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Rollins Inc (NYSE:ROL)
Q2 2020 Earnings Call
Jul 29, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Rollins Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] It is now my pleasure to introduce your host Marilynn Meek. Please go ahead.

Marilynn Meek -- Vice President, MWW Group

Thank you. By now you should have all received the 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 are 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 1-844-512-2921 with the passcode 13705813. Additionally, the call is being webcast at www.viavid.com and a replay will be available for 90 days.

On the line with me today and presenting are Gary Rollins, Rollins' Vice Chairman and Chief Executive Officer; John Wilson, Rollins' President and Chief Operating Officer; and Eddie Northen, Senior Vice President, Chief Financial Officer and Treasurer. Management will make some opening remarks and then we'll open the line for your questions.

Gary, would you like to begin?

Gary W. Rollins -- Vice Chairman and Chief Executive Officer

Yes, Marilynn. Thank you and good morning. We appreciate all of you joining us for our second quarter 2020 conference call. Eddie will read our forward-looking statement and disclaimer and then we'll begin.

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

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.

Gary W. Rollins -- Vice Chairman and Chief Executive Officer

Thank you, Eddie. Before talking about our results, I want to express how concerned and focused we are regarding the spread of COVID-19. We know many of you are experiencing the expansion of the virus in your communities and we hope you and your family are doing well and remain safe.

Now back to our second quarter. Revenues for the quarter grew 5.6% to $553.3 million compared to $524 million for the same quarter in 2019. Net income rose approximately 16.5% [Phonetic] to $74.9 million [Phonetic] or $0.23 per diluted shares, compared to $64 million or $0.20 per diluted shares for the second quarter of last year.

Revenues for the first six months of the year were $1.04 billion, an increase of 9.3% compared to $953 million for the same period last year. Net income for the first six months increased 8.9% to $118.1 million [Phonetic] or $0.36 per diluted share compared to $0.33 per diluted share for the comparable period last year, a 9% increase.

Turning to our business lines results in the quarter. Residential pest control grew an outstanding 14.8%. Commercial, however, excluding fumigation, was down 5.2%. We have offset some of those commercial revenue shortfalls with termite and ancillary service, which was up 7.3%. Eddie will provide greater detail around these numbers.

During what we consider the most challenging time in our Company's history, our employees' efforts and contributions have been exceptional in every regard. We couldn't be more grateful and proud of them in what they've done. They truly are our most valuable asset. We continue to be aware and involved to ensure their safety and good health. They are provided with personal protection as needed as they go about servicing our customers.

Most of our technicians are working remotely and avoiding spacing issues that would exist their coming into our branch offices. The majority of our home office and call center employees are also working remotely.

Our commitment to safe practices involves our valued customers as well. On the plus side, most of our residential customers have been at home 24/7 and they are becoming even more conscious of their home and, in some cases, the need to protect their family and property from unwanted pests. Additionally as families self quarantine, many are spending more time in their yards, recognizing the need for mosquito control. We are benefiting from the high regard, trust and confidence that our customers have in our brands, which is in part responsible for our fast-growing pest control revenue and our gain in new customers, all at record setting rates.

Before turning the call over to John, I want to note while we were pleased with the results for the quarter, we continue to face the challenges of the pandemic and the unknowns that go with it. As a result, we review and adjust our activities and policies routinely to help us better address the impact of COVID-19.

As I mentioned, commercial pest control unfortunately has been more impacted by the virus and its related economic circumstances. However, we've been narrowing the revenue shortfall gap each month since March. Anecdotally, we are seeing a growing realization at many businesses that they can't shut down pest control services for an extended period of time without having infestation consequences.

A worthwhile offset to these commercial pest control challenges has been our other brands and introduction of our disinfectant service, VitalClean. As a result of this new service development prior to the pandemic, we have the ability to roll out our related sales and service protocols quickly. VitalClean is gaining traction and we would expect it to be more significant contributor to our commercial revenue going forward.

Let me now turn the call over to John who will provide more details on these aspects of our business. John?

John Wilson -- President and Chief Operating Officer

Thank you, Gary, and good morning. I would like to echo the commentary Gary made earlier about our team members. A common theme worldwide was their unbelievable response to this pandemic and their commitment to their customers throughout this event. As the pandemic started, we saw firsthand the trust that our customers have in our highly reputable brands and service professionals.

Additionally, we quickly moved to outfit our field teams with personal protective gear that help keep them safe as well as give our customers confidence in our ability to service their pest needs responsibly. Without the response we received from our outstanding team members, our customers would have been left unprotected from many insect and rodent caused health threats. Thank you all very much for what you do.

As we noted last quarter, Orkin and many of our other brands are now offering a disinfection service which quickly and thoroughly eliminates a wide variety of serious pathogens. Comprehensive disinfection is imperative to keeping an establishment as sterile as possible and disease-free. During the second quarter, we were very delighted to see the positive reception this service is receiving from our commercial customers. I was especially pleased at a wide-ranging movement from our field teams to provide this service [Indecipherable] to hundreds of first responder locations, police stations, fire houses and hospitals.

As the economy slowly opens and more commercial businesses begin welcoming back their patrons for indoor dining, shopping or as guests in their hotels and as their employees go back to the various workplaces, we expect the demand for VitalClean services to continue to grow. We are pleased with the progress thus far and very excited about the potential for this opportunity.

Our call centers were very busy during the second quarter as reflected in our increased residential sales. The record book for performance was completely rewritten as our inbound telephone sales effort replaced seven of the top 10 sales days in our history. From what we are currently experiencing, we are optimistic that these results will continue into the third quarter as July performance certainly reflects that as the remaining three top 10 sales days have been replaced.

Last, we continue to expand our Company's presence both in the US and globally, having made second quarter acquisitions in Australia and the UK. On July 1, we announced one of our Australian subsidiaries had acquired the largest independent pest control company in Australia, Adams Pest Control. This acquisition solidifies Rollins' national coverage in Australia. Adams Pest founded by John Adams and established in 1944 has expertise in all aspects of general pests and wildlife control and is the market leader in the Greater Melbourne and Adelaide areas.

In the United Kingdom we also acquired two environmentally friendly companies, Albany Environmental Services based in Central London and Van Vynck Environmental Services in Essex. These latest acquisitions bring our presence to seven companies covering all the UK. We are very pleased to welcome these very fine companies and their teams to the Rollins portfolio of pest businesses.

I will now turn the call over to Eddie.

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

Thank you, John. Our press release on July 7th gave you some insight as to what we knew at that time related to the impact of COVID-19 on our business. Today, I'll share some details on our Q2 actual results and some additional insight to what we know today that will impact the future.

During the entirety of the second quarter, our operations have remarkably navigated all that we as a society have dealt with related to the economic and health impacts of the virus. Additionally, our non-field operation groups successfully switched to a remote work model and did not miss a beat with their support. As you can see from the outcome, their collective results and efforts have been outstanding.

From a reporting perspective, please also keep in mind that we lapped our initial Clark acquisition on May 1st and we will see much more normalized financial results for the quarter and the foreseeable future. For the quarter, our residential pest control and termite services lines showed growth and key to the quarter included higher material and supplies costs, which included the purchase of personal protective equipment, successful cost containment implemented to drive margin improvements year-over-year and provision set up for potential commercial customer bad debts.

Looking at the numbers, the second quarter revenue of $553.3 million was an increase of 5.6% over the prior year's second quarter revenue of $524 million. Income before income taxes was $103.5 million or 19% above 2019. Net income was $75.4 million, up 17.2% compared to last year.

Our GAAP earnings per share were $0.23 per diluted share. EBITDA was $126.9 million and rose 16.4% compared to 2019. Our Q2 numbers have begun to normalize again as we lapped the initial Clark acquisition in the quarter. The first six months revenue of $1.041 billion was an increase of 9.3% over the prior year's first six months revenue of $953 million. Income before income taxes was $158.9 million or 11.1% above last year. Net income was $118.6 million, up 9.3% compared to 2019. Our GAAP earnings per share were $0.36 per diluted share. EBITDA was $206.1 million and rose 13.6% compared to 2019.

As we stated on our Q1 call, we began aggressively purchasing PP&E [Phonetic] in March and in April. This along with the transition to new, more diversified vendors impacted our materials and supplies costs between $2 million and $3 million in Q2 and will impact the business in a similar manner for the remainder of the year.

Let's take a look through the Rollins revenue by service lines for the second quarter. As Gary reviewed, our total revenue increase of 5.6% included 3.1% from Clark and other acquisitions and the remaining 2.5% was from pricing and organic growth. In total residential pest control, which made up 47% of our revenue, was up 14.8%, commercial pest control, ex fumigation, which made up 33% of our revenue was down 5.2% and termite and ancillary services, which made up approximately 20% of our revenue, was up 7.3%. Also of note, our wildlife services were up strong double digits yet again this quarter. Again, total revenue less acquisitions was up 2.5% and from that residential was up 10.3%, commercial, ex fumigation, decreased 7.8% and termite and ancillary grew by 5.5%.

As John mentioned in his remarks, but I also want to recognize our call centers that made the transition to working remotely and then went on to set numerous revenue and sales records, which helped drive our residential growth. Both Gary and John discussed the trust of our customers during the quarter.

Our investment in PP&E also helped our customers to show trust in our well-known brands. Seeing their technicians or salesperson in full PP&E gave a comfort that we also had the customer safety top of mind. Our feedback from customers shared on our NPS score for our residential product showed 2.4 percentage points higher than last year, which included a new COVID-19 category. This data was further supported by significantly better Google reviews and Facebook recommendations. Marketing has supported our ops very well to gain these insights.

In total, gross margin increased to 53.8% from 51.7% in the prior year's quarter. The quarter was positively impacted by our lower salary expense in the areas of company furloughs, layoffs and salary reductions as well as lower fuel expense and continued improvements from our routing and scheduling initiatives. Additionally materials and supplies were up, as discussed earlier.

Depreciation and amortization expenses for the quarter increased $1.8 million to $21.9 million, an increase of 8.9%. Depreciation increased $1 million due to acquisitions, vehicles acquired and equipment purchases, while amortization of intangible assets increased $754,000 due to the amortization of customer contracts from several acquisitions, including Clark.

Sales, general and administrative expenses for the second quarter increased $9.4 million, or 5.8%, to $171.3 million, or 30.9% of revenues, which was flat to last year. The quarter produced savings in salaries and benefits, lower fuel, discretionary savings but was offset with a higher reserve set for our anticipated bad debt primarily from our commercial customers due to COVID-19.

Our commercial business is a mirror to the general economy around the world. While many of our commercial pest control customers are paying at a slower rate than normal, they are still paying. Based on what we know at this time, we feel that we have adequately reserved for those customers that may not be in business on the other side of the pandemic. Our cash flow continues to be strong and at this time we have no changes to our capital allocation plans.

As our top priority, we've continued with our M&A activity around the globe. As John mentioned, we completed several acquisitions in the quarter and have plans for more in the future. During the quarter, we more aggressively paid down our debt and are now on track to have this retired in late 2021. As for our cash position for the period ended June 30th, 2020, we spent $56 million on acquisitions, compared to $410.1 million in the same period last year, which included Clark. We paid $65.5 million on dividends and had $12.4 million of capex, which was slightly lower compared to 2019. We ended the period with $134.8 million in cash of which $73.2 million is held by our foreign subsidiaries.

Before I close, I want to share that we have released our first ever sustainability report for 2019. We've taken the opportunity to highlight some of the things that we have going on in the areas of the environment, social and governance. The report has been posted on our website and we look forward to building on these areas as a company as we move through 2020 and beyond.

Yesterday, the Board of Directors approved a temporary reduction of the regular cash dividend to $0.08 per share that will be paid on September 10th, 2020 to stockholders of record at the close of business on August 10th, 2020.

Gary, I'll turn the call back over to you.

Gary W. Rollins -- Vice Chairman and Chief Executive Officer

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

Questions and Answers:

Operator

Thank you. [Operator Instructions ] Our first question comes from Tim Mulrooney with William Blair. Please go ahead.

Tim Mulrooney -- William Blair -- Analyst

Good morning, everybody. Congrats on a nice quarter in these difficult times.

Gary W. Rollins -- Vice Chairman and Chief Executive Officer

[Indecipherable]

Tim Mulrooney -- William Blair -- Analyst

Yeah. Given how much is going on lately, I have plenty of questions about the quarter, but something else came up recently that I wanted to get your perspective on. So here it goes. A major lawn care provider recently announced that they're getting into the residential exterior pest services. Given how well residential pest has held up during the pandemic, are you seeing that more often other service providers encroaching into the pest control space? Do you view this as a competitive threat? Are you not concerned? Any thoughts you have on this issue would be greatly appreciated.

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

Yes. So I guess what I would say is that we've seen through the years, and Gary can share his 50-plus years of what he has seen, getting in and out of this space over time, residential continues to grow at a very hefty rate. But at the same time, it's a very fragmented market as you know. We have a very healthy market share and other large players also have a very healthy market share. But there are a lot of other regional and mom and pop players that are part of this market as well.

I know John has had some interaction with different companies as well. So, John, if you want to share something and maybe Gary share what you've seen in the past.

John Wilson -- President and Chief Operating Officer

Yeah. Sure. Thank you, Eddie. Tim we've seen sort of an evolution with TruGreen as their non-compete with Terminix has sort of expired go from lawn to offering tick and flea services, to mosquito, to now what they are offering is essentially outdoor residential pest control, outdoor only. And -- so the relationship with the technician and the customer is a struggle. And cross selling those customers is a real struggle. I think if that were easy to do ServiceMaster would still own both brands and they would have been more successful at selling -- at cross selling those services. So while it certainly bears watching, it's a tough sled. So we'll see what -- we'll see what they do.

Gary W. Rollins -- Vice Chairman and Chief Executive Officer

Many of you may know that we were like the number three lawn care company in the country. And we had the decision to kind of moving in the other way. Just felt like the lawn care business would be under more scrutiny. The fact that more regulatory pressures were existing and we just didn't see the growth pattern and margin pattern equaling pest control. So what we did is when we got out of the business, we just ramped up our acquisitions and ramped up the speed and our revenue. It's going to be a challenge for them to do. Well, they say nothing is hard for the guy that doesn't have to do it. That may apply to us, Eddie, but we welcome them. Anytime a competitor comes in that has big prices, it just makes our job easier.

Tim Mulrooney -- William Blair -- Analyst

Got it. Thank you for that perspective, everybody. That's very helpful. As my follow-up, I'll ask one question about commercial pest. Gary you mentioned something that I thought was interesting. You said you're narrowing the revenue shortfall gap each month since March. Is another way for me to interpret that is to say as you move through the quarter the declines became smaller each month? So April was down the most. May was down less. June was down less. And July is down even less than June. Am I reading that right?

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

Yeah, Tim I'll start and I'll let Gary share obviously what he wants to -- what he wants to say. I mean we're really going to be the mirror of the economy in general. So I think in March going into early April is when the majority of the economy was completely shut down. And I think as you saw pockets begin to open up and you began to see commerce and hiring began and some of the stimulus checks get into people's hands, I think that made people make different decisions on things. And I think you've kind of seen the ebb and flow of course of that as some things are starting to kind of tighten up again. But I think incrementally as things got a little bit better and a little bit better, we saw that on the commercial side as well.

If you want to say anything else on that?

Gary W. Rollins -- Vice Chairman and Chief Executive Officer

Yeah, I would just for a minute. We, as I said before, we've been in the business. We think that there is different growth patterns in lawn care than in pest control. But we -- what we're seeing is more of our commercial accounts, especially in the food-related industries, realize that they can't defer their pest control indefinitely. And that's one of the motivations of them coming back because they've had an experience typically of large infestations and that's one of the things. They cannot do without pest control indefinitely. And they've got health department attention naturally. And so we really think that -- we see them coming back. But we think they will continue to come back.

Tim Mulrooney -- William Blair -- Analyst

Great. Thank you everybody.

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

Welcome.

Operator

Our next question comes from Seth Weber with RBC Capital Markets. Please go ahead.

Emily McLaughlin -- RBC Capital Markets -- Analyst

Hi. This is Emily McLaughlin on for Seth this morning. My first question is on the margins. They were clearly very strong this quarter. Can you frame for us how much that reflected the temporary cost actions and what will come back with volumes as they improve? And I know you called out routing and scheduling enhancements as a benefit. Any way to quantify that?

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

I would say a couple of things. One if this event had to occur, if the virus had to occur, the pandemic had to occur, from a business standpoint it was the best possible time for us as an organization. We had not hired for our peak season. We were just starting into that at that point in time. So it enabled us to really be able to go through and quickly align the payroll side as best we could. And then John and team as well as here at our -- here in our home office, we made some difficult decisions and made some cuts to be able to go through and be prepared. So if in fact this were to be a lot worse than what -- at least what it's been so far, we feel like we were prepared from a payroll standpoint and discretionary standpoint. And as we move through time and as we've seen some of the business come back and as we've seen pockets in some areas flourish, especially on the residential side, we've adjusted the payroll based on that. So we continue to manage on the discretionary side very -- very closely and we'll continue to do that. We'll continue to monitor that.

I've stolen my boss' saying that there is still more unknowns than knowns at this point in time. So staying very close to that to make sure that we are -- that we're appropriately managing on the cost side will be something that will be -- that we will have a clear focus on. And John and team across all the brands have done that. And of course the commercial operations have been the most impacted, our brands that are predominantly commercial. But we have a lot of brands that have both residential and commercial and in a lot of cases termite.

Emily McLaughlin -- RBC Capital Markets -- Analyst

Okay.

Gary W. Rollins -- Vice Chairman and Chief Executive Officer

Emily, if I may add, we've got a pretty good indicator over the last two weeks of March that our commercial business was going to be most heavily impacted and -- whereas residential in our termite business was going to remain strong. So our people were able to laser in on the commercial side of that business and then -- and react very, very quickly.

And then further to that as we furloughed those people, we maintained them on benefits and as various circumstances happened, we were able to recall them and put them back to work and make them productive right away. So our teams in the field did a terrific job reacting. And as Eddie said, we hadn't really shifted into high gear quite yet on our hiring for the season. So those factors were at play.

Emily McLaughlin -- RBC Capital Markets -- Analyst

Okay. That's helpful. And just a quick follow-up on VitalClean. I know it's still early days, but is there any way to think about the revenue and the margin contribution in the quarter and what the take rate of the offering is with the clients that are reopening and if it's helping you win new customers?

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

So we're not going to break -- we're not going to break that out. We don't break any other pieces out like that. I'll say that what we are seeing -- we're pleased with the growth that we've seen in a short period of time. What we're seeing is a couple of different things. One, if customers have some sort of incident at their locations, they are typically much more open to quickly move forward and get that in place. And then as other places are fully ramping up, so restaurants instead of being take out and delivery, now having seating -- inside seating, those are the types of places where we've seen much more of a need.

And as the economy continues to move in that direction, I think we'll see good opportunities. But it's been a great cross-sell for us. John and team, again hats off, able to get the product launched, to get the salespeople trained, to get technicians fully trained and for our procurement group to get the product into the hands of our folks in a very short period of time has been very positive. So it's another trust point for our customers that we allow them to be able to run their business by us supporting them and just takes one more worry off of their plate having to do with this whole situation.

Emily McLaughlin -- RBC Capital Markets -- Analyst

Okay. Great. Thanks. I'll leave it there.

Operator

Our next question comes from Mario Cortellacci with Jefferies. Please go ahead.

Mario Cortellacci -- Jefferies -- Analyst

Hi, everyone. Thanks for the time. I wanted to drill a little further into the commercial business and just I guess what you're seeing from commercial customers right now. Have you seen any bankruptcies from that business that could potentially impair part of it? Obviously, I know you have the disinfectant business that is going to offset some of the lost revenue there and hopefully the commercial comes back. But I just wanted to see, I guess, what do you expect longer term? Is there going to be a partial impairment of the commercial business longer term? And obviously you'll gain some new commercial customers as the economy rebound, but would love to get your thoughts there.

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

Well, I don't think anybody has the full crystal ball on exactly what the economy is going to look like from Q3, Q4, moving into next year. I think there is no question that there will be bankruptcies that will come out of this. We've seen some of those already. We have the same headlines that you have, having to do with major franchise groups that have gone bankrupt, restaurant chains, some retail stores and things like that. When you don't have foot traffic and you're shutting down, of course, they're having to deal with everything dealing with that.

So we're dealing -- we're dealing with that. We're staying close to those customers. I did mention in my prepared remarks that we have set aside a reserve for what we feel is appropriate based predominantly on our commercial customers. And that's really where we're seeing the impact at this point. Residential, we are not seeing an impact at this time, having to do with the concern with that. But we're staying close to those large customers to try to help mitigate whatever we can and also work with our long-term customers that we've had relationships with. We want to help them to survive this as best we can and we're going to work with them as appropriate, but then we'll take the needed steps from there.

Mario Cortellacci -- Jefferies -- Analyst

Great. And then just one more and I'll turn it over. Obviously, you guys have had great strength in residential and congratulations on that. But I guess just -- I think that's obviously being driven from the work from home dynamics, but I guess just -- are you seeing anything a little deeper down below the surface that we're not seeing? Is there anything that could be causing maybe a shift or a step-up in the long-term trajectory of the residential growth rate?

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

I would point to two things. I would point to one, the continued growth of our mosquito product. If we go back two years -- if we go back three years ago, it was roughly 1.7% of our total revenue. Now it's grown to 2.8% of our total revenue, which again is not necessarily material at this point in time yet, but the growth rate has been very strong over now going on a four-year time period.

And I think if you were to ask our folks, they would believe that we have a good opportunity to grow this product for many years to come. It's a great add-on. It's our highest retention service that we have. Once people have it, they know that their lifestyle has changed. So I think that's one thing that's going to continue to help us drive on that residential market.

When customers have more than one product -- if they take more than one service from us, their likelihood of staying with us doubles over that time period. So if they were only a pest control customer and now we add on mosquito to that, it doubles their average time that they stay with us. So when we have less turnover from a customer standpoint, that's going to help us continue to make sure that we're growing as we move into the future.

And then the second point that I would make would be what we're seeing as far as a shift of the need one from services from the newest homeowners, the GenX folks that are the newest homeowners that are out there, the millennials that are the newest homeowners that are out there, they gravitate -- kind of stereotypically seem to gravitate more toward services paying for food delivery, paying for things like that. And we believe that the services that we offer are also going to potentially fall into that category and we're seeing a good take rate from the newest homeowners that are out there.

Gary W. Rollins -- Vice Chairman and Chief Executive Officer

And if I could add one thing, we've been investing quite heavily in technology. And one of those areas, in particular, is provide the customer more ways that they can pay us. And before we had the quarterly customer and that they -- they paid at the end of the previous quarter. And now they can pay by monthly. So there is other ways that they can pay and that's been highly acceptable.

And I think Eddie made a real good comment about if our customer has multiple services, and we call it bundling, so typically that starts when they're sold and that's helped a lot as far as customer satisfaction is concerned.

Mario Cortellacci -- Jefferies -- Analyst

Great. Thank you so much.

Operator

[Operator Instructions] Our next question comes from Michael Hoffman with Stifel. Please go ahead.

Michael Hoffman -- Stifel -- Analyst

Thank you very much. I appreciate the time. If I could try and thread in some of the previous questions and maybe tease out a little bit of clarity and somehow ask two questions and turn into 10, right. Gary, your comment about VitalClean is -- I think what you were trying to say is even if I'm not open yet, but I know I'm going to be a better start for pest service because it's -- you're getting infestation. That was the point, not VitalClean. I meant the -- well, that's part of VitalClean. But is that part of your comment about commercial, is that some are even doing the pest service even though they're not opened yet, but they expect to be open, that was part of what you were indicating? Because of the --

Gary W. Rollins -- Vice Chairman and Chief Executive Officer

The part of that VitalClean that's taking place right now is more and more companies are coming back. And they have read about the dangers, they know more about the dangers of the virus and so forth. And they also from our PR point -- HR point of view, they want to be able to tell their employees what they're doing to maintain good health practices. So that's been a wonderful factor as far as this past quarter and it will be beyond. I mean if the experts are ready and are correct, then we should be seeing a continuation of this group of customers.

Michael Hoffman -- Stifel -- Analyst

And some customers restarted pest without being back open again because of your infestation comment?

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

Yeah. I think that -- I think that's what we've seen as the time has gone by is that --

Michael Hoffman -- Stifel -- Analyst

Okay. That's what I was trying to understand better. Okay. And then on June 30th you all filed a 13D with regards to the original trust and dissolve that trust and there is a distribution. Are those distributions done? Are there any restrictions on those shares with regards to how they can be traded or not -- and having redistributed all those shares, are those individual smaller trusts now allowed to do whatever they want with the shares?

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

Michael, there is no material change. This has been updated multiple times throughout the years and just an update that was needed for the most recent set up that they have.

Michael Hoffman -- Stifel -- Analyst

Okay. But that didn't answer the question about trading restrictions on the shares.

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

I did say that, maybe you can go back and read it, that I did say that there were no material changes. This was just an update that they've done periodically over time.

Michael Hoffman -- Stifel -- Analyst

Okay. Thank you.

Operator

There are no further questions. I would like to turn the floor over to Gary for closing comments.

Gary W. Rollins -- Vice Chairman and Chief Executive Officer

Thank you. I want to thank you for participating. We still, unfortunately, there is more that we don't know than we do know. I think most of you will agree in just following the monthly dialog and the spike and various components that are impacting the disease and -- but we meet weekly or every other weekly, our key management people, to evaluate the success that we're having in different aspects of our defensive and offensive policy. And I didn't know you were going to quote me, [Phonetic] there is more known than unknown.

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

Sorry. It's so good. I had to borrow it.

Gary W. Rollins -- Vice Chairman and Chief Executive Officer

I need some copyright person here. But thank you for your support during these challenging times and look forward to speaking with you on our next call. Thank you again.

Operator

[Operator Closing Remarks]

Duration: 32 minutes

Call participants:

Marilynn Meek -- Vice President, MWW Group

Gary W. Rollins -- Vice Chairman and Chief Executive Officer

Paul E. Northen -- Senior Vice President, Chief Financial Officer and Treasurer

John Wilson -- President and Chief Operating Officer

Tim Mulrooney -- William Blair -- Analyst

Emily McLaughlin -- RBC Capital Markets -- Analyst

Mario Cortellacci -- Jefferies -- Analyst

Michael Hoffman -- Stifel -- Analyst

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