Company Announcements

ROLLINS, INC. REPORTS SECOND QUARTER AND SIX MONTH 2022 FINANCIAL RESULTS

ATLANTA , July 27, 2022 /PRNewswire/ -- Rollins, Inc. (NYSE: ROL) ("Rollins" or the "Company"), a premier global consumer and commercial services company, reported unaudited financial results for its second quarter and six months ended June 30, 2022.

The Company recorded record second quarter 2022 revenues of $714.0 million, an increase of 11.9% over the second quarter 2021 revenues of $638.2 million, with organic revenues* increasing 8.7% to $693.6 million. The Company's second quarter 2022 reported net income was $100.3 million or $0.20 per diluted share, compared to $98.9 million or $0.20 per diluted share for second quarter of 2021. Net income for the quarter was impacted by an increase in revenues offset by cost increases related to people, advertising, fleet, and materials and supplies. Revenues are impacted by the seasonal nature of the Company's pest and termite control services. Our residential, commercial, and termite and ancillary services each experienced double digit revenue percentage growth. People costs and materials and supplies increased in conjunction with the increase in revenues, and fleet costs were driven by an increase in fuel costs. Advertising costs are up due to a combination of an increase in our advertising campaigns in reaction to the late arrival of spring, combined with the impact of a change in our quarterly process for estimating and accruing advertising expenses. However, we expect total advertising expense to be consistent as a percentage of revenue year over year.  Adjusted net income* and adjusted earnings per diluted share* for the second quarter ended June 30, 2021 were $98.5 million and $0.20 per diluted share, respectively. The second quarter 2021 results have been adjusted to exclude the gain related to the disposition of properties received through the 2019 acquisition of Clark Pest Control of Stockton, Inc. of $0.5 million ($0.3 million, net of tax).

For the six months ended June 30, 2022, the Company's revenues rose 11.2% to $1.305 billion compared to $1.174 billion for the prior year, with organic revenues* increasing 8.0% to $1.267 billion. The Company reported net income of $172.7 million or $0.35 per diluted share compared to $191.5 million or $0.39 per diluted share for the prior year. Net income for the six months was impacted by an increase in revenues offset by cost increases related to people, fleet, advertising, and materials and supplies. Adjusted net income* and adjusted earnings per diluted share* for the six months ended June 30, 2021 were $168.3 million and $0.34, respectively. The results for 2021 have been adjusted for the gain related to the disposition of the properties received through the 2019 acquisition of Clark Pest Control of Stockton, Inc. of $31.5 million ($23.2 million net of tax).

Gary W. Rollins, Chairman and Chief Executive Officer of Rollins stated, "We are proud of our second quarter results and believe we are well positioned for the remainder of 2022. Our employees have displayed a strong level of commitment and drive towards taking care of our customers. We are confident in our continued strategic growth and profitability moving forward."

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 expectation in connection with its advertising expense, the Company's belief that it is well positioned for 2022 and its confidence in its strategic growth and profitability moving forward.  

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)











June 30


December 31



2022


2021

ASSETS







Cash and cash equivalents


$

220,964


$

105,301

Trade accounts receivables, net



162,755



139,579

Financed receivables, net



29,822



26,152

Materials and supplies



29,515



28,926

Other current assets



63,942



52,422

Total Current Assets



506,998



352,380

Equipment and property, net



130,424



133,257

Goodwill



742,019



721,819

Customer contracts, net



318,015



325,929

Trademarks and tradenames, net



111,040



108,976

Other intangible assets, net



10,004



11,679

Operating lease, right-of-use assets



252,355



244,784

Financed receivables, long-term, net



52,961



47,097

Other assets



43,666



34,949

Total Assets


$

2,167,482


$

1,980,870

LIABILITIES







Accounts payable



50,702



44,568

Accrued insurance, current



37,724



36,414

Accrued compensation and related liabilities



95,948



97,862

Unearned revenue



165,220



145,122

Operating lease liabilities, current



77,867



75,240

Current portion of long-term debt



15,000



18,750

Other current liabilities



75,283



73,206

Total Current Liabilities



517,744



491,162

Accrued insurance, less current portion



32,470



31,545

Operating lease liabilities, less current portion



178,021



172,520

Long-term debt



219,858



136,250

Long-term accrued liabilities



73,822



67,345

Total Liabilities



1,021,915



898,822

STOCKHOLDERS' EQUITY







Common stock



492,417



491,911

Retained earnings and other equity



653,150



590,137

Total stockholders' equity



1,145,567



1,082,048

Total Liabilities and Stockholders' Equity


$

2,167,482


$

1,980,870

 

 

 

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands except per share data)

(unaudited)

















Three Months Ended


Six Months Ended



June 30


June 30



2022


2021


2022


2021

REVENUES













Customer services


$

714,049


$

638,204


$

1,304,729


$

1,173,758

COSTS AND EXPENSES













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



336,780



297,862



632,158



559,414

Sales, general and administrative



219,987



183,482



398,772



345,690

Depreciation and amortization



24,325



23,306



49,172



46,902

   Total operating expenses



581,092



504,650



1,080,102



952,006

OPERATING INCOME



132,957



133,554



224,627



221,752

Interest expense, net



880



506



1,448



1,112

Other (income), net



(1,911)



(891)



(3,190)



(33,151)

CONSOLIDATED INCOME BEFORE INCOME TAXES



133,988



133,939



226,369



253,791

PROVISION FOR INCOME TAXES



33,689



35,085



53,625



62,294

NET INCOME


$

100,299


$

98,854


$

172,744


$

191,497

NET INCOME PER SHARE - BASIC AND DILUTED


$

0.20


$

0.20


$

0.35


$

0.39

Weighted average shares outstanding - basic



492,327



491,999



492,270



491,950

Weighted average shares outstanding - diluted



492,440



491,999



492,382



491,950

 

APPENDIX

Reconciliation of GAAP and non-GAAP Financial Measures

The Company has used the non-GAAP financial measures of organic revenues, adjusted net income and adjusted earnings per share ("EPS") in this earnings release, and the non-GAAP financial measures of organic revenues by type, organic revenues in constant dollars, adjusted EBITDA, 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, organic revenues by type and organic revenues in constant dollars to compare revenues over various periods excluding the impact of acquisitions and the change in foreign currency rates. 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


Six Months Ended




June 30


June 30










Variance








Variance




2022


2021


$


%


2022


2021


$


%


Reconciliation of Net Income to Adjusted Net
Income and EPS
























Net income


$

100,299


$

98,854


$

1,445


1.5


$

172,744


$

191,497


$

(18,753)


(9.8)


Property disposition gains (net of tax $337 and
$23,230, respectively)





(459)



459






(31,517)



31,517



Adjusted income taxes on excluded items





122



(122)






8,287



(8,287)



Adjusted net income


$

100,299


$

98,517


$

1,782


1.8


$

172,744


$

168,267


$

4,477


2.7


Adjusted earnings per share - basic and diluted


$

0.20


$

0.20


$



$

0.35


$

0.34


$

0.01


2.9


Weighted average shares outstanding - basic



492,327



491,999



328


0.1



492,270



491,950



320


0.1


Weighted average shares outstanding - diluted



492,440



491,999



441


0.1



492,382



491,950



432


0.1


























Reconciliation of Net Income to EBITDA and
Adjusted EBITDA
























Net income


$

100,299


$

98,854


$

1,445


1.5


$

172,744


$

191,497


$

(18,753)


(9.8)


Depreciation and amortization



24,325



23,306



1,019


4.4



49,172



46,902



2,270


4.8


Interest expense, net



880



506



374


73.9



1,448



1,112



336


30.2


Provision for income taxes



33,689



35,085



(1,396)


(4.0)



53,625



62,294



(8,669)


(13.9)


EBITDA



159,193



157,751



1,442


0.9



276,989



301,805



(24,816)


(8.2)


Property disposition gains





(459)



459






(31,517)



31,517



Adjusted EBITDA


$

159,193


$

157,292


$

1,901


1.2


$

276,989


$

270,288


$

6,701


2.5


























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
























Net cash provided by operating activities


$

127,285


$

99,719


$

27,566


27.6


$

214,817


$

219,205


$

(4,388)


(2.0)


Capital expenditures



(7,886)



(5,403)



(2,483)


(45.9)



(15,881)



(13,229)



(2,652)


(20.0)


Free Cash Flow


$

119,399


$

94,316


$

25,083


26.6


$

198,936


$

205,976


$

(7,040)


(3.4)






























Three Months Ended


Six Months Ended




June 30


June 30










Variance














2022


2021


$


%


2022


2021


$


%


Reconciliation of Revenues to Organic Revenues
and Organic Revenues in Constant Dollars
























Revenues


$

714,049


$

638,204



75,845


11.9


$

1,304,729


$

1,173,758



130,971


11.2


Revenue growth from acquisitions



(20,471)





(20,471)




(38,039)





(38,039)



Organic revenues 



693,578



638,204



55,374


8.7



1,266,690



1,173,758



92,932


8.0


Adjustment to organic revenues on a constant exchange rate



(7,624)





(7,624)




(11,287)





(11,287)



Organic revenues in constant dollars


$

685,954


$

638,204



47,750


7.5


$

1,255,403


$

1,173,758



81,645


7.0


























Reconciliation of Residential Revenues to
Organic Residential Revenues
























Residential revenues


$

325,311


$

292,945



32,366


11.0


$

584,570


$

528,124



56,446


10.7


Residential revenues from acquisitions



(11,625)





(11,625)




(21,908)





(21,908)



Residential organic revenues


$

313,686


$

292,945



20,741


7.0


$

562,662


$

528,124



34,538


6.6


























Reconciliation of Commercial Revenues to
Organic Commercial Revenues
























Commercial revenues


$

234,483


$

210,838



23,645


11.2


$

440,270


$

399,535



40,735


10.2


Commercial revenue growth from acquisitions



(3,943)





(3,943)




(6,165)





(6,165)



Commercial organic revenues


$

230,540


$

210,838



19,702


9.3


$

434,105


$

399,535



34,570


8.7


























Reconciliation of Termite Revenues to Organic
Termite Revenues
























Termite revenues


$

146,781


$

127,674



19,107


15.0


$

266,487


$

233,368



33,119


14.2


Termite revenues from acquisitions



(4,903)





(4,903)




(9,966)





(9,966)



Termite organic revenues


$

141,878


$

127,674



14,204


11.2


$

256,521


$

233,368



23,153


9.9


 

CONFERENCE CALL ANNOUNCEMENT

Rollins, Inc. 
(NYSE: ROL)

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

Wednesday, July 27, 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 13731028 
at least 5 minutes before start time.

REPLAY: available through August 3, 2022 
Please dial 1-877-660-6853 / 1-201-612-7415, Passcode 13731028 
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

Cision View original content:https://www.prnewswire.com/news-releases/rollins-inc-reports-second-quarter-and-six-month-2022-financial-results-301594049.html

SOURCE Rollins, Inc.