to give an update on one of our sustainability initiatives, particularly as it relates to our local communities. Through corporate and brand initiatives, such as our Rollins United and Northwest Good Deeds Teams, Rollins employees across all brands are strongly encouraged to volunteer within our local communities. In 2021, our employee volunteer goals include community cleanup efforts, trafficking education awareness, literacy programs, and support of the United Way, to name a few. Rollins is committed to giving back to our communities through a strong philanthropic vision. Please go to Rollins.com under the Investor Relations tab to view the full 2020 sustainability report. Yesterday, the Board of Directors approved a large regular cash dividend of $0.08 per share, plus a special dividend of $0.13 that will be paid on December 20, 2020, to stockholders of record at the close of business November 10, 2020. In addition, they also announced a three-for-two stock split that will take effect December 10, 2020, for stockholders of record at the close of business November 10, 2020. Gary, I'll turn the call back over to you.

Well, thank you, Eddie. We're happy to take your questions at this time.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. The first question is from Tim Mulrooney, William Blair. Please go ahead, sir.

Yeah, good morning, everybody, and good morning to Gary. My condolences once again to you and your family on the passing of your brother.

Thank you.

Yeah, just a few questions this morning. On the last conference call, Eddie, you mentioned that you hit 10 out of 10 record new sales days in June and July. How did your new sales trend through August and September? Does it remain elevated, or did you see a return to more normalized sales patterns as you exited that peak selling season?

Yeah, Tim, thanks. Yeah, we didn't highlight that today, and I don't know if we necessarily duplicated that number that we had shared before. But I think based on what we reported as far as the revenue gains, you can see that they were elevated, especially on the residential side. And our call center did see much higher activity than they had seen in previous years, even as we started to come out of the season earlier. and move into some cooler areas as we've seen. You know, again, the majority of that was on the residential side, but we have seen improvements, incremental improvements on the commercial side as well for some of the smaller businesses that would come through our call center for that.

Okay. That's helpful. Thank you. On the margins, EBITDA margins were particularly strong this quarter, nearly 24%. Is there any way for you to quantify for us how much of this is from the temporary cost cuts that you implemented earlier this year? I'm trying to figure out how much of this expansion in margin we've seen recently is structural from your routing and scheduling, for example, versus how much of this is more of a temporary dynamic.

Well, there's no question that routing and scheduling is paying great dividends for us now, especially as we're having to have technicians potentially adjust and change some routes that they maybe would have historically run on both sides. On the residential, as we're growing, it gives us the ability to be able to do that smoothly. And on the commercial side, it allows us to kind of reduce some of the noise that we would have by being able to schedule routes. We had one of the best quarters, which we didn't go through in detail. We had one of the best quarters as far as year-over-year stops per mile improvement in the quarter, which was positive. And I think those types of things, to the point of your question, are more structural in nature. I believe that the majority of the folks that we had furloughed as we went into the pandemic that are going to be brought back, have been brought back at this point in time, And I think that both our operations and our non-operations groups absolutely are leaner than when we started. We've been forced to find ways, as many organizations have, to use technology in ways that have made us more efficient. So I don't have a defined answer, an exact answer for you. We will be leaner and margins will be better as a part of this as we're moving forward. But I think as we see that revenue growth, we'll get a more and better clearer answer to that. The good news is from Q2 to Q3, we continue to see those margins positively impacted, even as we've had more revenue on the residential side and even more revenue on the commercial side come back into the business.

Okay. And you know what? I think you pretty much did answer my question.

Excuse me, this is the operator. Only two questions per participant, and then you can reenter the question queue after that. The next question is from Seth Weber, RBC Capital Market. Please go ahead, sir.

Hi, good morning, and I'd also like to extend my condolences to everybody there. I wanted to ask about the commercial business. You mentioned that trends improved sequentially month to month. And I was just wondering, you know, I think you said for the quarter, organic was down about 3.7. Can you just talk about did it end up with September in positive territory on the commercial side, or is that still trending negative through September? Thanks.

Yeah, I think we're still negative. You know, we have a few different operations that have some heavy concentrations. in areas that are the most impacted right now. We have a heavy concentration in the New York City area. Those of you that are there around that area know and understand the impact of what's going on there. But we're definitely seeing improvements in other areas that have been an opportunity to open back up and as businesses have been able to make those decisions. And our sales group continues to do a good job looking and and working on those verticals where we know that there's less impact. You know, on the health care side and on logistics and those things like that, they continue to do a nice job in those areas. So positive improvements, but I wouldn't say that we're positive quite yet.

Okay. And then to follow up on that, I think I heard in some of the SG&A discussion that bad debt expense actually got better. Can you just talk about your collection efforts and what kind of – trends you're seeing on the commercial side with respect to, you know, any kind of customer, you know, customer pain or just extensions that are happening on the commercial side specifically on the collections? Thanks.

On the collection side, on the residential side is where we saw our improvements that occurred, and those were in our larger brands. And if you think about our larger brands that are going to have, residential bases, large residential bases, our Orkin brand, our Home Team brand, our Clark brand, all have larger residential bases, and we were able to see improvements there. On the commercial side, obviously that continues to be a struggle. We made adjustments to payment terms mostly in Q2 with our customers that we made the decision to do that with. We really didn't have a lot of new customers in Q3 where we and we made adjustments for that. But the high profile bankruptcies that you read about and that we read about, a lot of those in cases are our customers. So we've worked really diligently to minimize our exposure in those areas. And, you know, the news for us there is that a lot of those customers that are on that bankruptcy list have been on that list for the past year. You know, so well before the pandemic occurred, they were on our watch list. We were minimizing our exposure at that point in time. But the reality is the customers that are struggling to stay in business today are just, you know, working day to day. And we're trying to work with them as a partner, but the collections on that side is slightly slower, but on the residential side with a positive impact. That's a great comment.

I appreciate it. Thank you very much.

We have a question from Mario Portolacci. Jeffrey, please go ahead, sir.

Thank you. I'd also like to send my condolences to all of you and Gary and your family. I'm very sorry for your loss. My question is around the disinfecting business and specifically in commercial areas. I guess, could you give us a sense of what kind of uptake you're seeing there or how much uptake you're seeing from customers? And the reason why I ask is just to understand how much of the improvement in revenue and on the commercial side has been this offset from the disinfectant business versus having customers come back, either coming back or increasing the amount of service that they're getting.

So I'm sure John's going to have some comments that he'd like to add. But I would say if you look at those two categories, it would be more weighted towards customers coming back. But the disinfectant, the new services in many of our brands has been a positive impact for us to be able to go through and add on the revenue side. You know, what we see from the disinfectant side, customers that have had some sort of incident occur previously, that need to ensure that they have this taken care of and the cleanliness in their workplace, either for their customers or for their employees, those are the ones that we have a shorter sales cycle for and that want and need to get something in place. Others that know this is the right thing to do but aren't necessarily under that same pressure, we've had a little bit of a longer sales cycle. And we're learning as we continue to move forward. But it continues to grow for us. But I would say if you had to differentiate between those two, that we've had more incremental business that has come back.

Yeah, Eddie, you're exactly right. The impact from the – in Oregon we call it Vital Clean. Various brands have different names that they're calling it as they go to market. But the impact on the gap from commercial revenue to a year ago is very small from Vital Clean. Most of it has been from customers returning to service as their needs change.

Yeah, I mean, you know, we don't have a lot of view of things that are kind of outside of our area where we are. As we know, most of us aren't traveling these days. You know, we just know what our view is here in Georgia. And, you know, a lot of things have opened back up and are more close to what we knew before. And you contrast that with something like the New York City area, where it is significantly different than what it was like before. So it's those pockets that are seeing those incremental improvements that we're able to see customers come back and we're able to continue to be able to service them.

Could I add one thing to that? We're very fortunate that in most of our commercial accounts, food-related, hospitality-related, health-related, they can't put the service off indefinitely. they know that the pest will come back the way they got started to begin with, receiving merchandise from outside and so forth. So that's a positive thing. We're disappointed when they defer service, but our experience has been is they will be back. And I thank our numbers for showing that.

Thank you. Great, thank you. And then just on M&A,

I'm sorry. If you wish to ask us a third question, please dial back in and press star 1. The next question is from Mr. Michael Hoffman, Seifel, Nicholas, and Company. Please go ahead, sir.

Thank you very much. And like my colleagues, we wish your family the best, Gary. Thank you. The two questions I have are focused on organic growth and then on margins. On the organic growth side, we're noticing across... the Stifel coverage broadly, that work from home is having interesting positive, mostly positive consequences. I point to like Pentair reported extraordinary pool numbers and so on and so forth. Can you disaggregate the 9% and help us understand how much is being influenced by People are all at home, and so they're ordering maybe adding mosquito and tick, or you spoke to the wildlife number versus its net new customer ads. So we can understand the influence, and then what are your thoughts about how that starts to anniversary?

Well, yeah, thanks, Michael. I mean, as you know, we don't break out customers and things like that. I will tell you that we have had – great new customer growth, but I can't really, and I don't know that we really know exactly how much of this is being driven by someone at home that is adding the mosquito versus that they would want the mosquito. Our mosquito continues to grow at a 30% plus rate as it has for the previous few years. That's a little bit of a higher base. It's still a low base, but it's a little bit of a higher base of what we've seen previously. But we are seeing good new customer growth that has come out of this. Now, you know, as far as, you know, when it comes time to lap this, can't answer that either, you know, just because we just don't know. You know, we don't know that people continue to work from home. You know, will we have situations where there's, you know, an additional need for more services? We anticipate that our retention of those customers will be higher because, as we talked before, as we add an additional service, the retention of those customers improves for us. So as they add Mosquito or as they add one of our other services, that retention rate does increase. And John was sharing that, at least in our Oregon brand, that we've seen that across the board in all of our services there. So good customer growth and probably the best that we can say at this point.

Okay. On the margin side, between gross margins and then as a cost SG&A, so the gross margin came down 100 basis points sequentially, which makes sense if you're bringing back furloughed people. Have we flushed out the sort of that returning of people issue? And then on the SG&A side, you clearly have shown a lot of discipline in the management of that in an absolute dollar basis as well as percent of revenue. How much of that is – annual accrual things that will come back versus it's permanent?

So I think the first part of your question, I think we've pretty much moved through all the furlough process that we had, just a very small number that we should be making decisions on. But I think Q2 we saw the majority of that. Q3 it's kind of moved through. On the structural side, on the SG&A, like I was answering earlier, we're leaner than we were when we went into this. We did have some positive impact that impacted through our bad debt. But we also saw, you know, very strong improvements in our administrative salaries as well as our personnel related. So, you know, structurally on the people side, I think Q2 and Q3, we're seeing kind of similar trends there. And, you know, we've used technology to be able to make us better and be able to make us more efficient as we're moving forward. Okay, thanks.

I'll come back in. Thank you. We have a further question from Mr. Tim Mulrooney, William Blair. Please go ahead, Tim.

Hey, thanks for taking my next question. Eddie, I just wanted to follow up on your previous answer to me. where you said that one of your greatest improvements in reduction of miles driven was this quarter. Is that due to anything that you're, I guess, doing differently, or are your branches just becoming more mature on the VRM system? I guess maybe I'm just looking for a general update on where you're at with your tech initiatives and rollout.

Yes. So, yes, I would say two things, and John's got something to add as well. I would say two things. One, maturity continues to move forward in time. As we continue to have retention of our technicians, that's going to be a positive thing for us. But we have this four stages of our routing and scheduling, and we're kind of in this phase two of this four stage. And as we continue to layer on additional technology pieces that are kind of behind the scenes for the operations, that's going to continue to drive improvements. So I would see improvements will continue to be positive as we're moving forward.

Yeah, I have two things, Eddie, and the first one is very similar, but greater adoption, Tim, no doubt, with our branch operations, but then also greater density with the, you know, huge amount of residential customers we've added, commercial coming back. We just have greater density on our routes.

One other thing that we have to look forward to, we do not have all of our brands on our routing and scheduling.

That's right.

So we've got, I guess, what we're converting now.

We've got cannabis converted, and then we have other brands that we're adding as well. Yeah, you're right. Because we talk about this four phases. That's exactly right.

Well, they're asking for it. That's always a good thing. You know, if you have the people that want it, they adapt it a lot quicker than a normal situation. You have to convince them.

Yeah, that's it. Right. Okay. Understood. Thanks for the color, everybody. Thank you.

Okay. Well, thank you all for joining us today. We appreciate your interest in our company. As you've heard during the past calls, we have several programs underway that will make our company better. improve our customers' experience, and our financial results. We look forward to giving you an update with our fourth quarter call in the future. Thanks again.