AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 18/10/2026
Moat38
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 1/4 · The deployed routing system and large footprint support efficiency, but a comparative cost lead is unproven and the industry explicitly has low entry barriers.
durability · 2/4 · Recurring contracts and 99 consecutive quarters of revenue growth demonstrate business persistence. They do not establish that competitors cannot replicate the economics; total revenue growth also includes acquisitions.
customer dependency · 1/4 · Recurring service supports repeat demand, but customers have numerous provider and do-it-yourself alternatives. No material switching friction is demonstrated.
erosion resilience · 2/4 · Positive organic growth and stronger relationship-based channels offset some residential weakness. Realized cost pressure and declining operating margin show incomplete insulation rather than a collapse in competitive position.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · — · The passages disclose growth and contractual pricing arrangements but no observed price outcome. Neither organic growth nor margin changes establish realized pricing.
retention · 2/4 · Contracted recurring services and continuing organic growth support repeat demand indirectly. Growth can include new customers and pricing, so it does not establish a retention rate or strong switching costs.
margin resilience · 2/4 · Gross margin improved slightly in 2025, but second-quarter 2026 gross and operating margins fell despite revenue growth. Labor, materials and fleet pressures demonstrate mixed resilience; no pricing response is inferred.
contractual freedom · — · Contracts specify customer pricing arrangements, but their duration, escalation clauses, reset rights and termination terms are absent. The ability to change prices or terms cannot be established.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 1.42
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 0.68
Financial strength71
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 100.00
- netDebtEbitGrade
- 85.96
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 0.00
- Debt / FCF (x)
- 0.94
- Net debt / operating income (x)
- 0.70
- Interest coverage (x)
- 25.42
- Current ratio (x)
- 0.60
Capital allocation100
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 41.57
- 3-year average dilution (%)
- -0.56
- 3-year average SBC / revenue (%)
- 0.91
- cashConversionGrade
- 100.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual cash generation and modest capital expenditures support investment capacity. However, first-half 2026 operating cash flow fell while acquisitions, dividends and repurchases accompanied additional borrowing. The completed $200 million secondary-offering repurchase is documented, but its value creation and acquisition returns are unproven.
incentive alignment · 3/4 · Actual 2025 grants combine three-year restricted-stock vesting with performance shares conditioned on financial goals and relative shareholder return. An adopted clawback adds accountability. This demonstrates meaningful incentive design, while actual ownership levels and eventual vesting outcomes remain unestablished.
execution · 2/4 · Continued organic growth and a long revenue-growth record demonstrate execution through operating outcomes, indirectly rather than through customer-level measures. Second-quarter results below expectations, weaker residential leads and margin compression temper that record.
governance · 2/4 · An independent audit committee performed documented financial oversight, and related-party agreements received committee approval. The absence of a formal director candidate policy and the actual FTC consent order restricting certain employment non-competes temper those safeguards. Approval alone does not establish the economic fairness of related-party arrangements.
Evidence
Through our family of leading brands, we provide essential pest and wildlife control services and protection against termite damage, rodents and insects to more than two million residential and commercial customers from more than 800 Company-owned and franchised locations in approximately 70 countries.
Business / customer and service footprint · Filed 12/02/2026
The contracted and recurring nature of our services provide us with visibility into a significant portion of our future revenue.
Business / contracted and recurring services · Filed 12/02/2026
We operate in a highly competitive industry with fragmented markets and low barriers to entry.
Risk factors / competition and entry barriers · Filed 12/02/2026
We compete with other large pest control companies, as well as numerous smaller pest control companies and do-it-yourself options, for a finite number of customers.
Risk factors / competitor categories · Filed 12/02/2026
We believe that the principal competitive factors in the market areas that we serve are quality and speed of service, customer proximity, customer satisfaction, brand awareness and reputation, terms of guarantees, technical proficiency and price.
Risk factors / competitive factors · Filed 12/02/2026
Our pest and termite control services are performed pursuant to terms of contracts that specify the pricing arrangement with the customer.
MD&A / contractual pricing arrangements · Filed 12/02/2026
Total franchising revenues were less than 1.0% of the Company’s annual revenues for each of the three years.
Revenue recognition / franchise revenue contribution · Filed 12/02/2026
Right to access intellectual property (Franchise)—The right to access Orkin’s, MissQuito’s, Critter Control’s, and our Australia franchisors’ intellectual property is an essential part of our franchise agreements.
Revenue recognition / franchise intellectual property · Filed 12/02/2026
These agreements provide the franchisee a license to use the brand name and trademark when advertising and selling services to end customers in their 53 Table of Contents normal course of business.
Revenue recognition / trademark licensing · Filed 12/02/2026
Our scale enables delivery of great customer service and provides a significant and reinforcing competitive advantage through (i) comprehensive capabilities to win new residential and commercial accounts, (ii) technology investments for operations optimization and enhanced customer experience, (iii) a diverse portfolio of brands of varying sizes of which to innovate, test, learn, and grow or expand, particularly when it comes to emerging technology, (iv) route density to manage variable costs, and (v) financial flexibility to generate organic growth and pursue acquisitions.
Business / management description of scale advantages · Filed 12/02/2026
The majority of our business runs on our proprietary Branch Operating Support System (“BOSS”), which offers a back-end interface to facilitate service tracking and payment processing for technicians.
Business / deployed BOSS operating platform · Filed 12/02/2026
BOSS also provides virtual route management tools to increase route efficiency across our network, reducing miles driven and associated costs while increasing customer retention through on-time and rapid response service.
Business / management description of routing efficiencies · Filed 12/02/2026
Effective sales and service staffing levels helped us to capitalize on continued demand and deliver solid results for the year, with organic revenues* growing by 6.9% compared to 2024.
Strategic update / 2025 organic growth · Filed 12/02/2026
Gross margin improved 10 basis points to 52.8% in 2025 compared to 52.7% in 2024.
MD&A / 2025 gross margin · Filed 12/02/2026
AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (in thousands) (unaudited) Six Months Ended June 30, 2026 2025 OPERATING ACTIVITIES Net income $ 251,748 $ 246,737 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 66,108 60,946 Stock-based compensation expense 21,495 19,809 Provision for expected credit losses 17,359 16,461 Loss (gain) on sale of assets, net 2,135 (984) Provision for deferred income taxes 2,053 12,470 Other operating activities, net 1,778 (1,223) Changes in operating assets and liabilities: Trade accounts receivable (52,765) (44,654) Financing receivables (12,412) (12,927) Materials and supplies (252) (2,086) Other current assets (67,288) (18,062) Accounts payable and accrued expenses 47,996 43,967 Unearned revenue 8,454 17,893 Other long-term assets and liabilities 4,464 (16,333) Net cash provided by operating activities 290,873 322,014 INVESTING ACTIVITIES Acquisitions, net of cash acquired (135,255) (253,578) Capital expenditures (13,568) (13,857) Proceeds from sale of assets 1,121 3,470 Other investing activities, net 1,493 874 Net cash used in investing activities (146,209) (263,091) FINANCING ACTIVITIES Payment of contingent consideration (9,495) (3,447) Issuance of senior notes — 492,215 Borrowings under revolving commitment — 11,000 Borrowings under commercial paper, net 101,488 59,989 Repayments of revolving commitment — (408,000) Payment of debt issuance costs — (5,986) Payment of dividends (175,941) (159,373) Cash paid for common stock purchased (42,826) (14,922) Other financing activities, net (7,948) (46) Net cash used in financing activities (134,722) (28,570) Effect of exchange rate changes on cash (861) 3,052 Net increase in cash and cash equivalents 9,081 33,405 Cash and cash equivalents at beginning of period 100,004 89,630 Cash and cash equivalents at end of period $ 109,085 $ 123,035 Supplemental disclosure of cash flow information: Cash paid for interest $ 17,729 $ 5,211 Cash paid for income taxes, net $ 134,763 $ 85,017 Non-cash additions to operating lease right-of-use assets $ 58,896 $ 70,534 The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed consolidated cash flows / first half 2026 and 2025 · Filed 23/07/2026
GENERAL OPERATING COMMENTS Below is a summary of the key operating results for the three months ended June 30, 2026: •Second quarter revenues were $1.1 billion, an increase of 7.9% over the second quarter of 2025 with organic revenues* increasing 5.7%.
MD&A / second-quarter 2026 revenue and organic growth · Filed 23/07/2026
This represents our 99th consecutive quarter of revenue growth.
MD&A / consecutive quarters of revenue growth · Filed 23/07/2026
Our reported results for the second quarter fell short of our expectations.
MD&A / results below management expectations · Filed 23/07/2026
Organic revenue* growth in the quarter was negatively impacted by slower growth in parts of our residential service offering due to a decline in lead volume.
MD&A / residential lead weakness · Filed 23/07/2026
Specifically, those of our brands that are more reliant on consumer-initiated demand through search, digital media and inbound calls experienced a more challenging demand environment.
MD&A / inbound customer acquisition channels · Filed 23/07/2026
Encouragingly, other areas of our business that leverage relationship-based channels, such as home builders and door-to-door sales, delivered solid organic revenue* growth in the quarter, reinforcing the importance of our diversified, multi-brand approach.
MD&A / relationship-based channel growth · Filed 23/07/2026
RESULTS OF OPERATIONS Quarter ended June 30, 2026 compared to quarter ended June 30, 2025 Three Months Ended June 30, Variance (in thousands, except per share data) 2026 2025 $ % GAAP Metrics Revenues $ 1,078,576 $ 999,527 $ 79,049 7.9 % Gross profit (1) $ 569,946 $ 537,666 $ 32,280 6.0 % Gross profit margin (1) 52.8 % 53.8 % (100) bps Operating income $ 201,359 $ 198,333 $ 3,026 1.5 % Operating margin 18.7 % 19.8 % (110) bps Net income $ 143,910 $ 141,489 $ 2,421 1.7 % EPS $ 0.30 $ 0.29 $ 0.01 3.4 % Operating cash flow $ 172,506 $ 175,122 $ (2,616) (1.5) % Non-GAAP Metrics Adjusted operating income (2) $ 209,939 $ 205,900 $ 4,039 2.0 % Adjusted operating margin (2) 19.5 % 20.6 % (110) bps Adjusted net income (2) $ 151,927 $ 146,902 $ 5,025 3.4 % Adjusted EPS (2) $ 0.32 $ 0.30 $ 0.02 6.7 % Adjusted EBITDA (2) $ 236,292 $ 231,152 $ 5,140 2.2 % Adjusted EBITDA margin (2) 21.9 % 23.1 % (120) bps Free cash flow (2) $ 166,077 $ 168,046 $ (1,969) (1.2) % (1) Exclusive of depreciation and amortization (2) Amounts are non-GAAP financial measures.
MD&A / second-quarter operating results · Filed 23/07/2026
The decrease is primarily due to 70 basis points of higher employee expenses, including higher employee medical costs and service salaries, 20 basis points of higher materials and supplies, and 20 basis points of higher fleet expenses associated with higher fuel costs.
MD&A / realized service-cost pressures · Filed 23/07/2026
Organic revenue* growth was 6.1% with acquisitions adding 2.8% in the six months ended June 30, 2026.
MD&A / first-half organic and acquisition growth · Filed 23/07/2026
Interest Expense, Net For the six months ended June 30, 2026, interest expense, net increased $5.1 million, compared to the six months ended June 30, 2025, primarily due to a higher average debt balance associated with higher borrowings under our commercial paper program.
MD&A / borrowing-related interest expense · Filed 23/07/2026
The Audit Committee presently consists of four independent directors, all of whom are considered financially literate under NYSE rules.
Proxy / audit committee independence · Filed 17/03/2026
In fulfilling its oversight responsibilities with respect to the year ended December 31, 2025, the Audit Committee: •Approved the engagement and terms of service of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ended December 31, 2025; •Reviewed with management and the Company’s independent registered public accounting firm, the interim financial information included in the Company’s Forms 10-Q prior to the Forms 10-Q being filed with the SEC, as well as the financial information in each quarterly earnings release; •Reviewed and discussed with the Company’s management (including internal audit) and the Company’s independent registered public accounting firm, the audited consolidated statements of financial position of the Company as of December 31, 2025 and 2024 and the related statements of income, comprehensive earnings, shareholders’ equity and cash flows for each of the three years ended December 31, 2025 including the related footnotes and financial statement schedule, and the related ICFR; •Discussed with the Company’s independent registered public accounting firm matters required to be discussed by the applicable requirements of the PCAOB and the SEC; and •Received from the Company’s independent registered public accounting firm the written disclosures and the letter in accordance with the requirements of the PCAOB regarding the firm’s communications with the Audit Committee concerning independence, and discussed with such firm its independence from the Company.
Proxy / completed 2025 audit committee oversight · Filed 17/03/2026
PClawback Policy. In 2023, we adopted a Clawback Policy which provides certain triggers for mandatory recovery of erroneously awarded compensation.
Proxy / adopted compensation clawback policy · Filed 17/03/2026
In 2025, the equity component of compensation for named executive officers (as well as certain other employees) continued to include grants of time-lapse restricted stock ("RSAs") and performance share units (“PSUs”), as in past years.
Proxy / equity awards granted in 2025 · Filed 17/03/2026
The RSAs will vest pro rata over a three-year period.
Proxy / restricted stock vesting terms · Filed 17/03/2026
The PSUs will cliff vest after three years based upon the Company’s successful achievement of certain financial performance goals and feature a relative TSR component, as described in more detail below.
Proxy / performance award vesting conditions · Filed 17/03/2026
2026 Proxy Statement 83 Appendix A Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow, Free Cash Flow Conversion, Adjusted Free Cash Flow, and Adjusted Free Cash Flow Conversion Twelve Months Ended December 31, Variance (unaudited, in thousands) 2025 2024 $ % Net cash provided by operating activities $ 678,107 $ 607,653 Capital expenditures (28,086) (27,572) Free cash flow 650,021 580,081 $ 69,940 12.1 % Delayed income tax payments (1) 21,710 (21,710) Adjusted free cash flow $ 671,731 $ 558,371 $ 113,360 20.3 % Free cash flow conversion 123.4 % 124.4 % Adjusted free cash flow conversion 127.5 % 119.7 % (1)The U.S.
Proxy appendix / 2025 and 2024 operating cash flow and capital expenditure · Filed 17/03/2026
The Nominating and Corporate Governance Committee does not have a formal policy with regard to the consideration of director candidates.
Proxy / absence of formal director candidate policy · Filed 17/03/2026
The Company's Nominating and Corporate Governance Committee approved the agreements in accordance with its Related Party Transactions policy.
Proxy / related-party agreement approval · Filed 17/03/2026
In addition, the Company completed the repurchase of 3,478,260 of the shares of Common Stock offered in the 2025 Offering for approximately $200 million at the same per share price paid by the Underwriter to the Selling Stockholders in the 2025 Offering, or $56.93 per share.
Proxy / completed 2025 secondary-offering share repurchase · Filed 17/03/2026
Although in the aggregate, our global portfolio of more than 450 trademarks is a valuable asset that is important to our operations, we believe that our competitive advantage is also largely attributable to the technical, marketing, and sales competence and capabilities of our teammates, rather than on any individual trademark; however, the loss of the Orkin trademark could be material to our business as a whole.
Business / trademark portfolio and management assessment · Filed 13/02/2025
The Company has now resolved this inquiry by entering into a voluntary consent order (the "Consent Order") with the FTC restricting the Company from entering into certain employment non-compete restrictive covenants with certain of its employees or enforcing such restrictive covenants.
Contingencies / FTC employment non-compete consent order · Filed 23/04/2026
