Published on January 29, 2020
Exhibit 99.1
For Further Information Contact
Eddie Northen (404) 888-2242
FOR IMMEDIATE RELEASE
ROLLINS, INC. REPORTS FOURTH QUARTER AND FULL-YEAR 2019
FINANCIAL RESULTS
| · | Revenue increased 13.8% for the quarter, eclipsing annual record revenues of $2 billion on Net Income of $50.8 million |
| · | Earnings Per Share (EPS) $0.16 for fourth quarter, flat to fourth quarter 2018 primarily impacted by increases in Casualty reserves of $0.01 |
| · | Fourth quarter earnings before interest, taxes, depreciation and amortization (EBITDA)* of $97 million, 10.5% increase for the quarter |
| · | Completed successful pilot of new Routing and Scheduling program in fourth quarter |
ATLANTA, GEORGIA, January 29, 2020: Rollins, Inc. (NYSE:ROL), a premier global consumer and commercial services company, reported strong unaudited financial results for its fourth quarter and year ended December 31, 2019.
The Company recorded fourth quarter revenues of $506.0 million, an increase of 13.8% over the prior year’s fourth quarter revenue of $444.6 million. Rollins reported net income of $50.8 million or $0.16 per diluted share in the fourth quarter that ended December 31, 2019, compared to $51.0 million or $0.16 per diluted share for the same period in 2018.
For the full-year ended December 31, 2019, Rollins’ revenues rose 10.6% to $2.015 billion compared to $1.822 billion for the prior year. The Company reported net income of $203.3 million, or $0.62 per diluted share in 2019, compared to net income of $231.7 million, or $0.71 per diluted share in the prior year. Net income was negatively impacted in 2019 by a $49.9 million one-time expense for discontinuing the pension plan, $2.7 million in acquisition expenses related to Clark Pest Control, and foreign currency exchange rate fluctuations. Rollins’ adjusted earnings per share (EPS)* removing these costs increases 2019 full year Adjusted EPS* by $0.11 to $0.73 per diluted share compared to 2018 Adjusted EPS* of $0.72 per diluted share.
*“Adjusted” amounts presented in this release are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial metrics, including a reconciliation to the most closely correlated GAAP measure.
Eddie Northen, Senior Vice President, Chief Financial Officer and Treasurer of Rollins, Inc. stated, “We continue to invest in innovative technology as well as seeking out strong acquisitions that fit well into the Rollins family of brands. As a result of these investments, we have experienced record amounts of amortization and depreciation that will deliver positive results for years to come.”
Gary W. Rollins, Vice Chairman and Chief Executive Officer of Rollins, Inc. stated, “The Company is well-positioned for 2020, and our team is optimistic and feels that we have plans and programs in place to achieve our desired results. As we move into a new decade, we are committed to continued improvement on all key elements of our business, for the benefit of our customers, employees and shareholders.”
On January 28, 2020, Rollins increased its regular quarterly cash dividend to shareholders 14.3% to $0.12 per share. This marks the 18th consecutive year the Board has increased its dividend a minimum of 12.0% or more.
Rollins, Inc. is a premier global consumer and commercial services company. Through its wholly owned subsidiaries, Orkin, HomeTeam Pest Defense, Clark Pest Control, Orkin Canada, Western Pest Services, Northwest Exterminating, Critter Control, The Industrial Fumigant Company, Trutech, Orkin Australia, Waltham Pest Services, OPC Pest Services, PermaTreat, Crane Pest Control, Safeguard, and Aardwolf Pestkare, the Company provides essential pest control services and protection against termite damage, rodents and insects to more than two million customers in the United States, Canada, Central America, South America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, Mexico, and Australia from more than 700 locations. You can learn more about Rollins and its subsidiaries by visiting our web sites at www.orkin.com, www.pestdefense.com, www.clarkpest.com, www.orkincanada.ca, www.westernpest.com, www.callnorthwest.com, www.crittercontrol.com, www.indfumco.com, www.trutechinc.com, www.orkinau.com, www.walthamservices.com, www.opcpest.com, www.permatreat.com, www.safeguardpestcontrol.co.uk, www.aardwolfpestkare.com, www.cranepestcontrol.com and www.rollins.com. You can also find this and other news releases at www.rollins.com by accessing the news releases button.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This release contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about the continued investment in innovative technology as well as seeking strong acquisitions; the expectation that we will deliver positive results for years to come, and the Company’s belief that it is well-positioned for 2020 and has the team and plan to achieve its desired results. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties, including without limitation, economic and competitive conditions which may adversely affect the Company’s business; the degree of success of the Company’s pest and termite process, and pest control selling and treatment methods; the Company’s ability to identify and integrate potential acquisitions; climate and weather trends; competitive factors and pricing practices; the Company’s ability to attract and retain skilled workers, and potential increases in labor costs; uncertainties of litigation; changes in various government laws and regulations, including environmental regulations; and the impact of the U. S. Government shutdown. All of the foregoing risks and uncertainties are beyond the ability of the Company to control, and in many cases the Company cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. A more detailed discussion of potential risks facing the Company can be found in the Company’s Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2018.
*“Adjusted” amounts presented in this release are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial metrics, including a reconciliation to the most closely correlated GAAP measure.
ROLLINS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands)
| At December 31, (unaudited) | 2019 | 2018 | ||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 94,276 | $ | 115,485 | ||||
| Trade accounts receivables, net | 122,766 | 104,016 | ||||||
| Financed receivables, net | 22,267 | 18,454 | ||||||
| Materials and supplies | 19,476 | 15,788 | ||||||
| Other current assets | 48,198 | 32,278 | ||||||
| Total Current Assets | 306,983 | 286,021 | ||||||
| Equipment and property, net | 195,533 | 136,885 | ||||||
| Goodwill | 572,847 | 368,481 | ||||||
| Customer contracts, net | 273,720 | 178,075 | ||||||
| Trademarks and tradenames, net | 102,539 | 54,140 | ||||||
| Other intangible assets, net | 10,525 | 11,043 | ||||||
| Operating lease, right-of-use assets | 200,727 | — | ||||||
| Financed receivables, long-term, net | 30,792 | 28,227 | ||||||
| Benefit plan assets | 21,565 | — | ||||||
| Prepaid pension | — | 5,274 | ||||||
| Deferred income tax assets | — | 6,915 | ||||||
| Other assets | 24,161 | 19,063 | ||||||
| Total Assets | $ | 1,739,392 | $ | 1,094,124 | ||||
| LIABILITIES | ||||||||
| Accounts payable | $ | 35,234 | $ | 27,168 | ||||
| Accrued insurance, current | 30,441 | 27,709 | ||||||
| Accrued compensation and related liabilities | 81,943 | 77,741 | ||||||
| Unearned revenue | 122,825 | 116,005 | ||||||
| Operating lease liabilities, current | 66,117 | — | ||||||
| Current portion of long-term debt | 12,500 | — | ||||||
| Other current liabilities | 59,682 | 50,406 | ||||||
| Total Current Liabilities | 408,742 | 299,029 | ||||||
| Accrued insurance, less current portion | 34,920 | 33,867 | ||||||
| Operating lease liabilities, less current portion | 135,651 | — | ||||||
| Long-term debt | 279,000 | — | ||||||
| Deferred income tax liabilities | 7,747 | — | ||||||
| Long-term accrued liabilities | 57,582 | 49,320 | ||||||
| Total Liabilities | 923,642 | 382,216 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock | 327,431 | 327,308 | ||||||
| Retained earnings and other equity | 488,319 | 384,600 | ||||||
| Total stockholders’ equity | 815,750 | 711,908 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,739,392 | $ | 1,094,124 | ||||
*“Adjusted” amounts presented in this release are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial metrics, including a reconciliation to the most closely correlated GAAP measure.
ROLLINS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| REVENUES | ||||||||||||||||
| Customer services | $ | 505,985 | $ | 444,624 | $ | 2,015,477 | $ | 1,821,565 | ||||||||
| COSTS AND EXPENSES | ||||||||||||||||
| Cost of services provided | 254,284 | 221,235 | 993,593 | 894,437 | ||||||||||||
| Depreciation and amortization | 22,606 | 16,644 | 81,111 | 66,792 | ||||||||||||
| Pension settlement loss | — | — | 49,898 | — | ||||||||||||
| Sales, general and administrative | 154,796 | 135,760 | 623,379 | 550,698 | ||||||||||||
| Gain on sale of assets, net | (175 | ) | (197 | ) | (581 | ) | (875 | ) | ||||||||
| Interest expense/(income), net | 2,465 | (290 | ) | 6,917 | (220 | ) | ||||||||||
| 433,976 | 373,152 | 1,754,317 | 1,510,832 | |||||||||||||
| INCOME BEFORE INCOME TAXES | 72,009 | 71,472 | 261,160 | 310,733 | ||||||||||||
| PROVISION FOR INCOME TAXES | 21,244 | 20,504 | 57,813 | 79,070 | ||||||||||||
| NET INCOME | $ | 50,765 | $ | 50,968 | $ | 203,347 | $ | 231,663 | ||||||||
| NET INCOME PER SHARE - BASIC AND DILUTED | $ | 0.16 | $ | 0.16 | $ | 0.62 | $ | 0.71 | ||||||||
| Weighted average shares outstanding - basic and diluted | 327,439 | 327,316 | 327,477 | 327,291 | ||||||||||||
*“Adjusted” amounts presented in this release are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial metrics, including a reconciliation to the most closely correlated GAAP measure.
APPENDIX
Reconciliation of GAAP and non-GAAP Financial Measures
The Company has used the non-GAAP financial measures of adjusted net income and adjusted EPS in today’s earnings release. This measure should not be considered in isolation or as a substitute for net income or other performance measures prepared in accordance with GAAP.
The Company uses adjusted net income and adjusted EPS as a measure of operating performance because it allows us to compare performance consistently over various periods without regard to the impact of the non-recurring pension settlement loss, large acquisition expenses, related to the acquisition of Clark Pest Control, and fluctuations in foreign currency valuations. International acquisition activity has increased along with the overall stronger US dollar.
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 adjusted net income and adjusted EPS with net income, the most comparable GAAP measures.
(unaudited in thousands except EPS)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||
| December 31 | December 31 | |||||||||||||||||||||||||||||||
| 2019 | 2018 | Better/ (Worse) | % | 2019 | 2018 | Better/ (Worse) | % | |||||||||||||||||||||||||
| Net Income | $ | 50,765 | $ | 50,968 | $ | (203 | ) | (0.4 | ) | $ | 203,347 | $ | 231,663 | $ | (28,316 | ) | (12.2 | ) | ||||||||||||||
| Pension Settlement Loss | — | — | — | — | 49,898 | — | 49,898 | N/M | ||||||||||||||||||||||||
| Clark Pest Control acquisition expense | — | — | — | — | 2,704 | — | 2,704 | N/M | ||||||||||||||||||||||||
| Foreign Currency Exchange | 2,172 | 2,030 | 142 | 7.0 | 8,933 | 6,997 | 1,936 | 27.7 | ||||||||||||||||||||||||
| Adjusted Income Taxes on Excluded Expenses | (587 | ) | (545 | ) | (42 | ) | (7.7 | ) | (26,477 | ) | (1,914 | ) | (24,563 | ) | N/M | |||||||||||||||||
| Adjusted Net Income | $ | 52,350 | $ | 52,453 | $ | (103 | ) | (0.2 | ) | $ | 238,405 | $ | 236,746 | $ | 1,659 | 0.7 | ||||||||||||||||
| Adjusted Net Income Per Share - Basic And Diluted | $ | 0.16 | $ | 0.16 | $ | — | — | $ | 0.73 | $ | 0.72 | $ | 0.01 | 1.4 | ||||||||||||||||||
| Weighted average participating shares outstanding - basic and diluted | 327,439 | 327,316 | (123 | ) | — | 327,477 | 327,291 | (186 | ) | (0.1 | ) | |||||||||||||||||||||
*“Adjusted” amounts presented in this release are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial metrics, including a reconciliation to the most closely correlated GAAP measure.
Rollins, Inc. has used the non-GAAP financial measure of earnings before interest, taxes, depreciation and amortization (EBITDA) in today’s earnings release, and anticipates using EBITDA in today’s earnings conference call. EBITDA should not be considered in isolation or as a substitute for operating income, net income or other performance measures prepared in accordance with U.S. GAAP. Rollins, Inc. uses EBITDA as a measure of operating performance because it allows us to compare performance consistently over various periods without regard to changes in our capital structure.
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 EBITDA with Net Income, the most comparable GAAP measure.
(in thousands except per share data)
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net Income | $ | 50,765 | $ | 50,968 | $ | 203,347 | $ | 231,663 | ||||||||
| Add: | ||||||||||||||||
| Income tax provision | 21,244 | 20,504 | 57,813 | 79,070 | ||||||||||||
| Interest (income)/expense, net | 2,465 | (290 | ) | 6,917 | (220 | ) | ||||||||||
| Depreciation and amortization | 22,606 | 16,644 | 81,111 | 66,792 | ||||||||||||
| EBITDA | $ | 97,080 | $ | 87,826 | $ | 349,188 | $ | 377,305 | ||||||||
*“Adjusted” amounts presented in this release are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial metrics, including a reconciliation to the most closely correlated GAAP measure.
(( CONFERENCE CALL ANNOUNCEMENT ((
Rollins, Inc.
(NYSE: ROL)
Management will hold a conference call to discuss
Fourth Quarter 2019 results on
Wednesday, January 29, 2020 at:
10:00 a.m. Eastern
9:00 a.m. Central
8:00 a.m. Mountain
7:00 a.m. Pacific
TO PARTICIPATE:
Please dial 800-353-6461 domestic;
334-323-0501
international
at least 5 minutes before start time.
REPLAY: available through February 5, 2020
Please dial 888-203-1112/719-457-0820, Passcode 1421446
THIS CALL CAN ALSO BE ACCESSED THROUGH THE INTERNET AT
www.rollins.com
Questions?
Contact Samantha Alphonso at Financial Relations Board at 212-827-3746
Or email to salphonso@mww.com
*“Adjusted” amounts presented in this release are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial metrics, including a reconciliation to the most closely correlated GAAP measure.