Rollins, Inc. ($ROL)

Good morning, everyone. Thanks for joining us. Curt Nagle, the senior information and business services analyst here at BofA. This session is Rollins. Very pleased to welcome CFO, Ken Krause. Ken, thanks for joining the fireside discussion. If there's any time left, we'll open up to the audience. But with that, again, welcome, Ken.

Yes. Great to be here. Thank you for having me.

Yes. Glad to have you, and thanks for coming. So maybe starting at the top, we're not going to start with AI. [ Having ] most of these conversations. We'll maybe dip into that a little bit. But employee retention, among a handful of things, pretty important. Strategic focus, already starting to see some improvement. I think you called out maybe 18% or so retention versus past couple of years. At a high level, just from like an operational or kind of a cultural perspective, what's driving or how are you implementing this pretty important change?

Sure. If you recall, we finished last year, we had an event at the New York Stock Exchange where we introduced The Rollins Way. And that was an important topic to discuss because it really just emphasizes the culture that we have at Rollins and what we're -- all that we're doing at Rollins around our culture. When we think about a technician and we think about turnover, we lose way too many technicians in the first year. So you join, and within the first year, our turnover is higher than it is. Once you get beyond year 1 into year 2, people tend to stay for 10, 15, 20-plus years. But that first year turnover can be challenging. So to combat that, there's a couple of things we're doing. But one thing that we're doing is culturally introducing The Rollins Way. And what we're trying to do is create this essential together culture with our technicians because it's a tough job. It's a challenging job. And for somebody new coming in, having somebody that can support them and onboard them and integrate them into the business, I think, is starting to pay dividends. And what we estimate is there's tens of millions of dollars of opportunity if we can cut or reduce the amount of turnover in those short-term employees, we'll have to hire less. In fact, last year, we estimate that we saved between $5 million and $10 million. And so that's one of many areas under the modernization brand that we -- or title that we continue to execute around, and it's having a big impact.

Okay. Maybe just a follow-up. One, it seems like you're starting to see an immediate effect. Tens of millions in terms of realization, right? How should we think about that?

Yes. I mean if you look at it -- and we have roughly, let's call it, 20,000-plus people that we employ across our business. And our customer churn might be 20% or 25% total, and we've talked about that. And so if you just...

Rep churn, not customer?

Yes. But if we just assume that our reps are churning at roughly the same pace, that means we're probably hiring upwards of 6,000 to 7,000 people a year. And if we're losing half of those people, that's 3,500 people. And it's costing us upwards of $15,000 per tech to onboard them. So if you think about that, 3,500 times 15,000, that's a $40 million or $50 million opportunity. Now that's not all going to go away. But if we can make small improvements like we made last year, that goes a long way in improving the margin profile.

Okay. Fair enough. And then maybe second order effects. Operationally, I mean, fairly clear, but in terms of service levels, maybe even retention, how should we think about it?

Certainly, yes. No, when we lose customer -- or when we lose technicians, that's when we stand the risk of potentially losing customers. And so if we can keep people in their jobs and invest in them and enable them to be the best tech possible, we stand a higher likelihood of keeping customers. And so there certainly is a high degree of relationship and correlation between when we lose technicians and when we lose customers.

Okay. Maybe kind of a higher level question, just staying on labor. In terms of maybe just kind of the pool, right, you're drawing from, I guess, what is -- what hiring looks like in terms of the available pool? Are you having to raise wages? Or -- again, just kind of all the things we talked about in terms of just a better working environment, getting people on and just getting them into the system.

Availability of talent is not an issue. We have been able to find and bring on really strong individuals to join our team, and we're seeing good progress there. And so no real issue there. We're getting the right amount of people. But if we had it our way, we'd hire less people. And in terms of if we can improve the churn and the turnover on the employee side, we will have -- it will result in us hiring less people, like it did last year when we look at the technician side.

Maybe be a little more selective, perhaps?

You could be more selective, more strategic. You certainly can. And so it certainly should help bring on and just improve the overall relationship. Because what we find is once those technicians get to a year or 2, we're really changing lives. When we think about pay -- you mentioned pay earlier and inflation -- it's not been an issue. Inflationary pressures on payroll have not been an issue because of how we structured our compensation programs. Our technicians are not only paid a fixed base comp, but they also get paid through variable incentive. And you'll -- it's not unreasonable to see a technician who might be making near or upwards of $100,000. And so if our high-performing technicians, who -- some of them are going to be with us in a few short weeks at our President's Club out in Scottsdale, Arizona -- those people are doing exceptional. And it's -- not only do they do exceptional and see benefits in their paycheck, but they also invest in our stock. And so when I walk into a room and I talk about Rollins, and I ask the question -- I always ask the question, how many of you are shareholders? Undoubtedly, 90% to 95% of the room's hands go up. People buy the stock. People invest in it. People believe in the mission, and they stay for a very long period of time. But you got to get into that 1-year mark. Once you get into that 1-year mark, you're not free and clear. You have to continue to invest in these people, but you stand the risk of keeping them for a very long time. And what happens is they create long-tenured customer relationships. These technicians know the dog's name. They know the kids. They know the life events that are occurring at the home. They become part of the household. And so that's an important thing for us to continue to focus on.

Yes. And all the weird quirks in the house that -- mine certainly has.

Certainly. All of ours do.

So yes, so incentivization, ownership, right? How do you incentivize? Or what is it based on?

There's a number of targets. You got productivity incentives. But for example, when we raise prices, our technicians get the benefit of that. When we do a cross-sell. So we've oftentimes talked about having 9 shots on goal when we go to the home. And that's from insulation to ridge vents, to mulch, to encapsulating crawl space, exclusion work around the house to keep the pests out. If we're -- technicians have an opportunity to sell that. Or they have an opportunity to identify when that opportunity exists and then bring in somebody that can help sell that to the homeowner and explain the benefits and the value of that to the homeowner. And when they do that, they receive a part of that. They receive a commission. And so those are the kind of things. It's productivity initiatives, but it's also growth initiatives that they're tied to that they can receive benefits from.

Okay. Fair enough. Definitely want to go back to some of the adjacent opportunities in a bit. But sticking with the concept of margins, right? So fairly clear goals, right? Near term, kind of 25% or just defined by your guidance, 25% to 30%. Medium target is higher, right, 30% to 35%. I guess, in terms of specific internal levers or just kind of what you need to see to kind of get confidence to more clearly and more immediately kind of target that range? Or what needs to happen?

This business is very much capable of delivering 30% to 35% incremental margins. And the way the math works and the business model works is our incremental gross margin -- our reported gross margins are in the low to mid-50s. And our incremental gross margins are in the mid- to high 50s because a large part of our cost structure is variable. About 10%, we would say, is probably more fixed, 90% is more variable. So as a result, 55% to 60% on the gross. And then on the SG&A, if we're spending 29%, similarly, 90% and 10%, 90% is variable and 10% is fixed. So that means about 25% is in the contribution margin. So that means if you take 57% minus 25%, that gets you to 30 -- roughly 32% incremental margins. The reason that we would not deliver that -- and we have delivered that from -- on a quarterly basis from time to time. But the reasons why we wouldn't deliver that are we're making investments. We see growth opportunities. We're going after and acquiring customers when there's an opportunity. Because as customers stay in the business and the relationship forms where we have a customer for 3, 4, 5-plus years, that's -- the lifetime value is enormous. And so we're focused on that, and we're excited about that. But the investments have to be made from time to time. And then on the flip side, not only are we making investments, but from time to time, we'll see casualty losses, some claims that come into our business. Trucks on the highway get into an unfortunate accident, somebody gets hurt, and litigation ensues. And so we'll see that from time to time, and that will add volatility to the P&L. Last year, we had some gains on fleet vehicles returning back in. We're lapping that now. But really, it comes down to two things: investments that we're making to acquire customers; and two, claims that we may face from time to time in the business, unfortunate claims that we do.

Sure. Yes. Fair enough. I guess customer acquisition, maybe talk on that a little bit in terms of I think maybe making some changes. But in terms of where you're investing most, maybe think about brand strategy. And you've got a lot of brands, but just the framework for customer acquisition and maybe potential leverage or not.

That's what makes the business so special is it's such a diversified manner in which we acquire customers. We've got 10, 15, 20-plus brands across the business. And Orkin, we all know Orkin. But you may not know Northwest if you don't live in Atlanta, Georgia or in the Southeast. Or you may not know Clark if you're not in California. Or even HomeTeam, if you're not in the Sunbelt. So what we do is we go to market across all of those brands. And not only are those brands different in terms of what the logo is on the truck, but how they acquire the customers is so different. Fox and Saela, we just acquired the last 2 to 3 years, door knocking, great businesses, one of -- some of our fastest-growing business, quite frankly, and very healthy business, good business coming in. Or HomeTeam with relationship with homebuilders, or Northwest in Atlanta with billboards, or Orkin through the digital means. And so there's so many different ways we're acquiring customers that allows us to efficiently bring on new customers. And when the costs associated with digital advertising may be escalating, we can shift dollars elsewhere and capitalize in alternative ways of acquiring our customers.

Maybe just on a point in terms of very specific marketing strategies, fit to market, fit to brand. And I don't recall if it's something you've talked about, but in terms of maybe leveraging kind of best practices, or maybe not because you don't want to upset the apple cart and if it's working, it's working?

Yes. No. I mean, we do that all the time. And it's interesting, when I think about one of our untapped opportunities, it's the sharing, and it gets into The Rollins Way, the collaboration, the sharing of information across the brands. So many -- for so many years, it's been very much siloed. Every brand is unique and -- but what we've started to do is to share in communication and sharing best practices across the portfolio. And it's having an impact. When I look at it, one area that is an opportunity for us is the cross-sell. So when we talk about ancillary, 9 shots on goal, 9 shots on the house, that really has been historically an Orkin-led initiative. But what we're doing right now is starting to train our folks over in the brand portfolio with some of the tools and tricks and areas that Orkin has invested in over the years to create a very valuable business. So we have a huge amount of untapped opportunity over in those brands associated with that ancillary business, which should help us continue to deliver that 7% to 8% organic growth.

And just remind me, the relative split between Orkin and sub brands?

Roughly half of the business is Orkin and roughly half of the business is the brand portfolio. And that's been built through acquisitions. Orkin was acquired in 1963. But over the last 10 to 15, we've really stepped up the acquisition area and made significant investments. And that's -- oftentimes, people ask me, why do you think you trade for 30x or 35x? And there's a number of reasons. The market, there's so many different reasons. But one thing that I always point out is individual brands may be bought and sold for 10x to 15x or even 8x. And they're not as valuable by themselves as they are together. And so the sum of the parts at Rollins is much greater than any individual component because of that broad way that we're acquiring and then accessing customers and growing our business.

Yes. I guess the point I was trying to make is if 50% of your business is non-Orkin and there's an opportunity from under-indexed, right, adjacencies that...

Yes, it's interesting. That's a great, great point, Curt. When I look at the ancillary business, that's roughly 10% of our business. And the average ticket price on that is upwards of $6,000. So it's upwards of 10x to 12x what our average pest control contract is, but it represents less than 10% of our business. So that means on an absolute customer count basis, it has to be well below 5%. And that's just in Orkin. So when you think about Orkin has untapped opportunity. And then the brands haven't done really anything when it comes to it. So there is so much untapped opportunity on the ancillary side, which is one of the reasons why we continue to make investments, and we're excited about it.

Maybe just remind us about the margin profile?

It's a great margin profile. Not dilutive at all to the pest control business, the more traditional pest control business. It's relatively neutral to the overall margin profile.

I guess higher ticket, higher...

Higher ticket, some more costs. More material costs that come into there than what you would see maybe in some of the more traditional pest control business.

Maybe more labor, too, right?

Yes. A little bit more labor, but it's a great business.

Economic sensitivity?

It's interesting when you look at it. We don't really see it. When you look at the last 20, 25 years, whether it be the pest control or whether it be the ancillary business, people are finding ways to buy this valuable service. It's a valuable service. I mean, the home is the largest investment many of us have, and people want to invest in that home. Even -- and so we benefit with -- when people are staying in homes longer. We also benefit when people change and move. And so I think from an economic sensitivity, it's -- we're neutral when it comes to the impact on our business.

Everyone wants pest control, right?

Yes. And nobody -- the question I always get too around pest control is what DIY forces are there? And the way I describe it -- or what AI forces are there? How can people learn how to do pest control? And I would say people don't do pest control because they don't know how to do pest control. They don't do it because they don't want to do it. It might be therapeutic to cut the lawn or take care of the swimming pool.

I did that once.

But to take care of the pests, it's a tough job. And you can't just do that once. You have to do that on a regular basis or the pests are going to come back.

I just look at the relative pricing, right, which is -- it's demonstrably different.

Pales in comparison.

Which I think proves your point in the value and who wants to spray for bugs every...

Yes. And deal with -- there are standards around it. There's regulation. There's -- and so we focus on employee safety. We invest in the safety of our employees when they're dealing with this sort of thing. And I think people don't -- they don't want to expose themselves to those risks.

Yes, for sure. And just -- who wants to do it?

Who wants to do it?

Pricing, right? That's been, I think, a very consistent part of the growth framework, helping margins. Organic growth, of course, has helped. But I guess in terms of just thinking about pricing -- I don't want to say sensitivity -- pricing power this year. Any difference? Where are you seeing kind of ebbs, flows, increases?

Well, it all gets down to -- if you're doing the work for the customer, you're taking care of the customer, the customer is going to take care of you, and they're going to value the service. And so for us, we've recently spent a lot of time in the last 3 or 4 years talking about our CPI plus approach. And so this is a valuable service. It's not a commodity. People aren't competing on price. People are competing on service. And if you do that, you get the right to charge a CPI plus sort of approach. And so this year, we talked about 3% to 4% pricing. CPI, I think I saw 2.5% to 3%. So a little bit above. Not a huge amount, not an umbrella or a pricing umbrella that might be forming, but a healthy amount for the service we're providing our customers.

Yes. That's certainly not egregious. And pricing environment sounds like pretty rational for competitors that matter?

Certainly is. We -- you always have an irrational competitor from time to time. That's just what makes the market. But generally, it's a very rational market. And people aren't competing on price. They're competing on the relationship, very much how we compete with M&A. They're competing on the relationship they have with the customers.

Sure. Okay. Rollins Way, we'd like to spend a little more time on that. You outlined in December. To me, it seems like a pretty big opportunity, right? You've got this huge organization. It's executing well yet. You've got a cost base that maybe is a little more full than you'd like. So we talked about the retention side, that's pretty clear. But in terms of any other -- whether you want to find a low-hanging fruit or larger opportunities and the flow-through that we could see, any way you could size or dimensionalize that, I think, would be really helpful.

There's so many different opportunities. When you think about The Rollins Way or you think about the modernization journey, we've got growth initiatives. We talked about the ancillary sale across the portfolio, using our credit extension arm that we're using and working across the brands to help enable customers to buy these services also is a big growth opportunity for us. But there's tons of -- and there's a significant amount of untapped opportunity when it comes to those cross-sell. On average, our customers have less than 2 services. And so there's an opportunity to bolster that and improve that as we go forward. There's an opportunity on margins. How do we procure? How do we do a better job of procuring material? It's very much left up to branches or regions or brands. And so how do we leverage the purchasing activity? Because the purchasing activity is no different, quite frankly, between brands. They're using the same materials. They're using the same insulation. They're using the same product. How do we leverage that? How do we take advantage of our economies of scale when it comes to the procurement side? How do we do a better job? I talked about earlier about onboarding and keeping people, but also the back office. We've invested in a lot of great new talent in our back office and brought a lot of new folks on. That talent is having an impact. They're putting new technologies in place, new tools, helping us take out costs from the back office and be a better acquirer of some of these businesses as we think about synergies. And so there's a tremendous amount of growth opportunities, productivity opportunities, profitability improvement opportunities. Last year, I started talking about our tax rate. Our tax team is doing an exceptional job there. We saw over 100 basis point improvement in tax rate last year, and we think that's sustainable as we think about the future. So we're looking at our state tax profile now and evaluating that. So there are tons of opportunities that we continue to evaluate.

Okay. Fair enough. And then in terms of -- so again, the company is operating very, very smoothly. Steady, high growth rates. As we maybe centralize or consolidate this, however you want to define it, how do you think about -- I guess I see like the risk in kind of maintaining the autonomy. Like maybe it's just we're talking about mostly back-office stuff, but that must be a consideration in terms of, again, just keeping things as they are and not upsetting operations from those changes.

It certainly is. When we look at our business, this is a decentralized business model. And that won't change. We want to be close to the customer. We want to be close to the communities we work in. We live, work and play in the same community. And so that's important to us for the relationship side of this business, and it's all about people and relationships. But there's things that our home office and other areas, they can do to better serve our field operations. And that's exactly what we're doing when it comes to the EPM initiatives around technology or the procurement initiatives or the real estate initiatives. I haven't even talked about that, but we're looking at our real estate footprint, thinking about the branch of the future. The branch of today is different than the branch we needed 5 or 6 years or pre-COVID. People aren't going into the branch. So do we really need that footprint? And how do we go about improving that? So there's a tremendous amount of back-office things that will help enable our field to serve the customer more effectively. That's what it's about. How do we serve the field to ensure they're serving the customer.

Maybe touch a little bit more on the real estate opportunity in terms of -- I don't know, you think could be 20%, 10%, 15% lower?

Yes. I mean, we're evaluating that right now. And so there's an opportunity to do more around that. We'll have an Investor Day, I believe, in May. And I'm sure that will be one initiative of many that we'll talk about that -- but there's an opportunity. There's really an opportunity to improve the use of that footprint, maybe take an opportunity to just generally improve the profile.

Okay. Well, stay tuned, I guess. Just quickly touching back on the adjacent services. So I think it's, on average, 1 to 2 or so, call it, 2 average products per customer. If we were to look at maybe -- not necessarily high marks, but if it's by brand or within Orkin or particularly services, where you're really starting to see traction or maybe even within the demographic or market, what does that look like? What's the North Star?

Yes. Well, where we're at right now is certainly not the number we want to be at. It's less than 2. And I mean, if we look at it, 3 to 4 services per customer would not be unrealistic. There's -- not only do you have the basic pest control, but how do you get termite control? You want pest control and termite. Or you might have termite, how do you convert it into a recurring termite and then also bring on the pest control? That's 2 services there. Then you got wildlife. Right now, you're seeing squirrels that are getting into homes. The last thing that -- I'm sure maybe you -- I don't want to assume you, Curtis, that you would want to do it, but I don't want to go in and try to remove a squirrel. And so we're seeing calls for stuff like that. So wildlife control, adding that into it. Mosquito control. Believe it or not, in New York City today, it's not 80 degrees. But when I left Atlanta yesterday, it was 80 degrees, and we were seeing mosquitoes. And mosquito is a huge amount of growth opportunity for us. It's one of the leading causes of illness from pests, and we're doing more work around improving that. So mosquito can easily be added. And we've got sustainable solutions in Northwest and other brands that are really appealing to some of our customer set. You've got ticks in the yard, Lyme disease is a horrible disease.

Out of control.

And so how do you prevent that from occurring? Well, you treat your lawn for ticks. And so there's 4 or 5 services there alone, not to mention the ancillary with the attic and keeping pests out. Once you have a pest infestation, you'll do anything to get that pest out of your house, remediate it and make sure it doesn't come back. So if we can add those services to help our customers, that's going to add additional revenue for us as well and help provide the customer with the solution they're desiring. So as you see, there's -- we're not where we want to be, but there's a lot of opportunity to continue to make headway on this.

Okay. Very good. Weather, right? That was -- yes. So recurring business seems like in totally fine shape, but drove a little bit of volatility in your nonrecurring business. I guess as we're going into the spring selling season, how are you feeling about kind of being past those headwinds and kind of getting back to a more stable...

We're certainly not giving up on the 7% to 8% organic growth. That's intact. Pricing is still intact, 3% to 4%. Markets are still very healthy. We're seeing good opportunities there. You're right, weather can impact it from time to time. And when weather impacts it, what you oftentimes see is it's in that last month or so of the quarter because you don't have time to make up the onetime business. The recurring business doesn't change, but the onetime business has an ability to impact a quarter worth of revenue. And so what you saw in the fourth quarter is November, December, really tough weather months. Carried over into January, but we have sequentially improved. From January to February, we saw improvement. March is a make or break month for us. It's hard to say how March will turn out. We feel like we're positioned well in March, but it's the start of the busy season. It's the start of peak season for pests. And that's the month where it will give us a really good sense as to how good the year is going to be as we think about March. So we're looking at that closely. We'll evaluate that. We'll be reporting that, of course, in April. But what we've seen is improvement as we went through the quarter. February was better than January. January is a tough month. I think we had more closures in the month of January than we had a year ago because of some of the really tough weather conditions that were out there. But we started to see some improvement in February, and we're hopeful that March will continue that positive trend.

Okay. Fair enough. Maybe shifting to M&A, and bolt-on is a really important part of the story. I guess, any changes in terms of -- look, you have a very specific strategy, right? You're not going to overpay, right, family business integration. But I guess just what does the M&A landscape look like? I mean, more competitive, less competitive? How are you adapting?

No. 30 -- I think we say 30,000 or so competitors across the space. And we meet once a week as an ELT on M&A, and we're looking at that. Pipeline is healthy. Our target is 2% to 3% this year. I don't think we're going to be below 2%. We're going to be in that 2% to 3%. There's a chance to be above that if we see some other deals come through. But there's a good healthy pipeline. We're seeing good activity in Q1. We've got the benefits of Saela carrying over this year into the first quarter, but we also have a really good pipeline of activities we're executing on as we think about 2026. So 2% to 3% revenue growth associated with M&A is still very much intact. And we're continuing to -- the pipeline is good, and we see great opportunities there.

Okay. So maybe not so much on velocity of acquisition, right, that can be market-dependent or whatever. But thinking about some of all the process and operational controls that you've been talking about, the opportunity to maybe integrate quicker, more efficiently. Is that a focus?

Yes, it is. I mean, many of the things that I spoke about earlier on the modernization side apply in the acquisitions. We have bought countless numbers of businesses and partnered with so many over the years, but so many are on their own systems. So many are following their own approach. It's very much a decentralized portfolio sort of approach to the investments. And -- but as we make more progress in the back office, as we get better on procurement, as we get better on some of those functions, we're going to improve the realization of synergies on some of those deals that we're executing on here in the future.

Have you given numbers in terms of getting to -- from day 1 of integration to, I guess, maybe end of the year or just maybe how quickly it takes to ramp the margins? Or is that not really a consideration?

No, it definitely is a consideration. It's specially a consideration when we think about some of our bigger deals like Saela and Fox. Fox, I want to say we purchased Fox for 13x or 14x. And after year 1, I think we were below 10x. And so for us, 3, 4 turns of multiple is good. On some of the smaller deals, we might be buying them for 6x, 7x or 8x. We're immediately getting a pretty healthy return, but we're not happy with that, and we're focused on improving that. And so generally, we're seeing a 2 to 3 turn improvement over the first 12 to 18 months in the business. And it's allowing us to get a return on capital that's in excess of 10% here in the U.S. And so we're continuing to evaluate that. But that's -- there's definitely opportunities to continue to make that better, but it certainly is a big target of mine. I mean when I look at acquisitions, I want to buy businesses that are going to grow faster than us organically because I don't want to jeopardize our organic growth. That's so valuable. I want to buy businesses that are going to be accretive to margins or there's a path to become accretive to margins. I want to buy businesses that are cash flow positive, meaning their cash flow and capital intensity is no greater than our business. Because you know as well as I do, what drives the valuation of the company is oftentimes the compounding of free cash flow.

100%.

And so us buying these businesses and investing in them, we want to make sure that they're an equivalent cash flow compounder. We want to accrete to earnings in the first year. We did that with Saela. Even with cost of debt at 4% or 5%, we still saw accretion to earnings in the first 12 months. And then return on capital is certainly a big part of what we do.

Okay. Running short of time. One really quick one, just AI utilization, how important is that in terms of improving internal efficiencies, procurement, stuff like that?

Yes. Yes. I mean, it is. I mean, we're looking at that. We continue to evaluate that. I think there's opportunities on growth and productivity when it comes to AI. When it comes to AI, when I think about AI in this business, oftentimes, I think about the data we have across the brand portfolio. And we lose too many customers every year from the portfolio. But if we can do a better job at predicting when a customer is going to leave us, and then if we could use that to redeploy those brands to proactively pursue those customers before they leave us, guess what, they're never going to leave the portfolio, the family of brands. They might leave Orkin or they might leave Northwest, but they won't leave the entire portfolio. So I think there's -- that's something we're evaluating and something I think it's an opportunity for us as we think about the future when it comes to AI. There's all the other back office and call centers and things like that. But I think that's a unique one that might be very attractive for us as we think about the future.

Okay. Quickly, rounds association. Rollins Way?

Together.

Orkin? Whatever comes to mind first.

Great brand.

Weather?

Neutral.

Neutral. Okay. Margins?

Opportunity.

M&A?

Exciting. Growth opportunities. Yes.

Very good. All right. Thank you so much, Ken. Really enjoyed it.