ROLLINS, INC. REPORTS FIRST QUARTER 2025 FINANCIAL RESULTS
Rollins (NYSE:ROL) reported strong Q1 2025 financial results with revenues reaching $823 million, up 9.9% year-over-year, including 7.4% organic growth. The company achieved notable increases in key metrics:
- Net income rose 11.5% to $105 million
- EPS increased 15.8% to $0.22 per diluted share
- Operating cash flow grew 15.3% to $147 million
The company's operating margin was 17.3%, showing a slight decrease of 40 basis points. The stronger dollar impacted revenues by 40 basis points. Rollins continued its strategic growth through M&A, including the recent Saela acquisition in April. The company maintained its focus on organic demand generation while experiencing healthy market conditions despite having one less business day in the quarter.
Rollins (NYSE:ROL) ha riportato solidi risultati finanziari nel primo trimestre 2025, con ricavi pari a 823 milioni di dollari, in crescita del 9,9% su base annua, di cui il 7,4% derivante da crescita organica. L'azienda ha registrato incrementi significativi nei principali indicatori:
- L'utile netto è aumentato dell'11,5%, raggiungendo 105 milioni di dollari
- L'EPS è cresciuto del 15,8%, arrivando a 0,22 dollari per azione diluita
- Il flusso di cassa operativo è salito del 15,3%, toccando 147 milioni di dollari
Il margine operativo si è attestato al 17,3%, con una leggera diminuzione di 40 punti base. Il rafforzamento del dollaro ha inciso sui ricavi per 40 punti base. Rollins ha perseguito la sua crescita strategica tramite fusioni e acquisizioni, inclusa la recente acquisizione di Saela in aprile. L'azienda ha mantenuto l'attenzione sulla crescita organica della domanda, beneficiando di condizioni di mercato favorevoli nonostante un giorno lavorativo in meno nel trimestre.
Rollins (NYSE:ROL) reportó sólidos resultados financieros en el primer trimestre de 2025, con ingresos que alcanzaron los 823 millones de dólares, un aumento del 9,9% interanual, incluyendo un crecimiento orgánico del 7,4%. La compañía logró incrementos notables en métricas clave:
- La utilidad neta creció un 11,5% hasta 105 millones de dólares
- Las ganancias por acción (EPS) aumentaron un 15,8%, llegando a 0,22 dólares por acción diluida
- El flujo de caja operativo creció un 15,3%, alcanzando 147 millones de dólares
El margen operativo de la empresa fue del 17,3%, mostrando una ligera disminución de 40 puntos básicos. El fortalecimiento del dólar impactó los ingresos en 40 puntos básicos. Rollins continuó su crecimiento estratégico a través de fusiones y adquisiciones, incluyendo la reciente adquisición de Saela en abril. La compañía mantuvo su enfoque en la generación orgánica de demanda mientras experimentaba condiciones de mercado saludables a pesar de tener un día hábil menos en el trimestre.
롤린스 (NYSE:ROL)는 2025년 1분기 강력한 재무 실적을 보고했으며, 매출은 8억 2,300만 달러로 전년 동기 대비 9.9% 증가했으며, 이 중 7.4%는 유기적 성장에 기인합니다. 회사는 주요 지표에서 눈에 띄는 상승을 기록했습니다:
- 순이익은 11.5% 증가하여 1억 500만 달러
- 희석 주당순이익(EPS)은 15.8% 상승하여 0.22 달러
- 영업 현금 흐름은 15.3% 증가하여 1억 4,700만 달러
회사의 영업 마진은 17.3%로 40 베이시스 포인트 소폭 감소했습니다. 강한 달러가 매출에 40 베이시스 포인트 영향을 미쳤습니다. 롤린스는 4월에 이루어진 최근 Saela 인수를 포함한 M&A를 통해 전략적 성장을 지속했습니다. 회사는 분기 중 영업일이 하루 적었음에도 불구하고 건강한 시장 상황 속에서 유기적 수요 창출에 집중했습니다.
Rollins (NYSE:ROL) a annoncé de solides résultats financiers pour le premier trimestre 2025, avec des revenus atteignant 823 millions de dollars, en hausse de 9,9 % sur un an, dont une croissance organique de 7,4 %. La société a enregistré des augmentations notables sur des indicateurs clés :
- Le bénéfice net a progressé de 11,5 % pour atteindre 105 millions de dollars
- Le BPA a augmenté de 15,8 % pour s’établir à 0,22 dollar par action diluée
- Les flux de trésorerie opérationnels ont crû de 15,3 % pour atteindre 147 millions de dollars
La marge opérationnelle de la société s’est établie à 17,3 %, marquant une légère baisse de 40 points de base. Le renforcement du dollar a impacté les revenus de 40 points de base. Rollins a poursuivi sa croissance stratégique par le biais de fusions et acquisitions, notamment avec l’acquisition récente de Saela en avril. L’entreprise a maintenu son focus sur la génération de demande organique tout en bénéficiant de conditions de marché favorables malgré un jour ouvrable en moins au cours du trimestre.
Rollins (NYSE:ROL) meldete starke Finanzergebnisse für das erste Quartal 2025 mit Umsätzen von 823 Millionen US-Dollar, was einem Anstieg von 9,9 % gegenüber dem Vorjahr entspricht, einschließlich eines organischen Wachstums von 7,4 %. Das Unternehmen erzielte bemerkenswerte Steigerungen bei wichtigen Kennzahlen:
- Der Nettogewinn stieg um 11,5 % auf 105 Millionen US-Dollar
- Das Ergebnis je Aktie (EPS) erhöhte sich um 15,8 % auf 0,22 US-Dollar pro verwässerter Aktie
- Der operative Cashflow wuchs um 15,3 % auf 147 Millionen US-Dollar
Die operative Marge des Unternehmens lag bei 17,3 % und verzeichnete einen leichten Rückgang um 40 Basispunkte. Der starke Dollar belastete die Umsätze um 40 Basispunkte. Rollins setzte sein strategisches Wachstum durch Fusionen und Übernahmen fort, darunter die kürzliche Übernahme von Saela im April. Das Unternehmen behielt seinen Fokus auf organisches Nachfragewachstum bei und profitierte trotz eines Arbeitstages weniger im Quartal von gesunden Marktbedingungen.
- Revenue growth of 9.9% YoY to $823 million
- Strong organic revenue growth of 7.4%
- Net income increase of 11.5% to $105 million
- EPS growth of 15.8% to $0.22
- Operating cash flow up 15.3% to $147 million
- Strategic expansion through Saela acquisition
- Operating margin declined 40 basis points to 17.3%
- Adjusted EBITDA margin decreased 60 basis points to 20.9%
- Negative currency impact of 40 basis points on revenue
- Increased fleet expenses as % of revenue
Insights
Rollins delivered strong revenue and earnings growth, though profitability margins declined slightly amid healthy cash generation and continued acquisitions.
Rollins achieved 9.9% revenue growth in Q1 2025, with organic revenue up 7.4%. Growth was broad-based and robust, especially given the headwind from currency. Net income jumped 11.5% and EPS rose 15.8% to $0.22, signaling operational strength. Adjusted metrics also showed healthy increases: Adjusted net income up 9.7% and Adjusted EPS up 10%. Cash flow was particularly strong, with operating cash flow up 15.3% and free cash flow up 16.5%. These results enabled Rollins to both invest in acquisitions ($27M) and return capital via dividends ($80M). However, margins declined modestly across several measures (operating, EBITDA and adjusted margins fell by 40-60 basis points), likely due to a mix of higher selling and marketing spend and fleet expenses as a percent of revenue. Despite the slight pressure on margins, the overall increase in earnings, strong cash flows and ongoing M&A activity (including the Saela acquisition) reinforce a positive business outlook. The company’s ability to offset a tough currency environment while growing organically and acquiring new businesses demonstrates underlying resilience and effective execution. The results indicate a solid start to the year, with ongoing investment in organic growth and acquisitions supporting future prospects. No material negatives are present, but the modest margin compression warrants monitoring if it continues.
Strong Revenue Growth Drives Double-Digit Increase in Earnings and Cash Flow
Key Highlights
- First quarter revenues were
$823 million 9.9% over the first quarter of 2024 with organic revenues* increasing7.4% . The stronger dollar versus foreign currencies in countries where we operate reduced revenues by 40 basis points during the quarter. - Quarterly operating income was
$143 million 7.7% over the first quarter of 2024. Quarterly operating margin was17.3% , a decrease of 40 basis points versus the first quarter of 2024. Adjusted operating income* was$147 million 6.7% over the prior year. Adjusted operating income margin* was17.9% , a decrease of 50 basis points compared to the prior year. - Adjusted EBITDA* was
$172 million 6.9% over the prior year. Adjusted EBITDA margin* was20.9% , a decrease of 60 basis points versus the first quarter of 2024. - Quarterly net income was
$105 million 11.5% over the prior year. Adjusted net income* was$108 million 9.7% over the prior year. - Quarterly EPS was
$0.22 15.8% increase over the prior year EPS of$0.19 $0.22 10.0% over the prior year. - Operating cash flow was
$147 million 15.3% compared to the prior year. The Company invested$27 million $7 million $80 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
"Our results for the first quarter reflect our resilient business model and our teammates' ongoing focus on operational excellence," said Jerry Gahlhoff, Jr., President and CEO. "We continue to invest in our business by focusing on organic demand generation activities, while also strengthening the breadth and depth of the Rollins portfolio through strategic M&A like the Saela acquisition we made in April. We are thrilled to welcome our Saela teammates to the Rollins family and look forward to the positive contributions they will bring to our business," Mr. Gahlhoff added.
"It was encouraging to see such a strong start to the year as the team delivered solid revenue growth, double-digit earnings growth, and a 15 percent increase in operating cash flow for the quarter," said Kenneth Krause, Executive Vice President and CFO. "Our investments in growth continue to yield results, as organic growth of 7.4 percent was at the midpoint of our range despite one less business day in the quarter. Our markets remain healthy and we are well-positioned to continue delivering strong results through our robust business model," Mr. Krause concluded.
Three Months Ended Financial Highlights
Three Months Ended March 31, | ||||||
Variance | ||||||
(unaudited, in thousands, except per share data and margins) | 2025 | 2024 | $ | % | ||
GAAP Metrics | ||||||
Revenues | $ 74,155 | 9.9 % | ||||
Gross profit (1) | $ 39,579 | 10.3 % | ||||
Gross profit margin (1) | 51.4 % | 51.2 % | 20 bps | |||
Operating income | $ 10,224 | 7.7 % | ||||
Operating income margin | 17.3 % | 17.7 % | (40) bps | |||
Net income | $ 94,394 | $ 10,854 | 11.5 % | |||
EPS | $ 0.22 | $ 0.19 | $ 0.03 | 15.8 % | ||
Net cash provided by operating activities | $ 19,459 | 15.3 % | ||||
Non-GAAP Metrics | ||||||
Adjusted operating income (2) | $ 9,172 | 6.7 % | ||||
Adjusted operating margin (2) | 17.9 % | 18.4 % | (50) bps | |||
Adjusted net income (2) | $ 98,357 | $ 9,511 | 9.7 % | |||
Adjusted EPS (2) | $ 0.22 | $ 0.20 | $ 0.02 | 10.0 % | ||
Adjusted EBITDA (2) | $ 11,074 | 6.9 % | ||||
Adjusted EBITDA margin (2) | 20.9 % | 21.5 % | (60) bps | |||
Free cash flow (2) | $ 19,849 | 16.5 % | ||||
(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. |
The following table presents financial information, including our significant expense categories, for the three months ended March 31, 2025 and 2024:
Three Months Ended March 31, | ||||
(unaudited, in thousands) | 2025 | 2024 | ||
$ | % of | $ | % of | |
Revenue | $ 822,504 | 100.0 % | $ 748,349 | 100.0 % |
Less: | ||||
Cost of services provided (exclusive of depreciation and amortization below): | ||||
Employee expenses | 261,724 | 31.8 % | 238,529 | 31.9 % |
Materials and supplies | 48,491 | 5.9 % | 44,786 | 6.0 % |
Insurance and claims | 16,524 | 2.0 % | 17,644 | 2.4 % |
Fleet expenses | 36,857 | 4.5 % | 30,697 | 4.1 % |
Other cost of services provided (1) | 36,538 | 4.4 % | 33,902 | 4.5 % |
Total cost of services provided (exclusive of depreciation and amortization below) | 400,134 | 48.6 % | 365,558 | 48.8 % |
Sales, general and administrative: | ||||
Selling and marketing expenses | 98,250 | 11.9 % | 82,911 | 11.1 % |
Administrative employee expenses | 81,481 | 9.9 % | 75,778 | 10.1 % |
Insurance and claims | 10,004 | 1.2 % | 10,526 | 1.4 % |
Fleet expenses | 9,403 | 1.1 % | 7,765 | 1.0 % |
Other sales, general and administrative (2) | 51,375 | 6.2 % | 46,077 | 6.2 % |
Total sales, general and administrative | 250,513 | 30.5 % | 223,057 | 29.8 % |
Depreciation and amortization | 29,209 | 3.6 % | 27,310 | 3.6 % |
Interest expense, net | 5,796 | 0.7 % | 7,725 | 1.0 % |
Other expense (income), net | (692) | (0.1) % | 61 | — % |
Income tax expense | 32,296 | 3.9 % | 30,244 | 4.0 % |
Net income | $ 105,248 | 12.8 % | $ 94,394 | 12.6 % |
1) Other cost of services provided includes facilities costs, professional services, maintenance & repairs, software license costs, and other expenses directly related to providing services. |
2) Other sales, general and administrative includes facilities costs, professional services, maintenance & repairs, software license costs, bad debt expense, and other administrative expenses. |
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
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; expected growth; our resilient business model; our focus on operational excellence; investments in our business by focusing on organic demand generation activities and strategic M&A; positive contributions Saela will bring to our business; healthy markets; and being well-positioned to continue delivering strong results through our robust business model.
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, 2024 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 24, 2025 at 8:30 a.m. Eastern Time to discuss the first quarter 2025 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 13752677. 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, | December 31, | ||
ASSETS | |||
Cash and cash equivalents | $ 201,177 | $ 89,630 | |
Trade receivables, net | 194,105 | 196,081 | |
Financed receivables, short-term, net | 38,898 | 40,301 | |
Materials and supplies | 41,249 | 39,531 | |
Other current assets | 80,542 | 77,080 | |
Total current assets | 555,971 | 442,623 | |
Equipment and property, net | 123,754 | 124,839 | |
Goodwill | 1,178,704 | 1,161,085 | |
Intangibles, net | 534,813 | 541,589 | |
Operating lease right-of-use assets | 422,683 | 414,474 | |
Financed receivables, long-term, net | 91,843 | 89,932 | |
Other assets | 40,790 | 45,153 | |
Total assets | $ 2,948,558 | $ 2,819,695 | |
LIABILITIES | |||
Accounts payable | $ 53,075 | $ 49,625 | |
Accrued insurance – current | 44,981 | 54,840 | |
Accrued compensation and related liabilities | 88,898 | 122,869 | |
Unearned revenues | 191,162 | 180,851 | |
Operating lease liabilities – current | 127,456 | 121,319 | |
Other current liabilities | 131,247 | 115,658 | |
Total current liabilities | 636,819 | 645,162 | |
Accrued insurance, less current portion | 70,551 | 61,946 | |
Operating lease liabilities, less current portion | 298,126 | 295,899 | |
Long-term debt | 485,451 | 395,310 | |
Other long-term accrued liabilities | 101,859 | 90,785 | |
Total liabilities | 1,592,806 | 1,489,102 | |
STOCKHOLDERS' EQUITY | |||
Common stock | 484,619 | 484,372 | |
Retained earnings and other equity | 871,133 | 846,221 | |
Total stockholders' equity | 1,355,752 | 1,330,593 | |
Total liabilities and stockholders' equity | $ 2,948,558 | $ 2,819,695 | |
ROLLINS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share data) (unaudited) | |||
Three Months Ended March 31, | |||
2025 | 2024 | ||
REVENUES | |||
Customer services | $ 822,504 | $ 748,349 | |
COSTS AND EXPENSES | |||
Cost of services provided (exclusive of depreciation and amortization below) | 400,134 | 365,558 | |
Sales, general and administrative | 250,513 | 223,057 | |
Depreciation and amortization | 29,209 | 27,310 | |
Total operating expenses | 679,856 | 615,925 | |
OPERATING INCOME | 142,648 | 132,424 | |
Interest expense, net | 5,796 | 7,725 | |
Other (income) expense, net | (692) | 61 | |
CONSOLIDATED INCOME BEFORE INCOME TAXES | 137,544 | 124,638 | |
PROVISION FOR INCOME TAXES | 32,296 | 30,244 | |
NET INCOME | $ 105,248 | $ 94,394 | |
NET INCOME PER SHARE - BASIC AND DILUTED | $ 0.22 | $ 0.19 | |
Weighted average shares outstanding - basic | 484,414 | 484,131 | |
Weighted average shares outstanding - diluted | 484,434 | 484,318 | |
DIVIDENDS PAID PER SHARE | $ 0.165 | $ 0.150 | |
ROLLINS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED CASH FLOW INFORMATION (in thousands) (unaudited) | |||
Three Months Ended March 31, | |||
2025 | 2024 | ||
OPERATING ACTIVITIES | |||
Net income | $ 105,248 | $ 94,394 | |
Depreciation and amortization | 29,209 | 27,310 | |
Change in working capital and other operating activities | 12,435 | 5,729 | |
Net cash provided by operating activities | 146,892 | 127,433 | |
INVESTING ACTIVITIES | |||
Acquisitions, net of cash acquired | (27,191) | (47,132) | |
Capital expenditures | (6,781) | (7,171) | |
Other investing activities, net | 1,405 | 1,838 | |
Net cash used in investing activities | (32,567) | (52,465) | |
FINANCING ACTIVITIES | |||
Net borrowings | 95,215 | 20,000 | |
Payment of dividends | (79,910) | (72,589) | |
Other financing activities, net | (19,917) | (11,665) | |
Net cash used in financing activities | (4,612) | (64,254) | |
Effect of exchange rate changes on cash and cash equivalents | 1,834 | (1,568) | |
Net increase in cash and cash equivalents | $ 111,547 | $ 9,146 | |
APPENDIX
Reconciliation of GAAP and non-GAAP Financial Measures
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.
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 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. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.
The Company has used the following non-GAAP financial measures in this earnings release:
Organic revenues
Organic revenues are calculated as revenues less the revenues from acquisitions completed within the prior 12 months and excluding the revenues from divested businesses. Acquisition revenues are based on the trailing 12-month revenue of our acquired entities. Management uses organic revenues, and organic revenues by type to compare revenues over various periods excluding the impact of acquisitions and divestitures.
Adjusted operating income and adjusted operating margin
Adjusted operating income and adjusted operating margin are calculated by adding back to net income those expenses resulting from the amortization of certain intangible assets, adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control, and restructuring costs related to restructuring and workforce reduction plans. Adjusted operating margin is calculated as adjusted operating income divided by revenues. Management uses adjusted operating income and adjusted operating margin as measures of operating performance because these measures allow the Company to compare performance consistently over various periods.
Adjusted net income and adjusted EPS
Adjusted net income and adjusted EPS are calculated by adding back to the GAAP measures amortization of certain intangible assets, adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control, and restructuring costs related to restructuring and workforce reduction plans, and excluding gains and losses on the sale of non-operational assets and gains on the sale of businesses, and by further subtracting the tax impact of those expenses, gains, or losses. Management uses adjusted net income and adjusted EPS as measures of operating performance because these measures allow the Company to compare performance consistently over various periods.
EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, incremental EBITDA margin and adjusted incremental EBITDA margin
EBITDA is calculated by adding back to net income depreciation and amortization, interest expense, net, and provision for income taxes. EBITDA margin is calculated as EBITDA divided by revenues. Adjusted EBITDA and adjusted EBITDA margin are calculated by further adding back those expenses resulting from the adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control, restructuring costs related to restructuring and workforce reduction plans, and excluding gains and losses on the sale of non-operational assets and gains on the sale of businesses. Management uses EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin as measures of operating performance because these measures allow the Company to compare performance consistently over various periods. Incremental EBITDA margin is calculated as the change in EBITDA divided by the change in revenue. Management uses incremental EBITDA margin as a measure of operating performance because this measure allows the Company to compare performance consistently over various periods. Adjusted incremental EBITDA margin is calculated as the change in adjusted EBITDA divided by the change in revenue. Management uses adjusted incremental EBITDA margin as a measure of operating performance because this measure allows the Company to compare performance consistently over various periods.
Free cash flow and free cash flow conversion
Free cash flow is calculated by subtracting capital expenditures from cash provided by operating activities. Management uses free cash flow to demonstrate the Company's ability to maintain its asset base and generate future cash flows from operations. Free cash flow conversion is calculated as free cash flow divided by net income. Management uses free cash flow conversion to demonstrate how much net income is converted into cash. Management believes that free cash flow is an important financial measure for use in evaluating the Company's liquidity. Free cash flow should be considered in addition to, rather than as a substitute for, net cash provided by operating activities as a measure of our liquidity. Additionally, the Company's definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, management believes it is important to view free cash flow as a measure that provides supplemental information to our consolidated statements of cash flows.
Adjusted sales, general and administrative ("SG&A")
Adjusted SG&A is calculated by removing the adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control. Management uses adjusted SG&A to compare SG&A expenses consistently over various periods.
Leverage ratio
Leverage ratio, a financial valuation measure, is calculated by dividing adjusted net debt by adjusted EBITDAR. Adjusted net debt is calculated by adding operating lease liabilities to total long-term debt less a cash adjustment of
Set forth below is a reconciliation of the non-GAAP financial measures contained in this release with their most directly comparable GAAP measures.
(unaudited, in thousands, except per share data and margins) | |||||||
Three Months Ended March 31, | |||||||
Variance | |||||||
2025 | 2024 | $ | % | ||||
Reconciliation of Revenues to Organic Revenues | |||||||
Revenues | 74,155 | 9.9 | |||||
Revenues from acquisitions | (18,550) | — | (18,550) | 2.5 | |||
Organic revenues | 55,605 | 7.4 | |||||
Reconciliation of Residential Revenues to Organic Residential Revenues | |||||||
Residential revenues | 26,975 | 8.2 | |||||
Residential revenues from acquisitions | (8,366) | — | (8,366) | 2.5 | |||
Residential organic revenues | 18,609 | 5.7 | |||||
Reconciliation of Commercial Revenues to Organic Commercial Revenues | |||||||
Commercial revenues | 26,243 | 10.2 | |||||
Commercial revenues from acquisitions | (7,032) | — | (7,032) | 2.8 | |||
Commercial organic revenues | 19,211 | 7.4 | |||||
Reconciliation of Termite and Ancillary Revenues to Organic Termite and Ancillary Revenues | |||||||
Termite and ancillary revenues | 20,070 | 13.2 | |||||
Termite and ancillary revenues from acquisitions | (3,152) | — | (3,152) | 2.1 | |||
Termite and ancillary organic revenues | 16,918 | 11.1 | |||||
Three Months Ended March 31, | |||||||
Variance | |||||||
2025 | 2024 | $ | % | ||||
Reconciliation of Operating Income and Operating Income Margin to Adjusted Operating Income and Adjusted Operating Income | |||||||
Operating income | $ 142,648 | $ 132,424 | |||||
Fox acquisition-related expenses (1) | 4,213 | 5,265 | |||||
Adjusted operating income | $ 146,861 | $ 137,689 | 9,172 | 6.7 | |||
Revenues | $ 822,504 | $ 748,349 | |||||
Operating income margin | 17.3 % | 17.7 % | |||||
Adjusted operating margin | 17.9 % | 18.4 % | |||||
Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS | |||||||
Net income | $ 105,248 | $ 94,394 | |||||
Fox acquisition-related expenses (1) | 4,213 | 5,265 | |||||
Gain on sale of assets, net (2) | (692) | 61 | |||||
Tax impact of adjustments (3) | (901) | (1,363) | |||||
Adjusted net income | $ 107,868 | $ 98,357 | 9,511 | 9.7 | |||
EPS - basic and diluted | $ 0.22 | $ 0.19 | |||||
Fox acquisition-related expenses (1) | 0.01 | 0.01 | |||||
Gain on sale of assets, net (2) | — | — | |||||
Tax impact of adjustments (3) | — | — | |||||
Adjusted EPS - basic and diluted (4) | $ 0.22 | $ 0.20 | 0.02 | 10.0 | |||
Weighted average shares outstanding – basic | 484,414 | 484,131 | |||||
Weighted average shares outstanding – diluted | 484,434 | 484,318 | |||||
Reconciliation of Net Income to EBITDA, Adjusted EBITDA, EBITDA Margin, Incremental EBITDA Margin, Adjusted EBITDA | |||||||
Net income | $ 105,248 | $ 94,394 | |||||
Depreciation and amortization | 29,209 | 27,310 | |||||
Interest expense, net | 5,796 | 7,725 | |||||
Provision for income taxes | 32,296 | 30,244 | |||||
EBITDA | $ 172,549 | $ 159,673 | 12,876 | 8.1 | |||
Fox acquisition-related expenses (1) | — | 1,049 | |||||
Gain on sale of assets, net (2) | (692) | 61 | |||||
Adjusted EBITDA | $ 171,857 | $ 160,783 | 11,074 | 6.9 | |||
Revenues | $ 822,504 | $ 748,349 | 74,155 | ||||
EBITDA margin | 21.0 % | 21.3 % | |||||
Incremental EBITDA margin | 17.4 % | ||||||
Adjusted EBITDA margin | 20.9 % | 21.5 % | |||||
Adjusted incremental EBITDA margin | 14.9 % | ||||||
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Free Cash Flow Conversion | |||||||
Net cash provided by operating activities | $ 146,892 | $ 127,433 | |||||
Capital expenditures | (6,781) | (7,171) | |||||
Free cash flow | $ 140,111 | $ 120,262 | 19,849 | 16.5 | |||
Free cash flow conversion | 133.1 % | 127.4 % | |||||
Three Months Ended March 31, | |||
2025 | 2024 | ||
Reconciliation of SG&A to Adjusted SG&A | |||
SG&A | $ 250,513 | $ 223,057 | |
Fox acquisition-related expenses (1) | — | 1,049 | |
Adjusted SG&A | $ 250,513 | $ 222,008 | |
Revenues | $ 822,504 | $ 748,349 | |
Adjusted SG&A as a % of revenues | 30.5 % | 29.7 % | |
Period Ended | Period Ended | ||
Reconciliation of Long-term Debt and Net Income to Leverage Ratio | |||
Long-term debt (5) | $ 500,000 | $ 397,000 | |
Operating lease liabilities (6) | 425,582 | 417,218 | |
Cash adjustment (7) | (181,059) | (80,667) | |
Adjusted net debt | $ 744,523 | $ 733,551 | |
Net income | $ 477,233 | $ 466,379 | |
Depreciation and amortization | 115,119 | 113,220 | |
Interest expense, net | 25,748 | 27,677 | |
Provision for income taxes | 165,903 | 163,851 | |
Operating lease cost (8) | 141,057 | 133,420 | |
Stock-based compensation expense | 31,602 | 29,984 | |
Adjusted EBITDAR | $ 956,662 | $ 934,531 | |
Leverage ratio | 0.8x | 0.8x | |
(1) Consists of expenses resulting from the amortization of certain intangible assets and adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control. While we exclude such expenses in this non-GAAP measure, the revenue from the acquired company is reflected in this non-GAAP measure and the acquired assets contribute to revenue generation. |
(2) Consists of the gain or loss on the sale of non-operational assets. |
(3) The tax effect of the adjustments is calculated using the applicable statutory tax rates for the respective periods. |
(4) In some cases, the sum of the individual EPS amounts may not equal total non-GAAP EPS calculations due to rounding. |
(5) As of March 31, 2025, the Company had outstanding borrowings of |
(6) Operating lease liabilities are presented under the operating lease liabilities - current and operating lease liabilities, less current portion captions of our consolidated balance sheet. |
(7) Represents |
(8) Operating lease cost excludes short-term lease cost associated with leases that have a duration of 12 months or less. |
For Further Information Contact
Lyndsey Burton (404) 888-2348
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SOURCE Rollins, Inc.
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