Rollins, Inc.

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Rollins, Inc.

2170 Piedmont Road N.E.
Atlanta, Georgia 30324
U.S.A.
(404) 888-2000
Fax: (404) 888-2662

Public Company
Incorporated: 1948 as Rollins Broadcasting, Inc.
Employees: 10,000
Sales: $575.8 million
Stock Exchanges: New York Pacific Philadelphia Chicago
Boston
SICs: 7342 Disinfecting & Pest Control Services; 7382
Security Systems Services; 0782 Lawn & Garden Services;
0781 Landscape Counselling & Planning; 7389 Business
Services, Not Elsewhere Classified; 5992 Florists; 5191
Farm Supplies

Rollins, Inc. is a leading consumer service company in the United States, providing termite and pest control, lawn care, plantscaping and protective services to more than 1.6 million residential and commercial customers. Rollins derives the majority of its revenues and profits from Orkin Pest Control, the largest operation of its type in the world, with branches in 49 states, the District of Columbia, Canada, Mexico, and Puerto Rico and one of only two national concerns in its field. Rollins’ other divisions include Rollins Protective Services, which custom designs, installs, maintains, and monitors wireless and hardwired residential and commercial security systems; Orkin Lawn Care, which provides fertilization, weed and insect control, seeding, aeration, and tree and shrub care services; and Orkin Plantscaping, the second largest operation of its kind in the country involved in the design, installation, and maintenance of plants it rents and sells to commercial customers.

Rollins, Inc. began as Rollins Broadcasting, Inc. in the 1940s, though the company’s Orkin Pest Control business is older, having been founded in 1901 and acquired by Rollins in the 1960s. Rollins Broadcasting was co-founded by O. Wayne Rollins, who was raised in rural Georgia and worked in a cotton mill during the Depression era, and his brother, John Rollins. Together they formed Rollins Broadcasting, a partnership based on a simple strategy: Wayne Rollins would acquire a small Virginia radio station that would advertise his brother’s car dealership.

Wayne Rollins became president of Rollins Broadcasting and guided an expansion of its media interests which by 1960 included six radio stations and three television stations in the eastern United States. In 1961, the company went public and was listed on the American Stock Exchange. Also that year, the company began diversifying, acquiring Tribble Advertising Company of Texas, which launched Rollins’ outdoor advertising/billboard business. In 1962, Rollins acquired its tenth broadcasting station with the purchase of its first west coast media operation, KDAY radio station in Los Angeles.

In 1963, Rollins expanded its outdoor advertising business further south when it acquired Vendors S.A., a Mexican company which marked Rollins entry into international operations. During the first half of 1964, Rollins acquired Satin Soft Cosmetics and also entered the citrus-fruit growing business, planting groves on acreage it had acquired in south-central Florida during the late-1950s.

In mid-1964, Wayne Rollins led what is believed to have been the first leveraged buyout in history, when his rapidly diversifying company acquired Orkin Exterminating Company for $62.4 million, a figure nearly seven times that of Rollins Broadcasting’s revenues that year. At the time of the Orkin acquisition, the family-run Atlanta-based pest control business was beset with squabbles that at one juncture led family members to commit the company founder, known as “Otto the Rat Man,” to a mental institution. Though Wayne Rollins knew little about pest control, he used his connections with Delaware’s Du Pont family to help secure financing from the Chase Manhattan Bank and Prudential Insurance Company, which funded most of the acquisition costs. With more than 800 offices in 29 states and the District of Columbia, Orkin gave Rollins a service company to which Rollins could apply advertising and merchandising operations. For a time the buyout served as a case study at the Harvard Business School, representing the first time that large institutional investors backed a smaller firm buying a larger company and lent money on the basis of potential earnings rather on the base value of Orkin, setting the stage for an acquisition that Wayne Rollins compared to “Jonah swallowing the whale.” The deal also became emblematic of other future Rollins’ acquisitions, with Rollins later acquiring several family-owned businesses based in southern states, which offered cross-marketing opportunities.

Soon after acquiring Orkin, Rollins entered the professional building maintenance service business with the acquisition of another Atlanta-based business, L.P. Martin Maintenance Corp. (renamed Rollins Services), with operations in ten southern states. Between 1964 and 1965 Rollins also took over several smaller pest control firms, including Dettlebach Pesticide Corp., a manufacturer of pesticides, insecticides, and rodenticides; and Arwell, Inc., a midwestern termite and pest control firm.

With the name Rollins Broadcasting no longer reflecting the company’s scattered interests, in 1965 the company changed its name to Rollins, Inc. By 1966, Orkin’s operations had been expanded to 1,000 offices and its recently acquired pest control business had followed Rollins billboard business into Mexico. The following year, Rollins, Inc. relocated its corporate offices from Wilmington, Delaware, to the Orkin headquarters in Atlanta, and, in 1968, Rollins began trading on the New York Stock Exchange. Moreover, the company also entered the wall covering and decorating business with the purchase of the Atlanta-based wholesale distribution firm Dwoskin, Inc. and its subsidiary Dwoskin Decorating Company.

In 1968, the Federal Communications Commission (FCC) refused to renew the operating license of one of Rollins then-12 radio stations, WNJR in Newark, New Jersey—one of the first radio stations in the United States to tailor programming specifically to African American audiences. In failing to renew the license, the FCC cited gross misconduct and fraud by station managers who concealed the relationship between the station and an advertising agency and charged that home office officials failed to exercise adequate control and supervision over the station. The FCC ruling was later upheld when the U.S. Supreme Court refused to hear a Rollins appeal.

In 1969, Rollins sales rose above $100 million for the first time. By the end of the decade, the company had formed Rollins Protective Services (RPS), initially a subsidiary, which became a pioneer in the security field after developing one of the first affordable wireless early-warning burglar and fire alarm systems in the 1970s.

During the early 1970s Rollins continued diversifying by acquiring the consumer cooperative United Buying Service and the oil and gas field services operation of Patterson Services, a leading services supplier to oil and gas companies and drilling contractors in the Gulf Coast area. During the same period, Rollins also expanded its home-decorating operations with the acquisitions of Star Wallpaper & Paint Company, Carole Textile Company, and Marks Custom Draperies, Inc. In 1973, the company’s Dwoskin division, which had become the country’s largest wholesale distributor of wallcoverings, began serving as the sole distributor of Ultra-Ease, a prepasted vinyl-coated wallcovering developed by the Du Pont Company.

By the end of 1973—Rollins’ 25th year in business—the company’s media interests included a growing cable television system in Wilmington, Delaware (a state which had no commercial television station), as well as three television stations and six radio stations operating in Virginia, West Virginia, Alabama, Illinois, California, and New York. Rollins was also operating the nation’s fourth largest outdoor advertising firm and an expanded collective buying service involved in the sale of such items as furniture, major appliances, cars, and boats and boasting one of the largest operations of its kind. Additionally, Rollins Services, the company’s building maintenance division, was the largest such operation serving commercial and institutional customers in the Southeast and Southwest and had expanded its services to include janitorial, building management, security and polygraph, engineering, hospital laundry and carpet care, and air sanitization services. Moreover, Rollins’ leading service business, Orkin, was the world’s largest termite and pest control company, having grown to serve more than one million customers through offices in 35 states, Mexico, and Jamaica.

R. Randall Rollins, son of Wayne Rollins, succeeded his father as president in 1975 while the company co-founder remained as chairperson and chief executive. In 1975, the company sold Dwoskin operations and closed the year recording revenues of $213 million and earnings of $19 million.

In early 1976, Rollins became the first American company to formally announce that it had made and would continue to make payoffs to local Mexican government officials (which was not illegal under U.S. law) in order to conduct business across the border. In a voluntary disclosure statement filed with the Securities and Exchange Commission (SEC), the company reported that it had paid Mexican officials $127,000 over a five-year period, helping Rollins’ billboard business earn about $10 million. After receiving negative publicity from the disclosure, in late 1976 Rollins announced that it would discontinue questionable payments to Mexican officials.

In 1977, Rollins began operating its second cable television system, in New Haven, Connecticut, and about the same time the company completed a new, expanded Plattsburgh, New York, television station, which began broadcasting across the northern U.S. border to Montreal. In 1977, Orkin Pest Control, hoping to benefit from another cross-marketing opportunity, launched a lawn care operation to compete for business in that growing industry, while Rollins, between 1978 and 1981, abandoned its consumer cooperative, business services, and custom drapery operations by discontinuing the business of United Buying Service and selling Rollins Services, Carole Textile Company, and Marks Custom Draperies.

In 1980, Rollins annual sales surpassed $400 million for the first time—after nearly doubling in five years—as earnings rose above $35 million. In 1982, drawing on Orkin’s history of serving residential customers in an environmentally sensitive markets, Rollins created a separate lawn care entity, Orkin Lawn Care, offering fertilization, weed and insect control, seeding, and aeration services.

During the early 1980s, Rollins began acquiring and operating numerous cable television franchises in Massachusetts and Rhode Island. In 1982, a local attorney representing Rollins in Danvers, Massachusetts, was convicted of offering a town official a $50,000 bribe to help Rollins secure a franchise there. Rollins was never implicated in the bribe, and, following the conviction, the Danvers Town Council voted to grant a franchise to Rollins, although the cable license was revoked in 1983 by a state consumer agency.

During this time, Rollins acquired about three million shares of its common stock as the Rollins family increased its stake in the company to about 43 percent. During the same period, Rollins’ earnings, which had increased on an average of more than 20 percent per year since the company went public, dipped with falling profits from oil and gas services. In 1984, seeking increased shareholder value and expanded business opportunities for family members, Wayne Rollins split his company into three public units: a new Rollins, Inc., operating strictly as a consumer services business offering pest control, lawn care, and security services; a media business, Rollins Communications, Inc. (RCI), controlling television and radio stations and cable television franchises; and RPC Energy Services (RPC), focusing on oil and gas field services. RCI and RPC were then spun off to shareholders, with Rollins family members retaining significant stakes in each. Wayne Rollins remained chair and chief executive of Rollins, Inc. and became chair and chief executive of RCI; Randall Rollins became senior vice-chairperson of Rollins, chair and chief executive of RPC, and president of RCI; and Wayne Rollins’ younger son, Gary, became president of Rollins, Inc., assuming the bulk of operational control over the new Rollins, Inc.

With the ability to channel capital, which its service divisions had earned, back into the company, Rollins, Inc. bought back more than a million of its shares for acquisition purposes and purchased companies operating in all three of Rollins’ principal business segments. In 1985, RPS increased its scope of operations in Cincinnati, Columbus, Dallas, Houston, and St. Louis with the acquisition of Warner Amex Security Systems, a home security business that provided Rollins with a hardwired security system product line (generally used in commercial application) to add to the company’s established line of wireless systems. Rollins’ pest control business also expanded in 1985 through acquisitions, including that of Ace Pest & Termite Control Company, which gave Orkin an entrance into the southern California market.

Between 1984 and 1987, Orkin Lawn Care, in attempt to pull its operations out of the red, expanded its reach from the Southeast across seven sunbelt markets from North Carolina to Texas. In 1987, the lawn care division further extended operations into the Midwest and Northeast with the acquisition of Amcare, Inc., which gave Orkin Lawn Care an additional 24 branches and doubled the division’s number of locations to more than 40.

Also that year, the company acquired two pest control firms, including Abalene, the largest operation in New York and New England. By this time, Orkin controlled about ten percent of the American pest control market—followed by Terminix with about six percent—and accounted for about 90 percent of Rollins revenues and earnings. After media properties became a hot commodity on Wall Street, the Rollins family sold its interest in RCI for $600 million, propelling Wayne Rollins into the ranks of the world’s 400 wealthiest. Moreover, Forbes magazine named Rollins, Inc. the nation’s leading service company in 1987.

During this time, however, the Federal Trade Commission (FTC) ruled that Orkin Exterminating had unfairly raised its renewal fees in 1980 (after earlier guaranteeing certain customers fixed fees). The company was ordered to roll back fees, although it was allowed to retain the $7.5 million it earned as a result of the increases. Orkin, which had cited inflation as the impetus for its fee hikes, appealed the decision, which was ultimately upheld when the Supreme Court let the FTC ruling stand. Two years after the initial FTC ruling, a federal court found Orkin guilty of improper use of pesticides during a home fumigation—which allegedly caused the death of a Virginia couple—and was fined $350,000. In 1988, Orkin’s pest control operations were hurt by industry-wide regulatory changes after the U.S. Environmental Protection Agency banned Chlordane, a widely used termiticide. Rollins responded to the new regulations, which took effect in the midst of Orkin’s research into a new foam termiticide, by establishing new customer relations and public relations departments which focused their efforts on public education.

During the late 1980s, Orkin Lawn Care acquired Village Green, Inc., operating in Connecticut and New York, and Easy-lawn, Inc., operating in South Carolina. Initially Orkin Lawn Care treated lawns with sprays, but in 1988 it converted its treatment process to a combination of wet and dry granular applications, allowing the company to change its vehicle fleet from tankers to smaller and more economical vans. Despite having expanded to a peak of 56 branches by 1988, Orkin Lawn Care had generated little profit since its formation six years earlier. Faced with an industry slump and increased competition, the lawn care division began consolidating some operations and added a complete tree and shrub program to its services. Continuing to persist in a goal of profitability, in 1989 the lawn care division entered the commercial market while pushing its territory westward, acquiring Yearound Lawn Care Experts, a West Coast company with branches in San Diego, Los Angeles, Sacramento, Portland, and Seattle.

During the late 1980s, RPS opened an expanded Technical Center in Atlanta, upgraded the computerized operating systems at its three alarm monitoring centers, acquired two security firms, and entered the Chicago residential security market. In 1989, Orkin—the only pest control business maintaining a continuous national television and outdoor advertising program—launched its “Exterminator” advertising campaign designed to reinforce the recognition of Orkin’s name while using the robotic Exterminator to suggest that the firm was the service company of the future. For 1989, Rollins sales climbed above $400 million (for the first time since the 1984 spinoffs) while profits remained flat due to unusual weather conditions that reduced the termite swarm period and delayed the start-up season for lawn care.

During the slow-growth period of late 1980s, Rollins began focusing on lowering turnover among both customers and employees by initiating a program that increased employee recruiting, training, and compensation. Early the following decade, Rollins initiated a total quality improvement plan, beginning with corporate management and designed to eventually touch the company’s entire work force with additional quality training.

Rollins entered the 1990s introducing a new division, a new foam termiticide, and new security systems. In 1990, Rollins formed Orkin Plantscaping to sell and rent flowering and green plants principally to commercial customers such as upscale hotels, office buildings, and shopping malls. Also that year, Orkin Termite and Pest Control division, after four years of development work, became the first business in its field to employ a foam termiticide. The pest control division, seeking ways to develop low-cost sales leads, also introduced a toll-free phone line—offering free termite inspections—in conjunction with its Exterminator commercials. In 1990, RPS launched a new automated alarm monitoring system and introduced the Rollins’ System VI and the hardwired Vista LX System. The System VI, consisting of a network of alarm sensors and devices communicating directly with one of the company’s three, 24-hour alarm monitoring centers, featured one-touch system activation, multiple zone security, and house lighting controls while the Vista LX system combined hardwired and wireless features.

In 1991, O. Wayne Rollins died unexpectedly after entering a hospital for a pacemaker implant. A near-billionaire and one of Florida’s largest landowners and biggest cattle barons, Rollins had an estimated net worth of $930 million and had been one of Atlanta’s most generous philanthropists. Randall Rollins succeeded his father as chairperson and chief executive while Gary Rollins remained president.

In 1991, the company launched a “Zero Pest” guarantee designed to attract premium commercial pest control accounts from sources such as upscale restaurants and major hotels as well as to complement the company’s toll-free inspection hotline, which was generating increasing numbers of residential sales leads. In 1991, RPS introduced its Quality-Plus system, targeting the middle-income family and small business markets, and the following year the security division expanded its cross-marketing programs with other Rollins operations and opened new commercial offices. In 1991, Orkin Plantscaping acquired operations in Dallas, Nashville, and Denver and the following year purchased operations in Portland, San Diego, and Seattle, as it became the second largest plantscaping concern in the country. In 1992, with increased sales generated by three of its four divisions, Rollins’ revenues rose more than $50 million and climbed above $500 million for the first time—to $528 million—while net income rose to $38 million.

While Rollins pest control, security, and plantscaping services were growing during the early 1990s, Orkin Lawn Care continued to struggle, resulting in further departures from unprofitable markets. In 1991, Orkin Lawn Care abandoned California and the following year bowed out of parts of the Northeast and Midwest. A slowing of industry growth and an increase in competition caused the lawn care operation to boost its prices and redirect marketing activities to focus on direct sales and forced the operation to retreat from some of its territory. By 1993, the lawn care division had been pared back to a 32-branch area, largely in territory familiar to Rollins: the Southeast and the sunbelt region.

In 1993, Orkin Plantscaping, then serving 16 states, opened a new Dallas distribution center to consolidate purchasing, warehousing, and distribution of plants and supplies. Also that year, Orkin Pest Control introduced a 24-hour hotline and launched a new agribusiness service designed to help dairy farmers in the control of the common fly. In September 1993, the Smithsonian National Museum of Natural History’s insect zoo was renamed the O. Orkin Insect Zoo after the company donated $500,000 for its expansion and renovation. Taking aiming at its core residential market, RPS introduced a mid-priced security system product, Protector. Moreover, Orkin Lawn Care introduced its Total Lawn Care (TLC) service, an expanded all-inclusive lawn service, and began a training school for its lawn care technicians and managers. For 1993, Rollins—for the seventh consecutive year—was ranked by Forbes as the nation’s best services company, as revenues rose to more than $575 million and net income increased to $44.5 million, marking the company’s fourth consecutive year recording double-digit earnings increases.

Rollins, Inc. moved into the mid-1990s with the Rollins family owning in excess of 41 percent of the company’s common stock and occupying three of the company’s seven director seats. The Orkin Pest Control division continued to pace Rollins’ revenues and earnings and had only one national competitor in the fragmented and growing near $4 billion pest control industry, which was still in the process of slowly consolidating. In looking to the future, Rollins anticipated increased acquisition activity—which had slowed considerably during the late 1980s and early 1990s due to high asking prices—particularly in the area of local and regional pest control operations and possibly those which could extend operations into Canada and Europe. Rollins Protective Services, generating about ten percent of the company’s revenues, appeared to be gaining momentum as it increased cross-marketing programs with other company divisions and expanded its product line in both residential and commercial market segments. Rollins was also hoping that its plantscaping operation, generating about five percent of Rollins’ annual sales, could become the first national concern of its kind and that the company’s determination to continue in the lawn care business, generating about five percent of Rollins’ revenues, would eventually become profitable. With continued attention to customer and employee retention paying dividends as the company neared the mid-decade mark, Rollins appeared to have sound reasons to believe it could reach its goal of becoming a billion-dollar company by the year 2000.