ROLLINS, INC. REPORTS FOURTH QUARTER AND FULL YEAR 2021 FINANCIAL RESULTS
Rollins, Inc. (NYSE: ROL) reported robust financial results for Q4 and the fiscal year 2021. Q4 revenues surged to $600.3 million, an 11.9% increase from $536.3 million in Q4 2020. Net income for the quarter was $65.3 million, or $0.13 per diluted share, slightly up from $62.6 million in the prior year. For the full year, revenues reached $2.424 billion, a 12.2% rise compared to $2.161 billion in 2020. Net income also improved to $350.7 million, or $0.71 per diluted share. Adjusted net income for the year was $335.5 million, reflecting strong operational performance despite ongoing SEC matters.
- Q4 revenues increased by 11.9% to $600.3 million.
- Net income for Q4 rose to $65.3 million, maintaining EPS at $0.13.
- Full-year revenues grew by 12.2% to $2.424 billion.
- Annual net income improved to $350.7 million, resulting in EPS of $0.71.
- Adjusted net income for the year was $335.5 million.
- Ongoing SEC investigation with a $5.0 million accrual related to potential settlement.
- Includes a $8.0 million accrual for SEC matter in full-year results.
ATLANTA, Jan. 26, 2022 /PRNewswire/ -- Rollins, Inc. (NYSE: ROL) ("Rollins" or the "Company"), a premier global consumer and commercial services company, reported strong unaudited financial results for its fourth quarter and year ended December 31, 2021.
The Company recorded fourth quarter revenues of
For the full year ended December 31, 2021, the Company's revenues rose
Gary W. Rollins, Chairman and Chief Executive Officer of Rollins stated, "We are proud of the performance and dedication of our employees and are very pleased with our strong financial results for both the quarter and full year 2021. We remain confident of our continued success for 2022."
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 two million customers in North America, South America, Europe, Asia, Africa, and Australia from more than 700 locations. You can learn more about Rollins and its subsidiaries by visiting our web sites at www.orkin.com, www.pestdefense.com, www.clarkpest.com, www.callnorthwest.com, www.mccallservice.com, www.trutechinc.com, www.crittercontrol.com, www.westernpest.com, www.walthamservices.com, www.opcpest.com, www.indfumco.com, www.permatreat.com, www.cranepestcontrol.com, www.missquito.com, www.orkincanada.ca, www.orkinau.com, www.safeguardpestcontrol.co.uk, www.aardwolfpestkare.com, and www.rollins.com. You can also find this and other news releases at www.rollins.com by accessing the news releases button.
*Adjusted amounts presented in this release 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
This press release may contain or incorporate by reference information that includes or is based on forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding the Company's confidence in its continued success. Forward-looking statements give expectations or forecasts of future events and can be identified by the fact that they relate to future actions, performance or results rather than strictly to historical or current facts.
Any or all forward-looking statements may turn out to be wrong, and, accordingly, you are cautioned not to place undue reliance on such statements, which speak only as of the date of this press release. Forward-looking statements involve a number of risks and uncertainties that are difficult to predict and are not guarantees of future performance. Among the general factors that could cause actual results and financial condition to differ materially from those indicated by the forward-looking statements and estimated results and financial condition are those factors listed in periodic reports filed by Rollins with the Securities and Exchange Commission ("SEC"), which factors include, but are not limited to, the Company's belief that its accounting estimates and assumptions, financial condition and results of operations may change materially in future periods in response to the COVID-19 pandemic; the Company's belief that it will continue to be involved in various claims, arbitrations, contractual disputes, investigations, and regulatory and litigation matters relating to, and arising out of, its business and its operations; the outcomes of any pending or potential claim, proceeding, litigation, regulatory action or investigation filed against us, which could have a material adverse effect on our business, financial condition and results of operations, including, but not limited to, the Company's ongoing SEC investigation; the Company's belief that the ongoing SEC investigation is primarily focused on how it established accruals and reserves at period-ends and the impact of those accruals and reserves on reported earnings per share, and the Company's inability to predict the outcome of the SEC investigation, or the possibility that the ultimate amount of potential liability could be different from the amount accrued under ASC 450; the Company's belief, after consultation with the Audit Committee and independent counsel, that its financial statements filed with the SEC on Forms 10-K and 10-Q for the relevant periods under SEC investigation fairly present in all material respects, its financial condition, results of operations and cash flows as of their respective balance sheet dates and for the periods then ended; the Company's evaluation of pending or threatened claims and establishment of loss contingency reserves based upon outcomes it currently believes to be probable and estimable; risks related to the Company's belief that its current cash and cash equivalent balances, future cash flows expected to be generated from operating activities and available borrowings under its credit facilities will be sufficient to finance its current operations and obligations, and fund expansion of the business for the foreseeable future; the Company's belief that it maintains adequate liquidity and capital resources that are directed to finance domestic operations and obligations and to fund expansion of its domestic business for the foreseeable future without regard to its foreign deposits; exposure of certain market risks in the ordinary course of our business, including fluctuation in interest rates and foreign currency exchange fluctuations; the Company's ability to identify and successfully integrate potential acquisitions or guarantee that any acquisitions will achieve the anticipated financial benefits adverse economic conditions, including restrictions in customer discretionary expenditures, disruptions in credit or financial markets, increases in fuel prices, raw material costs, or other operating costs; labor shortages and/or our ability to attract and retain skilled workers; significant disruption in, or breach in security of our information technology systems or one of our third-party information technology providers, and resultant interruptions in service or the loss of functionality of critical systems through ransomware or other malware, and any related impact on our reputation; the Company's expectation that it will continue to pay cash dividends to common stockholders, subject to the earnings and financial condition of the Company and other relevant factors; risks related to changes in industry practices or technologies; the Company's ability to protect its intellectual property and other proprietary rights; competitive factors and pricing practices; damage to our brand or reputation; and climate and weather conditions.
No assurances can be given that the results and financial condition contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable. Rollins assumes no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent to the date of this press release, including any such statements related to COVID-19. You are advised, however, to consult any further disclosures Rollins makes on related subjects in its filings with the SEC.
ROLLINS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||
(in thousands) | ||||||
At December 31, (unaudited) | 2021 | 2020 | ||||
ASSETS | ||||||
Cash and cash equivalents | $ | 105,301 | $ | 98,477 | ||
Trade accounts receivables, net | 139,579 | 126,337 | ||||
Financed receivables, net | 26,152 | 23,716 | ||||
Materials and supplies | 28,926 | 30,843 | ||||
Other current assets | 52,422 | 35,404 | ||||
Total Current Assets | 352,380 | 314,777 | ||||
Equipment and property, net | 133,257 | 178,052 | ||||
Goodwill | 716,303 | 653,176 | ||||
Customer contracts, net | 330,644 | 298,949 | ||||
Trademarks and tradenames, net | 108,376 | 109,044 | ||||
Other intangible assets, net | 11,636 | 10,777 | ||||
Operating lease, right-of-use assets | 244,784 | 212,342 | ||||
Financed receivables, long-term, net | 47,097 | 38,187 | ||||
Other assets | 34,949 | 30,596 | ||||
Total Assets | $ | 1,979,426 | $ | 1,845,900 | ||
LIABILITIES | ||||||
Accounts payable | 44,568 | 64,596 | ||||
Accrued insurance, current | 36,414 | 31,675 | ||||
Accrued compensation and related liabilities | 97,862 | 91,011 | ||||
Unearned revenue | 143,778 | 131,253 | ||||
Operating lease liabilities, current | 75,240 | 73,248 | ||||
Current portion of long-term debt | 18,750 | 17,188 | ||||
Other current liabilities | 73,106 | 63,540 | ||||
Total Current Liabilities | 489,718 | 472,511 | ||||
Accrued insurance, less current portion | 31,545 | 36,067 | ||||
Operating lease liabilities, less current portion | 172,520 | 140,897 | ||||
Long-term debt | 136,250 | 185,812 | ||||
Deferred income tax liabilities | 13,255 | 10,612 | ||||
Long-term accrued liabilities | 54,090 | 58,641 | ||||
Total Liabilities | 897,378 | 904,540 | ||||
STOCKHOLDERS' EQUITY | ||||||
Common stock | 491,911 | 491,612 | ||||
Retained earnings and other equity | 590,137 | 449,748 | ||||
Total stockholders' equity | 1,082,048 | 941,360 | ||||
Total Liabilities and Stockholders' Equity | $ | 1,979,426 | $ | 1,845,900 | ||
*Due to the Company's recent acquisitions, certain balances may change as the purchase price allocations are finalized. | ||||||
ROLLINS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share data) (unaudited) | ||||||||||||
Three Months Ended | Year Ended | |||||||||||
December 31, | December 31, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
REVENUES | ||||||||||||
Customer services | $ | 600,343 | $ | 536,292 | $ | 2,424,300 | $ | 2,161,220 | ||||
COSTS AND EXPENSES | ||||||||||||
Cost of services provided (exclusive of depreciation and amortization below) | 297,729 | 266,344 | 1,162,617 | 1,048,592 | ||||||||
Sales, general and administrative | 187,538 | 159,086 | 727,489 | 656,207 | ||||||||
Depreciation and amortization | 23,686 | 22,403 | 94,205 | 88,329 | ||||||||
Total operating expenses | 508,953 | 447,833 | 1,984,311 | 1,793,128 | ||||||||
OPERATING INCOME | 91,390 | 88,459 | 439,989 | 368,092 | ||||||||
Interest (income) expense, net | (504) | 591 | 830 | 5,082 | ||||||||
Other (income) expense, net | (2,081) | 970 | (35,679) | 8,290 | ||||||||
CONSOLIDATED INCOME BEFORE INCOME TAXES | 93,975 | 86,898 | 474,838 | 354,720 | ||||||||
PROVISION FOR INCOME TAXES | 28,638 | 24,279 | 124,151 | 93,896 | ||||||||
NET INCOME | $ | 65,337 | $ | 62,619 | $ | 350,687 | $ | 260,824 | ||||
NET INCOME PER SHARE - BASIC AND DILUTED | $ | 0.13 | $ | 0.13 | $ | 0.71 | $ | 0.53 | ||||
Weighted average shares outstanding - basic and diluted | 492,041 | 491,619 | 492,054 | 491,604 | ||||||||
APPENDIX
Reconciliation of GAAP and non-GAAP Financial Measures
The Company has used the non-GAAP financial measures of adjusted net income and adjusted EPS in this earnings release, and the non-GAAP financial measures of organic revenues, 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, the accelerated stock vesting expense or the SEC matter. 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 | Year Ended | ||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||
Better/ | Better/ | ||||||||||||||||||||||
2021 | 2020 | (Worse) | % | 2021 | 2020 | (Worse) | % | ||||||||||||||||
Reconciliation of Net Income to Adjusted Net | |||||||||||||||||||||||
Net income | $ | 65,337 | $ | 62,619 | $ | 2,718 | 4.3 | % | $ | 350,687 | $ | 260,824 | $ | 89,863 | 34.5 | % | |||||||
Property disposition gains (net of tax ( | — | — | — | — | (31,517) | — | (31,517) | — | |||||||||||||||
SEC matter1 | 5,000 | — | 5,000 | — | 8,000 | — | 8,000 | — | |||||||||||||||
Late Chairman's accelerated stock vesting expense2 | — | — | — | — | — | 6,691 | (6,691) | — | |||||||||||||||
Adjusted income taxes on excluded items | — | — | — | — | 8,287 | — | 8,287 | — | |||||||||||||||
Adjusted net income | $ | 70,337 | $ | 62,619 | $ | 7,718 | 12.3 | % | $ | 335,457 | $ | 267,515 | $ | 67,942 | 25.4 | % | |||||||
Adjusted earnings per share - basic and diluted | $ | 0.14 | $ | 0.13 | $ | 0.01 | 7.7 | % | $ | 0.68 | $ | 0.54 | $ | 0.14 | 25.9 | % | |||||||
Weighted average shares outstanding - basic and diluted | 492,041 | 491,619 | 422 | 0.1 | % | 492,054 | 491,604 | 450 | 0.1 | % | |||||||||||||
Reconciliation of Net Income to EBITDA and | |||||||||||||||||||||||
Net income | $ | 65,337 | $ | 62,619 | $ | 2,718 | 4.3 | % | $ | 350,687 | $ | 260,824 | $ | 89,863 | 34.5 | % | |||||||
Depreciation and amortization | 23,686 | 22,403 | 1,283 | 5.7 | 94,205 | 88,329 | 5,876 | 6.7 | |||||||||||||||
Interest (income) expense, net | (504) | 591 | (1,095) | (185.3) | 830 | 5,082 | (4,252) | (83.7) | |||||||||||||||
Provision for income taxes | 28,638 | 24,279 | 4,359 | 18.0 | 124,151 | 93,896 | 30,255 | 32.2 | |||||||||||||||
EBITDA | 117,157 | 109,892 | 7,265 | 6.6 | % | 569,873 | 448,131 | 121,742 | 27.2 | % | |||||||||||||
Property disposition gains | — | — | — | — | (31,517) | — | (31,517) | — | |||||||||||||||
SEC matter | 5,000 | — | 5,000 | — | 8,000 | — | 8,000 | — | |||||||||||||||
Late Chairman's accelerated stock vesting expense | — | — | — | — | — | 6,691 | (6,691) | — | |||||||||||||||
Adjusted EBITDA | $ | 122,157 | $ | 109,892 | $ | 12,265 | 11.2 | % | $ | 546,356 | $ | 454,822 | $ | 91,534 | 20.1 | % | |||||||
Reconciliation of Net Cash Provided by | |||||||||||||||||||||||
Net cash provided by operating activities | $ | 96,062 | $ | 95,178 | $ | 884 | 0.9 | % | $ | 394,973 | $ | 435,785 | $ | (40,812) | (9.4) | % | |||||||
Capital expenditures | (7,163) | (5,539) | (1,624) | (29.3) | (27,194) | (23,229) | (3,965) | (17.1) | |||||||||||||||
Free Cash Flow | $ | 88,899 | $ | 89,639 | $ | (740) | (0.8) | % | $ | 367,779 | $ | 412,556 | $ | (44,777) | (10.9) | % | |||||||
1These amounts are not tax deductible for state or federal purposes. | |||||||||||||||||||||||
2This amount is not tax deductible for state or federal purposes due to the limitation on executive compensation under IRC Sec. 162(m). | |||||||||||||||||||||||
3Due to the Company's recent acquisitions, certain balances may change as the purchase price allocations are finalized. | |||||||||||||||||||||||
2021 | |||||||||||||||||||||||
YTD | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||||||||||
Reconciliation of Revenues to Organic Revenues | |||||||||||||||||||||||
Revenues | $ | 2,424,300 | $ | 600,343 | $ | 650,199 | $ | 638,204 | $ | 535,554 | |||||||||||||
Revenue growth from acquisitions | (58,587) | (15,910) | (12,689) | (13,832) | (16,156) | ||||||||||||||||||
Organic revenues | 2,365,713 | 584,433 | 637,510 | 624,372 | 519,398 | ||||||||||||||||||
Adjustment to organic revenues on a constant exchange rate | (17,301) | (4,944) | (2,702) | (6,868) | (2,787) | ||||||||||||||||||
Organic revenues in constant dollars | $ | 2,348,412 | $ | 579,489 | $ | 634,808 | $ | 617,504 | $ | 516,611 | |||||||||||||
2020 revenues | $ | 2,161,220 | $ | 536,292 | $ | 583,698 | $ | 553,329 | $ | 487,901 | |||||||||||||
Revenue growth | |||||||||||||||||||||||
Revenue growth from acquisitions | |||||||||||||||||||||||
Organic revenue growth | |||||||||||||||||||||||
Organic revenue growth in constant dollars | |||||||||||||||||||||||
Reconciliation of Commercial Revenues to | |||||||||||||||||||||||
Commercial revenues | $ | 829,396 | $ | 211,213 | $ | 218,648 | $ | 210,838 | $ | 188,697 | |||||||||||||
Commercial revenue growth from acquisitions | (20,749) | (3,949) | (4,532) | (5,779) | (6,489) | ||||||||||||||||||
Commercial organic revenues | $ | 808,647 | $ | 207,264 | $ | 214,116 | $ | 205,059 | $ | 182,208 | |||||||||||||
2020 revenues | $ | 752,348 | $ | 189,572 | $ | 199,561 | $ | 179,900 | $ | 183,315 | |||||||||||||
Revenue growth | |||||||||||||||||||||||
Revenue growth from acquisitions | |||||||||||||||||||||||
Organic revenue growth | (0.6)% | ||||||||||||||||||||||
Reconciliation of Residential Revenues to | |||||||||||||||||||||||
Residential revenues | $ | 1,103,687 | $ | 267,816 | $ | 307,747 | $ | 292,945 | $ | 235,179 | |||||||||||||
Residential revenues from acquisitions | (28,130) | (8,429) | (6,004) | (5,938) | (7,759) | ||||||||||||||||||
Residential organic revenues | $ | 1,075,557 | $ | 259,387 | $ | 301,743 | $ | 287,007 | $ | 227,420 | |||||||||||||
2020 revenues | $ | 977,470 | $ | 239,311 | $ | 275,581 | $ | 257,921 | $ | 204,657 | |||||||||||||
Revenue growth | |||||||||||||||||||||||
Revenue growth from acquisitions | |||||||||||||||||||||||
Organic revenue growth | |||||||||||||||||||||||
Reconciliation of Termite Revenues to Organic | |||||||||||||||||||||||
Residential revenues | $ | 465,053 | $ | 114,262 | $ | 117,423 | $ | 127,674 | $ | 105,694 | |||||||||||||
Residential revenues from acquisitions | (9,708) | (3,532) | (2,153) | (2,115) | (1,908) | ||||||||||||||||||
Residential organic revenues | $ | 455,345 | $ | 110,730 | $ | 115,270 | $ | 125,559 | $ | 103,786 | |||||||||||||
2020 revenues | $ | 406,781 | $ | 100,593 | $ | 102,144 | $ | 109,817 | $ | 94,227 | |||||||||||||
Revenue growth | |||||||||||||||||||||||
Revenue growth from acquisitions | |||||||||||||||||||||||
Organic revenue growth | |||||||||||||||||||||||
CONFERENCE CALL ANNOUNCEMENT
Rollins, Inc.
(NYSE: ROL)
Management will hold a conference call to discuss
Fourth Quarter 2021 results on
Wednesday, January 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 13725733
at least 5 minutes before start time.
REPLAY: available through February 2, 2022
Please dial 1-877-660-6853 / 1-201-612-7415, Passcode 13725733
THIS CALL CAN ALSO BE ACCESSED THROUGH THE INTERNET AT
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
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SOURCE Rollins, Inc.
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