Rollins, Inc. Reports Fourth Quarter and Full-Year 2006 Financial Results
-- Revenue increased 5.0% for the quarter and 7.0% for full year
-- Diluted Earnings per share rose from $0.76 to $0.84 for the 2006, a 10.5% increase.
-- Cash and marketable securities increased 47.1% to $63.3 million
ATLANTA--(BUSINESS WIRE)--
Rollins, Inc. (NYSE:ROL), a premier North American consumer and commercial services company, today reported unaudited financial results for its fourth quarter and year ended December 31, 2006.
The Company recorded revenues of $204.7 million, an increase of 5.0% over the prior year's fourth quarter revenue of $194.8 million. Net income increased 43.3% to $10.5 million or $0.15 per diluted share for the fourth quarter ended December 31, 2006, compared to $7.4 million or $0.11 per diluted share for the same period in 2005.
Revenues for full year 2006 increased to $858.9 million, compared to $802.4 million for the prior year. Rollins recorded net income of $57.8 million or $0.84 per diluted share compared to net income of $52.8 million or $0.76 per diluted share for the comparable period last year. Included in the results for the year ended December 31, 2005 was a $2.5 million gain, net of taxes, or $0.04 per diluted share, as the Company curtailed Rollins, Inc.'s pension plan effective June 30, 2005. Excluding the impact of the pension curtailment gain in 2005, the Company's diluted earnings per share increased 16.7% or $0.12 per diluted share compared to last year. See attached detailed reconciliation.
Rollins' balance sheet continued to grow with total assets increasing to $453.2 million and stockholder's equity growth to $211.5 million. The Company ended the year with cash and marketable securities of $63.3 million, up 47.1% over last year.
Gary W. Rollins, President and Chief Executive Officer of Rollins, Inc. stated, "We are very pleased with the progress the Company made during the fourth quarter of 2006 where our growth represented the highest percentage of internal growth in our company's recent history. Further, the overall improvement in revenue and net income for the quarter and full year are a confirmation that the effort we have put on sales growth and productivity improvement is bearing fruit."
Mr. Rollins continued, "We believe that we are on track to build on our growth initiatives in all segments of our business and plan to continue to make selective investments in our sales and service initiatives. At the same time, we will be working on expense margins and productivity improvements. Orkin has again been recognized as a top 100 Training Company in the U.S. in part as a result of our satellite training network launched in 2006. We have exciting plans to ramp up the use of this extraordinary asset in the New Year."
Mr. Rollins concluded, "We remain excited about our Company's future but we recognize that there is still much to be done to accomplish our objectives. Our team is dedicated to our plans of business growth and operational improvement for the New Year."
Rollins, Inc. is a premier North American consumer and commercial services company. Through its wholly owned subsidiaries, Orkin, Inc., Western Pest Services, and The Industrial Fumigant Company, the Company provides essential pest control services and protection against termite damage, rodents and insects to approximately 1.7 million customers in the United States, Canada, Mexico, Panama and Costa Rica from over 400 locations. You can learn more about our subsidiaries by visiting our Web sites at www.orkin.com, www.westernpest.com, www.indfumco.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 include statements regarding effect of various operational initiatives and the dedication of the Company's employees to further increase the Company's business put the Company on track year-to-date to meet the Company's financial goals for 2006 and the Company's expectation that 2006 will be another notable year for the Company and its shareholders. 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, general economic conditions; market risk; changes in industry practices or technologies; the degree of success of the Company's pest and termite process reforms 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; expected benefits of the commercial re-engineering project may not be realized, potential increases in labor costs; uncertainties of litigation; and changes in various government laws and regulations, including environmental regulations. 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, 2005.
ROLLINS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands)
2006 2005
At December 31, (unaudited) (unaudited)
----------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 63,344 $ 43,065
Trade receivables, short-term 52,693 47,705
Materials and supplies 8,401 9,082
Deferred income taxes 19,435 27,510
Prepaid taxes - 3,036
Other current assets 7,200 6,069
----------- -----------
Total Current Assets 151,073 136,467
Equipment and property, net 72,141 65,932
Goodwill and other intangible assets 202,216 205,584
Deferred income taxes 14,069 15,946
Trade receivables, long-term 8,796 9,368
Other assets 4,880 5,123
----------- -----------
Total Assets $453,175 $438,420
=========== ===========
LIABILITIES
Capital leases $ 498 $ 825
Accounts payable 16,309 17,204
Accrued insurance 14,310 17,605
Accrued compensation and related liabilities 47,305 41,822
Unearned revenue 79,441 79,990
Other current liabilities 27,343 32,220
----------- -----------
Total Current Liabilities 185,206 189,666
Capital leases, less current portion 124 560
Accrued pension 6,946 20,651
Long-term accrued liabilities 49,440 50,591
----------- -----------
Total Liabilities 241,716 261,468
----------- -----------
STOCKHOLDERS' EQUITY
Common stock 67,891 68,011
Retained earnings and other equity 143,568 108,941
----------- -----------
Total Stockholders' Equity 211,459 176,952
----------- -----------
Total Liabilities and Stockholders' Equity $453,175 $438,420
=========== ===========
ROLLINS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED DECEMBER 31, 2006,
(in thousands except per share data)
(unaudited)
Fourth Quarter Ended Twelve Months Ended
December 31, December 31,
-------------------- -------------------
2006 2005 2006 2005
---------- --------- --------- ---------
REVENUES
Customer services $204,653 $194,830 $858,878 $802,417
COSTS AND EXPENSES
Cost of services provided 112,601 112,534 457,869 437,160
Depreciation and amortization 6,460 6,472 26,860 24,280
Sales, general and
administrative 69,250 64,924 280,578 259,763
Pension curtailment gain - - - (4,176)
Gain on sales of assets (65) (438) (81) (982)
Interest income (539) (278) (1,507) (1,583)
---------- --------- --------- ---------
187,707 183,214 763,719 714,462
---------- --------- --------- ---------
INCOME BEFORE TAXES 16,946 11,616 95,159 87,955
---------- --------- --------- ---------
PROVISION FOR INCOME TAXES 6,407 4,264 37,350 35,182
---------- --------- --------- ---------
NET INCOME $ 10,539 $ 7,352 $ 57,809 $ 52,773
========== ========= ========= =========
NET INCOME PER SHARE - BASIC $ 0.16 $ 0.11 $ 0.86 $ 0.78
========== ========= ========= =========
NET INCOME PER SHARE - DILUTED $ 0.15 $ 0.11 $ 0.84 $ 0.76
========== ========= ========= =========
Weighted average shares
outstanding - basic 67,108 67,596 67,165 67,898
Weighted average shares
outstanding - Diluted 68,727 69,333 68,876 69,772
ROLLINS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31,
(in thousands)
2006 2005
(unaudited) (unaudited)
----------- -----------
OPERATING ACTIVITIES
Net Income $ 57,809 $ 52,773
Adjustments to reconcile net income to net
cash
Provided by operating activities:
Depreciation and amortization 26,860 24,280
Pension curtailment gain - (4,176)
Provision for deferred income taxes 6,007 3,653
Stock based compensation 1,830 739
Gain/(Loss) on sales of assets (81) (982)
Other, net (544) (2,834)
(Increase)/decrease in assets
Trade receivables (3,784) 4,291
Materials and supplies 681 2,385
Other current assets 1,914 715
Other non-current assets 301 353
Increase/(decrease) in liabilities:
Accounts payable and accrued expenses 6,633 4,893
Unearned revenue (550) (31)
Accrued insurance 1,344 (1,029)
Accrual for termite contracts (3,000) (2,111)
Accrued pension (5,000) (5,000)
Long-term accrued liabilities (5,219) (1,169)
----------- -----------
Net cash provided by operating activities 85,201 76,750
----------- -----------
INVESTING ACTIVITIES
Purchase of equipment and property (18,729) (25,541)
Acquisitions of companies (10,087) (27,239)
Cash from sales of franchises 707 639
Proceeds from sales of assets 128 754
----------- -----------
Net cash used in investing activities (27,981) (51,387)
----------- -----------
FINANCING ACTIVITIES
Dividends paid (17,025) (13,714)
Common stock purchased (19,452) (30,308)
Common stock options exercised 1,086 3,315
Principal payments on capital leases (763) -
Other (235) 558
----------- -----------
Net cash used in financing activities (36,389) (40,149)
----------- -----------
Effect of exchange rate changes on cash (552) 1,114
----------- -----------
Net increase in cash and cash equivalents 20,279 (13,672)
Cash and cash equivalents at beginning of
period 43,065 56,737
----------- -----------
Cash and cash equivalents at end of period $ 63,344 $ 43,065
=========== ===========
ROLLINS, INC. AND SUBSIDIARIES
REVENUE RECONCILIATION
REVENUES EXCLUDING THE INDUSTRIAL FUMIGANT COMPANY
Twelve Months Ended,
December 31
-----------------------
$ %
2006 2005 Better/ Better/
(unaudited) (unaudited) (worse) (worse)
----------- ----------- -------- --------
Reported net revenues $858,878 $802,417 $56,461 7.0%
Less: The Industrial
Fumigant Company (IFC) 25,920 6,275 19,645 313.1%
----------- ----------- -------- --------
Net revenues excluding IFC $832,958 $796,142 $36,816 4.6%
=========== =========== ======== ========
ROLLINS, INC. AND SUBSIDIARIES
NET INCOME AND EARNINGS PER SHARE RECONCILIATION
EARNINGS AND EARNINGS PER SHARE EXCLUDING PENSION CURTAILMENT GAIN
Twelve Months Ended,
December 31
-----------------------
$ %
2006 2005 Better/ Better/
(unaudited) (unaudited) (worse) (worse)
----------- ----------- -------- --------
Reported net income $57,809 $52,773 $5,036 9.5%
Less: Pension curtailment
gain (net of tax) - 2,485 2,485 100.0
----------- ----------- -------- --------
Income excluding pension
curtailment gain $57,809 $50,288 $7,521 15.0%
=========== =========== ======== ========
Reported earnings per share
- Basic $ 0.86 $ 0.78 $ 0.08 10.3%
Less: Pension curtailment
gain (net of tax) - 0.04 0.04 100.0
----------- ----------- -------- --------
Earnings per share - Basic
excluding pension
curtailment gain $ 0.86 $ 0.74 $ 0.12 16.2%
=========== =========== ======== ========
Reported earnings per share
- Diluted $ 0.84 $ 0.76 $ 0.08 10.5%
Less: pension curtailment
gain (net of tax) - 0.04 0.04 100.0
----------- ----------- -------- --------
Earnings per share - diluted
excluding pension
curtailment gain $ 0.84 $ 0.72 $ 0.12 16.7%
=========== =========== ======== ========
CONFERENCE CALL ANNOUNCEMENT
Rollins, Inc.
(NYSE: ROL)
Management will hold a conference call to discuss
Fourth quarter results on:
Wednesday, February 7, 2007 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 800-218-0530 domestic;
303-262-2137 international
at least 5 minutes before start time.
REPLAY: available through February 14, 2007
Please dial 800-405-2236/303-590-3000, Passcode: 11081805
THIS CALL CAN ALSO BE ACCESSED THROUGH THE INTERNET AT
www.viavid.net
Questions?
Contact Janet Jazimin at Financial Relations Board at 212-827-3777
Or email to jjazimin@financialrelationsboard.com
Source: Rollins, Inc.
Released February 7, 2007