Rentokil Initial plc American Depositary Shares (each representing five (5) Ordinary Shares) 2026 Q3 Earnings Call

Good morning, everyone, and welcome to our third quarter conference call. To begin, I am going to cover the key highlights and then hand over to Paul to discuss the results in more detail. I will then close with an update on progress against our strategy to build the platform for sustainable organic growth. Overall, it was a solid quarter. I am encouraged by the progress we have made executing against our priorities of customer focus, sales and operational excellence, and business simplification. Where we have taken action, we are seeing results. In North America, we delivered an encouraging performance by optimizing our marketing spend, prioritizing the highest converting lead channels, and improving service quality. In our international business, Pest delivered another strong quarter of organic growth, close to 6%, as our focus on excellent client service, targeted account management, and connected solutions continues to pay dividends.

As I have said before, our first priority is to restore North America to market levels of organic growth, which will include investing in training, sales capabilities, and our separated residential and commercial businesses. These investments will be fully funded through savings across our international business and group central costs. Over the last few months, I have been working closely with my leadership team to finalize these investment and savings plans. We will provide more detail at our full year results in February. Finally, we are moving fast on business simplification with our divestment of SOLitude. The disposal proceeds will further reduce our leverage, and as a result, the board has approved a $200 million share buyback program. Before I hand over to Paul to discuss trading, I wanted to say a few words about our leadership announcement this morning.

Paul has taken the decision to retire from full-time executive life for family health reasons. He retires on January the 31st, and we are pleased that he will stay on as a senior advisor, ensuring a smooth transition to a new permanent CFO. Paul has been a great partner, helping me get up to speed with the business, and during his time at Rentokil, has had a significant impact improving our financial discipline and strategic focus. The board, myself, and the entire leadership team are sad to see him retire, but also fully understand and support his decision to prioritize his family. The search process for a new permanent CFO is underway. If it is not complete by February the 1st of next year, Sarah Sergeant will step up from her current role as group financial controller to become interim CFO.

With that, let me hand over to Paul to discuss trading.

Thank you, Mike, and good morning, everyone. Before we begin, I would like to draw your attention to the usual cautionary statement contained in our trading update, which also applies to this call. Unless otherwise stated, all figures are in USD, and any comparative performance is on a constant currency basis. Starting with group, revenue was $1.9 billion, representing 3.4% organic growth. North America delivered 3.2% organic growth and international 3.7%. Looking at North America in more detail, Pest Control Services revenue growth was 2.7%. Contract growth was 3.1%, an improvement from the second quarter. Weaker lead flow early in the third quarter resulted in a lower jobbing performance at 2.6%. Organic growth was 2.4%, with the pricing environment remaining robust.

Residential performance across core pest control and termite was solid, while pleasingly, commercial national account, which is approximately one-third of our commercial business, saw improved growth driven by better service quality and continued PestConnect adoption. The drag from rationalizing our heritage Terminix commercial client portfolio is now largely passed. After seeing a mid to high single-digit decline for July and August, residential lead flow moderated towards a 1% decline for the month of September. North America Business Services continued to deliver strong revenue growth, up 9.6% organically, driven by ongoing momentum in our product distribution business and continued strength from new client wins in brand standards. We continue to anticipate growth to moderate towards mid-single digits. I am pleased to note that both customer and colleague retention continues to improve year-over-year. We saw progress in residential customer retention, and commercial retention stabilized in the quarter.

Moving on now to our international business, where revenue was up 5% and organic growth was 3.7%, or 4.7%, excluding our two businesses serving the U.K. property market, which continues to be challenging. International pest control organic growth strengthened to 5.7%. Growth was broad-based across regions, and it is pleasing to see some markets, including the U.K., our largest international pest market, sustaining high single-digit organic contract growth despite tough economic backdrops. International Hygiene and Wellbeing organic growth was 0.7%, significantly impacted by weak trading in our DCUK asbestos removal business. Excluding DCUK, organic growth was 2.6%. Overall, as Mike said, it was a solid quarter. We have also made good progress with our cost savings program in North America, and we expect to deliver full-year profits in line with current market expectations. Moving on now to capital allocation, where I have consistently emphasized our disciplined returns-focused approach.

Our first priority is to invest in the business, both organically and inorganically, then pay a progressive dividend, and finally return surplus capital while maintaining a strong balance sheet with a target leverage ratio of 2 to 2.5 times. We were back inside that range for the first time since the Terminix acquisition at the half year stage, and with the sale of SOLitude, we will continue to delever through the remainder of the year. The board has therefore approved a $200 million share buyback program, which will start shortly. Finally, before I hand back to Mike, as this will be my last results conference call for Rentokil Initial, I want to thank all of you who have supported us during a period of heightened change.

I am committed to ensuring a seamless transition, and I am pleased that we have the caliber of talent on the finance bench of Sarah Sergeant, who will step up, if required, to be interim CFO as of the 1st of February next year. Sarah is a chartered accountant with a long track record of success across multiple senior finance leadership roles, primarily at Compass Group. Prior to Rentokil, she was group CFO for a small listed U.K. business. I am looking forward to continuing to work with Mike and the wider executive leadership team on an advisory basis. My conviction in the long-term opportunity to drive value creation has only grown since I joined the business in late 2024, and I am pleased to remain part of the team working to unlock that opportunity. Let me now hand it back to Mike.

Thank you, Paul. Let me start by spending a few minutes on the consumer search environment. The start of the third quarter saw reduced total Google Search activity, which we flagged in July, as we also saw weakness in our lead flow. We took action and saw results, with our lead flow improving sequentially through the quarter. We shifted our marketing mix towards our highest yielding channels and improved year-over-year conversion in nearly all our channels through self-help actions. As Paul referenced, this self-help improved our residential lead flow decline to just 1% for the month of September. We are being agile and adaptive. Where the environment is changing, we are understanding those changes and responding. With LLMs, we are moving into a world of increasing transparency where local reputation and service matters.

We will win by continuing to elevate our service quality and by deepening customer relationships to become their trusted advisor. These models draw on the broader web, not just Google, so we are strengthening our signal across the sources they trust, reengaging affiliate channels like Yelp and the Better Business Bureau, and producing hyperlocal content where it moves the needle. Our scale provides us the capabilities and the resources required to win locally. We are also front-footed on AI agents. Terminix.com already lets you price, schedule, and pay in minutes, and our call center is being trained to win when an AI agent calls on a customer's behalf. Looking ahead, we are developing capabilities to push live pricing and scheduling availability into a format AI agents can interact with and expect implementation in early 2027. Before I move on, let me reiterate what I said before.

AI search is currently a very small share of our mix, whether we are dealing with a human or an AI agent, immediate availability, speed to install, and service quality are what matters most. That is exactly why we are focused on our three priorities of elevating our customer focus, delivering sales and operational excellence, and simplifying the business. Turning now to some highlights on executing those priorities. In North America, we have made good progress over the last few months, taking steps to separate residential and commercial and promoting two pest industry veterans to lead those businesses. We will continue to work towards a full functional separation to drive greater operational focus, transparency, and accountability for those businesses, reflecting the distinct needs and expectations of each customer group. In the third quarter, we implemented multiple self-help actions to drive sales excellence and improve conversion.

These included shortening connection times to customer service agents through process improvements for call and chat journeys. We are also reducing friction in the online selling experience and implementing SMS and email nudges for abandoned cart recoveries. In Atlanta, we have stood up our test and learn pilot this month to start working towards a standardized branch operating model, a model based on demonstrated best practices from within our network. The opportunity from consistently executing a standardized playbook is significant, as demonstrated by the top third of our branches delivering above-market growth. This pilot takes learnings from our best performers captured earlier in the year and puts them into practice. It will run into the first quarter next year, leaving time to start phased implementations ahead of the next peak season.