Thank you. By now, you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive one, please contact our office at 212-827-3746 and we will send you a release and make sure you are on the company's distribution list.

There will be a replay of the call, which will begin one hour after the call and run for one week. The replay can be accessed by dialing 1-844-512-2921 with the passcode of 3596058. Additionally, the call is being webcast at www.viavid.com, and a replay will be available for 90 days.

On the line with me today and presenting are Gary Rollins, Rollins' Vice Chairman and Chief Executive Officer; John Wilson, Rollins' President and Chief Operating Officer; and Eddie Northen, Senior Vice President, Chief Financial Officer and Treasurer. Management will make some opening remarks, and then we'll open the line for your questions.

Gary, would you like to begin.

Gary W. Rollins - Vice Chairman and Chief Executive Officer

Yes, Marilynn. Thank you, and good morning. We appreciate all of you joining us for our first quarter 2020 conference call. Eddie will read our forward-looking statement and disclaimer, and then we'll begin.

Eddie Northen - Senior Vice President, Chief Financial Officer and Treasurer

Our earnings release discusses our business outlook and contains certain forward-looking statements. These particular forward-looking statements and all other statements that have been made on this call, excluding historical facts, are subject to a number of risks and uncertainties and actual risks may differ materially from any statement we make today. Please refer to today's press release and our SEC filings, including the Risk Factors section of our Form 10-K for the year ended December 31st, 2019 for more information and the risk factors that could cause actual results to differ.

Gary W. Rollins - Vice Chairman and Chief Executive Officer

Thank you, Eddie. We find ourselves in a place that none of us could have ever imagined when we last spoke. Needless to say, in our over 50 years as a public company, we have never encountered anything close to this pandemic. Many refer to the economic crisis of 2008 as the closest example that we've had. But from my perspective, this virus is a totally different animal. Its impact is multifaceted, found ourselves in unchartered waters.

Prior to the last two weeks of March, our pest control service and sales were very positive and on track. However, as the virus began to expand, we started to see a reduction in the demand for our services. Initially, California shutdown early, and we saw our business affected immediately. Further impacted by the hardest hit state, New York, and other states shutdown randomly until the end of the quarter. As you would expect, we were not able to cut our expenses enough during those final two weeks to adjust for the revenue drop.

Revenues for the first quarter though grew 13.7% to $487.9 million compared to $429.1 million for the same quarter in 2019. Net income was approximately $43.3 million or $0.13 per diluted share compared to $44.2 million or $0.14 per share for the first quarter last year. On the positive side, we experienced growth in all of our business lines in the quarter, residential up 18.6%, commercial pest control rose 8%, and termite and ancillary services grew 17.4%. Couple of other bright spots during the quarter, mosquito sales and service began as the weather warmed. As a result, we saw record-setting growth in that business line. We also saw a strong revenue increase in our wildlife business, which increased double digits over last year. Eddie will provide greater detail on this as well as other financial results shortly.

You're entering what is traditionally the high pest season. All of our domestic and global facilities remain operational. However, commercial account retention and commercial sales results have been negatively impacted. Residential pest control demand remains positive. And with termite, it's too early to judge the season.

Overall, commercial pest control has been the most negatively impacted by the virus. Commercial crosses multiple verticals, including healthcare, food processing, logistics, grocery, retail, hospitality and others. Each of these industries is being impacted differently due to COVID-19. The hospitality, retail, restaurant business has been the most adversely affected, whereas we continue to see improved demand in healthcare, food processing, logistics and grocery.

The business is facing an all-time concern about the transmission of germs. We're pleased to announce last month that Orkin began offering a new disinfectant service called Orkin VitalClean. This new service will help business quickly and thoroughly suppress a number of serious pathogens that could endanger their employees and customers. The VitalClean service has the potential to positively contribute to revenue and profit this year. John will provide more details on this new service.

Our company has implemented numerous proactive and defensive actions to address the current business challenges and the impact of a pandemic. And while there are uncertainties regarding the duration and total effect of COVID-19, we anticipate our business will generally mirror the economy. This will be across the nation as regions, states, counties and cities begin to open up. The actions that we have implemented take into consideration both the short-term impact and longer-term effects to follow. As the pandemic situation evolves, we will continue to evaluate our actions, their impact and adjust the business accordingly.

Before turning the call over to John, I want to acknowledge our employees and their importance. Our people are our greatest asset, and we couldn't be prouder of them as they have quickly adjusted to the pandemic. We're experiencing an unprecedented time in our history, and our people are rising to the occasion in extraordinary ways. We're taking our responsibilities seriously as we've been deemed an essential service provider by the Department of Homeland Security. With this distinction and as the world's largest pest control company, we have an extremely important role during this critical time. Protecting people health and property and the public's well-being is an important assignment.

I'll now turn the call over to John for more details.

John Wilson - President and Chief Operating Officer

Thank you. As Gary noted, we are certainly in very challenging times, and we are quickly responding to the impact that COVID-19 is having on our businesses, employees and customers. Our people on the front-lines of this pandemic have performed heroically taking care of their customers and each other during this time. The services we provide are considered essential, so we are continuing to service our residential and commercial customers where possible. This holds true for our global operations as well, and we are continuing to do business in accordance with each country's guidelines.

Our focus over the past weeks has been on ensuring that our employees around the globe are safe and that we are providing them with the protection they need to service their customers responsibly. Rollins has purchased and provided our technicians and other employees that interact with customers with disposable personal protective equipment, including masks, gloves, shoe covers and protective outerwear. This is an ongoing investment that we believe we will continue to make in order to keep our employees and customers safe, in line with this new normal we are all facing.

The highest priority during this difficult time is and always will be the safety and security of our team, especially on the front-line. To help ensure this, we have provided a companywide increase to our paid time-off program for all full and part-time employees. Full-time employees will receive up to 80 hours of PTO for emergency leave during this coronavirus pandemic, and our part-time team will receive 40 hours if they should need it. Our people can use this time for their own personal care or for a member of their immediate family who has tested positive or has been quarantined for suspected case of the virus. We believe these measures will provide our team with the help and support they need while protecting their health and the safety of those around them.

Given current business conditions, we have temporarily furloughed a number of employees in both field operations and our home offices. The furloughs will allow us to rehire these employees as demand improves. And in the meantime, we are providing full employee benefits for those affected. Additionally, Rollins has suspended merit increases for the corporate staff, along with management salary reductions in both field and home office positions. Front-line team members have not been impacted by these salary reductions. Eddie will provide greater detail on this and other cost-cutting measures we have taken.

As Gary noted, Orkin and many of our other brands are now offering a new disinfection service that will quickly and thoroughly eliminate a wide variety of serious pathogens. Large scale disinfection is imperative to keeping establishments where people shop, eat and work as sterile as possible and disease-free. Orkin's VitalClean is an effective option for reducing risk and helping restore a safer and healthier business environment.

The Orkin program trademarked as VitalClean uses an EPA registered disinfectant labeled for use against a wide variety of pathogens and is included on the EPA's list of approved products or lists and that meet their criteria for use against SARS-CoV2, the coronavirus that causes COVID-19.

When applied in accordance with the product label by trained service professionals, this powerful disinfectant will kill 100% of bacteria and viruses on hard, non-porous surfaces and will sanitize soft porous surfaces. We are very excited about the potential for this service for both our existing and potential customers.

And now, I'll turn the call over to Eddie.

Eddie Northen - Senior Vice President, Chief Financial Officer and Treasurer

Thank you, John. Our press release on April 20th gave you some insights as to what we knew at that time related to the impact of COVID-19 on our business. Today, we will report on our Q1 actual results and add some insights to what we know today.

Before I begin, I would also like to thank our over 15,000 employees that have adapted to a new way to work and support our customers, as well as those that have helped and supported our impacted employees as well as our communities. We want to thank them for their efforts. We will truly be getting through this together.

As I go through the results of Q1, there are some items that were already being felt in our numbers. As Gary mentioned, the slowing of our commercial pest control revenue and, as John highlighted, an increased expense related to protective personal equipment, or PPE, for all customer-facing employees. While we patiently stood in line for PPE behind those first responder groups at the most critical need to ensure they receive first, we began accumulating masks and other items to ensure the safety of our employees.

For the quarter, all of our service lines showed growth and key to the quarter included higher material costs and supplies as mentioned with the personal protective equipment, the launch of our new commercial disinfectant service Orkin VitalClean, and our initial round of cost containment in our field operations and home office locations.

In addition to reporting our Q1 numbers, my focus today will be to share what we know at this time related to Q2. Looking any of the numbers, the first quarter revenue of $487.9 million, an increase of 13.7% over the prior year's first quarter revenue of $429.1 million. Income before income taxes was $55.4 million or 1.2% below 2019. Net income was $43.3 million, down 2.2% compared to 2019. Our GAAP earnings per share were $0.13 per diluted share. EBITDA was $79.2 million and rose 9.2% compared to 2019.

Our Q2 numbers will begin to normalize as we lock Clark in May of this year. The impact of the initial Clark acquisition to our net income for the quarter includes depreciation of $1.4 million mostly due to buildings and added vehicles, amortization of intangibles of $3.1 million, and interest expense of $2.4 million.

As we've mentioned earlier, we began aggressively purchasing PPE in Q1 along with the equipment and supplies needed for our new disinfectant service, VitalClean. These two items, along with the transition to new more diversified pest product suppliers, impacted our materials and supply costs for Q1 and will impact the business for the remainder of the year.

Let's take a look to the Rollins revenue by service line for the first quarter. Our total revenue increase of 13.7% included 8.6% from Clark and other acquisitions, and the remaining 5.1% was from pricing and organic growth. In total, residential pest control, which made up 42% of our revenue, was up 18.6%. Commercial pest control, which made up 38% of our revenue, was up 8%; and termite and ancillary services, which made up approximately 20% of our revenue, was up 17.4%. Also of note, as Gary mentioned, our wildlife services were up strong double-digits.

Again, total revenue less acquisitions was up 5.1%, even with the slowdown during March. From that, residential was up 6.1%, commercial ex-fumigation increased 2.1%, and termite and ancillary grew 11%. There are two items that I'd like to note. As Gary mentioned, the continued growth of our mosquito service at record levels continues to drive our residential revenue. And also, this quarter eclipsed last quarter with double-digit increases as we also experienced the fastest termite and ancillary growth in the past six years.

In total, gross margin reduced to 48.5% from 49.4% in the prior year's quarter. The quarter experienced increases in several categories, mostly driven by Clark in the categories of service salaries, administrative salaries, and personnel related for our 401(k) match. Additionally, materials and supplies were up as discussed earlier. But moving the impact of Clark, gross margin improved 49.3% in 2020.

Depreciation and amortization expense for the quarter increased $4.9 million to $21.6 million, an increase of 29.5%. Depreciation increased $2 million due to acquisitions, vehicles acquired, and equipment purchases as mentioned earlier, while amortization of intangible assets increased $2.9 million due to the amortization of customer contracts from several acquisitions, including Clark.

Sales, general and administrative expenses for the first quarter increased $18.3 million or 13.1% to $157.9 million or 32.4% of revenues, down one-tenth-of-a-percentage-point from $139.5 million or 32.5% of revenues for the first quarter of 2019. The decrease as the percent of revenue and the percent of revenue was primarily due to administrative salaries, sales salaries and personnel related all growing at a slower rate than our revenue growth, offset by higher insurance claims and maintenance and repairs due to scheduled IT projects.

Our cash flow continues to remain strong at this time. Our conservative move in reducing our dividend will further improve our balance sheet and will add flexibility as needed for the future. There are currently more unknowns than knowns around the economic impact of the virus, and this step, along with the others that we have taken, will further prepare us to come out of this time and even stronger financial shape for the future.

Finally, related to cash, as our top priority, we have continued with our M&A activity around the globe with completed acquisitions in March and plans for more in the second quarter. As for our cash position for the period ended March 31st, 2020, we spent $47.6 million on acquisitions compared to $7 million at the same period last year. We paid $39.3 million on dividends and had $6.7 million of capital expenditures, which was slightly higher compared to 2019. We ended the period with $92.6 million in cash, of which $64.2 million is held by our foreign subsidiaries.

Before I wrap up, I want to share the pandemic-related impacts that we are aware of that will be ongoing. As most of you know, our payroll and benefits are just over 50% of our costs and are extremely variable based on our revenue levels. The two other major cost categories are fleet at about 7.5%, which is slightly less variable than payroll, and materials and supplies, which is also about 7.5% and variable based on revenue.

Here are a few items and approximate impacts to consider for the second quarter. First, the cost items for the quarter. We'll have additional materials and supply expense, which will be between $2 million and $3 million for the PP&E for our customer-facing employees, and this will be ongoing for the foreseeable future. Costs for the benefits for furloughed employees will be between $300,000 and $500,000, and we will update as we know more in future quarters. Cost of additional paid sick and leave time related to COVID-19 will be between $350,000 and $600,000, and we would anticipate that amount reducing in future quarters.

Offsetting these higher costs for Q2, we have cost containment or reductions implemented in April, which will impact Q2 between $18 million and $22 million. These include discretionary cuts and payroll, some of which John mentioned. Capital expenditure cuts to only essential products to run our business. This will reduce our historical percent to revenue by about one-tenth-of-a-percentage-point or $700,000. We're moving into our mosquito and termite seasons, as Gary mentioned, which will help improve our route density and improve efficiency.

And finally, the launch of VitalClean with early winds around the globe in industries such as food, housing, hospitality, fitness and transit. As a specific example, we just signed the British Columbia Transit system in Canada. As shelter-in-place rules change in the coming months, we anticipate demand for our pest services and new disinfectant to rise, and we are well positioned to adapt as those changes occur. Until that time, we will continue to study and adjust our cost structure as needed.

Finally, the Board of Directors approved the temporary reduction through our cash dividend to $0.08 per share that will be paid on June 10th, 2020, to stockholders of record at the close of business on May 11th, 2020.

Gary, I will now turn the call back over to you.

Gary W. Rollins - Vice Chairman and Chief Executive Officer

Thank you, Eddie. We're happy to take your questions at this time.

Question & Answers

Operator

[Operator Instructions] And we'll take our first question from Mario Cortellacci with Jefferies. Go ahead.

Mario Cortellacci - Jefferies - Analyst

Thank you. Hi, everyone. I hope everyone is doing well and staying safe. Just - I think the most important thing for investors to derive in what the exit rates were at the end of March, and just wondering if you can give us more color and then if you can quantify what you saw organic growth for resi and commercial at the end of March and then how that's trended throughout April? Do you think that we've bottomed at this point? And just what do you see, I guess, where you can expect possibly the rest of the quarter? Obviously we don't know, but just based out of April trends?

Gary W. Rollins - Vice Chairman and Chief Executive Officer

Yeah. Mario, I hate to punt on the first question out. That's really difficult. We have - on the residential side, which we put in our press release, we're still seeing good demand. On the commercial side, we know what customers have been impacted on the commercial side. We've suspended some customers or they suspended us because of not having a need.

And the reason why I'm pumping on the question is because we don't know of those ones that have suspended. We don't know which ones of those customers will be coming back. We have a feeling for the larger customers which ones will be coming back, but we just don't know about those mom and pops. They may or may not be coming back based on their personal economic situation. So, it's really too soon for us to be able to give any sort of prediction on that. And as Gary talked about on the termite side, that's hanging in there as well. But residential, we're definitely seeing the most positive, and we can give more color as we see things shaping up as we move forward. But I think at this point time, we're still not sure what that commercial is going to look like.

Mario Cortellacci - Jefferies - Analyst

Okay. And then, even during, say, the exit in March, you can share any color on that?

Gary W. Rollins - Vice Chairman and Chief Executive Officer

Well, you look at the end of March and then you look at what that flowed into April. So, by the end of March, New York was shutdown, California was shutdown, a few other major states were shutdown, but then you had other states that were beginning that shutdown process or shutdown portions of what they had going on. So, I just don't think that it's going to be fair for us to be able to even share that because I don't really know what that's going to look like.

I know it's anecdotal. And if you need to go bowling, you can come here to Georgia because we have a bowling alleys open, but we also have restaurants - we also have restaurants that are opened up. I know it's anecdotal, but we took a little poll this morning of my folks here, and I said, okay, how many folks went to a sit-down restaurant since we've opened back up, and no one raised their hand. So, we just don't really know what the impact is going to be even as we're opening back up and what the impact is going to be longer term for these businesses to be able to stay in business.

Mario Cortellacci - Jefferies - Analyst

Got you. Okay. And then just one more and I'll turn it over. On the disinfectant business, actually it's a very interesting idea, and I'm just wondering if you can kind of share some of the success that you might have seen, I think - I've heard that you think the more success in Europe versus the US in the early on days and probably with COVID hit over there versus the US earlier. But what do you think that business looks like longer-term? I mean, just as people tend to have a very short memory, I mean, does this business accelerate in a year from now or do you think because people tend to be short-minded that maybe they forget about the COVID situation and they tell, I don't need this service anymore, and then maybe doesn't gain as much traction or have as much relevance maybe a year or two for now, just what your take on that?

Gary W. Rollins - Vice Chairman and Chief Executive Officer

Well, before 9/11, we could always walk through an airport and we could just go get on a plane. And then after 9/11, that changed for all of us, forever probably. And I don't think we know exactly what the outcome of this will be at this point in time. I think in the near-term, I think all of the things we've seen from the different states that are opening up have some form of a recommendation of the cleanliness. And so, we're trying to go through and talk about what makes sense for the verticals, where to spend our time from a sales perspective with that. Some are going to need that just to be able to get customer back in the door and feel comfortable. Now, what I think the question that we don't know is, what's going to be mandated as we move forward in time as far as cleanliness.

John Wilson - President and Chief Operating Officer

Yeah. This is John Wilson, by the way, if I may add. I think Eddie hit the nail in the head with the mandated portion. I think there'll be certain industries, maybe hospitals, healthcare, food processing that it may well be mandated, some others that it's strongly recommended by the various government entities, health department, maybe most especially. So, it's hard to say, but I do think it can be fairly significant for us where the early returns is terrific in terms of what our people are managing to add to their customers with.

Mario Cortellacci - Jefferies - Analyst

Okay. Thank you so much.

Operator

Our next question will come from Tim Mulrooney from William Blair. Please go ahead.

Tim Mulrooney - William Blair - Analyst

Good morning, everybody.

Gary W. Rollins - Vice Chairman and Chief Executive Officer

Good morning, Tim.

Eddie Northen - Senior Vice President, Chief Financial Officer and Treasurer

Good morning, Tim.

Tim Mulrooney - William Blair - Analyst

Can you shed some light on your end market exposure in the commercial parts business? I understand you don't want to give any insight into the growth rates through April, but what would help me and others maybe model because we have to model something, right? Specifically, I'm curious what percent of your commercial business is restaurants and hotels, which are likely under significant pressure right now?

Eddie Northen - Senior Vice President, Chief Financial Officer and Treasurer

Yes. We've never broken that out. We're not going to break that out by vertical, and a lot of that's just going to be from a competitive standpoint. We don't want to put ourselves in the crosshairs of other competitors being able to step into the areas, but we have a good strong cross-section of all the different verticals. And if you'll go back to previous calls that we've had having to do with this topic, we've talked a lot about moving into the verticals such as - or moving more strongly into verticals such as healthcare, such as food processing, such as logistics, and we've talked about that over the past couple of years. So we've had a strong concentration in those areas. But there's no question that we have a very strong cross-section of all those different ones as well as a decent amount of large customers with a large performance of small and medium-sized customers as well.

Tim Mulrooney - William Blair - Analyst

Okay, Eddie. Okay. That - I understand. You don't want to disclose that for competitive reasons. Any vertical, I'm just trying to get something that can help us if any vertical more than 25% of your commercial business or can you tell us that no vertical is more than X percent of your business? Any color that way where you're not really disclosing much of anything for competitive reasons but gives investors assurance that you're not overweighted in any particular end market?

Eddie Northen - Senior Vice President, Chief Financial Officer and Treasurer

I think your last statement is spot on. We were not overweighted in any individual vertical that is out there. We have a relatively diversified set of verticals and have percentages in those relatively diversified as well.

Tim Mulrooney - William Blair - Analyst

Okay. Because I read an article recently from specialty consultants, which does market sizing. I think in there, it said something like 40% of the commercial business is restaurants. So, it's fair to say that your end market mix does not necessarily match that of the broader market?

Gary W. Rollins - Vice Chairman and Chief Executive Officer

Your statement is correct. And I would be interested to understand the data behind what you read there.

Tim Mulrooney - William Blair - Analyst

Okay [Phonetic].

Eddie Northen - Senior Vice President, Chief Financial Officer and Treasurer

That's what I understand about what's out there in the industry, but your statement is correct.

Tim Mulrooney - William Blair - Analyst

Okay. Cool. Thank you very much. And I'll get back in the queue.

Gary W. Rollins - Vice Chairman and Chief Executive Officer

Okay. Thanks.

Operator

[Operator Instructions] And we will take our next question from Seth Weber with RBC Capital Markets. Please go ahead.

Seth Weber - RBC Capital Markets - Analyst

Hi. Good morning. I hope everybody is well. I guess maybe a question for Eddie. Can you just talk about what you're seeing on the collection side. Are you seeing customers delay payments? Are you doing anything to kind of ensure just the quality of your receivables or anything like that? And then, I just had a follow-up on the M&A comment. Thanks.

Eddie Northen - Senior Vice President, Chief Financial Officer and Treasurer

Yes. So, we shored up our reserves a little bit on that side just to make sure we do have a pretty healthy diversified customer base as well. We've really concentrated on higher income to be able to not only sell our product, but sell more than one product. And we're seeing that band of - or income band of customers not being as impacted from a collections standpoint. So, I think it's still a little bit too early to be able to say one way or another on that. We're just three or four weeks into the unemployment checks, and people still having relatively full income. But we're being a little bit cautious with that, and we're being a little bit aggressive putting more resources into that area just to do the best that we can at this point.

Seth Weber - RBC Capital Markets - Analyst

Okay. Thanks. And then, just going back to your comment on…

Eddie Northen - Senior Vice President, Chief Financial Officer and Treasurer

Just one more thing with that.

Seth Weber - RBC Capital Markets - Analyst

Sorry.

Eddie Northen - Senior Vice President, Chief Financial Officer and Treasurer

Just one more thing with that. You may or may not know there are certain states that have put mandates in place where you are not allowed to collect in those areas.

Seth Weber - RBC Capital Markets - Analyst

Right. Right.

Eddie Northen - Senior Vice President, Chief Financial Officer and Treasurer

So you probably already know about all those, and we're complying as we should for all of those states.

Seth Weber - RBC Capital Markets - Analyst

Okay. Thank you. And then, just following-up on your M&A comment, can you just characterize, have valuations started to come down across the group here over the last couple of months relative to where they were?

Eddie Northen - Senior Vice President, Chief Financial Officer and Treasurer

I would say, the number of sellers are much less than what we've seen in previous times. And I would say that valuations for those that are still in the market are probably coming down as well with other - with less other players in the market. Some of our direct competitors have said publicly that they are not in the market. And so while we're not necessarily aggressively going out there and looking, we're actually being open and opportunistic.

Gary W. Rollins - Vice Chairman and Chief Executive Officer

Yeah. I would agree with all of those statements. I do see valuations maybe coming down a bit because just simple because there aren't as many buyers in the market at least right now.

Seth Weber - RBC Capital Markets - Analyst

Yeah. Okay. Very interesting. Thank you. Thank you, guys. Appreciate it.

Operator

[Operator Instructions] Our next question will come from Michael Hoffman with Stifel. Go ahead.

Michael Hoffman - Stifel - Analyst

Hi. Thank you all for taking the questions, and I'm glad everybody is safe and you all have done the right thing by your employees. Can I ask a clarification question first, if I may? I'm scribbling the numbers down as fast as I could when you're talking, but when you said $18 million to $22 million cost containment, is that an annualized number or that's the quarter savings?

Eddie Northen - Senior Vice President, Chief Financial Officer and Treasurer

That's for the quarter. That's for the quarter. And that's going to include some of the categories that John talked about having to do with payroll. We really didn't go into a lot of the details on the discretionary cuts that we've made, but that would include those two categories, discretionary and payroll.

Michael Hoffman - Stifel - Analyst

So just so I'm clear. If I took the high end of materials and furloughs, and PPO [Phonetic], I mean, that's kind of $4 million, so I got $4 million headwind and I got an $18 million offset.

Gary W. Rollins - Vice Chairman and Chief Executive Officer

If that's just the math [Phonetic], yeah. I don't have that [Speech Overlap] that's transcribed.

Michael Hoffman - Stifel - Analyst

Okay, good. All right then. I just want to make sure I understood right. My question-question [Phonetic]. It's two parts, trying to stay in the spirit of one question. Residential lead generation is okay, and when this lead starts, do you think you would get calls from commercial, let's say, hey, I'm going to restart, come in and do a - I'll call it an added service, so there's a restart service kind of activity?

Gary W. Rollins - Vice Chairman and Chief Executive Officer

Yeah. I'm sure John can weigh in with a lot more specifics to that, but I'll just start by saying, I think we see customers in a few different buckets. One is, they're doing normal - their normal service that they would have, either because they are fully in business or they're in some sort of partial business. I think we have another bucket that it completely stops at this point in time because they don't have anything at all going on. And I think we have a third bucket which is kind of a hybrid which, let's just say they maybe received a service once a week, they might now be receiving a service every other week or every three weeks just to keep things relatively intact at this point.

So, we've got - by customer, we're trying to accommodate as best as makes sense for them, especially for those that know they're going to be opening up relatively soon, they don't want to make a decision that they're going to open up on, let's just say, May 1st, they haven't done anything for four weeks and now they have an infestation that they have to go through and deal with. They don't want to have that situation. So, I think those are kind of the buckets of what we're seeing by the customers.

John Wilson - President and Chief Operating Officer

And Michael, we've seen a wide array of tactics by our customers to maybe defray costs. Some have chosen to suspend altogether, some have chosen to reduce frequency, and some have continued with their service even though they may be shut down knowing that they don't want an outbreak of pest problem. We've had one of our big retailers that had put us on suspend that's already notified us for to re-begin or begin service in May. So, I would suspect that we will have quite a few that as we're coming back on, we'll get us in there before they open.

Michael Hoffman - Stifel - Analyst

Okay. That's what I thought, given a little pop from that and then back on to a normal trend.

John Wilson - President and Chief Operating Officer

That makes sense.

Michael Hoffman - Stifel - Analyst

Okay. Thanks.

John Wilson - President and Chief Operating Officer

Yeah. Thank you.

Operator

And there are no further questions at this time.

Marilynn Meek - Vice President

Okay. No other questions?

Gary W. Rollins - Vice Chairman and Chief Executive Officer

Okay. No other question. I'd like to add a comment, and that's - we were so uncomfortable with these we don't know answers as I'm sure you all are hearing them. But I think that we have responded quickly. I think that we have three wonderful areas of increasing our business with our termite season, our mosquito season, and with the VitalClean. So - and again, it is challenging to try to determine how big can VitalClean be.

The first 30 days have been very encouraging, and our residential pest control leads have continued to be strong. So, you have so many variables, it's just really difficult to gauge all these. But I think one of the reasons that we took status with our dividend was that we just want to be prepared for the future. And those of you that have followed the company for some time know that we're generally conservative, and I think that we're in a best position of anybody in the industry to deal with this. So we're just going to keep working at it and improving, and hopefully we'll see this turn in the near future.

Saying that, I'd like to thank you all for joining us. We appreciate your interest in our company. On our behalf, we hope that you and your family and friends remain safe and well, and we look forward to updating you on our second quarter call. Thank you.

Operator

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ROLLINS INC

Q1 2020

Earnings Transcript

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