Price Increases
Q: Are customers more sensitive to price increases this year?
A: Management implemented a similar 3% to 4% price increase this year as in the prior year. " They are not seeing increased customer sensitivity, monitoring churn and cancellations, and feel the price level is healthy and represents the value of their services. "

M&A Growth Pipeline
Q: What's the M&A carryover from '23 and the pipeline outlook?
A: The company expects roughly 2% carryover from 2023 M&A into 2024, mainly due to the Fox acquisition. " The M&A pipeline is healthy, and they aim for 2% to 3% growth from acquisitions going forward. " January activity indicates strong deal flow. "

Margin Outlook
Q: What is the target for incremental margins this year?
A: Management is confident in delivering 30% incremental margins. " They have seen incremental margins step up over the years, with some quarters as high as 35% to 40%. " Last year, they achieved 70 basis points improvement in EBITDA margins. "

Residential Recurring Revenue
Q: How are residential recurring revenue trends and growth drivers?
A: Recurring revenue growth remains healthy and above last year's levels. " The company expects continued growth through strategic pricing, cross-selling services like mosquito and ticks, and focusing on termite and ancillary services. " They also emphasize growth in the commercial segment. "

Competitive Dynamics
Q: Are you gaining market share despite competitive pressures?
A: The industry remains highly fragmented and competitive. " Management is pleased with organic growth over 7% in the quarter. " They focus on their performance and have confidence in delivering healthy growth, indicating potential market share gains. "

SG&A Leverage
Q: Can SG&A leverage increase with initiatives gaining traction?
A: Management sees opportunities to improve SG&A performance. " Despite investments in customer acquisition and growth initiatives, they aim to enhance the administrative side without sacrificing growth. "

Demand Environment
Q: Is slower onetime service due to macro factors?
A: The slowdown in onetime residential services, like bed bug and wildlife work, may be due to seasonal or demand changes. " However, strong growth in ancillary services indicates a healthy consumer. " The company proactively tightened credit standards but sees no major deterioration in customer demand. "

Cost Inflation and Pricing
Q: With inflation easing, will price increases change?
A: Management acknowledges uncertainties in cost inflation. " Despite similar price increases of 3% to 4%, they remain cautiously optimistic as inflation data hasn't slowed as fast as desired. " They continue to monitor costs like fleet prices and materials. "

Back-office Modernization
Q: How will modernization impact incremental margins?
A: The company is early in their back-office modernization journey. " Despite this, SG&A improved from nearly 31% to under 29%. " They see opportunities for further improvements contributing to incremental EBITDA margins in the future. "

Digital Leads and Cross-selling
Q: How did digital marketing leads perform in Q4?
A: Digital queries saw modest increases year-over-year in Q4. " This led to healthy increases in lead starts and sales. " The company benefits from a diversified approach, not overly reliant on digital, and sees robust demand driven by cross-selling. "

Labor Retention
Q: Are you seeing higher sales employee retention?
A: The company has been successful in hiring, onboarding, and training sales teams. " They focus on enabling success early to drive long-term retention. " Investments in training and tools contribute to high-performing teams as they head into 2024. "

Insurance Costs
Q: Will safety improvements lower insurance costs?
A: While difficult to predict timing, management hopes safety improvements will reduce insurance costs over time. " They emphasize a people-first culture, aiming for drivers' safety, which should ultimately benefit financials. "