ROLLINS, INC. REPORTS THIRD QUARTER 2024 FINANCIAL RESULTS
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 StatementsThis 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 CallRollins 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 September30,
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
