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ROLLINS, INC. REPORTS FIRST QUARTER 2024 FINANCIAL RESULTS
Double-Digit Revenue Growth Drives Solid Increase in Earnings and Cash Flow
ATLANTA, April 24, 2024 /PRNewswire/ -- Rollins, Inc. (NYSE:ROL) ("Rollins" or the "Company"), a premier global consumer and commercial services company, reported unaudited financial results for the first quarter of 2024.
Key Highlights
First quarter revenues were $748 million, an increase of 13.7% over the first quarter 2023 with organic revenues* increasing 7.5%.
Quarterly operating income was $132 million, an increase of 18.0% over the first quarter of 2023. Quarterly operating margin was 17.7% of revenue, an increase of 60 basis points over the first quarter of 2023. Adjusted operating income* was $138 million, an increase of 22.7% over the prior year. Adjusted operating income margin* was 18.4%, an increase of 130 basis points over the prior year. Adjusted EBITDA* was $161 million, an increase 19.3%. Adjusted EBITDA margin* was 21.5% of revenue, an increase of 100 basis points over the first quarter of 2023.
Quarterly net income was $94 million, an increase of 7.0% over the prior year net income. Adjusted net income* was $98 million, an increase of 16.1% over the prior year.
Quarterly EPS was $0.19 per diluted share, a 5.6% increase over the prior year EPS of $0.18. Adjusted EPS* was $0.20 per diluted share, an increase of 17.6% over the prior year.
Operating cash flow was $127 million for the quarter, an increase of 26.5% over the prior year. The Company invested $47 million in acquisitions, $7 million in capital expenditures, and paid dividends totaling $73 million.
*Amounts are non-GAAP financial measures. See the schedules below for a discussion of non-GAAP financial metrics including a reconciliation of the most directly comparable GAAP measure.
Management Commentary
"The team delivered a strong first quarter with double-digit revenue across all major service lines and an improving margin and cash flow profile," said Jerry Gahlhoff, Jr., President and CEO. "While there was some unfavorable and erratic weather in January compared to last year, we delivered a healthy 7.5 percent organic growth rate for the quarter. We saw significant improvement moving through the quarter, as organic revenue growth accelerated to over 10 percent for February and March, with solid performance across our residential, commercial, and termite and ancillary businesses. Demand for our services remains strong and our pipeline for acquisitions is robust. We are well positioned for continued growth in 2024, both organically, as well as through acquisitions, and remain focused on continuous improvement initiatives to enhance profitability across our business," Mr. Gahlhoff added.
"It was encouraging to see the strong growth in revenue, profitability, and cash flow in the quarter, as the team delivered healthy revenue growth, 130 basis points of improvement in adjusted operating margins, and a 29 percent increase in free cash flow in the quarter," said Kenneth Krause, Executive Vice President and CFO. "We achieved a healthy first quarter gross margin level and saw further leverage in SG&A costs while also making incremental investments in resources and programs to drive growth," Mr. Krause concluded.
Three Months Ended Financial Highlights
Three Months Ended March 31,
Variance
(in thousands, except per share data)
2024
2023
$
%
GAAP Metrics
Revenues
$ 748,349
$ 658,015
$ 90,334
13.7 %
Gross profit (1)
$ 382,791
$ 331,173
$ 51,618
15.6 %
Gross profit margin (1)
51.2 %
50.3 %
90 bps
Operating income
$ 132,424
$ 112,240
$ 20,184
18.0 %
Operating income margin
17.7 %
17.1 %
60 bps
Net income
$ 94,394
$ 88,234
$ 6,160
7.0 %
EPS
$ 0.19
$ 0.18
$ 0.01
5.6 %
Operating cash flow
$ 127,433
$ 100,773
$ 26,660
26.5 %
Non-GAAP Metrics
Adjusted operating income (2)
$ 137,689
$ 112,240
$ 25,449
22.7 %
Adjusted operating margin (2)
18.4 %
17.1 %
130 bps
Adjusted net income (2)
$ 98,357
$ 84,727
$ 13,630
16.1 %
Adjusted EPS (2)
$ 0.20
$ 0.17
$ 0.03
17.6 %
Adjusted EBITDA (2)
$ 160,783
$ 134,742
$ 26,041
19.3 %
Adjusted EBITDA margin (2)
21.5 %
20.5 %
100 bps
Free cash flow (2)
$ 120,262
$ 93,137
$ 27,125
29.1 %
(1) Exclusive of depreciation and amortization
(2) 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 directly comparable GAAP measure.
About Rollins, Inc.:
Rollins, Inc. (ROL) is a premier global consumer and commercial services company. Through its family of leading brands, 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, with more than 19,000 employees from more than 800 locations. Rollins is parent to 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, Fox Pest Control, Orkin Canada, Orkin Australia, Safeguard (UK), Aardwolf Pestkare (Singapore), and more. You can learn more about Rollins and its subsidiaries by visiting www.rollins.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release as well as other written or oral statements by the Company may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current opinions, expectations, intentions, beliefs, plans, objectives, assumptions and projections about future events and financial trends affecting the operating results and financial condition of our business. Although we believe that these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions, or expectations. Generally, statements that do not relate to historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. The words "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "possible," "potential," "predict," "should," "will," "would," and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this press release include, but are not limited to, statements regarding: expectations with respect to our financial and business performance; demand for our services; our pipeline of acquisitions; continuous improvement initiatives enhancing profitability; and a balanced capital allocation program.
These forward-looking statements are based on information available as of the date of this press release, and current expectations, forecasts, and assumptions, and involve a number of judgments, risks and uncertainties. Important factors could cause actual results to differ materially from those indicated or implied by forward-looking statements including, but not limited to, those set forth in the sections entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and may also be described from time to time in our future reports filed with the SEC.
Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required by law.
Conference Call
Rollins will host a conference call on Thursday, April 25, 2024 at 8:30 a.m. Eastern Time to discuss the first quarter 2024 results. The conference call will also broadcast live over the internet via a link provided on the Rollins, Inc. website at www.rollins.com. Interested parties can also dial into the call at 1-877-869-3839 (domestic) or +1-201-689-8265 (internationally) with conference ID of 13745380. For interested individuals unable to join the call, a replay will be available on the website for 180 days.
ROLLINS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands)
(unaudited)
March 31,2024
December 31,2023
ASSETS
Cash and cash equivalents
$ 112,971
$ 103,825
Trade receivables, net
177,254
178,214
Financed receivables, short-term, net
35,717
37,025
Materials and supplies
35,698
33,383
Other current assets
62,713
54,192
Total current assets
424,353
406,639
Equipment and property, net
127,116
126,661
Goodwill
1,095,141
1,070,310
Intangibles, net
549,390
545,734
Operating lease right-of-use assets
341,639
323,390
Financed receivables, long-term, net
79,040
75,909
Other assets
41,940
46,817
Total assets
$ 2,658,619
$ 2,595,460
LIABILITIES
Accounts payable
$ 40,038
$ 49,200
Accrued insurance – current
51,660
46,807
Accrued compensation and related liabilities
79,372
114,355
Unearned revenues
186,021
172,380
Operating lease liabilities – current
97,394
92,203
Other current liabilities
137,451
101,744
Total current liabilities
591,936
576,689
Accrued insurance, less current portion
51,928
48,060
Operating lease liabilities, less current portion
246,614
233,369
Long-term debt
510,909
490,776
Other long-term accrued liabilities
89,736
90,999
Total liabilities
1,491,123
1,439,893
STOCKHOLDERS' EQUITY
Common stock
484,230
484,080
Retained earnings and other equity
683,266
671,487
Total stockholders' equity
1,167,496
1,155,567
Total liabilities and stockholders' equity
$ 2,658,619
$ 2,595,460
ROLLINS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited)
Three Months Ended March 31,
2024
2023
REVENUES
Customer services
$ 748,349
$ 658,015
COSTS AND EXPENSES
Cost of services provided (exclusive of depreciation and amortization below)
365,558
326,842
Sales, general and administrative
223,057
196,431
Depreciation and amortization
27,310
22,502
Total operating expenses
615,925
545,775
OPERATING INCOME
132,424
112,240
Interest expense, net
7,725
465
Other expense (income), net
61
(4,714)
CONSOLIDATED INCOME BEFORE INCOME TAXES
124,638
116,489
PROVISION FOR INCOME TAXES
30,244
28,255
NET INCOME
$ 94,394
$ 88,234
NET INCOME PER SHARE - BASIC AND DILUTED
$ 0.19
$ 0.18
Weighted average shares outstanding - basic
484,131
492,516
Weighted average shares outstanding - diluted
484,318