TIDMRTO
RNS Number : 8171I
Rentokil Initial PLC
21 April 2022
21 April 2022
RENTOKIL INITIAL PLC (RTO)
FIRST QUARTER TRADING UPDATE
2022 has started well, with the strong momentum from 2021
continuing into Q1, and with progress across all business
categories and regions
(GBPm) Q1 2022 Growth
AER AER CER
Ongoing Revenue 721.6 1.8% 1.8%
Revenue 722.0 1.8% 1.8%
Excluding disinfection
Ongoing Revenue(1) 713.4 12.2% 12.3%
Revenue 713.9 12.1% 12.2%
Summary (at CER)
-- Organic growth, excluding disinfection, of 8.0% (Ongoing Revenue
+12.3%)
-- Input cost inflation entirely recovered by price increases
-- Terminix acquisition progressing well and remains on track to complete
in the second half of 2022, with a target completion date towards
the end of the third quarter
-- Business performing well and in line with our expectations
Revenue growth ( at CER)
Pest Control delivered organic growth of 5.5% in Q1 (Ongoing
Revenue +11.2%) with all regions in positive growth. Ongoing
Revenue in our Growth and Emerging markets grew by 10.9% and 13.6%
respectively. North America Pest Control, our largest pest control
business, demonstrated further strong momentum, growing Ongoing
Revenue by 11.2% (Organic +5.0%), driven by both residential and
commercial revenue growth. Hygiene & Wellbeing, excluding
disinfection, grew organically by 12.9% (Ongoing Revenue +14.2%),
reflecting growth in all regions including Asia, despite the
continued impact of the pandemic in a number of countries. Trading
conditions in our France Workwear business have continued to
improve in Q1, resulting in organic growth of 14.7%.
Group Ongoing Revenue, excluding disinfection, grew by 12.3%;
8.0% organic(2) and 4.3% from acquisitions. Including disinfection,
Group organic growth was -2.0%. As highlighted in our Preliminary
results in March, we are lapping strong disinfection revenues of
GBP95.3m from H1 2021. Disinfection revenues amounted to GBP8.2m in
Q1, a decline of GBP64.5m on the prior year. We reiterate our
guidance for disinfection revenues for the full year 2022 to be
within the range of GBP10m to GBP20m, vs. GBP116.0m last year.
Pricing for inflation
Like all companies, we have experienced inflationary increases
on our cost base in Q1, such as labour, fuel, consumables and
paper. As anticipated, we have continued to successfully mitigate
the impact on margins of these via annual price increases (APIs),
in line with normal practice. Total price increases achieved in Q1
have entirely offset input cost inflation in the quarter and we
remain confident that we will be able to continue to counter rising
inflation through APIs during the course of the year.
Operational progress
Customer retention in Q1 was robust at 85.3%, in line with full
year 2021. Colleague retention (on a rolling 12-month basis) was
also strong, with Service Colleague retention at similar levels to
the full year 2021 at 81.8%, and Sales Colleague retention
improving slightly versus the previous year at 83.5%.
M&A
We acquired 11 businesses in Q1 - 10 in Pest Control and one in
Hygiene & Wellbeing - in Chile, Colombia, Hong Kong, Poland,
Malaysia, New Zealand and the US, with combined annualised revenues
in the year prior to acquisition of c.GBP20m. We continue to build
on the strength of our attractive M&A pipeline of both Pest
Control and Hygiene & Wellbeing opportunities, and remain
confident in our targeted spend of around GBP250m for 2022 .
Acquisition of Terminix Global Holdings, Inc. (Terminix)
We announced on 15 March that the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 had
expired, thereby completing the necessary antitrust process in the
US. A number of other conditions remain to be satisfied, including
obtaining approval by the Company's and Terminix's shareholders,
and the registration of the Company ADSs with the U.S. Securities
and Exchange Commission and their listing on the New York Stock
Exchange. With good progress being made on satisfying the remaining
conditions, both parties continue to be on track to complete the
transaction in the second half of 2022, with a target completion
date towards the end of the third quarter.
Impact from geopolitical events
The Company has no operations in, or exposure to, Russia or
Ukraine and has not been directly impacted by the war in Ukraine.
During the quarter, the Company donated GBP100,000 from the
Rentokil Initial Cares charity fund to UNICEF, which is helping to
provide critical services including water and sanitation,
immunisation and healthcare, to children and families displaced
across Ukraine and in neighbouring countries.
Outlook
The business is performing well and in line with our
expectations resulting from organic growth delivery and the flow
through of revenues from our M&A programme in 2021. Although we
will lap strong disinfection revenues in H1 and will have to
contend with ongoing macro-economic uncertainty, we continue to
expect the Group to deliver good operational and financial progress
in the coming year.
Commenting on today's announcement Andy Ransom, Chief Executive,
said:
"I am very pleased with our performance in Q1, and the continued
growth momentum achieved in our core Pest Control and Hygiene &
Wellbeing businesses. We remain confident in delivering further
operational and financial progress in 2022.
"We are making excellent progress with the acquisition of
Terminix. With the US competition condition being satisfied in
March, and with integration planning progressing well, we are
focused on completing the remaining conditions to closing the deal
and we remain on track to complete the transaction in the second
half of 2022, with a target completion date towards the end of the
third quarter."
Enquiries:
Investors Katharine Rentokil Initial
/ Analysts: Rycroft plc 07811 270734
Rentokil Initial
Media: Malcolm Padley plc 07788 978199
Richard Mountain FTI 07909 684466
(1) Ongoing Revenue represents the performance of the continuing
operations of the Group (including acquisitions) after removing the
effect of disposed or closed businesses.
(2) Organic Revenue represents the growth in Ongoing Revenue
excluding the effect of businesses acquired during the year.
Acquired businesses are included in organic measures in the year
following acquisition, and the comparative period is adjusted to
include an estimated full year performance for growth
calculations.
AER - actual exchange rates; CER - constant 2021 exchange
rates
This announcement contains statements that are, or may be,
forward-looking regarding the Group's financial position and
results, business strategy, plans and objectives. Such statements
involve risk and uncertainty because they relate to future events
and circumstances and there are accordingly a number of factors
which might cause actual results and performance to differ
materially from those expressed or implied by such statements.
Forward-looking statements speak only as of the date they are made
and no representation or warranty, whether expressed or implied, is
given in relation to them, including as to their completeness or
accuracy or the basis on which they were prepared. Other than in
accordance with the Company's legal or regulatory obligations
(including under the Listing Rules and the Disclosure Guidance and
Transparency Rules), the Company does not undertake any obligation
to update or revise publicly any forward-looking statement, whether
as a result of new information, future events or otherwise.
Information contained in this announcement relating to the Company
or its share price, or the yield on its shares, should not be
relied upon as an indicator of future performance. Nothing in this
announcement should be construed as a profit forecast.
Additional Information About The Proposed Transaction And Where
To Find It
In connection with the proposed transaction between Rentokil
Initial plc ("Rentokil") and Terminix Global Holdings, Inc.
("Terminix"), Rentokil will file with the U.S. Securities and
Exchange Commission (the "SEC") a registration statement on Form
F-4, which will include a proxy statement of Terminix that also
constitutes a prospectus of Rentokil. Each of Rentokil and Terminix
will also file other relevant documents in connection with the
proposed transaction. The definitive proxy statement/prospectus
will be sent to the shareholders of Terminix. Rentokil will also
file a shareholder proxy circular in connection with the proposed
transaction with applicable securities regulators in the United
Kingdom and the shareholder proxy circular will be sent to
Rentokil's shareholders. This communication is not a substitute for
any registration statement, proxy statement/prospectus or other
documents Rentokil and/or Terminix may file with the SEC in
connection with the proposed transaction. BEFORE MAKING ANY VOTING
OR INVESTMENT DECISIONS, INVESTORS, STOCKHOLDERS AND SHAREHOLDERS
OF TERMINIX AND RENTOKIL ARE URGED TO READ CAREFULLY AND IN THEIR
ENTIRETY THE PROXY STATEMENT/PROSPECTUS AND SHAREHOLDER PROXY
CIRCULAR, AS APPLICABLE, AND ANY OTHER RELEVANT DOCUMENTS THAT ARE
FILED OR WILL BE FILED WITH THE SEC OR APPLICABLE SECURITIES
REGULATORS IN THE UNITED KINGDOM, AS WELL AS ANY AMMENTS OR
SUPPLEMENTS TO THESE DOCUMENTS, IN CONNECTION WITH THE PROPOSED
TRANSACTION WHEN THEY BECOME AVAILABLE, AS THEY CONTAIN OR WILL
CONTAIN IMPORTANT INFORMATION ABOUT TERMINIX, RENTOKIL, THE
PROPOSED TRANSACTION AND RELATED MATTERS. The registration
statement and proxy statement/prospectus and other documents filed
by Rentokil and Terminix with the SEC, when filed, will be
available free of charge at the SEC's website at www.sec.gov. In
addition, investors and
shareholders will be able to obtain free copies of the proxy
statement/prospectus and other documents filed with the SEC by
Terminix online at investors.terminix.com, upon written request
delivered to Terminix at 150 Peabody Pl., Memphis, TN 38103, USA,
Attention: Corporate Secretary, or by calling Terminix's Corporate
Secretary's Office by telephone at +1 901-597-1400 or by email at
deidre.richardson@terminix.com, and will be able to obtain free
copies of the registration statement, proxy statement/prospectus,
shareholder proxy circular and other documents which will be filed
with the SEC and applicable securities regulators in the United
Kingdom by Rentokil online at https://www.rentokil-initial.com,
upon written request delivered to Rentokil at Compass House, Manor
Royal, Crawley, West Sussex, RH10 9PY, England, Attention:
Katharine Rycroft, or by calling Rentokil by telephone at +44 (0)
7811 270734 or by email at katharine.rycroft@rentokil-initial.com.
The information included on, or accessible through, Rentokil's or
Terminix's website is not incorporated by reference into this
communication.
This communication is for informational purposes only and is not
intended to, and shall not, constitute an offer to sell or buy or
the solicitation of an offer to sell or buy any securities, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
appropriate registration or qualification under the securities laws
of any such jurisdiction. No offering of securities shall be made
except by means of a prospectus meeting the requirements of Section
10 of the U.S. Securities Act of 1933, as amended.
Participants in the Solicitation of Proxies
This communication is not a solicitation of proxies in
connection with the proposed transaction. However, under SEC rules,
Terminix, Rentokil, and certain of their respective directors,
executive officers and other members of the management and
employees may be deemed to be participants in the solicitation of
proxies in connection with the proposed transaction. Information
about Terminix's directors and executive officers may be found on
its website at
corporate.terminix.com/responsibility/corporate-governance and in
its 2021 Annual Report on Form 10-K filed with the SEC on March 1,
2022, available at investors.terminix.com and www.sec.gov.
Information about Rentokil's directors and executive officers may
be found on its website at https://www.rentokil-initial.com and in
its 2021 Annual Report filed with applicable securities regulators
in the United Kingdom on March 30, 2022, available on its website
at https://www.rentokil-initial.com. The information included on,
or accessible through, Rentokil's or Terminix's website is not
incorporated by reference into this communication. These documents
can be obtained free of charge from the sources indicated above.
Additional information regarding the interests of such potential
participants in the solicitation of proxies in connection with the
proposed transaction will be included in the proxy
statement/prospectus and shareholder proxy circular and other
relevant materials filed with the SEC and applicable securities
regulators in the United Kingdom when they become available.
Information Regarding Forward-Looking Statements
This communication contains forward-looking statements as that
term is defined in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements can sometimes be identified by the use
of forward-looking terms such as "believes," "expects," "may,"
"will," "shall," "should," "would," "could," "potential," "seeks,"
"aims," "projects," "predicts," "is optimistic," "intends,"
"plans," "estimates," "targets, " "anticipates," "continues" or
other comparable terms or negatives of these terms, but not all
forward-looking statements include such identifying words.
Forward-looking statements are based upon current plans, estimates
and expectations that are subject to risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those indicated or
anticipated by such forward-looking statements. We can give no
assurance that such plans, estimates or expectations will be
achieved and therefore, actual results may differ materially from
any plans, estimates or expectations in such forward-looking
statements. Important factors that could cause actual results to
differ materially from such plans, estimates or expectations
include: a condition to the closing of the proposed transaction may
not be satisfied; the occurrence of any event that can give rise to
termination of the proposed transaction; Rentokil is unable to
achieve the synergies and value creation contemplated by the
proposed transaction; Rentokil is unable to promptly and
effectively integrate Terminix's businesses; management's time and
attention is diverted on transaction related issues; disruption
from the proposed transaction makes it more difficult to maintain
business, contractual and operational relationships; the credit
ratings of Rentokil declines following the proposed transaction;
legal proceedings are instituted against Terminix or Rentokil;
Terminix or Rentokil is unable to retain or hire key personnel; the
announcement or the consummation of the proposed acquisition has a
negative effect on the market price of the capital stock of
Terminix or Rentokil or on Terminix's or Rentokil's operating
results; evolving legal, regulatory and tax regimes; changes in
economic, financial, political and regulatory conditions, in the
United Kingdom, the United States and elsewhere, and other factors
that contribute to uncertainty and volatility, natural and man-made
disasters, civil unrest, pandemics (e.g., the coronavirus
(COVID-19) pandemic (the "COVID-19 pandemic")), geopolitical
uncertainty, and conditions that may result from legislative,
regulatory, trade and policy changes associated with the current or
subsequent U.S. or U.K. administration; the ability of Rentokil or
Terminix to successfully recover from a disaster or other business
continuity problem due to a hurricane, flood, earthquake, terrorist
attack, war, pandemic, security breach, cyber-attack, power loss,
telecommunications failure or other natural or man-made event,
including the ability to function remotely during long-term
disruptions such as the COVID-19 pandemic; the impact of public
health crises, such as pandemics (including the COVID-19 pandemic)
and epidemics and any related company or governmental policies and
actions to protect the health and safety of individuals or
governmental policies or actions to maintain the functioning of
national or global economies and markets, including any quarantine,
"shelter in place," "stay at home," workforce reduction, social
distancing, shut down or similar actions and policies; actions by
third parties, including government agencies; the risk that
disruptions from the proposed transaction will harm Rentokil's or
Terminix's business, including current plans and operations;
certain restrictions during the pendency of the acquisition that
may impact Rentokil's or Terminix's ability to pursue certain
business opportunities or strategic transactions; Rentokil's or
Terminix's ability to meet expectations regarding the accounting
and tax treatments of the proposed transaction ; the risks and
uncertainties discussed in the "Risks and Uncertainties" section in
Rentokil's reports available on the National Storage Mechanism at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on its
website at https://www.rentokil-initial.com (information included
on or accessible through Rentokil's website is not incorporated by
reference into this communication); and the risks and uncertainties
discussed in the "Risk Factors" and "Information Regarding
Forward-Looking Statements" sections in Terminix's reports filed
with the SEC. These risks, as well as other risks associated with
the proposed transaction, will be more fully discussed in the proxy
statement/prospectus and shareholder proxy circular. While the list
of factors presented here is, and the list of factors to be
presented in proxy statement/prospectus and shareholder proxy
circular will be, considered representative, no such list should be
considered to be a complete statement of all potential risks and
uncertainties. Unlisted factors may present significant additional
obstacles to the realization of forward-looking statements. We
caution you not to place undue reliance on any of these
forward-looking statements as they are not guarantees of future
performance or outcomes and that actual performance and outcomes,
including, without limitation, our actual results of operations,
financial condition and liquidity, and the development of new
markets or market segments in which we operate, may differ
materially from those made in or suggested by the forward-looking
statements contained in this communication. Except as required by
law, neither Rentokil nor Terminix assumes any obligation to update
or revise the information contained herein, which speaks only as of
the date hereof.
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TSTGZGZDRGFGZZM
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