An increase in insect pest and rodent pressure, and expanded service offerings for public health pests like mosquitoes, appear to have aided the professional pest control industry again this past year. The professional pest control industry generated an estimated $8.597 billion in total service revenue in 2017, a 5.2 percent increase from the $8.175 billion measured in 2016, according to the latest report “A Strategic Analysis of the U.S. Structural Pest Control Industry” from Specialty Consultants. (The PCT Top 100 generated $6.998 billion in 2017.)

The amount of service revenue generated from controlling bed bugs surpassed the revenue generated from controlling spiders for the first time this past year. Nationwide, service revenue derived from controlling bed bugs increased to $644.7 million. “We estimate 1,046,440 bed bug jobs were completed in the U.S. this past year. This is a 15.3 percent increase from the estimated 907,875 jobs completed in 2016,” said Gary Curl, Specialty Consultants’ founder and president. Six of ten (59.9 percent) respondents named bed bugs as the pest needing a better solution to control, followed by ants, which were named by more than one-quarter (27.6 percent) of the respondents.

Mosquito control services remained the fastest-growing pest segment in 2017. Service revenue, primarily from residential barrier treatments, increased 22.8 percent this past year. Service revenue from controlling rats and mice in commercial and residential accounts increased 6.4 percent to $860 million.

Nationwide, an estimated 56.4 percent of all post-construction termite jobs were completed primarily with liquid termiticides this past year. Overall, termite baits were primarily used on an estimated 43.6 percent of post-construction termite jobs. “We expect the industry to continue to grow the sale of preventative post-construction termite treatments,” said Rich Kalik, partner, Specialty Consultants. “Preventative post-construction treatments are defined as treatments to established structures which do not have a termite or other wood destroying organism (WDO) infestation.” In 2017, respondents reported that 36.4 percent of their post-construction termite jobs were conducted on structures where no termites were present.

For the third year in a row, more than one of five (22.6 percent) respondents reported that “finding or keeping good employees” was the greatest challenge to their pest control business. The second greatest challenge was “gaining new customers” (14.5 percent). Despite the challenges, a majority of the respondents had a positive outlook for their business in 2018, with about six in ten expecting their residential (64.2 percent) and commercial (58.9 percent) business to increase. In contrast, only four in ten (43.8 percent) respondents expect their termite business to increase this year. “Sluggish existing home sales (+1.1 percent) continues to hamper the number of termite and carpenter ant treatments this past year,” added Kalik.

The 2017 season market report is the 18^th edition of “A Strategic Analysis of the U.S. Structural Pest Control Industry.” A total of 800 owners or managers of pest control companies were surveyed for this study. The market report forecasts pest control service and pesticide product category sales through 2022. The impact of expanding service offerings like mosquito barrier treatments, industry consolidation and pest control operators’ outlook for 2018 are just a few of the topics analyzed in this year’s report.

Learn more about the report at www.spcresearch.com.

Every year, the companies that make the PCT Top 100 inspire the industry. They remind us how much foresight, responsibility and commitment to quality it takes to reach these kinds of heights.

But this year, more than ever before, these companies are also excelling in agility.

They’re quickly responding to emerging customer needs. Meeting regulatory requirements, even across state lines. Nurturing and growing young talent. And of course, keeping an eye on the bottom line.

Industry leaders understand that what it means to operate as a PMP is evolving, and it’s evolving fast. Changes are forcing them — and us — to work harder to keep up and get ahead. To bridge that gap, we at Univar have been supporting PMPs across a wider variety of operations, with a broader suite of business support services, and deeper knowledge across the board.

To everyone who made it on this year’s Top 100, congratulations. Your ability to see and adapt to new changes and pressures has set your businesses apart — and it shows. To everyone else, embrace change, keep your eyes forward, and you’ll find new opportunities to grow your business, too.

Vice President

Univar Environmental Sciences — Americas

In thinking about the Top 100 issues we’ve produced throughout the years (this year is the 17^th list), it feels like I’ve written a similar View Point column in both the recent and not-so-recent past.

For a while now, mergers and acquisitions have continued to dominate the industry’s headlines and conversations. Why? One reason: Your peers are making big bucks as they sell their companies. Even those who weren’t thinking of selling have been wooed by historically high multiples. Industry consolidation hasn’t been as robust since Waste Management went on a buying spree in the mid-1980s.

This year’s list reflects these big changes. There are nine companies off this year’s list and we already know of half a dozen that will be off next year’s. And at press time, we were only through one-third of the year!

This 17^th annual PCT Top 100 List marks the first appearance of Sweden-based Anticimex (#19), a notable addition since it’s the first international firm since Rentokil in 2006 to make a splash in the U.S. pest control marketplace. But the world’s fourth-largest pest management firm isn’t the only one interested in our market. Investors have taken note of the pest management industry as well.

I’ve written in this space before about how this list is carefully studied outside of our industry’s “four walls.” More than a few times a year PCT is contacted by a New York (or Chicago or San Francisco) financial analyst looking to learn more about the industry and/or the PCT Top 100 list. Here’s an actual (edited) email I received earlier this year:

“My name is…and I’m an equity analyst at a mutual fund firm in Los Angeles. I’m doing some research on the pest control industry and signed up to subscribe to your magazine yesterday. The online issues are very helpful, as are the historical lists of the Top 100 companies. Do you happen to have online versions of the Top 100 issue going back further than 2015? Thank you! Your magazine has been very helpful in my analysis.”

Dan Gordon, a consultant with PCO M&A Specialists, agrees. In the article “Shattered” on page 24, Gordon says, “Private equity companies have learned how valuable pest control companies are — they’re real companies making real money — and they will continue to have an interest in acquiring these businesses.”

How do these acquisitions affect the list? Not surprisingly, the big get bigger. But also, slowly but surely, new companies appear. There are nine new companies on this year’s list (plus three companies that are making a return after being absent a couple of years or more).

It’s always said that industry consolidation breeds new companies. (Company A buys company B, company B employee says, “I don’t want to work for company A, I can do this myself.” Company B employee starts company C.) I agree with NPMA’s Dominique Stumpf, who is quoted in this issue, saying, “It might feel as though consolidation is gutting the middle, but other companies will move up to fill that gap. Ten years from now, we’ll be seeing many of the companies being formed today take their place among the Top 100.” We can’t wait to see who those new companies are in the future!

Speaking of new companies, yes, this list represents the 100 largest companies by revenue. Their achievements are big, but of course they aren’t the only ones that are doing great things in the pest management industry. Throughout the year, we profile many up-and-coming companies, and we do the same in this issue (we highlight three “new to the list” companies on the following pages). We’ve included a variety of articles in our Top 100 coverage, as well as all of the other content in this issue (Technology Trends Supplement, anyone?), that applies to all of our readers. And we’d love to hear from you about your innovative sales techniques, new service offerings or newsworthy employees. Please drop me a line at jdorsch@gie.net.

The author is editor of PCT magazine.

P.S. – I know the word “literally” is literally overused but LITERALLY as I was writing this column, we received word that another company on this year’s list was purchased by a top five company. Stay tuned for additional coverage!

Editor’s Note: This article is the first in a series focusing on risk management practices for the pest management industry. The articles are based on presentations from the 2017 PestSure Safety and Loss Prevention Conference where PMPs gathered to hear the latest strategies for protecting their employees, customers and businesses from a variety of threats. In business for more than 30 years, PestSure is a nationwide association providing insurance and risk management services that is owned and operated by pest management professionals.

Editor’s Note: The identity of the company and its officials involved in this story have been withheld at their request.

It was a seemingly harmless email sent to employees from their CEO requesting they send him PDFs of their 2015 and 2016 W-2s for a wage and salary review.

Like at most organizations, when the CEO at this firm asked for something, people complied with the request. What no one realized was that the email came from a cybercriminal masquerading as the CEO looking to steal personal information.

By the time the company could react to the data breach, more than 200 employees were impacted and the company’s management team had to move into crisis management mode.

“We thought we were ready to combat any cyber threats until we weren’t,” said the company executive tasked with leading the response. “Our CEO never would have asked for that information but the cybercriminals created a phishing email that looked like the real thing.”

COMPANY REACTS. Once the management team realized the breach occurred they immediately took steps to mitigate the damage.

Working with their insurance carrier, the company offered credit monitoring services to all employees for two years, worked with their attorney to make proper notifications to various state agencies where their employees lived, and provided extra paid time off to employees to deal with the issue.

The impact on employees was direct and showed the warp speed at which cybercriminals work. False tax returns were filed, forcing ownership and other employees to meet with the Internal Revenue Service to reconstruct their returns and delay refunds.

“It was a disruption to the business but our employees took the brunt of it,” says the manager. “There was a seemingly endless to-do list of items early on that had to be done and done fast.”

Following the breach, the company enlisted the services of KnowBe4, a digital security awareness service, to conduct regular phishing testing and training, and the results have been positive.

“You have to rely on your employee training to raise awareness and reduce the risk,” says the manager. “You must be diligent and stay on top of it because everyone in your organization is vulnerable.”

PROACTIVE STEPS. What steps can companies take to reduce the risk of falling prey to a data breach?

• Have a professional cyber security plan in place. Have your IT manager or consultants lead the planning; involve human resources and accounting.
• Secure a cyber insurance policy. Talk with your insurance carrier about a policy that protects you and your employees in the event of a data breach. Dealing with a breach is expensive and insurance will help buffer the cost and provide you with valuable support.
• Control access to information. In the aftermath of the breach, the company took steps to reduce what sensitive information was shared through email or the company website. For example, the company’s payroll vendor provided employees with an app where they could access their W-2s, removing the company from the process and lowering risk.
• Establish a verification system for financial transactions. Today it might be counterintuitive to pick up the phone and call someone but a simple call to verify an email or online payment request from a coworker or vendor can save you time, hassle and money.

The author is a partner with B Communications and can be reached at jfenner@b-communications.com.