Roto-Rooter revenue climbs on residential plumbing rebound

Roto-Rooter, a wholly-owned subsidiary of Chemed Corporation, is the largest provider of plumbing and drain cleaning services in North America, counting 123 company-owned locations and 328 franchise locations, with residential customers representing 71 percent of revenues.

In 2024, the company’s revenue declined by 5.2 percent year-over-year, but it’s seen a modest turnaround this year, with revenue through the nine months ended September 30 up 1.2 percent year-over-year, according to a presentation.  

What they’re saying: “While still below our long-term expectations, there are signs that the Roto-Rooter business has stabilized and is on the way to returning to a predictable, sustainable growth trajectory,” said Chemed CEO Kevin McNamara on a third-quarter earnings call in late October. 

What’s happening: Roto-Rooter’s residential, company-owned branch revenue grew 3.4 percent year-over-year during the third quarter, totaling nearly $151 million, Chemed CFO Michael Witzeman noted. 

• “This aggregate residential revenue change consisted of plumbing increasing 8.2 percent, excavation increasing 4.5 percent, and water restoration increasing 6.8 percent, offset by a decline in drain cleaning of 2.6 percent,” he said.
• “For the first time in several quarters, we saw strength in our residential plumbing revenue service line,” McNamara added. 

Of note: The company’s ‘adjusted’ EBITDA margin was 22.7 percent in the third quarter, down slightly from last year. 

Go deeper: During the quarter, Roto-Rooter executed a “multipronged” campaign targeting high-dollar plumbing opportunities, including more targeted online advertising, enhanced sales materials for field techs, and more frequent close rate reporting to branch management, which yielded “positive results,” per McNamara. 

• Total lead volume was down 1.3 percent year-over-year in the quarter, according to executives; however, “The entire decline in leads is in the natural lead category,” McNamara said, as paid leads grew 8.6 percent year-over-year.

Between the lines: “In my opinion, this trend is both a positive and a negative,” McNamara continued. “While we are paying for more leads, causing some margin pressure, we also believe this trend indicates a potential moderation of competition for leads from our most significant private equity competitors.”

• Zoom out: In the second quarter of last year, Roto-Rooter upped its digital ad spend, which was “met by a competitive response… And the net result was everyone paid more, but there wasn’t a change in the balance of leads,” he added. “That’s not what we’re seeing now. We’re seeing that as we spend more, we’re getting more.”

What we’re watching: Roto-Rooter performs best in the first and fourth quarters, when it’s “colder, wetter,” per Witzeman, and pricing discipline remains a focus area. 

• “When calls are down, the service man goes out, makes a written estimate, and it’s all or nothing,” McNamara noted. “Essentially, the customer says okay or no.”
• “At that point, there’s not another job on the board for that service man to go run to,” he added. “You can see how he’s inclined to say, ‘Well, what will it take for me to do it?’ That’s where you lose margin.”
• “It’s easier to have that pricing discipline when there’s enough work to go around. And we’re starting to see that… That’s what we’re really shooting for, for the improvement for 2026.”