The COVID Factor

Cover Story: Top 100 - Cover Story: Top 100

The pest management industry and Top 100 companies, in particular, increased revenue during the pandemic. And even though commercial service revenue declined, it could have been far worse.

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May 6, 2021

During the COVID-19 pandemic, companies in some industries thrived and couldn’t keep up with demand; others shuttered their doors.

Pest management, deemed an essential service, fared quite well.

According to an annual report by Specialty Consultants, the industry saw 2.9 percent organic growth in 2020. “More than 56 percent of the respondents in our survey said the COVID-19 pandemic had some impact or a major impact on their business this past year,” said Gary Curl, founder of the company.

People were required to work, learn and play at home and they noticed pests, which was a boon to residential pest control.

PMPs who participated in various PCT State of the Market surveys throughout 2020 and 2021 said the pandemic had a positive impact on their locations’ revenue for controlling rodents (31 percent), mosquitoes (26 percent) and ants (19 percent). Last spring, more than half (51 percent) expected tick control revenue to increase in 2020 since more people were spending time in their yards.

Even termite work benefited: In this year’s PCT survey, 66 percent of pest management professionals said customers became aware of termite issues sooner than in the past due to extra time spent at home; 44 percent said calls for termite service increased in 2020 compared to a year ago.

HOUSING MARKET. The surprisingly robust housing market — more people moved to roomier suburban and rural digs — was an added bonus for the industry. Last year, existing-home sales totaled 5.64 million, up 5.6 percent from 2019 and the most sales since before the Great Recession, said National Association of Realtors Chief Economist Lawrence Yun.

As such, some pest control companies did more wood-destroying insect/organism inspections needed for real estate closings and performed remediation work when pest activity was found.

Home renovations also uncovered termite and carpenter ant damage. And a lot of homeowners — 61 percent, according to an August 2020 survey by NerdWallet — undertook home improvements during the pandemic. In fact, 30 percent of PMPs agreed additions to customers’ homes necessitated new termite treatments in 2020, found a PCT 2021 survey.

Overall, 48 percent of U.S. homeowners with annual household incomes of $75,000+ used licensed professional pest control services in the past year, according to a 2020 Harris Poll survey conducted for the Professional Pest Management Alliance (PPMA). In 2018, this number was 28 percent.

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In 2020, existing-home sales totaled 5.64 million, up 5.6 percent from 2019.

COMMERCIAL SIDE. Commercial pest control revenue didn’t fare as well. “High single-digit growth in residential pest services was offset by a low single-digit decline in commercial pest services,” said Specialty Consultants’ Curl.

Many commercial clients closed during shutdowns; some for good. The National Restaurant Association reported 110,000 restaurants nationwide had been lost to date to the COVID-19 pandemic.

In September 2020, Abell Pest Control (#13) reported about 17 percent of its more than 7,000 restaurant clients in Canada and four U.S. states had cancelled service. Most cancellations were due to permanent business closures.

Top 100 companies prospered in the pandemic year. On average, Top 100 companies that reported revenue changes grew about 15 percent in 2020. That number is based on both organic growth and growth related to M&A activity.

And the outlook for 2021 is positive. Top 100 firms reporting projected growth rates expect total revenue to increase an average of about 15 percent this year.

Still, customers won’t be home-bound forever. Eventually, they’ll return to working full time at the office and attending school in person. It’s uncertain how that will impact revenue gained because of the pandemic.

“The question for the industry is going to be, how do you hold onto that?” said Cindy Mannes, PPMA executive director.

The author is a frequent contributor to PCT.