Investing in Growth to Capitalize on Healthy
Market
ATLANTA, Oct. 23,
2024 /PRNewswire/ -- Rollins, Inc. (NYSE:ROL)
("Rollins" or the "Company"), a premier global consumer and
commercial services company, reported unaudited financial results
for the third quarter of 2024.
Key Highlights
- Third quarter revenues were $916
million, an increase of 9.0% over the third quarter of 2023
with organic revenues* increasing 7.7%.
- Quarterly operating income was $192
million, an increase of 8.3% over the third quarter of 2023.
Quarterly operating margin was 20.9%, a decrease of 20 basis points
versus the third quarter of 2023. Adjusted operating income* was
$196 million, an increase of 4.5%
over the prior year. Adjusted operating income margin* was 21.4%, a
decrease of 90 basis points compared to the prior year.
- Adjusted EBITDA* was $219
million, an increase of 5.5% over the prior year. Adjusted
EBITDA margin* was 24.0%, a decrease of 80 basis points versus the
third quarter of 2023.
- Quarterly net income was $137
million, an increase of 7.1% over the prior year. Adjusted
net income* was $140 million, an
increase of 3.3% over the prior year.
- Quarterly EPS was $0.28 per
diluted share, a 7.7% increase over the prior year EPS of
$0.26. Adjusted EPS* was $0.29 per diluted share, an increase of 3.6% over
the prior year.
- Operating cash flow was $147
million for the quarter, an increase of 15.4% compared to
the prior year. The Company invested $24
million in acquisitions, $8
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
"Our team delivered a strong third quarter with organic revenue
growth of 7.7 percent, at the high end of the 7 percent to 8
percent range that we have discussed for the year, despite some
disruption to operations from Hurricane Helene that occurred during
the last week of the quarter," said Jerry
Gahlhoff, Jr., President and CEO. "Our thoughts are with all
of those that have been impacted by recent hurricanes. Our teams
have worked together to support our teammates and communities in
the aftermath of these natural disasters, and our efforts will
continue in the days, weeks, and months ahead. I would like to
thank our team for their ongoing commitment to our customers and to
each other," Mr. Gahlhoff added.
"We continue to invest in our team and other resources aimed at
capitalizing on a healthy market environment to drive further
growth in our business," said Kenneth
Krause, Executive Vice President and CFO. "The 20 basis
points of leverage in our gross margin was offset by growth
investments that tempered our overall margin performance in the
quarter but will support our long-term objectives. We are on track
to deliver healthy margin improvement and double-digit earnings
growth for the year," Mr. Krause concluded.
Board Leadership Transition
Additionally, today the Company announces that effective
January 1, 2025, Gary W. Rollins, 80, will transition from
Executive Chairman of the Board to Executive Chairman Emeritus in
accordance with its long-planned leadership succession goals. Gary
will be succeeded by John F. Wilson,
the current Vice Chairman, as Executive Chairman of the
Board.
"I have had the pleasure of working closely with John since he
joined our Company in 1996. I look forward to supporting him as he
transitions to this important leadership role, as I will remain an
active and engaged member of our exceptional Board of Directors,"
said Gary W. Rollins, Executive
Chairman of the Board.
"On behalf of the Board of Directors, we congratulate John on
his new role and look forward to working with him, Gary, and the
entire management team as we guide the business into its next phase
of growth," said Louise S. Sams, the
Company's Lead Independent Director.
Three and Nine Months Ended Financial Highlights
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
Variance
|
|
|
|
|
|
Variance
|
|
(in thousands, except
per share data)
|
2024
|
|
2023
|
|
$
|
%
|
|
2024
|
|
2023
|
|
$
|
%
|
|
GAAP
Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
916,270
|
|
$ 840,427
|
|
$
75,843
|
9.0 %
|
|
$
2,556,539
|
|
$
2,319,192
|
|
$
237,347
|
10.2 %
|
|
Gross profit
(1)
|
$
494,378
|
|
$ 451,894
|
|
$
42,484
|
9.4 %
|
|
$
1,358,804
|
|
$
1,219,626
|
|
$
139,178
|
11.4 %
|
|
Gross profit margin
(1)
|
54.0 %
|
|
53.8 %
|
|
|
20 bps
|
|
53.2 %
|
|
52.6 %
|
|
|
60
bps
|
|
Operating
income
|
$
191,796
|
|
$ 177,124
|
|
$
14,672
|
8.3 %
|
|
$
506,597
|
|
$
444,153
|
|
$
62,444
|
14.1 %
|
|
Operating income
margin
|
20.9 %
|
|
21.1 %
|
|
|
(20)
bps
|
|
19.8 %
|
|
19.2 %
|
|
|
60
bps
|
|
Net income
|
$
136,913
|
|
$ 127,777
|
|
$
9,136
|
7.1 %
|
|
$
360,704
|
|
$
326,154
|
|
$
34,550
|
10.6 %
|
|
EPS
|
$
0.28
|
|
$
0.26
|
|
$ 0.02
|
7.7 %
|
|
$
0.74
|
|
$
0.66
|
|
$
0.08
|
12.1 %
|
|
Operating cash
flow
|
$
146,947
|
|
$ 127,355
|
|
$
19,592
|
15.4 %
|
|
$
419,495
|
|
$
375,541
|
|
$
43,954
|
11.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
income (2)
|
$
196,012
|
|
$ 187,582
|
|
$
8,430
|
4.5 %
|
|
$
520,286
|
|
$
459,872
|
|
$
60,414
|
13.1 %
|
|
Adjusted operating
margin (2)
|
21.4 %
|
|
22.3 %
|
|
|
(90)
bps
|
|
20.4 %
|
|
19.8 %
|
|
|
60
bps
|
|
Adjusted net income
(2)
|
$
139,617
|
|
$ 135,191
|
|
$
4,426
|
3.3 %
|
|
$
370,194
|
|
$
333,217
|
|
$
36,977
|
11.1 %
|
|
Adjusted EPS
(2)
|
$
0.29
|
|
$
0.28
|
|
$ 0.01
|
3.6 %
|
|
$
0.76
|
|
$
0.68
|
|
$
0.08
|
11.8 %
|
|
Adjusted EBITDA
(2)
|
$
219,460
|
|
$ 208,038
|
|
$
11,422
|
5.5 %
|
|
$
590,331
|
|
$
525,055
|
|
$
65,276
|
12.4 %
|
|
Adjusted EBITDA margin
(2)
|
24.0 %
|
|
24.8 %
|
|
|
(80)
bps
|
|
23.1 %
|
|
22.6 %
|
|
|
50
bps
|
|
Free cash flow
(2)
|
$
139,425
|
|
$ 120,487
|
|
$
18,938
|
15.7 %
|
|
$
396,106
|
|
$
354,262
|
|
$
41,844
|
11.8 %
|
|
|
(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 20,000 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; expected growth;
continuing to invest in our team and other resources aimed at
capitalizing on a healthy market environment; and the Board
leadership transition.
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, October 24, 2024 at
8:30 a.m. Eastern Time to discuss the
third 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 13749018. 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)
|
|
|
September
30,
2024
|
|
December 31,
2023
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
95,282
|
|
$ 103,825
|
|
Trade receivables,
net
|
226,452
|
|
178,214
|
|
Financed receivables,
short-term, net
|
39,289
|
|
37,025
|
|
Materials and
supplies
|
39,283
|
|
33,383
|
|
Other current
assets
|
86,196
|
|
54,192
|
|
Total current
assets
|
486,502
|
|
406,639
|
|
Equipment and property,
net
|
129,168
|
|
126,661
|
|
Goodwill
|
1,135,122
|
|
1,070,310
|
|
Intangibles,
net
|
540,721
|
|
545,734
|
|
Operating lease
right-of-use assets
|
391,626
|
|
323,390
|
|
Financed receivables,
long-term, net
|
87,880
|
|
75,909
|
|
Other assets
|
45,179
|
|
46,817
|
|
Total
assets
|
$
2,816,198
|
|
$
2,595,460
|
|
LIABILITIES
|
|
|
|
|
Accounts
payable
|
$
58,217
|
|
$
49,200
|
|
Accrued insurance –
current
|
50,106
|
|
46,807
|
|
Accrued compensation
and related liabilities
|
108,227
|
|
114,355
|
|
Unearned
revenues
|
201,909
|
|
172,380
|
|
Operating lease
liabilities – current
|
113,727
|
|
92,203
|
|
Other current
liabilities
|
89,882
|
|
101,744
|
|
Total current
liabilities
|
622,068
|
|
576,689
|
|
Accrued insurance, less
current portion
|
57,510
|
|
48,060
|
|
Operating lease
liabilities, less current portion
|
280,555
|
|
233,369
|
|
Long-term
debt
|
445,176
|
|
490,776
|
|
Other long-term accrued
liabilities
|
93,112
|
|
90,999
|
|
Total
liabilities
|
1,498,421
|
|
1,439,893
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
Common stock
|
484,306
|
|
484,080
|
|
Retained earnings and
other equity
|
833,471
|
|
671,487
|
|
Total stockholders'
equity
|
1,317,777
|
|
1,155,567
|
|
Total liabilities
and stockholders' equity
|
$
2,816,198
|
|
$
2,595,460
|
|
ROLLINS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except
per share data)
(unaudited)
|
|
|
Three Months Ended
September
30,
|
|
Nine Months Ended
September
30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
REVENUES
|
|
|
|
|
|
|
|
|
Customer
services
|
$
916,270
|
|
$ 840,427
|
|
$
2,556,539
|
|
$
2,319,192
|
|
COSTS AND
EXPENSES
|
|
|
|
|
|
|
|
|
Cost of services
provided (exclusive of depreciation and amortization
below)
|
421,892
|
|
388,533
|
|
1,197,735
|
|
1,099,566
|
|
Sales, general and
administrative
|
274,918
|
|
244,906
|
|
769,522
|
|
696,668
|
|
Restructuring
costs
|
—
|
|
5,196
|
|
—
|
|
5,196
|
|
Depreciation and
amortization
|
27,664
|
|
24,668
|
|
82,685
|
|
73,609
|
|
Total operating
expenses
|
724,474
|
|
663,303
|
|
2,049,942
|
|
1,875,039
|
|
OPERATING
INCOME
|
191,796
|
|
177,124
|
|
506,597
|
|
444,153
|
|
Interest expense,
net
|
7,150
|
|
5,547
|
|
22,650
|
|
10,797
|
|
Other income,
net
|
(582)
|
|
(493)
|
|
(933)
|
|
(6,226)
|
|
CONSOLIDATED INCOME
BEFORE INCOME TAXES
|
185,228
|
|
172,070
|
|
484,880
|
|
439,582
|
|
PROVISION FOR INCOME
TAXES
|
48,315
|
|
44,293
|
|
124,176
|
|
113,428
|
|
NET
INCOME
|
$
136,913
|
|
$ 127,777
|
|
$
360,704
|
|
$ 326,154
|
|
NET INCOME PER SHARE
- BASIC AND DILUTED
|
$
0.28
|
|
$
0.26
|
|
$
0.74
|
|
$
0.66
|
|
Weighted average shares
outstanding - basic
|
484,317
|
|
490,775
|
|
484,231
|
|
491,980
|
|
Weighted average shares
outstanding - diluted
|
484,359
|
|
490,965
|
|
484,270
|
|
492,158
|
|
DIVIDENDS PAID PER
SHARE
|
$
0.15
|
|
$
0.13
|
|
$
0.45
|
|
$
0.39
|
|
ROLLINS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED CASH FLOW INFORMATION
(in
thousands)
(unaudited)
|
|
|
Three Months Ended
September
30,
|
|
Nine Months Ended
September
30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income
|
$
136,913
|
|
$ 127,777
|
|
$
360,704
|
|
$ 326,154
|
|
Depreciation and
amortization
|
27,664
|
|
24,668
|
|
82,685
|
|
73,609
|
|
Change in working
capital and other operating activities
|
(17,630)
|
|
(25,090)
|
|
(23,894)
|
|
(24,222)
|
|
Net cash provided by
operating activities
|
146,947
|
|
127,355
|
|
419,495
|
|
375,541
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Acquisitions, net of
cash acquired
|
(23,875)
|
|
(21,420)
|
|
(105,529)
|
|
(349,312)
|
|
Capital
expenditures
|
(7,522)
|
|
(6,868)
|
|
(23,389)
|
|
(21,279)
|
|
Other investing
activities, net
|
1,458
|
|
(2,424)
|
|
5,358
|
|
8,257
|
|
Net cash used in
investing activities
|
(29,939)
|
|
(30,712)
|
|
(123,560)
|
|
(362,334)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Net (repayments)
borrowings
|
(57,000)
|
|
259,000
|
|
(46,000)
|
|
544,000
|
|
Payment of
dividends
|
(72,797)
|
|
(63,809)
|
|
(217,964)
|
|
(191,805)
|
|
Other financing
activities, net
|
(1,823)
|
|
(301,643)
|
|
(41,542)
|
|
(318,452)
|
|
Net cash (used in)
provided by financing activities
|
(131,620)
|
|
(106,452)
|
|
(305,506)
|
|
33,743
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
3,197
|
|
(2,691)
|
|
1,028
|
|
(49)
|
|
Net (decrease) increase
in cash and cash equivalents
|
$
(11,415)
|
|
$ (12,500)
|
|
$
(8,543)
|
|
$
46,901
|
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 ("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,
adjustments to the fair value of contingent consideration resulting
from the acquisition of Fox, and restructuring costs related to
restructuring and workforce reduction plans. Adjusted net income
and adjusted EPS are calculated by adding back to the GAAP measure
amortization of certain intangible assets, adjustments to the fair
value of contingent consideration resulting from the acquisition of
Fox, and restructuring costs related to restructuring and workforce
reduction plans, 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,
restructuring costs related to restructuring and workforce
reduction plans, and excluding gains and losses on the sale of
non-operational assets. Incremental EBITDA margin is calculated as
the change in EBITDA divided by the change in revenue. Adjusted
incremental EBITDA 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
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
Variance
|
|
|
|
|
|
Variance
|
|
2024
|
|
2023
|
|
$
|
|
%
|
|
2024
|
|
2023
|
|
$
|
|
%
|
|
Reconciliation of
Operating Income to Adjusted Operating Income and Adjusted
Operating Income Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
191,796
|
|
$
177,124
|
|
|
|
|
|
$
506,597
|
|
$
444,153
|
|
|
|
|
|
Fox acquisition-related
expenses (1)
|
4,216
|
|
5,262
|
|
|
|
|
|
13,689
|
|
10,523
|
|
|
|
|
|
Restructuring costs
(2)
|
—
|
|
5,196
|
|
|
|
|
|
—
|
|
5,196
|
|
|
|
|
|
Adjusted operating
income
|
$
196,012
|
|
$
187,582
|
|
8,430
|
|
4.5
|
|
$
520,286
|
|
$
459,872
|
|
60,414
|
|
13.1
|
|
Revenues
|
$
916,270
|
|
$
840,427
|
|
|
|
|
|
$
2,556,539
|
|
$
2,319,192
|
|
|
|
|
|
Operating income
margin
|
20.9 %
|
|
21.1 %
|
|
|
|
|
|
19.8 %
|
|
19.2 %
|
|
|
|
|
|
Adjusted operating
margin
|
21.4 %
|
|
22.3 %
|
|
|
|
|
|
20.4 %
|
|
19.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income to Adjusted Net Income and Adjusted
EPS (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
136,913
|
|
$
127,777
|
|
|
|
|
|
$
360,704
|
|
$
326,154
|
|
|
|
|
|
Fox acquisition-related
expenses (1)
|
4,216
|
|
5,262
|
|
|
|
|
|
13,689
|
|
10,523
|
|
|
|
|
|
Restructuring costs
(2)
|
—
|
|
5,196
|
|
|
|
|
|
—
|
|
5,196
|
|
|
|
|
|
Gain on sale of assets,
net (3)
|
(582)
|
|
(493)
|
|
|
|
|
|
(933)
|
|
(6,226)
|
|
|
|
|
|
Tax impact of
adjustments (4)
|
(930)
|
|
(2,551)
|
|
|
|
|
|
(3,266)
|
|
(2,430)
|
|
|
|
|
|
Adjusted net
income
|
$
139,617
|
|
$
135,191
|
|
4,426
|
|
3.3
|
|
$
370,194
|
|
$
333,217
|
|
36,978
|
|
11.1
|
|
EPS - basic and
diluted
|
$
0.28
|
|
$
0.26
|
|
|
|
|
|
$
0.74
|
|
$
0.66
|
|
|
|
|
|
Fox acquisition-related
expenses (1)
|
0.01
|
|
0.01
|
|
|
|
|
|
0.03
|
|
0.02
|
|
|
|
|
|
Restructuring costs
(2)
|
—
|
|
0.01
|
|
|
|
|
|
—
|
|
0.01
|
|
|
|
|
|
Gain on sale of assets,
net (3)
|
—
|
|
—
|
|
|
|
|
|
—
|
|
(0.01)
|
|
|
|
|
|
Tax impact of
adjustments (4)
|
—
|
|
(0.01)
|
|
|
|
|
|
(0.01)
|
|
—
|
|
|
|
|
|
Adjusted EPS - basic
and diluted (5)
|
$
0.29
|
|
$
0.28
|
|
0.01
|
|
3.6
|
|
$
0.76
|
|
$
0.68
|
|
0.08
|
|
11.8
|
|
Weighted average shares
outstanding – basic
|
484,317
|
|
490,775
|
|
|
|
|
|
484,231
|
|
491,980
|
|
|
|
|
|
Weighted average shares
outstanding – diluted
|
484,359
|
|
490,965
|
|
|
|
|
|
484,270
|
|
492,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income to EBITDA, Adjusted EBITDA, EBITDA Margin, Incremental
EBITDA Margin, Adjusted EBITDA Margin, and Adjusted Incremental
EBITDA Margin (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
136,913
|
|
$
127,777
|
|
|
|
|
|
$
360,704
|
|
$
326,154
|
|
|
|
|
|
Depreciation and
amortization
|
27,664
|
|
24,668
|
|
|
|
|
|
82,685
|
|
73,609
|
|
|
|
|
|
Interest expense,
net
|
7,150
|
|
5,547
|
|
|
|
|
|
22,650
|
|
10,797
|
|
|
|
|
|
Provision for income
taxes
|
48,315
|
|
44,293
|
|
|
|
|
|
124,176
|
|
113,428
|
|
|
|
|
|
EBITDA
|
$
220,042
|
|
$
202,285
|
|
17,757
|
|
8.8
|
|
$
590,215
|
|
$
523,988
|
|
66,227
|
|
12.6
|
|
Fox acquisition-related
expenses (1)
|
—
|
|
1,050
|
|
|
|
|
|
1,049
|
|
2,097
|
|
|
|
|
|
Restructuring costs
(2)
|
—
|
|
5,196
|
|
|
|
|
|
—
|
|
5,196
|
|
|
|
|
|
Gain on sale of assets,
net (3)
|
(582)
|
|
(493)
|
|
|
|
|
|
(933)
|
|
(6,226)
|
|
|
|
|
|
Adjusted
EBITDA
|
$
219,460
|
|
$
208,038
|
|
11,422
|
|
5.5
|
|
$
590,331
|
|
$
525,055
|
|
65,276
|
|
12.4
|
|
Revenues
|
$
916,270
|
|
$
840,427
|
|
75,843
|
|
|
|
$
2,556,539
|
|
$
2,319,192
|
|
237,347
|
|
|
|
EBITDA
margin
|
24.0 %
|
|
24.1 %
|
|
|
|
|
|
23.1 %
|
|
22.6 %
|
|
|
|
|
|
Incremental EBITDA
margin
|
|
|
|
|
23.4 %
|
|
|
|
|
|
|
|
27.9 %
|
|
|
|
Adjusted EBITDA
margin
|
24.0 %
|
|
24.8 %
|
|
|
|
|
|
23.1 %
|
|
22.6 %
|
|
|
|
|
|
Adjusted incremental
EBITDA margin
|
|
|
|
|
15.1 %
|
|
|
|
|
|
|
|
27.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Cash Provided by Operating Activities to Free Cash Flow and
Free Cash Flow Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
146,947
|
|
$
127,355
|
|
|
|
|
|
$
419,495
|
|
$
375,541
|
|
|
|
|
|
Capital
expenditures
|
(7,522)
|
|
(6,868)
|
|
|
|
|
|
(23,389)
|
|
(21,279)
|
|
|
|
|
|
Free cash
flow
|
$
139,425
|
|
$
120,487
|
|
18,938
|
|
15.7
|
|
$
396,106
|
|
$
354,262
|
|
41,844
|
|
11.8
|
|
Free cash flow
conversion
|
101.8 %
|
|
94.3 %
|
|
|
|
|
|
109.8 %
|
|
108.6 %
|
|
|
|
|
|
|
(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) Restructuring costs
consist of costs primarily related to severance and benefits paid
to employees pursuant to restructuring and workforce reduction
plans.
|
|
(3) Consists of the
gain or loss on the sale of non-operational assets.
|
|
(4) The tax effect of
the adjustments is calculated using the applicable statutory tax
rates for the respective periods.
|
|
(5) In some cases, the
sum of the individual EPS amounts may not equal total non-GAAP EPS
calculations due to rounding.
|
|
(6) 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. Refer to
our first quarter 2024 press release for fully revised quarterly
metrics.
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
Variance
|
|
|
|
|
|
Variance
|
|
2024
|
|
2023
(7)
|
|
$
|
|
%
|
|
2024
|
|
2023
(7)
|
|
$
|
|
%
|
|
Reconciliation of
Revenues to Organic Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
916,270
|
|
$ 840,427
|
|
75,843
|
|
9.0
|
|
$
2,556,539
|
|
$
2,319,192
|
|
237,347
|
|
10.2
|
|
Revenues from
acquisitions
|
(17,339)
|
|
—
|
|
(17,339)
|
|
2.1
|
|
(77,479)
|
|
—
|
|
(77,479)
|
|
3.3
|
|
Revenues of
divestitures
|
—
|
|
(5,823)
|
|
5,823
|
|
(0.8)
|
|
—
|
|
(16,500)
|
|
16,500
|
|
(0.8)
|
|
Organic
revenues
|
$
898,931
|
|
$ 834,604
|
|
64,327
|
|
7.7
|
|
$
2,479,060
|
|
$
2,302,692
|
|
176,368
|
|
7.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Residential Revenues to Organic Residential Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
revenues
|
$
428,290
|
|
$ 402,559
|
|
25,731
|
|
6.4
|
|
$
1,166,042
|
|
$
1,069,403
|
|
96,639
|
|
9.0
|
|
Residential revenues
from acquisitions
|
(9,571)
|
|
—
|
|
(9,571)
|
|
2.4
|
|
(54,257)
|
|
—
|
|
(54,257)
|
|
5.1
|
|
Residential revenues of
divestitures
|
—
|
|
(3,263)
|
|
3,263
|
|
(0.9)
|
|
—
|
|
(9,668)
|
|
9,668
|
|
(1.0)
|
|
Residential organic
revenues
|
$
418,719
|
|
$ 399,296
|
|
19,423
|
|
4.9
|
|
$
1,111,785
|
|
$
1,059,735
|
|
52,050
|
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Commercial Revenues to Organic Commercial Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
revenues
|
$
299,633
|
|
$ 273,865
|
|
25,768
|
|
9.4
|
|
$
845,517
|
|
$
767,472
|
|
78,045
|
|
10.2
|
|
Commercial revenues
from acquisitions
|
(6,434)
|
|
—
|
|
(6,434)
|
|
2.3
|
|
(17,456)
|
|
—
|
|
(17,456)
|
|
2.3
|
|
Commercial revenues of
divestitures
|
—
|
|
(2,560)
|
|
2,560
|
|
(1.0)
|
|
—
|
|
(6,832)
|
|
6,832
|
|
(1.0)
|
|
Commercial organic
revenues
|
$
293,199
|
|
$ 271,305
|
|
21,894
|
|
8.1
|
|
$
828,061
|
|
$
760,640
|
|
67,421
|
|
8.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Termite and Ancillary Revenues to Organic Termite and Ancillary
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termite and ancillary
revenues
|
$
177,674
|
|
$ 155,135
|
|
22,539
|
|
14.5
|
|
$
515,758
|
|
$
457,664
|
|
58,094
|
|
12.7
|
|
Termite and ancillary
revenues from acquisitions
|
(1,334)
|
|
—
|
|
(1,334)
|
|
0.8
|
|
(5,766)
|
|
—
|
|
(5,766)
|
|
1.3
|
|
Termite and ancillary
organic revenues
|
$
176,340
|
|
$ 155,135
|
|
21,205
|
|
13.7
|
|
$
509,992
|
|
$
457,664
|
|
52,328
|
|
11.4
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
Variance
|
|
|
|
|
|
Variance
|
|
2023 (7)
|
|
2022
(7)
|
|
$
|
|
%
|
|
2023 (7)
|
|
2022
(7)
|
|
$
|
|
%
|
|
Reconciliation of
Revenues to Organic Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
840,427
|
|
$ 729,704
|
|
110,723
|
|
15.2
|
|
$
2,319,192
|
|
$
2,034,433
|
|
284,759
|
|
14.0
|
|
Revenues from
acquisitions
|
(49,971)
|
|
—
|
|
(49,971)
|
|
6.8
|
|
(114,273)
|
|
—
|
|
(114,273)
|
|
5.6
|
|
Organic
revenues
|
$
790,456
|
|
$ 729,704
|
|
60,752
|
|
8.4
|
|
$
2,204,919
|
|
$
2,034,433
|
|
170,486
|
|
8.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Residential Revenues to Organic Residential Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
revenues
|
$
402,559
|
|
$ 336,626
|
|
65,933
|
|
19.6
|
|
$
1,069,403
|
|
$
917,790
|
|
151,613
|
|
16.5
|
|
Residential revenues
from acquisitions
|
(42,974)
|
|
—
|
|
(42,974)
|
|
12.8
|
|
(91,067)
|
|
—
|
|
(91,067)
|
|
9.9
|
|
Residential organic
revenues
|
$
359,585
|
|
$ 336,626
|
|
22,959
|
|
6.8
|
|
$
978,336
|
|
$
917,790
|
|
60,546
|
|
6.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Commercial Revenues to Organic Commercial Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
revenues
|
$
273,865
|
|
$ 245,009
|
|
28,856
|
|
11.8
|
|
$
767,472
|
|
$
688,523
|
|
78,949
|
|
11.5
|
|
Commercial revenues
from acquisitions
|
(3,456)
|
|
—
|
|
(3,456)
|
|
1.4
|
|
(10,688)
|
|
—
|
|
(10,688)
|
|
1.6
|
|
Commercial organic
revenues
|
$
270,409
|
|
$ 245,009
|
|
25,400
|
|
10.4
|
|
$
756,784
|
|
$
688,523
|
|
68,261
|
|
9.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Termite and Ancillary Revenues to Organic Termite and Ancillary
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termite and ancillary
revenues
|
$
155,135
|
|
$ 139,359
|
|
15,776
|
|
11.3
|
|
$
457,664
|
|
$
405,089
|
|
52,575
|
|
13.0
|
|
Termite and ancillary
revenues from acquisitions
|
(3,541)
|
|
—
|
|
(3,541)
|
|
2.5
|
|
(12,518)
|
|
—
|
|
(12,518)
|
|
3.1
|
|
Termite and ancillary
organic revenues
|
$
151,594
|
|
$ 139,359
|
|
12,235
|
|
8.8
|
|
$
445,146
|
|
$
405,089
|
|
40,057
|
|
9.9
|
|
|
(7) Revenues classified
by significant product and service offerings for the three and nine
months ended September 30, 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
September 30,
|
|
Nine Months Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Reconciliation of
SG&A to Adjusted SG&A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A
|
$
274,918
|
|
$
244,906
|
|
$
769,522
|
|
$
696,668
|
|
Fox acquisition-related
expenses (1)
|
—
|
|
1,050
|
|
1,049
|
|
2,097
|
|
Adjusted
SG&A
|
$
274,918
|
|
$
243,856
|
|
$
768,473
|
|
$
694,571
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
916,270
|
|
$
840,427
|
|
$
2,556,539
|
|
$
2,319,192
|
|
Adjusted SG&A as a
% of revenues
|
30.0 %
|
|
29.0 %
|
|
30.1 %
|
|
29.9 %
|
|
Period
Ended
September 30,
2024
|
|
Period
Ended
December 31,
2023
|
|
Reconciliation of
Long-term Debt to Net Debt and Net Leverage Ratio
|
|
|
|
|
|
|
|
|
|
Long-term debt
(8)
|
$
447,000
|
|
$
493,000
|
|
Less: cash
|
95,282
|
|
103,825
|
|
Net debt
|
$
351,718
|
|
$
389,175
|
|
Trailing twelve-month
EBITDA
|
$
771,291
|
|
$
705,064
|
|
Net leverage
ratio
|
0.5x
|
|
0.6x
|
|
|
(8) As of
September 30, 2024, the Company had outstanding borrowings of
$447.0 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 $1.8 million in
unamortized debt issuance costs as of September 30,
2024.
|
For Further Information Contact
Lyndsey Burton (404) 888-2348
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SOURCE Rollins, Inc.