Kenneth Krause
Thanks, Jerry, and good morning, everyone. Our results for the quarter and the year reflect continued strong execution by the Rollins team, and let me begin with a few highlights for 2024. First, we delivered robust revenue growth of 10.3% for the year with strong growth across each of our service offerings.
It was encouraging to see organic growth of 7.9% for the year, while acquisitions continue to be a meaningful part of our growth profile. Second, we made progress on profitability improvement in 2024 while also making significant long-term investments to support the business. The pricing environment remains healthy, and we continue to focus on investing in future growth while delivering margin improvement.
Growth investments and pressure from developments on legacy auto claims that materialized in December, both weighed on incremental margins for the quarter and the year. When you isolate the impact of these two factors, the incremental margin that was generated by our underlying operations for the year is solidly in the 30% range. And finally, we delivered operating cash flow of $608 million and free cash flow of $580 million, up 15% and 17%, respectively, versus last year.
Our strong cash flow performance enabled us to execute a balanced capital allocation strategy deploying almost $500 million of capital in 2024 with a focus on investing for growth while returning cash to shareholders through a growing dividend. Turning to our fourth quarter performance. The team delivered a strong quarter with revenue up 10.4% and our strongest organic growth rate of the year at 8.5%. It was certainly encouraging to see the strong improvement in organic revenue growth in the second half of the year.
In the fourth quarter, residential revenue increased 8.4%, commercial pest control increased 9.2% and termite and ancillary related services was up 16.6%. Organic growth was healthy across the portfolio, with growth of 6.5% in residential, 7.2% in commercial and 14.9% in termite and ancillary. Our demand creation efforts and investments in customer-facing resources are paying off with stronger organic growth in our portfolio.
Gross margin improved 40 basis points to 51.3% in the quarter, and looking at our four major buckets of service costs, people, fleet, materials and supplies as well as insurance and claims, we saw improvements in margins associated with materials and supplies as well as people costs despite healthy staffing levels needed to support strong underlying demand trends.
Fleet was neutral to margins in the quarter, while insurance and claims were a headwind driven by developments on legacy auto claims that we previously mentioned. Quarterly SG&A costs as a percentage of revenue increased by 50 basis points versus last year. We continue to see leverage in administrative people costs which somewhat offset deleverage from selling and marketing expenses associated with growth initiatives.
Unpacking this further, we have consistently talked about our intent to reinvest savings from administrative costs in the sales and marketing initiatives. And since the end of 2022, we have seen 50 basis points of leverage in administrative employees expenses and have invested that back into selling and marketing expenses. Going forward, we do see an opportunity to continue to leverage our administrative costs to drive further investment as well as margin expansion.
Fourth quarter GAAP operating income was $151 million, up 8.3% year over year, and adjusted operating income was $155 million, up 7.3% versus last year. Quarterly adjusted EBITDA was $181 million and EBITDA margin was 21.8%. While we saw nice leverage with respect to gross profit, EBITDA margins were negatively impacted by growth investments, and our claims experience in the quarter. The effective tax rate was 27.3% for the quarter and 26% for the full year.
For 2025, we are expecting an effective tax rate of approximately 26%. Quarterly GAAP net income was $106 million or $0.22 per share. For the fourth quarter, we had non-GAAP pretax adjustments associated with Fox acquisition-related items totaling approximately $4 million of pretax expense in the quarter. Considering these adjustments, adjusted net income for the fourth quarter was $109 million or $0.23 per share, increasing just under 10% from the same period a year ago.
Turning to cash flow and the balance sheet. Operating cash flow increased 23% in the quarter to $188 million. Cash flow did benefit from a disaster relief measure granted to those with operations impacted by Hurricane Helene that allowed us to defer an estimated $32 million fourth quarter tax payment. This payment would have occurred in Q4 and will now be paid in the second quarter of 2025.
Cash flow conversion, a percent of income that was converted into operating cash was approximately 144% for the quarter, adjusting for the positive impact of the deferred tax payment. We generated $184 million of free cash flow and $106 million of earnings, a 30% increase versus last year. As Jerry mentioned, I wanted to take a moment to highlight the assignment of investment-grade corporate credit ratings from Fitch and S&P.
The agencies have announced public credit ratings for the company with Fitch issuing a BBB+ rating and S&P a BBB rating. Today, we are also announcing that our Board has approved a $1 billion commercial paper program backstopped by our existing $1 billion revolving credit facility. We will start to work to put this in place in the coming weeks, helping provide flexibility and more efficient shorter-term liquidity options.
We have made considerable progress in modernizing our back office and capital structure over the last several years. A key goal of this effort has been to ensure access to the most efficient capital to further enable our balanced and disciplined approach to capital allocation. One of our top priorities has been to achieve investment-grade ratings. These ratings represent a big step forward, ensuring our ability to grow using the most cost-efficient capital.
We've also recently welcomed Brady Knudsen as our new Treasurer. Brady has been working alongside many of our team members and helping guide us through the ratings process. It is great to have Brady on the team. Throughout our history, we have managed this business through an investment-grade lens, and we will continue to do so in the future. We are committed to maintaining a strong investment-grade rating with leverage well under 2x supported by healthy cash flow generation and disciplined capital allocation.
Going forward, we have updated our definition of leverage to better align with the rating agencies, which results in a more conservative view. A reconciliation can be found in our press release, but using this definition of our leverage, our leverage calculation currently would stand -- stands at 0.8x.
As we look to 2025, we remain encouraged by the strength of our markets and the execution by our teams. We are focused on delivering another year of robust growth and healthy incremental margins, further complemented by a strategic and disciplined approach to M&A.
We continue to expect organic growth in the range of 7% to 8% with additional growth from M&A of at least 2% to 3%. Additionally, we are focused on improving our incremental margin profile while investing in growth opportunities. We anticipate that cash flow will continue to convert at a rate that is above 100% again in 2025.
With that, I'll turn the call back over to Jerry.
Jerry Gahlhoff
Thank you, everyone. We're happy to take any questions you have at this time.
Operator
(Operator Instructions) Tim Mulrooney, William Blair.
Tim Mulrooney
Congrats on a nice quarter. My first question is about your residential business, which I know the organic growth up 6.5% in the fourth quarter. I think that was better than what we were expecting and certainly better than what the Street was expecting.
I think the Street was a little concerned based on some web traffic data and credit card data and other things that were floating out there, but there really doesn't seem to be much of a correlation there at all. Can you talk about what drove this better-than-expected result? Was there a big surge in onetime sales or surge it and lead flow? Just any color would be helpful.
Jerry Gahlhoff
Yes. Tim, this is Jerry. It's interesting to me, we often see a lot of the reports with the data, the website data and the visitors. And as we see those items come up, sometimes it confuses us because what we -- what those reports say aren't necessarily aligned with what we're seeing day to day in the market. So there's a time or two where it ties, but I would say more often than not, some of those data just don't tie out.
We've seen this time and time again with credit card processing data, et cetera. And it's rarely tied out releases fairly (inaudible). Our residential business was strong in the fourth quarter. Our customer base is larger that we carry it into the fourth quarter, that was helpful. We did see also rises in calls for especially rodents in November and December.
The population of rodents, particularly rats and mice, really had a strong pop late in the year. And there's a recent article out there, University of Richmond study that talks about how in most of these very urban markets, these rodent populations, especially rats are just driving. And we're certainly seeing that opportunity in the business as well. So we had very strong lead demand, a lot of call volume coming into the business that may not necessarily have been aligned with what some of the data others are seeing out there are publishing.
Tim Mulrooney
Okay. That's really helpful. For my follow-up, I actually want to switch gears completely and ask a question on sales and marketing. I appreciate the extra disclosure that you gave for your different expense buckets in the press release where I noticed that sales and marketing expense really jumped up about 70 basis points in the fourth quarter, I think, 40 basis points in 2024.
Now a skeptical investor might look at that and say, you're just having to spend more on leases, your cost per lead is going up. I'm curious what would be your response to that? What data can you share to prove that the increased spend is more about growth investments rather than just your [Taexx] is going up.
Jerry Gahlhoff
Yes. So the -- when you look at the S part of the SG&A, the sales and which could include marketing, it's our people costs. It's the investments we're making in sales staffing, not that we're spending irrationally into the market to drive the phone calls to our business.
We have not seen that. And as I've stated repeatedly over the last couple of years, we still spend as a percent of revenue, very similar amounts in investing in our business to drive new leads into our business, both direct allocated leads that come in as well as our mass media advertising that, say, an Orkin brand would do.
We still spend at the same percent of revenue that we've historically spent at the investments are made in our people. And that's where you see many of those people, especially, say, in the fourth quarter are both on the commercial side and then also on our termite and ancillary business, which is heavily cross-sell, and you see the organic growth rates there.
That's not having to drive leads into the business. Those are creative sales opportunities that are coming from cross-selling to our existing customer base, not by just irrationally spending into the market. And these are sustainable ways to drive long-term organic growth through investments in our people and investments in our staffing.
And I realize that might confused some people. But we monitor cost per lead, especially in businesses like Orkin very, very carefully, very closely. And we are committed to not spending irrationally and just trying to buy business.
Kenneth Krause
The one thing I would add to Jerry's comment there is I would point you back to -- I think an important thing to think about is our investment meeting investor conference last May, where we showcased the diversity in the approach to acquiring customers. And you could see it's not solely focused on digital. It's not solely focused on one avenue to our customer. It's a very broad-based approach. And Jerry is spot on.
When we look at the investments that we made in the last, say, six months, they're very heavily tilted towards people, that's helped us drive demand across the business, not just in one sector, but across the business. But talking about the resi area a little bit closer what gives us some optimism there is the recurring growth is stepping up.
There for a while, we were talking about it approaching 6%. It's solidly in that 6% to 7% here. So it's not like it's onetime business driving that resi area. It's really a nice recurring revenue that's coming through that's providing some wind in our sales.
Operator
George Tong, Goldman Sachs.
George Tong
Can you detail how much auto claims activity impacted EBITDA margins in the quarter?
Kenneth Krause
Certainly, George. It was -- if you look at it, there were two buckets of claims experience that came through. We lost about 40 basis points of leverage across the P&L. 20 basis points of that leverage was -- or loss leverage was in gross margin. The other 20 basis points was in SG&A.
And it's one of those areas that we're dealing with, we continue to deal with. These claims are legacy claims from years ago that we're working through. But we're doing a nice job at really making investments in a number of safety programs to ensure our workforce gets home safely each and every day.
Our safety systems and our trucks, the scoring systems that we're monitoring and a number of other measures that we're taking to really improve the current performance and the safety, most importantly, the safety of our folks that are out on the highways.
George Tong
Got it. That's helpful context. And then in your commercial business, the book there decelerated a bit in the quarter despite easier comps. Can you elaborate on trends you're seeing there that may be driving that?
Jerry Gahlhoff
Yes. So looking at the fourth quarter, we're still really optimistic about what's going on in the commercial side. The Orkin business, Orkin commercial. Keep in mind, not all of our all commercial businesses at Orkin, we have other brands that also perform commercial business. So the fourth quarter was a little -- it was a little bit softer, but I don't think it's indicative of anything, especially as we started the year already. That business is really strong.
Sometimes in the commercial space, you have some large onetime pops. You could have some large bird jobs. You could have some commodity fumigations that occur, especially around the holidays that may not reoccur in the same cycle the following year.
So we had -- there's some of that type of activity that laps that affects the commercial number the commercial business is still really strong. It's been strong out of the gates here already in January and nothing that -- certainly nothing that I'm at all concerned about.
Operator
Manav Patnaik, Barclays.
Ronan Kennedy
This is Ronan Kennedy, on for Manav. Can I just confirm in response to the question posed by George on the auto claims. Does that imply that there's potential for this to continue versus it being a onetime event. Can you give some further insight there?
Kenneth Krause
It's always hard -- thanks for the question. It's always hard to predict these sorts of things. We've been dealing with it. If you go back several years, we've been dealing with some volatility associated with this. We have so many folks that are out on the road. And what we saw as we came out of COVID, as you just saw an uptick in claims experience and the cost of claims activity.
And so we saw that happen as we came out of COVID. So we've been dealing with it for some time. But we've been putting a number of measures in place to mitigate exposures going forward, a lot of safety measures in our trucks taking advantage of the technologies that are out there to help improve the safety experience of our technicians on the highway.
Ronan Kennedy
Okay. And for my follow-up, please. Could I just -- you touched on this to a certain extent, but an assessment of the progress made in the modernization of back office and the centralizing services and processes.
So I think the intent there is amongst the benefits to be a better acquirer of businesses, but also the ability to fund sales and marketing investments. I think you referenced 50 bps of leverage there since '22 from takeout of those admin costs. To what extent is that happening now? And when can we expect to see that ramp?
Kenneth Krause
Sure. Great question, and thank you for it. When you look at the business, if you go back to '22, for example, and that's when this really started to occur, between '22 and year-end '24. What you'll see is the savings from administrative costs of about 50 basis points has completely offset the selling and marketing increase over that same time period. And so we certainly are taking costs out, and we're helping fund those activities.
It may not be a one-for-one match every single quarter. But generally, over the long term, that's the focus is try to redeploy those investments into customer-facing (inaudible) creation sort of (inaudible). When we think about the other steps we're taking, I think we're still very early on.
We made a ton of progress with our capital structure and a number of other measures with bringing a lot of new folks on board. And also with respect to the credit ratings, which we announced earlier today. So we made a ton of progress, I think, across those areas. But we certainly have a lot ahead of us and a lot of opportunity to continue to be a better acquirer and a better, quite frankly, integrator of some of these businesses that we're acquiring along the way.
Operator
Ashish Sabadra, RBC Capital.
Ashish Sabadra
I had a question on the pricing increases in 2025. A number of business services companies are talking about normalization of price increases. I was just wondering if you could comment on your ability to continue to drive 3% to 4% (inaudible) 2025 on the consumer side, but also if you could comment on the pricing trends within the commercial business.
Kenneth Krause
CPI print yesterday, still remains at a relatively elevated level. I think we still have an opportunity to get above CPI level of pricing here in 2025, probably similar to the pricing that we got in the last year or 2. And so there's no reason for us to take our foot off the gas when it comes to the pricing.
We feel like we're providing a very essential service to our customers. Our customers see the value of the service, and we price it slightly ahead of what CPI is coming in at. So we feel pretty good about our position with pricing in the marketplace.
Ashish Sabadra
That's great color. And then maybe just switching gear about the growth investments of the very high ROI on those investments. But how do we think about those investments going into 2025. You've guided to roughly 30% incremental margins, but I was just curious if you could provide some color on the quarterly cadence there. How should we think about the timing of those investments?
Kenneth Krause
Thanks for the question on the growth investments. When we look at the growth investments, we think the (inaudible) first half, you'll see a slightly elevated level of year over year of growth investments. And so we continue to invest. We started to really ramp up the investments in the second half of last year. So you'll start to lap that as you get into the second half of 2025. But I think for the first half, it will be a more challenging comp for us.
The other area that we're looking at as we go into 2025, is just fleet costs. The cost of vehicles compared to what we bought or what we leased two, three years ago, those are coming back in. We're replacing them. So the costs are going up slightly in those areas as well. But our pricing, we feel very good about. We feel very good about the ability to get gross margin leverage with that 3% to 4% price increase.
Operator
Jason Haas, Wells Fargo.
Jason Haas
I was curious if you could comment on what you're seeing from an organic growth perspective so far this year. And then we've heard some concern in the industry that there was a pretty severe cold weather in January that essentially, I guess, pulled off the ag and (inaudible) from some of the past.
And I guess, I don't know, the rodent populations as well in January. So there's a concern that we could see a muted spring selling season. So I was curious if that's a dynamic that you're seeing and if you agree with that?
Jerry Gahlhoff
Jason, this is Jerry. I don't necessarily think that we've seen that. In January, we're off to a pretty strong start. It's interesting you think about insects and related tests. They're all very adaptive. A lot of mechanisms to survive difficult conditions.
You think about -- one example I'll give you is I think about mosquitoes in Minnesota. Mosquitoes in Minnesota can be really bad once you get to spring or summer. And guess what, they'll probably be really bad again this year because those mosquitoes are able to over winter in immature stages, they're able to over winter and do just fine because they're back. Back in the late spring, they're back biting people. And when you think about mosquitoes, one mosquito is too many mosquito.
So that one mosquito bite you 10x, whether there's 10 mosquitoes or 1 mosquito, doesn't matter. One mosquito is too many, right? So I don't get too hung up on that. We see it as -- all those things are opportunities. You see right now and parts of the core getting a lot of moisture and rain, you could also make the case that excess of moisture is very good for certain inset populations.
To me, if there's some insect or maybe something that doesn't do well surviving the winners, maybe some invasive species that comes in and is in a climate that is not as well adapted to and populations collapse because it's in (inaudible) of an area or something like that. I certainly see that. But for the primary past that recur in the same markets year after year, we've never seen any cycle of weather that has radically changed the pest populations. They still manage to come back in the spring just fine.
Kenneth Krause
It's interesting when you look at the start of the year compared to the prior year with respect to weather, oftentimes, you might have a disparity in the weather patterns year over year. However, last January in 2024, it was a tough weather comp, too.
So we did have some bad weather here in January, and I can attest to it from the snowfall that we saw in Atlanta. And so we certainly had some bad weather in January this year, but we had a similar experience a year ago. Our growth continues to be very healthy.
Second half of this year of 2024 was up versus the first half, and that's the first time we've seen that in several years. And so we see a really nice trajectory of growth here as we start the new year.
Jason Haas
Got it. That's great to hear. And then can you -- I just wanted to ask you again on the incrementals. I think you have said that it was a 40 basis point headwind from the auto claims. So it was getting like a little over $3 million.
So excluding that in 4Q, I was getting incrementals of about 23%. I guess the other piece that keeps -- because I know you said the underlying business was approaching 30%. So I guess the other piece was the investments that you're making. So can you just help us bridge to getting closer to the 30% incrementals for 2025?
Because it sounds like some of those investments, maybe the auto claims don't all repeat, but it sounds like some of those investments will continue -- and then even more just like bigger picture, I know the long-term target is 30% to 35%. Can you help us bridge to that as well and what can increase incremental margins over time?
Kenneth Krause
Certainly, Jason. So when you look at the quarter, there was $4 million to $5 million of absolute dollars spent in those insurance and claims that were just unfortunately came through and materialized late in the quarter. We had about, call it, $6 million or so of what we call sales and marketing, people costs, primarily.
And then you had some -- about $2 million of things that shouldn't repeat they were new and they shouldn't repeat in the quarter. So I mean you had $10 million to $15 million of things that we identified in the quarter that came through. If you take some of those things out. And again, there's always going to be things that occur from time to time.
But if you do adjust for some of those things, we were there. But more importantly, when I look at the business and what gives me confidence in our ability to get 30% to 40% is just look at the first half of last year, it was 30% to 40% of incremental margins. You go back in the '23 in the third quarter, you had 35% to 40%. I mean this business is certainly capable of generating that type of incremental margin profile, and we feel good about it.
When we think about the first half, you might see a slightly lower incremental margin to start the year, but we feel like it's temporary. We feel like we've got to be able to go after and acquire customers that are going to be with us for four or five, six, sometimes even longer, and the lifetime value of those customers is so great. And what you're seeing with the growth we're putting up right now is we're acquiring those customers.
Those customers will pay off for us in future quarters, future years, and those are the reasons why we continue to grow through economic recessions, pandemics, industrial slowdowns. Those are the reasons we continue to do so well through all those various economic cycles that we're taking a long-term view on the business. We're investing in it. We're bringing new customers and we're growing our base.
Operator
(Operator Instructions) Aadit Shrestha, Stifel.
Aadit Shrestha
You mentioned outside deal contribution again in 2025, I think about 2% to 3%. How much of that is already in hand from rollover from deals you already did in '24 and what you've already done in '25.
Kenneth Krause
Yes, it's approaching 2% in terms of carryover. So we feel pretty good about our ability to get that 2% to 3%. And our pipeline is strong. I mean we've got -- we've got a number of opportunities in the pipeline that range from the small tuck-in sort of level to those that look like Fox in terms of [$2] million to $400 million of acquisitions. So we're prepared and we're positioned extremely well to continue to deliver on that commitment.
Aadit Shrestha
Okay. Great. And just as a follow-up, the investment-grade rating in hand, so -- now you have access to cheaper capital and runs versus historically now you're more comfortable with debt. So does this open up a larger pipeline opportunities for M&A? Than maybe in the past may have decided not to just because now the return on the capital will be fit within your requirements?
Kenneth Krause
What I would say is we have so many opportunities in the middle of the fairway. And when I talk about the fairway, it's what we've been doing for years. You're not going to see a major inflection point where we're going and changing the strategy. Our focus is investment grade. Our focus is to continue to manage this business and investment grade but take advantage of the opportunities that a company like us should have.
And that's why we went after and got the credit rating was we want to avail ourselves to the opportunity that we should be should have available to us.
And so -- but with respect to your question, we're going to continue to execute this business the same way we've done for -- under our leadership, but also past leadership. The pro is working, and we're -- we feel like there's a lot of runway left to execute on that approach.
Jerry Gahlhoff
Yes. So let me -- I'll add to that. We will still have a very disciplined approach to how we both pace, how we value, how we assess acquisitions. And yes, the maybe going to -- this happens credit rating helps lower our hurdle rate for return on investment, those kinds of things. But we are still going to be maintaining the same strategy that we've had for a very long time and being very conservative in how we approach things.
Operator
Josh Chan, UBS.
Karen Sangani
This is Karen Sangani, on for Josh. If I could ask a question maybe on what you're seeing on the cost inflation side. What you're seeing maybe just across the board, but labor material and equipment. And what are you expecting [inflation] for 2025 versus what you saw in 2024?
Kenneth Krause
We feel like the inflation is very much under control. We continue to see -- and what gives us confidence in the ability to say that is when you look at the gross margin level. And you look at -- when you isolate things that we're doing in terms of adding folks to go after growth, from the underlying business in materials and supplies and those other things, we feel good about our ability to manage inflation.
We -- I mentioned earlier, the one area that we see outsized inflation maybe is in the fleet area. That -- when you look at -- just look at the lease liability that we have on the books, it's stepped up of late. You look at the cost of acquiring new leases relative to two, three, four years ago, it's a higher cost. And so that's something that that's probably more of a headwind. But when you look at the other areas of the P&L, that's not a large area of the P&L by any stretch.
But when you look at the other areas, people our largest area. We feel very well managed and ability to continue to manage that.
Karen Sangani
Got it. That's helpful. And maybe for my follow-up, if I can ask a question on the difference. (inaudible) what are your priorities for 2025 with respect to those areas? And -- how do you expect that to drive like volume performance for the year?
Kenneth Krause
Could you repeat that question again? I missed the first half of your question.
Karen Sangani
Sorry, yes, sure. So basically, I wanted to ask you about the different channels that you have? And how are you thinking about that for 2025? And like how do you expect those to drive some volume performance over there?
Jerry Gahlhoff
Yes. So this is Jerry. I think each of our channels, as I stated, they're all performing well and doing well, and we aim to continue to have all of them keep that momentum that we currently have. We see the residential business as a continued opportunity to grow. We have a multifaceted way to acquire new customers that's dependent on our brands.
We have the commercial business, those investments we made last year continue to pay off for us as we try to drive execution, efficiency, sales productivity, those types of things continue to drive that business. And we think our brands are what will continue to help us drive that. And then continuing to drive on the termite and the ancillary side. As you see in the growth rates of that is continued opportunity.
We haven't seen any concerns with the consumer. When there's a severe say, rat infestation in the attic, and we've got to do other exclusion work or major remediation of contaminated insulation and these types of things. we haven't seen resistance from our customers not willing to pay for that service. So all those channels for us, execution in all three of those areas will continue to be a focus for us, and we see all three of them as excellent opportunities as we go into 2025.
Operator
Stephanie Moore, Jefferies.
Peter Sullivan
This is Peter Sullivan, on for Stephanie Moore. I was just curious about your strategy for continuing momentum in new business wins. What are you guys seeing in your end when it comes to through digital versus door? And then also, is there a dispersion in retention for gaining customers through these avenues.
Kenneth Krause
We feel like it's getting -- we're going to continue to have a multifaceted approach to customer acquisition. That's a really important part of our strategy. We've been very successful -- and when you look at it, the cost might differ across the different categories, the retention doesn't necessarily differ.
The retention is very healthy across those various categories. So we feel we feel really good about our ability to continue to do that. And when we look at acquisitions, when we buy businesses, we look at their geographic footprint and how complementary it might be to us.
We look at the way they access their customers. We look at the way they service their customers. So we're always looking at adding diversification to our arsenal in terms of how we approach our customers. And so we feel good. We feel really good about those various channels.
Peter Sullivan
Appreciate it, guys. And then for my follow-up, I was curious a little bit on to switch it up to the labor side. And then looking at kind of the consolidation of the competitive landscape, are you guys seeing any noticeable change in say, technician turnover and then some context on what the technician hiring environment currently is?
Jerry Gahlhoff
This is Jerry. Yes, we had a good hiring environment in 2024, as I mentioned. It's probably the -- I'm still not going to describe it as -- I wouldn't fully describe it as easy. But compared to, say, 2020 and 2021, it definitely feels easier.
And so from that standpoint, we did a great job of being staffed to meet the demands of our customers, probably better than we have in the previous five years. And so we don't see anything changing there. We monitor pay. We try to make sure that we pay our people very competitively. We try to be in the top quartile of pay to make sure we retain people, offer great benefits and a great place to work.
So a great career opportunity. So the -- while certainly the people expenses are the majority of our real expenses of our business, it's also where we spend a lot of our time and make a lot of our investment. So we're pretty comfortable and confident in the position that we're in today.
Kenneth Krause
I guess maybe, Jerry, the one thing maybe is the retention that we continue to focus on investing in retention and the real impact of that with customer engagement and profitability across the business. It's certainly an area it's an opportunity. We continue to make strides there, but we're certainly not finished with respect to our efforts on retention.
Operator
At this time, I would like to turn the floor back over to management for closing comments.
Jerry Gahlhoff
Thank you, everyone, for joining us today. We appreciate your interest in our company, and we look forward to speaking with you on our first quarter earnings call in a few months.
Operator
Thank you This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.
