ROLLINS, INC. REPORTS THIRD QUARTER 2022 FINANCIAL RESULTS

Strong revenue growth drives 14.7% increase in quarterly net income

ATLANTA, Oct. 26, 2022 /PRNewswire/ -- Rollins, Inc. (NYSE:ROL) ("Rollins" or the "Company"), a premier global consumer and commercial services company, reported unaudited financial results for its third quarter and nine months ended September 30, 2022.

Quarterly Highlights

  • Third quarter revenues were $729.7 million, an increase of 12.2% over the third quarter 2021 with organic revenues* increasing 8.6% to $706.0 million. The stronger dollar versus foreign currencies in countries where we operate reduced revenues by 50 basis points during the quarter. Growth in revenues was driven by strong growth across all major service lines.
  • Quarterly operating income was $143.7 million, an increase of 13.3% over the third quarter of 2021. Quarterly operating margin was 19.7% of revenue, an increase of 20 basis points compared to the third quarter of 2021. Adjusted EBITDA* was $169.9 million for the quarter, an increase of 12.6%. Adjusted EBITDA was 23.3% of sales, an increase of 10 basis points compared to the third quarter of 2021. The Company incurred higher losses stemming from asserted claims associated with automobile accidents. These losses reduced EBITDA margins by 140 basis points, the majority of which was in gross profit margin.
  • Quarterly net income was $107.6 million, an increase of 14.7% over the prior year. Quarterly EPS was $0.22 per diluted share, an increase from $0.19 in the prior year.
  • Operating cash flow was $127.7 million, increasing 60.2% compared to the same quarter a year ago.
  • The Company invested $60.8 million in acquisitions in the quarter. Dividends totaled $49.2 million for the quarter reflecting a 23.2% increase versus the same period a year ago. The Company announced a 30% increase to the regular quarterly dividend for the fourth quarter.

Comments from Management

"Our third quarter results reflected strong execution by our team across all of the business", said Gary Rollins, Chairman and Chief Executive Officer.  We continued to see favorable demand for our services with double digit growth across all major service lines.  Our quarterly results reflect our employees' commitment to deliver exceptional customer service," Mr. Rollins said. 

"Cash flow generation was strong and our balance sheet positions us well to continue to drive growth through acquisitions while maintaining our balanced approach to capital allocation," Mr. Rollins said. 

"Overall, we remain well positioned to continue to deliver strong results in the fourth quarter of 2022 and beyond. Demand for our services remains strong as we start the fourth quarter. Our teams remain focused on executing our plans and driving increased revenues and profitability as we close out 2022," Mr. Rollins concluded. 

About Rollins, Inc.:

Rollins, Inc. is a premier global consumer and commercial services company.  Through its family of leading brands, 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, Orkin Canada, Orkin Australia, Safeguard (UK), Aardwolf Pestkare (Singapore), and more, 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 from more than 800 locations. You can learn more about Rollins and its subsidiaries by visiting our web site at www.rollins.com, where you can also find this and other news releases by accessing the news releases button.

*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 closely correlated GAAP measure.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Statements made in this press release and on our earnings call, may contain forward-looking statements that involve risks and uncertainties concerning the business and financial results of Rollins, Inc. We have based these forward-looking statements largely on our current opinions, expectations, beliefs, plans, objectives, assumptions and projections about future events and financial trends affecting the operating results and financial condition of our business. Such forward looking statements include, but are not limited to, statements regarding the Company's belief that its balance sheet positions the Company well to continue to drive growth through acquisitions while maintaining a balanced approach to capital allocation, and that the Company is well positioned to continue to deliver strong results in the fourth quarter of 2022.  

Our actual results could differ materially from those indicated by the forward-looking statements because of various risks, timing and uncertainties including, without limitation, the failure to maintain and enhance our brands and develop a positive client reputation; our ability to protect our intellectual property and other proprietary rights that are material to our business and our brand recognition; actions taken by our franchisees, subcontractors or vendors that may harm our business; general economic conditions; the impact of the extent and duration of economic contraction related to COVID-19 on general economic activity for the remainder of 2022 and beyond; the impact of future developments related to the COVID-19 pandemic on the Company's business, results of operations, accounting assumptions and estimates and financial condition, including, without limitation, inflation and restrictions in customer discretionary expenditures, disruptions in credit or financial markets, increases in fuel prices, raw material costs or other operating costs; potential increases in labor costs; labor shortages and/or our inability to attract and retain skilled workers; competitive factors and pricing practices; changes in industry practices or technologies; the degree of success of our termite process reforms and pest control selling and treatment methods; our ability to identify, complete and successfully integrate potential acquisitions; unsuccessful expansion into international markets; climate change and unfavorable weather conditions; a breach of data security resulting in the unauthorized access of personal, financial, proprietary, confidential or other personal data or information about our customers, employees, third parties, or of our proprietary confidential information; damage to our brands or reputation; possibility of an adverse ruling against us in pending litigation, regulatory action or investigation; changes in various government laws and regulations, including environmental regulations; the adequacy of our insurance coverage to cover all significant risk exposures; the effectiveness of our risk management and safety program; general market risk; management's substantial ownership interest and its impact on public stockholders and the availability of the Company's common stock to the investing public; and the existence of certain anti-takeover provisions in our governance documents, which could make a tender offer, change in control or takeover attempt that is opposed by the Company's Board of Directors more difficult or expensive. All of the foregoing risks and uncertainties are beyond our ability to control, and in many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. The Company does not undertake to update its forward-looking statements.

 

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands)

(unaudited)










September 30, 


December 31, 



2022


2021

ASSETS







Cash and cash equivalents


$

121,876


$

105,301

Trade receivables, net



170,274



139,579

Financed receivables, short-term, net



32,253



26,152

Materials and supplies



28,572



28,926

Other current assets



45,981



52,422

Total current assets



398,956



352,380

Equipment and property, net



130,362



133,257

Goodwill



772,325



721,819

Customer contracts, net



319,382



325,929

Trademarks and tradenames, net



114,016



108,976

Other intangible assets, net



9,807



11,679

Operating lease right-of-use assets



270,365



244,784

Financed receivables, long-term, net



58,634



47,097

Other assets



38,636



34,949

Total assets


$

2,112,483


$

1,980,870

LIABILITIES







Accounts payable



42,874



44,568

Accrued insurance - current



40,424



36,414

Accrued compensation and related liabilities



95,694



97,862

Unearned revenues



166,866



145,122

Operating lease liabilities - current



82,611



75,240

Current portion of long-term debt



15,000



18,750

Other current liabilities



66,300



73,206

Total current liabilities



509,769



491,162

Accrued insurance, less current portion



35,257



31,545

Operating lease liabilities, less current portion



191,565



172,520

Long-term debt



109,878



136,250

Other long-term accrued liabilities



69,463



67,345

Total Liabilities



915,932



898,822

STOCKHOLDERS' EQUITY







Common stock



492,472



491,911

Retained earnings and other equity



704,079



590,137

Total stockholders' equity



1,196,551



1,082,048

Total liabilities and stockholders' equity


$

2,112,483


$

1,980,870

 

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands except per share data)

(unaudited)
















Three Months Ended


Nine Months Ended



September 30, 


September 30, 



2022


2021


2022


2021

REVENUES













Customer services


$

729,704


$

650,199


$

2,034,433


$

1,823,957

COSTS AND EXPENSES













Cost of services provided (exclusive of depreciation and amortization below)



348,158



305,474



980,316



864,888

Sales, general and administrative



213,581



194,261



612,353



539,951

Depreciation and amortization



24,282



23,617



73,454



70,519

   Total operating expenses



586,021



523,352



1,666,123



1,475,358

OPERATING INCOME



143,683



126,847



368,310



348,599

Interest expense, net



846



222



2,294



1,334

Other (income), net



(1,980)



(447)



(5,170)



(33,598)

CONSOLIDATED INCOME BEFORE INCOME TAXES



144,817



127,072



371,186



380,863

PROVISION FOR INCOME TAXES



37,195



33,219



90,820



95,513

NET INCOME


$

107,622


$

93,853


$

280,366


$

285,350

NET INCOME PER SHARE - BASIC AND DILUTED


$

0.22


$

0.19


$

0.57


$

0.58

Weighted average shares outstanding - basic



492,316



492,069



492,285



492,058

Weighted average shares outstanding - diluted



492,430



492,069



492,398



492,058

 

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW INFORMATION

(in thousands)

(unaudited)
















Three Months Ended


Nine Months Ended



September 30, 


September 30, 



2022


2021


2022


2021

OPERATING ACTIVITIES













Net income


$

107,622


$

93,853


$

280,366


$

285,350

Depreciation and amortization



24,282



23,617



73,454



70,519

Change in working capital and other operating activities



(4,184)



(37,764)



(11,283)



(56,958)

Net cash provided by operating activities



127,720



79,706



342,537



298,911

INVESTING ACTIVITIES













Acquisitions, net of cash acquired



(60,838)



(11,307)



(110,418)



(39,692)

Capital expenditures



(7,040)



(6,802)



(22,921)



(20,031)

Other investing activities, net



6,532



588



9,961



70,827

Net cash (used in) provided by investing activities



(61,346)



(17,521)



(123,378)



11,104

FINANCING ACTIVITIES













Net debt repayments



(110,000)



(20,000)



(30,000)



(135,000)

Payment of dividends



(49,201)



(39,945)



(147,635)



(119,677)

Other financing activities



(6,444)



(6,849)



(18,650)



(30,011)

Net cash used in financing activities



(165,645)



(66,794)



(196,285)



(284,688)

Effect of exchange rate changes on cash and cash equivalents



183



(6,264)



(6,299)



(6,149)

Net (decrease) increase in cash and cash equivalents


$

(99,088)


$

(10,873)


$

16,575


$

19,178

 

APPENDIX

Reconciliation of GAAP and non-GAAP Financial Measures

The Company has used the non-GAAP financial measures of organic revenues, adjusted EBITDA, adjusted net income and adjusted earnings per share ("EPS") in this earnings release, and the non-GAAP financial measures of organic revenues by type, and free cash flow in today's conference call. Organic revenue is calculated as revenue less acquisition revenue. Acquisition revenue is based on the trailing 12-month revenue of our acquired entities. 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 net income, adjusted EPS and adjusted EBITDA as measures of operating performance because these measures allow the Company to compare performance consistently over various periods without regard to the impact of the property disposition gains. Management also uses organic revenues, and organic revenues by type to compare revenues over various periods excluding the impact of acquisitions. Management uses free cash flow, which is calculated as net cash provided by operating activities less capital expenditures, to demonstrate the Company's ability to maintain its asset base and generate future cash flows from operations. 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.

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 non-GAAP financial measures used in today's earnings release and conference call with their most comparable GAAP measures.

 

(unaudited, in thousands except EPS)



























Three Months Ended


Nine Months Ended




September 30, 


September 30, 










Variance








Variance




2022


2021


$


%


2022


2021


$


%


Reconciliation of Net Income to Adjusted Net
Income and EPS
























Net income


$

107,622


$

93,853


$

13,769


14.7


$

280,366


$

285,350


$

(4,984)


(1.7)


Property disposition gains (net of tax $23,230)












(31,517)



31,517



Adjusted income taxes on excluded items












8,287



(8,287)



Adjusted net income


$

107,622


$

93,853


$

13,769


14.7


$

280,366


$

262,120


$

18,246


7.0


Adjusted earnings per share - basic and diluted


$

0.22


$

0.19


$

0.03


15.8


$

0.57


$

0.53


$

0.04


7.5


Weighted average shares outstanding - basic



492,316



492,069



247


0.1



492,285



492,058



227


0.0


Weighted average shares outstanding - diluted



492,430



492,069



361


0.1



492,398



492,058



340


0.1


























Reconciliation of Net Income to EBITDA and
Adjusted EBITDA
























Net income


$

107,622


$

93,853


$

13,769


14.7


$

280,366


$

285,350


$

(4,984)


(1.7)


Depreciation and amortization



24,282



23,617



665


2.8



73,454



70,519



2,935


4.2


Interest expense, net



846



222



624


281.1



2,294



1,334



960


72.0


Provision for income taxes



37,195



33,219



3,976


12.0



90,820



95,513



(4,693)


(4.9)


EBITDA



169,945



150,911



19,034


12.6



446,934



452,716



(5,782)


(1.3)


Property disposition gains












(31,517)



31,517



Adjusted EBITDA


$

169,945


$

150,911


$

19,034


12.6


$

446,934


$

421,199


$

25,735


6.1


























Reconciliation of Net Cash Provided by
Operating Activities to Free Cash Flow
























Net cash provided by operating activities


$

127,720


$

79,706


$

48,014


60.2


$

342,537


$

298,911


$

43,626


14.6


Capital expenditures



(7,040)



(6,802)



(238)


(3.5)



(22,921)



(20,031)



(2,890)


(14.4)


Free Cash Flow


$

120,680


$

72,904


$

47,776


65.5


$

319,616


$

278,880


$

40,736


14.6


 

(unaudited, in thousands)






Three Months Ended


Nine Months Ended




September 30, 


September 30, 










Variance














2022


2021


$


%


2022


2021


$


%


Reconciliation of Revenues to Organic Revenues
























Revenues


$

729,704


$

650,199



79,505


12.2


$

2,034,433


$

1,823,957



210,476


11.5


Revenue growth from acquisitions



(23,709)





(23,709)




(61,748)





(61,748)



Organic revenues 


$

705,995



650,199



55,796


8.6


$

1,972,685



1,823,957



148,728


8.2


























Reconciliation of Residential Revenues to
Organic Residential Revenues
























Residential revenues


$

337,878


$

307,747



30,131


9.8


$

922,448


$

835,871



86,577


10.4


Residential revenues from acquisitions



(13,909)





(13,909)




(35,818)





(35,818)



Residential organic revenues


$

323,969


$

307,747



16,222


5.3


$

886,630


$

835,871



50,759


6.1


























Reconciliation of Commercial Revenues to
Organic Commercial Revenues
























Commercial revenues


$

243,478


$

218,648



24,830


11.4


$

683,748


$

618,183



65,565


10.6


Commercial revenue growth from acquisitions



(3,693)





(3,693)




(9,857)





(9,857)



Commercial organic revenues


$

239,785


$

218,648



21,137


9.7


$

673,891


$

618,183



55,708


9.0


























Reconciliation of Termite Revenues to
Organic Termite Revenues
























Termite revenues


$

139,668


$

117,423



22,245


18.9


$

406,155


$

350,791



55,364


15.8


Termite revenues from acquisitions



(6,107)





(6,107)




(16,073)





(16,073)



Termite organic revenues


$

133,561


$

117,423



16,138


13.7


$

390,082


$

350,791



39,291


11.2




















































Three Months Ended


Nine Months Ended




September 30, 


September 30, 










Variance














2021


2020


$


%


2021


2020


$


%


Reconciliation of Revenues to Organic Revenues
























Revenues


$

650,199


$

583,698



66,501


11.4


$

1,823,957


$

1,624,928



199,029


12.2


Revenue growth from acquisitions



(12,689)





(12,689)




(42,677)





(42,677)



Organic revenues 


$

637,510



583,698



53,812


9.2


$

1,781,280



1,624,928



156,352


9.6


























Reconciliation of Residential Revenues to
Organic Residential Revenues
























Residential revenues


$

307,747


$

275,581



32,166


11.7


$

835,871


$

738,159



97,712


13.2


Residential revenues from acquisitions



(6,004)





(6,004)




(16,800)





(16,800)



Residential organic revenues


$

301,743


$

275,581



26,162


9.5


$

819,071


$

738,159



80,912


11.0


























Reconciliation of Commercial Revenues to
Organic Commercial Revenues
























Commercial revenues


$

218,648


$

199,561



19,087


9.6


$

618,183


$

562,777



55,406


9.8


Commercial revenue growth from acquisitions



(4,532)





(4,532)




(19,701)





(19,701)



Commercial organic revenues


$

214,116


$

199,561



14,555


7.3


$

598,482


$

562,777



35,705


6.3


























Reconciliation of Termite Revenues to
Organic Termite Revenues
























Termite revenues


$

117,423


$

102,144



15,279


15.0


$

350,791


$

306,188



44,603


14.6


Termite revenues from acquisitions



(2,153)





(2,153)




(6,176)





(6,176)



Termite organic revenues


$

115,270


$

102,144



13,126


12.9


$

344,615


$

306,188



38,427


12.6


 

CONFERENCE CALL ANNOUNCEMENT

Rollins, Inc.
(NYSE: ROL)

Management will hold a conference call to discuss
Third Quarter 2022 results on

Wednesday, October 26, 2022 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 1-877-869-3839 domestic;
1-201-689-8265 international
with conference ID of 13733118
at least 5 minutes before start time.

REPLAY: available through November 2, 2022
Please dial 1-877-660-6853 / 1-201-612-7415, Passcode 13733118
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

For Further Information Contact
Julie Bimmerman (404) 888-2103

Cision View original content:https://www.prnewswire.com/news-releases/rollins-inc-reports-third-quarter-2022-financial-results-301659328.html

SOURCE Rollins, Inc.