Double-Digit Revenue Growth Drives Solid
Increase in Earnings and Cash Flow
ATLANTA, April 24,
2024 /PRNewswire/ -- Rollins, Inc. (NYSE:ROL)
("Rollins" or the "Company"), a premier global consumer and
commercial services company, reported unaudited financial results
for the first quarter of 2024.
Key Highlights
- First quarter revenues were $748
million, an increase of 13.7% over the first quarter 2023
with organic revenues* increasing 7.5%.
- Quarterly operating income was $132
million, an increase of 18.0% over the first quarter of
2023. Quarterly operating margin was 17.7% of revenue, an increase
of 60 basis points over the first quarter of 2023. Adjusted
operating income* was $138 million,
an increase of 22.7% over the prior year. Adjusted operating income
margin* was 18.4%, an increase of 130 basis points over the prior
year. Adjusted EBITDA* was $161
million, an increase 19.3%. Adjusted EBITDA margin* was
21.5% of revenue, an increase of 100 basis points over the first
quarter of 2023.
- Quarterly net income was $94
million, an increase of 7.0% over the prior year net income.
Adjusted net income* was $98 million,
an increase of 16.1% over the prior year.
- Quarterly EPS was $0.19 per
diluted share, a 5.6% increase over the prior year EPS of
$0.18. Adjusted EPS* was $0.20 per diluted share, an increase of 17.6%
over the prior year.
- Operating cash flow was $127
million for the quarter, an increase of 26.5% over the prior
year. The Company invested $47
million in acquisitions, $7
million in capital expenditures, and paid dividends totaling
$73 million.
*Amounts are non-GAAP financial measures. See the schedules
below for a discussion of non-GAAP financial metrics including a
reconciliation of the most directly comparable GAAP measure.
Management Commentary
"The team delivered a strong first quarter with double-digit
revenue across all major service lines and an improving margin and
cash flow profile," said Jerry Gahlhoff,
Jr., President and CEO. "While there was some unfavorable
and erratic weather in January compared to last year, we delivered
a healthy 7.5 percent organic growth rate for the quarter. We saw
significant improvement moving through the quarter, as organic
revenue growth accelerated to over 10 percent for February and
March, with solid performance across our residential, commercial,
and termite and ancillary businesses. Demand for our services
remains strong and our pipeline for acquisitions is robust. We are
well positioned for continued growth in 2024, both organically, as
well as through acquisitions, and remain focused on continuous
improvement initiatives to enhance profitability across our
business," Mr. Gahlhoff added.
"It was encouraging to see the strong growth in revenue,
profitability, and cash flow in the quarter, as the team delivered
healthy revenue growth, 130 basis points of improvement in adjusted
operating margins, and a 29 percent increase in free cash flow in
the quarter," said Kenneth Krause,
Executive Vice President and CFO. "We achieved a healthy first
quarter gross margin level and saw further leverage in SG&A
costs while also making incremental investments in resources and
programs to drive growth," Mr. Krause concluded.
|
Three Months
Ended Financial Highlights
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
Variance
|
|
(in thousands, except
per share data)
|
2024
|
|
2023
|
|
$
|
%
|
|
GAAP
Metrics
|
|
|
|
|
|
|
|
Revenues
|
$
748,349
|
|
$
658,015
|
|
$
90,334
|
13.7 %
|
|
Gross profit
(1)
|
$
382,791
|
|
$
331,173
|
|
$
51,618
|
15.6 %
|
|
Gross profit margin
(1)
|
51.2 %
|
|
50.3 %
|
|
|
90 bps
|
|
Operating
income
|
$
132,424
|
|
$
112,240
|
|
$
20,184
|
18.0 %
|
|
Operating income
margin
|
17.7 %
|
|
17.1 %
|
|
|
60 bps
|
|
Net income
|
$
94,394
|
|
$
88,234
|
|
$ 6,160
|
7.0 %
|
|
EPS
|
$
0.19
|
|
$
0.18
|
|
$
0.01
|
5.6 %
|
|
Operating cash
flow
|
$
127,433
|
|
$
100,773
|
|
$
26,660
|
26.5 %
|
|
|
|
|
|
|
|
|
Non-GAAP
Metrics
|
|
|
|
|
|
|
|
Adjusted operating
income (2)
|
$
137,689
|
|
$
112,240
|
|
$
25,449
|
22.7 %
|
|
Adjusted operating
margin (2)
|
18.4 %
|
|
17.1 %
|
|
|
130 bps
|
|
Adjusted net income
(2)
|
$
98,357
|
|
$
84,727
|
|
$
13,630
|
16.1 %
|
|
Adjusted EPS
(2)
|
$
0.20
|
|
$
0.17
|
|
$
0.03
|
17.6 %
|
|
Adjusted EBITDA
(2)
|
$
160,783
|
|
$
134,742
|
|
$
26,041
|
19.3 %
|
|
Adjusted EBITDA margin
(2)
|
21.5 %
|
|
20.5 %
|
|
|
100 bps
|
|
Free cash flow
(2)
|
$
120,262
|
|
$
93,137
|
|
$
27,125
|
29.1 %
|
|
|
(1) Exclusive of
depreciation and amortization
|
|
(2) Amounts are
non-GAAP financial measures. See the appendix to this release for a
discussion of non-GAAP financial metrics including a reconciliation
of the most directly comparable GAAP measure.
|
About Rollins, Inc.:
Rollins, Inc. (ROL) is a premier global consumer and commercial
services company. Through its family of leading brands, the
Company and its franchises provide essential pest control services
and protection against termite damage, rodents, and insects to more
than 2.8 million customers in North
America, South America,
Europe, Asia, Africa,
and Australia, with more than
19,000 employees from more than 800 locations. Rollins is parent to
Orkin, HomeTeam Pest Defense, Clark Pest Control, Northwest
Exterminating, McCall Service,
Trutech, Critter Control, Western Pest Services, Waltham Services,
OPC Pest Services, The Industrial Fumigant Company, PermaTreat,
Crane Pest Control, Missquito, Fox Pest Control, Orkin Canada,
Orkin Australia, Safeguard (UK), Aardwolf Pestkare (Singapore), and more. You can learn more about
Rollins and its subsidiaries by
visiting www.rollins.com.
Cautionary Statement Regarding Forward-Looking
Statements
This press release as well as other written or oral
statements by the Company may contain "forward-looking statements"
as defined in the Private Securities Litigation Reform Act of 1995.
We have based these forward-looking statements on our current
opinions, expectations, intentions, beliefs, plans, objectives,
assumptions and projections about future events and financial
trends affecting the operating results and financial condition of
our business. Although we believe that these forward-looking
statements are reasonable, we cannot assure you that we will
achieve or realize these plans, intentions, or expectations.
Generally, statements that do not relate to historical facts,
including statements concerning possible or assumed future actions,
business strategies, events or results of operations, are
forward-looking statements. The words "believe," "continue,"
"could," "estimate," "expect," "intend," "may," "might," "plan,"
"possible," "potential," "predict," "should," "will," "would," and
similar expressions may identify forward-looking statements, but
the absence of these words does not mean that a statement is not
forward-looking. Forward-looking statements in this press release
include, but are not limited to, statements regarding: expectations
with respect to our financial and business performance; demand for
our services; our pipeline of acquisitions; continuous improvement
initiatives enhancing profitability; and a balanced capital
allocation program.
These forward-looking statements are based on information
available as of the date of this press release, and current
expectations, forecasts, and assumptions, and involve a number of
judgments, risks and uncertainties. Important factors could cause
actual results to differ materially from those indicated or implied
by forward-looking statements including, but not limited to, those
set forth in the sections entitled "Risk Factors" in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2023 and may also be described from
time to time in our future reports filed with the SEC.
Accordingly, forward-looking statements should not be relied
upon as representing our views as of any subsequent date, and we do
not undertake any obligation to update forward-looking statements
to reflect events or circumstances after the date they were made,
whether as a result of new information, future events or otherwise,
except as may be required by law.
Conference Call
Rollins will host a conference call on Thursday, April 25, 2024 at 8:30 a.m. Eastern Time to discuss the first
quarter 2024 results. The conference call will also broadcast live
over the internet via a link provided on the Rollins, Inc. website
at www.rollins.com. Interested parties can also dial into the call
at 1-877-869-3839 (domestic) or +1-201-689-8265 (internationally)
with conference ID of 13745380. For interested individuals unable
to join the call, a replay will be available on the website for 180
days.
|
ROLLINS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in
thousands)
(unaudited)
|
|
|
March 31,
2024
|
|
December 31,
2023
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
112,971
|
|
$ 103,825
|
|
Trade receivables,
net
|
177,254
|
|
178,214
|
|
Financed receivables,
short-term, net
|
35,717
|
|
37,025
|
|
Materials and
supplies
|
35,698
|
|
33,383
|
|
Other current
assets
|
62,713
|
|
54,192
|
|
Total current
assets
|
424,353
|
|
406,639
|
|
Equipment and property,
net
|
127,116
|
|
126,661
|
|
Goodwill
|
1,095,141
|
|
1,070,310
|
|
Intangibles,
net
|
549,390
|
|
545,734
|
|
Operating lease
right-of-use assets
|
341,639
|
|
323,390
|
|
Financed receivables,
long-term, net
|
79,040
|
|
75,909
|
|
Other assets
|
41,940
|
|
46,817
|
|
Total
assets
|
$
2,658,619
|
|
$
2,595,460
|
|
LIABILITIES
|
|
|
|
|
Accounts
payable
|
$
40,038
|
|
$
49,200
|
|
Accrued insurance –
current
|
51,660
|
|
46,807
|
|
Accrued compensation
and related liabilities
|
79,372
|
|
114,355
|
|
Unearned
revenues
|
186,021
|
|
172,380
|
|
Operating lease
liabilities – current
|
97,394
|
|
92,203
|
|
Other current
liabilities
|
137,451
|
|
101,744
|
|
Total current
liabilities
|
591,936
|
|
576,689
|
|
Accrued insurance, less
current portion
|
51,928
|
|
48,060
|
|
Operating lease
liabilities, less current portion
|
246,614
|
|
233,369
|
|
Long-term
debt
|
510,909
|
|
490,776
|
|
Other long-term accrued
liabilities
|
89,736
|
|
90,999
|
|
Total
liabilities
|
1,491,123
|
|
1,439,893
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
Common stock
|
484,230
|
|
484,080
|
|
Retained earnings and
other equity
|
683,266
|
|
671,487
|
|
Total stockholders'
equity
|
1,167,496
|
|
1,155,567
|
|
Total liabilities
and stockholders' equity
|
$
2,658,619
|
|
$
2,595,460
|
|
ROLLINS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except
per share data)
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
REVENUES
|
|
|
|
|
Customer
services
|
$
748,349
|
|
$ 658,015
|
|
COSTS AND
EXPENSES
|
|
|
|
|
Cost of services
provided (exclusive of depreciation and amortization
below)
|
365,558
|
|
326,842
|
|
Sales, general and
administrative
|
223,057
|
|
196,431
|
|
Depreciation and
amortization
|
27,310
|
|
22,502
|
|
Total operating
expenses
|
615,925
|
|
545,775
|
|
OPERATING
INCOME
|
132,424
|
|
112,240
|
|
Interest expense,
net
|
7,725
|
|
465
|
|
Other expense (income),
net
|
61
|
|
(4,714)
|
|
CONSOLIDATED INCOME
BEFORE INCOME TAXES
|
124,638
|
|
116,489
|
|
PROVISION FOR INCOME
TAXES
|
30,244
|
|
28,255
|
|
NET
INCOME
|
$
94,394
|
|
$
88,234
|
|
NET INCOME PER SHARE
- BASIC AND DILUTED
|
$
0.19
|
|
$
0.18
|
|
Weighted average shares
outstanding - basic
|
484,131
|
|
492,516
|
|
Weighted average shares
outstanding - diluted
|
484,318
|
|
492,701
|
|
ROLLINS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED CASH FLOW INFORMATION
(in
thousands)
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income
|
$
94,394
|
|
$
88,234
|
|
Depreciation and
amortization
|
27,310
|
|
22,502
|
|
Change in working
capital and other operating activities
|
5,729
|
|
(9,963)
|
|
Net cash provided by
operating activities
|
127,433
|
|
100,773
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Acquisitions, net of
cash acquired
|
(47,132)
|
|
(15,480)
|
|
Capital
expenditures
|
(7,171)
|
|
(7,636)
|
|
Other investing
activities, net
|
1,838
|
|
9,526
|
|
Net cash used in
investing activities
|
(52,465)
|
|
(13,590)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Net
borrowings
|
20,000
|
|
10,000
|
|
Payment of
dividends
|
(72,589)
|
|
(64,053)
|
|
Other financing
activities, net
|
(11,665)
|
|
(17,029)
|
|
Net cash used in
financing activities
|
(64,254)
|
|
(71,082)
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
(1,568)
|
|
1,056
|
|
Net increase in cash
and cash equivalents
|
$
9,146
|
|
$
17,157
|
APPENDIX
Reconciliation of GAAP and non-GAAP Financial Measures
The Company has used the non-GAAP financial measures of organic
revenues, organic revenues by type, adjusted operating income,
adjusted operating margin, adjusted net income, adjusted earnings
per share ("EPS"), earnings before interest, taxes, depreciation
and amortization ("EBITDA"), EBITDA margin, Adjusted EBITDA,
adjusted EBITDA margin, incremental EBITDA margin, adjusted
incremental EBITDA margin, free cash flow, free cash flow
conversion, net debt, net leverage ratio, and adjusted sales,
general and administrative expenses ("Adjusted SG&A") in this
earnings release. Organic revenue is calculated as revenue less the
revenue from acquisitions completed within the prior 12 months and
excluding the revenue from divested businesses. Acquisition revenue
is based on the trailing 12-month revenue of our acquired entities.
Adjusted operating income and adjusted operating income margin are
calculated by adding back to the GAAP measures those expenses
resulting from the amortization of certain intangible assets and
adjustments to the fair value of contingent consideration resulting
from the acquisition of Fox Pest Control ("Fox"). Adjusted net
income and adjusted EPS are calculated by adding back to the GAAP
measure amortization of certain intangible assets and adjustments
to the fair value of contingent consideration resulting from the
acquisition of Fox and excluding gains and losses on the sale of
non-operational assets and by further subtracting the tax impact of
those expenses, gains, or losses. Adjusted EBITDA and adjusted
EBITDA margin are calculated by adding back to the GAAP measures
those expenses resulting from the adjustments to the fair value of
contingent consideration resulting from the acquisition of Fox and
excluding gains and losses on the sale of non-operational assets.
Incremental margin is calculated as the change in EBITDA divided by
the change in revenue. Adjusted incremental margin is calculated as
the change in adjusted EBITDA divided by the change in revenue.
Free cash flow is calculated by subtracting capital expenditures
from cash provided by operating activities. Free cash flow
conversion is calculated as free cash flow divided by net income.
Net debt is calculated as total long-term debt less cash and cash
equivalents. Net leverage ratio is calculated by dividing net debt
by trailing twelve-month EBITDA. Adjusted SG&A is calculated by
removing the adjustments to the fair value of contingent
consideration resulting from the acquisition of Fox. These measures
should not be considered in isolation or as a substitute for
revenues, net income, earnings per share or other performance
measures prepared in accordance with GAAP.
Management uses adjusted operating income, adjusted operating
income margin, adjusted net income, adjusted EPS, EBITDA, EBITDA
margin, adjusted EBITDA, adjusted EBITDA margin, incremental EBITDA
margin, adjusted incremental EBITDA margin, and adjusted SG&A
as measures of operating performance because these measures allow
the Company to compare performance consistently over various
periods. Management also uses organic revenues, and organic
revenues by type to compare revenues over various periods excluding
the impact of acquisitions and divestitures. Management uses free
cash flow to demonstrate the Company's ability to maintain its
asset base and generate future cash flows from operations.
Management uses free cash flow conversion to demonstrate how much
net income is converted into cash. Management uses net debt as an
assessment of overall liquidity, financial flexibility, and
leverage. Net leverage ratio is useful to investors because it is
an indicator of our ability to meet our future financial
obligations. Management believes all of these non-GAAP financial
measures are useful to provide investors with information about
current trends in, and period-over-period comparisons of, the
Company's results of operations. An analysis of any non-GAAP
financial measure should be used in conjunction with results
presented in accordance with GAAP.
A non-GAAP financial measure is a numerical measure of financial
performance, financial position, or cash flows that either 1)
excludes amounts, or is subject to adjustments that have the effect
of excluding amounts, that are included in the most directly
comparable measure calculated and presented in accordance with GAAP
in the statement of operations, balance sheet or statement of cash
flows, or 2) includes amounts, or is subject to adjustments that
have the effect of including amounts, that are excluded from the
most directly comparable measure so calculated and presented.
Set forth below is a reconciliation of the non-GAAP financial
measures used in this earnings release with their most directly
comparable GAAP measures.
|
(unaudited, in
thousands, except per share data and margins)
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
Variance
|
|
2024
|
|
2023
|
|
$
|
|
%
|
|
Reconciliation of
Operating Income to Adjusted Operating Income and Adjusted
Operating Income Margin
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
132,424
|
|
$
112,240
|
|
|
|
|
|
Fox acquisition-related
expenses (1)
|
5,265
|
|
—
|
|
|
|
|
|
Adjusted operating
income
|
$
137,689
|
|
$
112,240
|
|
25,449
|
|
22.7
|
|
Revenues
|
$
748,349
|
|
$
658,015
|
|
|
|
|
|
Operating income
margin
|
17.7 %
|
|
17.1 %
|
|
|
|
|
|
Adjusted operating
margin
|
18.4 %
|
|
17.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income to Adjusted Net Income and Adjusted
EPS (5)
|
|
|
|
|
|
|
|
|
|
Net income
|
$
94,394
|
|
$
88,234
|
|
|
|
|
|
Fox acquisition-related
expenses (1)
|
5,265
|
|
—
|
|
|
|
|
|
Loss (gain) on sale of
assets, net (2)
|
61
|
|
(4,714)
|
|
|
|
|
|
Tax impact of
adjustments (3)
|
(1,363)
|
|
1,207
|
|
|
|
|
|
Adjusted net
income
|
$
98,357
|
|
$
84,727
|
|
13,630
|
|
16.1
|
|
EPS - basic and
diluted
|
$
0.19
|
|
$
0.18
|
|
|
|
|
|
Fox acquisition-related
expenses (1)
|
0.01
|
|
—
|
|
|
|
|
|
Loss (gain) on sale of
assets, net (2)
|
—
|
|
(0.01)
|
|
|
|
|
|
Tax impact of
adjustments (3)
|
—
|
|
—
|
|
|
|
|
|
Adjusted EPS - basic
and diluted (4)
|
$
0.20
|
|
$
0.17
|
|
0.03
|
|
17.6
|
|
Weighted average shares
outstanding - basic
|
484,131
|
|
492,516
|
|
|
|
|
|
Weighted average shares
outstanding - diluted
|
484,318
|
|
492,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income to EBITDA, Adjusted EBITDA, EBITDA Margin, Incremental
EBITDA Margin, Adjusted EBITDA
Margin, and Adjusted Incremental EBITDA
Margin (5)
|
|
|
|
|
|
|
|
|
|
Net income
|
$
94,394
|
|
$
88,234
|
|
|
|
|
|
Depreciation and
amortization
|
27,310
|
|
22,502
|
|
|
|
|
|
Interest expense,
net
|
7,725
|
|
465
|
|
|
|
|
|
Provision for income
taxes
|
30,244
|
|
28,255
|
|
|
|
|
|
EBITDA
|
$
159,673
|
|
$
139,456
|
|
20,217
|
|
14.5
|
|
Fox acquisition-related
expenses (1)
|
1,049
|
|
—
|
|
|
|
|
|
Loss (gain) on sale of
assets, net (2)
|
61
|
|
(4,714)
|
|
|
|
|
|
Adjusted
EBITDA
|
$
160,783
|
|
$
134,742
|
|
26,041
|
|
19.3
|
|
Revenues
|
$
748,349
|
|
$
658,015
|
|
90,334
|
|
|
|
EBITDA
margin
|
21.3 %
|
|
21.2 %
|
|
|
|
|
|
Incremental EBITDA
margin
|
|
|
|
|
22.4 %
|
|
|
|
Adjusted EBITDA
margin
|
21.5 %
|
|
20.5 %
|
|
|
|
|
|
Adjusted incremental
EBITDA margin
|
|
|
|
|
28.8 %
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Cash Provided by Operating Activities to Free Cash Flow and
Free Cash Flow Conversion
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
127,433
|
|
$
100,773
|
|
|
|
|
|
Capital
expenditures
|
(7,171)
|
|
(7,636)
|
|
|
|
|
|
Free cash
flow
|
$
120,262
|
|
$
93,137
|
|
27,125
|
|
29.1
|
|
Free cash flow
conversion
|
127.4 %
|
|
105.6 %
|
|
|
|
|
|
|
(1) Consists of
expenses resulting from the amortization of certain intangible
assets and adjustments to the fair value of contingent
consideration resulting from the acquisition of Fox. While we
exclude such expenses in this non-GAAP measure, the revenue from
the acquired company is reflected in this non-GAAP measure and the
acquired assets contribute to revenue generation.
|
|
(2) Consists of the
gain or loss on the sale of non-operational assets.
|
|
(3) The tax effect of
the adjustments is calculated using the applicable statutory tax
rates for the respective periods.
|
|
(4) In some cases, the
sum of the individual EPS amounts may not equal total non-GAAP EPS
calculations due to rounding.
|
|
(5) In the first
quarter of 2024, we revised the non-GAAP metrics adjusted net
income, adjusted EPS, and adjusted EBITDA to exclude gains and
losses related to non-operational asset sales. These measures are
of operating performance and we believe excluding the gains and
losses on non-operational assets allows us to better compare our
operating performance consistently over various periods. Revising
these metrics for the three months ended March 31, 2023 resulted in
a $3.5 million reduction to adjusted net income, a $0.01 reduction
to adjusted EPS, and a $4.7 million reduction to adjusted
EBITDA.
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
Variance
|
|
2024
|
|
2023
(6)
|
|
$
|
|
%
|
|
Reconciliation of
Revenues to Organic Revenues
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
748,349
|
|
$
658,015
|
|
90,334
|
|
13.7
|
|
Revenues from
acquisitions
|
(45,987)
|
|
—
|
|
(45,987)
|
|
7.0
|
|
Revenues of
divestitures
|
—
|
|
(4,753)
|
|
4,753
|
|
(0.8)
|
|
Organic
revenues
|
$
702,362
|
|
$
653,262
|
|
49,100
|
|
7.5
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Residential Revenues to Organic Residential Revenues
|
|
|
|
|
|
|
|
|
|
Residential
revenues
|
$
329,338
|
|
$
282,757
|
|
46,581
|
|
16.5
|
|
Residential revenues
from acquisitions
|
(37,709)
|
|
—
|
|
(37,709)
|
|
13.3
|
|
Residential revenues of
divestitures
|
—
|
|
(3,032)
|
|
3,032
|
|
(1.1)
|
|
Residential organic
revenues
|
$
291,629
|
|
$
279,725
|
|
11,904
|
|
4.3
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Commercial Revenues to Organic Commercial Revenues
|
|
|
|
|
|
|
|
|
|
Commercial
revenues
|
$
258,114
|
|
$
231,707
|
|
26,407
|
|
11.4
|
|
Commercial revenues
from acquisitions
|
(4,956)
|
|
—
|
|
(4,956)
|
|
2.1
|
|
Commercial revenues of
divestitures
|
—
|
|
(1,721)
|
|
1,721
|
|
(0.8)
|
|
Commercial organic
revenues
|
$
253,158
|
|
$
229,986
|
|
23,172
|
|
10.1
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Termite and Ancillary Revenues to Organic Termite and Ancillary
Revenues
|
|
|
|
|
|
|
|
|
|
Termite and ancillary
revenues
|
$
152,060
|
|
$
136,131
|
|
15,929
|
|
11.7
|
|
Termite and ancillary
revenues from acquisitions
|
(3,322)
|
|
—
|
|
(3,322)
|
|
2.4
|
|
Termite and ancillary
organic revenues
|
$
148,738
|
|
$
136,131
|
|
12,607
|
|
9.3
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
Variance
|
|
2023
(6)
|
|
2022
|
|
$
|
|
%
|
|
Reconciliation of
Revenues to Organic Revenues
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
658,015
|
|
$
590,680
|
|
67,335
|
|
11.4
|
|
Revenues from
acquisitions
|
(13,155)
|
|
—
|
|
(13,155)
|
|
2.2
|
|
Organic
revenues
|
$
644,860
|
|
$
590,680
|
|
54,180
|
|
9.2
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Residential Revenues to Organic Residential Revenues
|
|
|
|
|
|
|
|
|
|
Residential
revenues
|
$
282,757
|
|
$
257,469
|
|
25,288
|
|
9.8
|
|
Residential revenues
from acquisitions
|
(6,003)
|
|
—
|
|
(6,003)
|
|
2.3
|
|
Residential organic
revenues
|
$
276,754
|
|
$
257,469
|
|
19,285
|
|
7.5
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Commercial Revenues to Organic Commercial Revenues
|
|
|
|
|
|
|
|
|
|
Commercial
revenues
|
$
231,707
|
|
$
206,975
|
|
24,732
|
|
11.9
|
|
Commercial revenues
from acquisitions
|
(4,194)
|
|
—
|
|
(4,194)
|
|
2.0
|
|
Commercial organic
revenues
|
$
227,513
|
|
$
206,975
|
|
20,538
|
|
9.9
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Termite and Ancillary Revenues to Organic Termite and Ancillary
Revenues
|
|
|
|
|
|
|
|
|
|
Termite and ancillary
revenues
|
$
136,131
|
|
$
119,369
|
|
16,762
|
|
14.0
|
|
Termite and ancillary
revenues from acquisitions
|
(2,958)
|
|
—
|
|
(2,958)
|
|
2.5
|
|
Termite and ancillary
organic revenues
|
$
133,173
|
|
$
119,369
|
|
13,804
|
|
11.5
|
|
|
(6) Revenues classified
by significant product and service offerings for the three months
ended March 31, 2023 and 2022 were misstated by an immaterial
amount and have been restated from the amounts previously
reported to correct the classification of such revenues. There was
no impact on our condensed consolidated statements of income,
financial position, or cash flows.
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
Reconciliation of
SG&A to Adjusted SG&A
|
|
|
|
|
|
|
|
SG&A
|
$
223,057
|
|
$
196,431
|
|
Fox acquisition-related
expenses (1)
|
1,049
|
|
—
|
|
Adjusted
SG&A
|
$
222,008
|
|
$
196,431
|
|
|
|
|
|
Revenues
|
$
748,349
|
|
$
658,015
|
|
Adjusted SG&A as a
% of revenues
|
29.7 %
|
|
29.9 %
|
|
|
Period
Ended
March 31,
2024
|
|
Period
Ended
December 31,
2023
|
|
Reconciliation of
Long-term Debt to Net Debt and Net Leverage Ratio
|
|
|
|
|
|
|
Long-term debt
(7)
|
$
513,000
|
|
$
493,000
|
|
Less: cash
|
112,971
|
|
103,825
|
|
Net debt
|
$
400,029
|
|
$
389,175
|
|
Trailing twelve-month
EBITDA
|
$
725,281
|
|
$
705,064
|
|
Net leverage
ratio
|
0.6x
|
|
0.6x
|
|
|
(7) As of March 31,
2024, the Company had outstanding borrowings of $513.0 million
under the Credit Facility. Borrowings under the Credit Facility are
presented under the long-term debt caption of our condensed
consolidated balance sheet, net of $2.1 million in unamortized
debt issuance costs as of March 31, 2024.
|
|
|
In the first quarter of
2024, we revised non-GAAP metrics adjusted net income, adjusted
EPS, and adjusted EBITDA to exclude gains and losses related to
non-operational asset sales. These measures are of operating
performance and we believe excluding the gains and losses on
non-operational assets allows us to better compare our operating
performance consistently over various periods. We have presented
the revised metrics for each quarter of 2023 below.
|
|
|
Three Months
Ended
|
|
March 31,
2023
|
|
June 30,
2023
|
|
September 30,
2023
|
|
December 31,
2023
|
|
Reconciliation of
Net Income to Adjusted Net Income and Adjusted EPS
|
|
|
|
|
|
|
|
|
|
Net income
|
$
88,234
|
|
$
110,143
|
|
$
127,777
|
|
$
108,803
|
|
Fox acquisition-related
expenses (1)
|
—
|
|
5,261
|
|
5,262
|
|
5,266
|
|
Loss (gain) on sale of
assets, net (2)
|
(4,714)
|
|
(1,019)
|
|
(493)
|
|
(410)
|
|
Restructuring
costs
|
—
|
|
—
|
|
5,196
|
|
—
|
|
Gain on sale of
businesses
|
—
|
|
—
|
|
—
|
|
(15,450)
|
|
Tax impact of
adjustments (3)
|
1,207
|
|
(1,086)
|
|
(2,551)
|
|
2,712
|
|
Adjusted net
income
|
$
84,727
|
|
$
113,299
|
|
$
135,191
|
|
$
100,921
|
|
EPS - basic and
diluted
|
$
0.18
|
|
$
0.22
|
|
$
0.26
|
|
$
0.22
|
|
Fox acquisition-related
expenses (1)
|
—
|
|
0.01
|
|
0.01
|
|
0.01
|
|
Loss (gain) on sale of
assets, net (2)
|
(0.01)
|
|
—
|
|
—
|
|
—
|
|
Restructuring
costs
|
—
|
|
—
|
|
0.01
|
|
—
|
|
Gain on sale of
businesses
|
—
|
|
—
|
|
—
|
|
(0.03)
|
|
Tax impact of
adjustments (3)
|
—
|
|
—
|
|
(0.01)
|
|
0.01
|
|
Adjusted EPS - basic
and diluted (4)
|
$
0.17
|
|
$
0.23
|
|
$
0.28
|
|
$
0.21
|
|
Weighted average shares
outstanding - basic
|
492,516
|
|
492,700
|
|
490,775
|
|
483,922
|
|
Weighted average shares
outstanding - diluted
|
492,701
|
|
492,891
|
|
490,965
|
|
484,112
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income to EBITDA, Adjusted EBITDA, EBITDA Margin, Incremental
EBITDA Margin, Adjusted EBITDA
Margin, and Adjusted Incremental EBITDA Margin
|
|
|
|
|
|
|
|
|
|
Net income
|
$
88,234
|
|
$
110,143
|
|
$
127,777
|
|
$
108,803
|
|
Depreciation and
amortization
|
22,502
|
|
26,439
|
|
24,668
|
|
26,143
|
|
Interest expense,
net
|
465
|
|
4,785
|
|
5,547
|
|
8,258
|
|
Provision for income
taxes
|
28,255
|
|
40,880
|
|
44,293
|
|
37,872
|
|
EBITDA
|
$
139,456
|
|
$
182,247
|
|
$
202,285
|
|
$
181,076
|
|
Fox acquisition-related
expenses (1)
|
—
|
|
1,047
|
|
1,050
|
|
1,050
|
|
Loss (gain) on sale of
assets, net (2)
|
(4,714)
|
|
(1,019)
|
|
(493)
|
|
(410)
|
|
Restructuring
costs
|
—
|
|
—
|
|
5,196
|
|
—
|
|
Gain on sale of
businesses
|
—
|
|
—
|
|
—
|
|
(15,450)
|
|
Adjusted
EBITDA
|
$
134,742
|
|
$
182,275
|
|
$
208,038
|
|
$
166,266
|
|
Revenues
|
$
658,015
|
|
$
820,750
|
|
$
840,427
|
|
$
754,086
|
|
EBITDA
margin
|
21.2 %
|
|
22.2 %
|
|
24.1 %
|
|
24.0 %
|
|
Incremental EBITDA
margin
|
32.2 %
|
|
21.6 %
|
|
29.2 %
|
|
37.9 %
|
|
Adjusted EBITDA
margin
|
20.5 %
|
|
22.2 %
|
|
24.8 %
|
|
22.0 %
|
|
Adjusted incremental
EBITDA margin
|
27.1 %
|
|
23.4 %
|
|
31.5 %
|
|
25.2 %
|
For Further Information Contact
Lyndsey Burton (404) 888-2348
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SOURCE Rollins Inc.