Exhibit 99.1

 


For Further Information Contact

Harry J. Cynkus (404) 888-2922

 

FOR IMMEDIATE RELEASE

 

ROLLINS, INC. REPORTS THIRD QUARTER FINANCIAL RESULTS

 

Revenues Rise 8.8% over Previous Year’s Third Quarter; Net income up 12.8%

 

ATLANTA, GEORGIA, October 25, 2006: Rollins, Inc. (NYSE:ROL), a premier North American consumer and commercial services company, today reported that revenues rose 8.8% for the third quarter ended September 30, 2006 to $227.8 million, compared to revenues of $209.3 million for the third quarter ended September 30, 2005. Excluding revenues resulting from the Company’s October 1, 2005 acquisition of the Industrial Fumigant Company, revenues grew 4.6%. See attached detailed reconciliation.

 

Rollins recorded net income of $17.0 million, or $0.25 per diluted share for the third quarter ended September 30, 2006, compared to $15.1 million, or $0.22 per diluted share for the third quarter ended September 30, 2005.

 

Rollins recorded net income of $47.3 million, or $0.69 per diluted share for the nine months ended September 30, 2006, compared to $45.4 million, or $0.65 per diluted share for the nine months ended September 30, 2005.  Included in the first nine months of last years results 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 earnings increased 10.1% or $.08 per diluted share compared to the same period last year. See attached detailed reconciliation.

 

Rollins’ balance sheet remains strong with total assets of $454.2 million and stockholders’ equity increasing to $198.9 million. In the third quarter, the Company announced that it repurchased 127,306 shares of common stock with a total of 1,006,680 shares repurchased year to date. In total, approximately 2.3 million additional shares may be purchased under programs previously approved by the Board of Directors.

 

Gary W. Rollins, President and Chief Executive Officer of Rollins, Inc. stated, “We are pleased with the progress we are making increasing our revenue and growing our customer base. Additionally, we are focused on providing our customers a positive experience from the first service rendered through the entire customer relationship. Our commitment to extraordinary service has been recognized through recent industry acknowledgement. Orkin received the “Best in Class Customer Service” award from PCT Magazine and Syngenta, a leading pesticide manufacturer. We were recognized in the class of pest control companies with over $6.0 million in revenue, which includes a large number of exceptional competitors.”

 

 

 



 

 

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 September 30,

(unaudited)

 

(unaudited)

ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

$

53,787

 

 

$

79,489

 

Trade receivables, short-term

 

57,817

 

 

 

48,954

 

Materials and supplies

 

8,398

 

 

 

7,358

 

Deferred income taxes

 

21,053

 

 

 

30,389

 

Other current assets

 

8,975

 

 

 

8,097

 

Total Current Assets

 

150,030

 

 

 

174,287

 

 

 

 

 

 

 

 

 

Equipment and property, net

 

72,090

 

 

 

57,928

 

Goodwill and other intangible assets

 

201,556

 

 

 

189,893

 

Deferred income taxes

 

16,867

 

 

 

17,441

 

Trade receivables, long-term

 

9,111

 

 

 

9,866

 

Other assets

 

4,531

 

 

 

4,221

 

Total Assets

$

454,185

 

 

$

453,636

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Capital leases

$

623

 

 

$

-

 

Accounts payable

 

14,092

 

 

 

14,901

 

Accrued insurance

 

16,633

 

 

 

16,516

 

Accrued compensation and related liabilities

 

42,813

 

 

 

38,816

 

Unearned revenue

 

88,945

 

 

 

90,080

 

Other current liabilities

 

31,759

 

 

 

39,827

 

Total Current Liabilities

 

194,865

 

 

 

200,140

 

 

 

 

 

 

 

 

 

Capital leases, less current portion

 

197

 

 

 

-

 

Accrued pension

 

15,651

 

 

 

27,291

 

Long-term accrued liabilities

 

44,593

 

 

 

47,522

 

Total Liabilities

 

255,306

 

 

 

274,953

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Common stock

 

67,783

 

 

 

68,383

 

Retained earnings and other equity

 

131,096

 

 

 

110,300

 

Total Stockholders’ Equity

 

198,879

 

 

 

178,683

 

Total Liabilities and Stockholders’ Equity

$

454,185

 

 

$

453,636

 

 

 

 

 



 

 

ROLLINS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30,

(in thousands except per share data)

(unaudited)

 

Third Quarter

 

Nine months ended

 

September 30

 

September 30

 

2006

 

2005

 

2006

 

2005

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer services

$

227,816

 

 

$

209,346

 

 

$

654,225

 

 

$

607,587

 

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services provided

 

119,206

 

 

 

110,083

 

 

 

345,255

 

 

 

324,626

 

Depreciation and amortization

 

6,662

 

 

 

5,800

 

 

 

20,400

 

 

 

17,808

 

Sales, general and administrative

 

74,472

 

 

 

68,574

 

 

 

211,340

 

 

 

194,839

 

Pension curtailment gain

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,176

)

Gain sales of assets

 

(17

)

 

 

(1

)

 

 

(15

)

 

 

(544

)

Interest income

 

(332

)

 

 

(489

)

 

 

(968

)

 

 

(1,305

)

 

 

199,991

 

 

 

183,967

 

 

 

576,012

 

 

 

531,248

 

INCOME BEFORE TAXES

 

27,825

 

 

 

25,379

 

 

 

78,213

 

 

 

76,339

 

PROVISION FOR INCOME TAXES

 

10,788

 

 

 

10,279

 

 

 

30,943

 

 

 

30,918

 

NET INCOME

$

17,037

 

 

$

15,100

 

 

$

47,270

 

 

$

45,421

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE - BASIC

$

0.25

 

 

$

0.22

 

 

$

0.70

 

 

$

0.67

 

NET INCOME PER SHARE - DILUTED

$

0.25

 

 

$

0.22

 

 

$

0.69

 

 

$

0.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

 

67,068

 

 

 

68,117

 

 

 

67,184

 

 

 

67,999

 

Weighted average shares outstanding – diluted

 

68,700

 

 

 

70,042

 

 

 

68,926

 

 

 

70,046

 

 

 

 



 

 

 

ROLLINS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

(in thousands)

 

2006

 

2005

 

 

Unaudited

 

 

 

Unaudited

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net Income

$

47,270

 

 

$

45,421

 

Adjustments to reconcile net income to net cash

 

 

 

 

 

 

 

Provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

20,400

 

 

 

17,808

 

Pension curtailment gain

 

-

 

 

 

(4,176

)

Provision for deferred income taxes

 

5,144

 

 

 

2,085

 

Gain on sales of assets

 

(15

)

 

 

(544

)

Other, net

 

(1,822

)

 

 

(2,590

)

(Increase)/decrease in assets

 

 

 

 

 

 

 

Trade receivables

 

(9,747

)

 

 

(3,187

)

Materials and supplies

 

685

 

 

 

1,536

 

Other current assets

 

138

 

 

 

(2,059

)

Other non-current assets

 

735

 

 

 

233

 

Increase/(decrease) in liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

2,893

 

 

 

8,298

 

Unearned revenue

 

8,955

 

 

 

10,147

 

Accrued insurance

 

1,398

 

 

 

(2,484

)

Accrual for termite contracts

 

(3,900

)

 

 

(1,263

)

Accrued Pension

 

(5,000

)

 

 

-

 

Long-term accrued liabilities

 

(6,666

)

 

 

(881

)

Net cash provided by operating activities

 

60,468

 

 

 

68,344

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchase of equipment and property

 

(15,657

)

 

 

(16,999

)

Acquisitions of companies

 

(5,050

)

 

 

(3,022

)

Cash from sales of franchises

 

550

 

 

 

340

 

Proceeds from sales of assets

 

20

 

 

 

749

 

Net cash used in investing activities

 

(20,137

)

 

 

(18,932

)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

Dividends paid

 

(12,790

)

 

 

(10,304

)

Common stock purchased

 

(19,452

)

 

 

(21,313

)

Common stock options exercised

 

435

 

 

 

3,229

 

Principal payments on capital leases

 

(566

)

 

 

-

 

Other

 

2,157

 

 

 

983

 

Net cash used in financing activities

 

(30,216

)

 

 

(27,405

)

Effect of exchange rate changes on cash

 

607

 

 

 

745

 

Net increase/(decrease) in cash and cash equivalents

 

10,722

 

 

 

22,752

 

Cash and cash equivalents at beginning of period

 

43,065

 

 

 

56,737

 

Cash and cash equivalents at end of period

$

53,787

 

 

$

79,489

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

ROLLINS, INC. AND SUBSIDIARIES

REVENUE RECONCILIATION

REVENUES EXCLUDING THE INDUSTRIAL FUMIGANT COMPANY

 

Third Quarter Ended

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

2006

 

2005

 

$ Better/

 

% Better/

 

 

(Unaudited)

 

(Unaudited)

 

(Worse)

 

(Worse)

 

Reported net revenues

$

227,816

 

$

209,346

 

$

18,470

 

 

8.8

%

Less: The Industrial Fumigant Company (IFC)

 

8,773

 

 

-

 

 

8,773

 

 

100.0

 

Net revenue excluding IFC

$

219,043

 

$

209,346

 

$

9,697

 

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ROLLINS, INC. AND SUBSIDIARIES

NET INCOME AND EARNINGS PER SHARE RECONCILIATION

EARNINGS AND EARNINGS PER SHARE EXCLUDING PENSION CURTAILMENT GAIN

 

Third Quarter Ended

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

2006

 

2005

 

$ Better/

 

% Better/

 

 

(Unaudited)

 

(Unaudited)

 

(Worse)

 

(Worse)

 

Reported net income

$

47,270

 

$

45,421

 

$

1,849

 

 

4.1

%

Less: Pension Curtailment Gain (net of tax)

 

-

 

 

2,485

 

 

2,485

 

 

100.0

 

Income excluding Pension Curtailment Gain

$

47,270

 

$

42,936

 

$

4,334

 

 

10.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Earnings Per Share – Basic

$

0.70

 

$

0.67

 

$

0.03

 

 

4.5

%

Less: Pension Curtailment Gain (net of tax)

 

-

 

 

0.04

 

 

0.04

 

 

100.0

 

Earnings Per Share – Basic excluding Pension Curtailment Gain

$

0.70

 

$

0.63

 

$

0.07

 

 

11.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Earnings Per Share – Diluted

$

0.69

 

$

0.65

 

$

0.04

 

 

6.2

%

Less: Pension Curtailment Gain (net of tax)

 

-

 

 

0.04

 

 

0.04

 

 

100.0

 

Earnings Per Share – Diluted excluding Pension Curtailment Gain

$

0.69

 

$

0.61

 

$

0.08

 

 

13.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

CONFERENCE CALL ANNOUNCEMENT

Rollins, Inc.

(NYSE: ROL)

 

 

 

Management will hold a conference call to discuss

third quarter results on:

 

Wednesday, October 25, 2006 at:

9:30 a.m. Eastern

8:30 a.m. Central

7:30 a.m. Mountain

6:30 a.m. Pacific

 

TO PARTICIPATE:

Please dial 800-867-0448 domestic;

303-262-2140 international

at least 5 minutes before start time.

 

REPLAY: available through November 1, 2006

Please dial 800-405-2236/303-590-3000, Passcode: 11073223

THIS CALL CAN ALSO BE ACCESSED THROUGH THE INTERNET AT

www.viavid.net

 

Questions?

Contact Samantha Alphonso at Financial Relations Board at 212-827-3746

Or email to salphonso@financialrelationsboard.com