ROLLINS, INC. REPORTS SECOND QUARTER 2024 FINANCIAL RESULTS
Rollins (NYSE: ROL) reported robust Q2 2024 financial results with revenues of $892 million, up 8.7% YoY, and organic revenue growth of 7.7%. Operating income rose by 17.8% to $182 million, with a margin of 20.4%, improving by 150 basis points. Adjusted EBITDA increased 15.3% to $210 million, yielding a margin of 23.6%, up 140 basis points. Net income reached $129 million, a 17.5% rise, and EPS grew by 22.7% to $0.27 per diluted share. Investments included $35 million in acquisitions and $9 million in capital expenditures, while $73 million was paid in dividends. Operating cash flow amounted to $145 million.
Management highlighted strong demand for services and a robust acquisition pipeline, projecting continuous growth and enhanced profitability.
Rollins (NYSE: ROL) ha riportato risultati finanziari robusti per il secondo trimestre del 2024, con entrate di 892 milioni di dollari, in aumento dell'8,7% rispetto all'anno precedente, e una crescita dei ricavi organici del 7,7%. Il reddito operativo è aumentato del 17,8% raggiungendo i 182 milioni di dollari, con un margine del 20,4%, migliorato di 150 punti base. L'EBITDA rettificato è cresciuto del 15,3% a 210 milioni di dollari, generando un margine del 23,6%, in aumento di 140 punti base. Il reddito netto ha raggiunto i 129 milioni di dollari, registrando un aumento del 17,5%, e l'EPS è aumentato del 22,7% a 0,27 dollari per azione diluita. Gli investimenti hanno incluso 35 milioni di dollari in acquisizioni e 9 milioni di dollari in spese in conto capitale, mentre sono stati pagati 73 milioni di dollari in dividendi. Il flusso di cassa operativo è stato di 145 milioni di dollari.
Il management ha evidenziato una forte domanda di servizi e una robusta pipeline di acquisizioni, prevedendo una crescita continua e una redditività migliorata.
Rollins (NYSE: ROL) reportó resultados financieros sólidos para el segundo trimestre de 2024, con ingresos de 892 millones de dólares, un aumento del 8.7% en comparación con el año anterior, y un crecimiento orgánico de los ingresos del 7.7%. El ingreso operativo aumentó un 17.8% hasta los 182 millones de dólares, con un margen del 20.4%, mejorando en 150 puntos básicos. El EBITDA ajustado creció un 15.3% hasta los 210 millones de dólares, generando un margen del 23.6%, un incremento de 140 puntos básicos. El ingreso neto alcanzó los 129 millones de dólares, un aumento del 17.5%, y el EPS creció un 22.7% a 0.27 dólares por acción diluida. Las inversiones incluyeron 35 millones de dólares en adquisiciones y 9 millones de dólares en gastos de capital, mientras que se pagaron 73 millones de dólares en dividendos. El flujo de efectivo operativo ascendió a 145 millones de dólares.
La dirección destacó la fuerte demanda de servicios y una sólida cartera de adquisiciones, proyectando un crecimiento continuo y una rentabilidad mejorada.
롤린스 (NYSE: ROL)는 2024년 2분기 재무 결과를 발표하며 매출이 8억 9200만 달러에 달해 전년 대비 8.7% 증가했으며, 유기적 매출 성장률은 7.7%에 이르렀습니다. 영업 소득은 17.8% 증가하여 1억 8200만 달러에 도달하였고, 마진은 20.4%로 150bp 개선되었습니다. 조정 EBITDA는 15.3% 증가하여 2억 1000만 달러가 되었고, 마진은 23.6%로 140bp 상승했습니다. 순이익은 1억 2900만 달러에 도달하여 17.5% 증가하였으며, 주당순이익 (EPS)은 22.7% 증가하여 희석 기준으로 0.27달러가 되었습니다. 투자에는 인수에 3500만 달러, 자본 지출에 900만 달러가 포함되었고, 7300만 달러는 배당금으로 지급되었습니다. 운영 현금 흐름은 1억 4500만 달러에 달했습니다.
경영진은 서비스에 대한 강한 수요와 건전한 인수 파이프라인을 강조하며 지속적인 성장과 수익성 향상을 전망했습니다.
Rollins (NYSE: ROL) a rapporté de solides résultats financiers pour le deuxième trimestre 2024, avec des revenus de 892 millions de dollars, en hausse de 8,7 % par rapport à l'année précédente, et une croissance des revenus organiques de 7,7 %. Le résultat opérationnel a augmenté de 17,8 % pour atteindre 182 millions de dollars, avec une marge de 20,4 %, améliorée de 150 points de base. L'EBITDA ajusté a augmenté de 15,3 % pour atteindre 210 millions de dollars, générant une marge de 23,6 %, en hausse de 140 points de base. Le revenu net a atteint 129 millions de dollars, soit une augmentation de 17,5 %, et le BPA a augmenté de 22,7 % pour atteindre 0,27 dollar par action diluée. Les investissements comprenaient 35 millions de dollars pour des acquisitions et 9 millions de dollars pour des dépenses d'investissement, tandis que 73 millions de dollars ont été versés en dividendes. Le flux de trésorerie opérationnel s'est élevé à 145 millions de dollars.
La direction a souligné une forte demande pour les services et un solide pipeline d'acquisitions, projetant une croissance continue et une rentabilité améliorée.
Rollins (NYSE: ROL) berichtete über starke Finanzresultate für das 2. Quartal 2024 mit Einnahmen von 892 Millionen Dollar, was einem Anstieg von 8,7% im Vergleich zum Vorjahr entspricht, sowie einem organischen Umsatzwachstum von 7,7%. Der Betriebsgewinn stieg um 17,8% auf 182 Millionen Dollar, mit einer Marge von 20,4%, was einer Verbesserung um 150 Basispunkte entspricht. Das bereinigte EBITDA erhöhte sich um 15,3% auf 210 Millionen Dollar, was eine Marge von 23,6% ergibt, und 140 Basispunkte höher ist. Der Nettogewinn erreichte 129 Millionen Dollar, ein Anstieg von 17,5%, und der EPS stieg um 22,7% auf 0,27 Dollar pro verwässerter Aktie. Zu den Investitionen gehörten 35 Millionen Dollar für Akquisitionen und 9 Millionen Dollar für Investitionen, während 73 Millionen Dollar an Dividenden ausgezahlt wurden. Der operative Cashflow betrug 145 Millionen Dollar.
Das Management hob die starke Nachfrage nach Dienstleistungen und eine robuste Akquisitionspipeline hervor, wobei ein kontinuierliches Wachstum und eine verbesserte Rentabilität prognostiziert wird.
- Revenue increased by 8.7% YoY to $892 million.
- Operating income rose by 17.8% to $182 million.
- Net income reached $129 million, up 17.5%.
- EPS increased by 22.7% to $0.27.
- Adjusted EBITDA grew by 15.3% to $210 million.
- Invested $35 million in acquisitions.
- Operating cash flow decreased by 1.6% to $145 million.
- Free cash flow declined by 3.0% to $136 million.
Insights
Rollins Inc.'s Q2 2024 results demonstrate robust financial performance, signaling positive momentum for the pest control giant. The 8.7% revenue growth to
Profitability metrics are particularly impressive. The 150 basis point increase in operating margin to
However, investors should note the slight
Overall, Rollins' Q2 results paint a picture of a company executing well in a favorable market environment, with potential for continued growth and margin expansion in the coming quarters.
Rollins' Q2 performance offers valuable insights into the broader pest control market. The 7.7% organic revenue growth suggests robust demand for pest control services, likely driven by factors such as urbanization, climate change and increased awareness of hygiene and health issues.
The company's ability to improve margins in this growth environment indicates a favorable competitive landscape. It suggests Rollins has pricing power and can pass on cost increases to customers without significant pushback. This bodes well for the industry as a whole, potentially signaling a period of expansion and profitability for well-positioned players.
The mention of a "robust" acquisition pipeline is noteworthy. It implies that the pest control industry may be entering a period of consolidation, with larger players like Rollins potentially absorbing smaller, regional operators. This could lead to increased market concentration and potentially higher barriers to entry for new competitors.
Investors should keep an eye on macroeconomic factors that could impact the industry. While pest control is often considered a necessity service, an economic downturn could affect discretionary spending on preventive treatments. However, Rollins' strong performance suggests the company is well-positioned to navigate potential headwinds.
Solid Revenue Growth and Margin Improvement Drives Double-Digit Earnings Growth
Key Highlights
- Second quarter revenues were
$892 million 8.7% over the second quarter of 2023 with organic revenues* increasing7.7% . - Quarterly operating income was
$182 million 17.8% over the second quarter of 2023. Quarterly operating margin was20.4% , an increase of 150 basis points over the second quarter of 2023. Adjusted operating income* was$187 million 16.6% over the prior year. Adjusted operating income margin* was20.9% , an increase of 140 basis points over the prior year. - Adjusted EBITDA* was
$210 million 15.3% over the prior year. Adjusted EBITDA margin* was23.6% , an increase of 140 basis points over the second quarter of 2023. - Quarterly net income was
$129 million 17.5% over the prior year. Adjusted net income* was$132 million 16.7% over the prior year. - Quarterly EPS was
$0.27 22.7% increase over the prior year EPS of$0.22 $0.27 17.4% over the prior year. - Operating cash flow was
$145 million $35 million $9 million $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
"Our team delivered a strong second quarter with organic growth of 7.7 percent and an improving margin profile," said Jerry Gahlhoff, Jr., President and CEO. "Demand for our services remains strong and our pipeline for acquisitions is robust. Our results through the first six months of the year position us to deliver another year of healthy growth in 2024 and we are focused on continuous improvement to enhance profitability across our business. I would like to thank our team for their ongoing commitment to our customers," Mr. Gahlhoff added.
"It was encouraging to see solid performance in revenue and profitability in the quarter," said Kenneth Krause, Executive Vice President and CFO. "In addition to the growth Jerry mentioned, our team delivered strong improvement in margins, with a 140 basis point improvement in EBITDA margins and a strong incremental EBITDA margin performance. We continue to invest in our team and other resources aimed at capitalizing on a healthy market environment to drive further growth in our business," Mr. Krause concluded.
Three and Six Months Ended Financial Highlights | |||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
Variance | Variance | ||||||||||||
(in thousands, except per share data) | 2024 | 2023 | $ | % | 2024 | 2023 | $ | % | |||||
GAAP Metrics | |||||||||||||
Revenues | $ 71,170 | 8.7 % | $ 1,640,269 | $ 1,478,765 | $ 161,504 | 10.9 % | |||||||
Gross profit (1) | $ 45,076 | 10.3 % | $ 864,426 | $ 767,732 | $ 96,694 | 12.6 % | |||||||
Gross profit margin (1) | 54.0 % | 53.2 % | 80 bps | 52.7 % | 51.9 % | 80 bps | |||||||
Operating income | $ 27,588 | 17.8 % | $ 314,801 | $ 267,029 | $ 47,772 | 17.9 % | |||||||
Operating income margin | 20.4 % | 18.9 % | 150 bps | 19.2 % | 18.1 % | 110 bps | |||||||
Net income | $ 19,254 | 17.5 % | $ 223,791 | $ 198,377 | $ 25,414 | 12.8 % | |||||||
EPS | $ 0.27 | $ 0.22 | $ 0.05 | 22.7 % | $ 0.46 | $ 0.40 | $ 0.06 | 15.0 % | |||||
Operating cash flow | $ (2,298) | (1.6) % | $ 272,548 | $ 248,186 | $ 24,362 | 9.8 % | |||||||
Non-GAAP Metrics | |||||||||||||
Adjusted operating income (2) | $ 26,546 | 16.6 % | $ 324,285 | $ 272,290 | $ 51,995 | 19.1 % | |||||||
Adjusted operating margin (2) | 20.9 % | 19.5 % | 140 bps | 19.8 % | 18.4 % | 140 bps | |||||||
Adjusted net income (2) | $ 18,930 | 16.7 % | $ 230,586 | $ 198,026 | $ 32,560 | 16.4 % | |||||||
Adjusted EPS (2) | $ 0.27 | $ 0.23 | $ 0.04 | 17.4 % | $ 0.48 | $ 0.40 | $ 0.08 | 20.0 % | |||||
Adjusted EBITDA (2) | $ 27,813 | 15.3 % | $ 370,871 | $ 317,017 | $ 53,854 | 17.0 % | |||||||
Adjusted EBITDA margin (2) | 23.6 % | 22.2 % | 140 bps | 22.6 % | 21.4 % | 120 bps | |||||||
Free cash flow (2) | $ (4,219) | (3.0) % | $ 256,681 | $ 233,775 | $ 22,906 | 9.8 % | |||||||
(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
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, July 25, 2024 at 8:30 a.m. Eastern Time to discuss the second 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 13747513. 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) | |||
June 30, | December 31, | ||
ASSETS | |||
Cash and cash equivalents | $ 106,697 | $ 103,825 | |
Trade receivables, net | 205,183 | 178,214 | |
Financed receivables, short-term, net | 39,959 | 37,025 | |
Materials and supplies | 37,925 | 33,383 | |
Other current assets | 84,528 | 54,192 | |
Total current assets | 474,292 | 406,639 | |
Equipment and property, net | 129,115 | 126,661 | |
Goodwill | 1,116,215 | 1,070,310 | |
Intangibles, net | 545,979 | 545,734 | |
Operating lease right-of-use assets | 371,018 | 323,390 | |
Financed receivables, long-term, net | 85,498 | 75,909 | |
Other assets | 44,385 | 46,817 | |
Total assets | $ 2,766,502 | $ 2,595,460 | |
LIABILITIES | |||
Accounts payable | $ 54,075 | $ 49,200 | |
Accrued insurance – current | 49,246 | 46,807 | |
Accrued compensation and related liabilities | 107,606 | 114,355 | |
Unearned revenues | 196,690 | 172,380 | |
Operating lease liabilities – current | 105,905 | 92,203 | |
Other current liabilities | 96,428 | 101,744 | |
Total current liabilities | 609,950 | 576,689 | |
Accrued insurance, less current portion | 57,602 | 48,060 | |
Operating lease liabilities, less current portion | 267,639 | 233,369 | |
Long-term debt | 502,043 | 490,776 | |
Other long-term accrued liabilities | 93,210 | 90,999 | |
Total liabilities | 1,530,444 | 1,439,893 | |
STOCKHOLDERS' EQUITY | |||
Common stock | 484,314 | 484,080 | |
Retained earnings and other equity | 751,744 | 671,487 | |
Total stockholders' equity | 1,236,058 | 1,155,567 | |
Total liabilities and stockholders' equity | $ 2,766,502 | $ 2,595,460 | |
ROLLINS, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||
(in thousands except per share data) | |||||||
(unaudited) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
REVENUES | |||||||
Customer services | $ 891,920 | $ 820,750 | $ 1,640,269 | $ 1,478,765 | |||
COSTS AND EXPENSES | |||||||
Cost of services provided (exclusive of | 410,285 | 384,191 | 775,843 | 711,033 | |||
Sales, general and administrative | 271,547 | 255,331 | 494,604 | 451,762 | |||
Depreciation and amortization | 27,711 | 26,439 | 55,021 | 48,941 | |||
Total operating expenses | 709,543 | 665,961 | 1,325,468 | 1,211,736 | |||
OPERATING INCOME | 182,377 | 154,789 | 314,801 | 267,029 | |||
Interest expense, net | 7,775 | 4,785 | 15,500 | 5,250 | |||
Other income, net | (412) | (1,019) | (351) | (5,733) | |||
CONSOLIDATED INCOME BEFORE INCOME | 175,014 | 151,023 | 299,652 | 267,512 | |||
PROVISION FOR INCOME TAXES | 45,617 | 40,880 | 75,861 | 69,135 | |||
NET INCOME | $ 129,397 | $ 110,143 | $ 223,791 | $ 198,377 | |||
NET INCOME PER SHARE - BASIC AND | $ 0.27 | $ 0.22 | $ 0.46 | $ 0.40 | |||
Weighted average shares outstanding - basic | 484,244 | 492,700 | 484,187 | 492,593 | |||
Weighted average shares outstanding - diluted | 484,419 | 492,891 | 484,356 | 492,764 | |||
DIVIDENDS PAID PER SHARE | $ 0.15 | $ 0.13 | $ 0.30 | $ 0.26 | |||
ROLLINS, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED CASH FLOW INFORMATION | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
OPERATING ACTIVITIES | |||||||
Net income | $ 129,397 | $ 110,143 | $ 223,791 | $ 198,377 | |||
Depreciation and amortization | 27,711 | 26,439 | 55,021 | 48,941 | |||
Change in working capital and other operating | (11,993) | 10,831 | (6,264) | 868 | |||
Net cash provided by operating activities | 145,115 | 147,413 | 272,548 | 248,186 | |||
INVESTING ACTIVITIES | |||||||
Acquisitions, net of cash acquired | (34,522) | (312,412) | (81,654) | (327,892) | |||
Capital expenditures | (8,696) | (6,775) | (15,867) | (14,411) | |||
Other investing activities, net | 2,062 | 1,155 | 3,900 | 10,681 | |||
Net cash used in investing activities | (41,156) | (318,032) | (93,621) | (331,622) | |||
FINANCING ACTIVITIES | |||||||
Net (repayments) borrowings | (9,000) | 275,000 | 11,000 | 285,000 | |||
Payment of dividends | (72,578) | (63,943) | (145,167) | (127,996) | |||
Other financing activities, net | (28,054) | 220 | (39,719) | (16,809) | |||
Net cash (used in) provided by financing activities | (109,632) | 211,277 | (173,886) | 140,195 | |||
Effect of exchange rate changes on cash and | (601) | 1,586 | (2,169) | 2,642 | |||
Net (decrease) increase in cash and cash | $ (6,274) | $ 42,244 | $ 2,872 | $ 59,401 | |||
APPENDIX
Reconciliation of GAAP and non-GAAP Financial Measures
The Company has used the non-GAAP financial measures of organic revenues, organic revenues by type, adjusted operating income, adjusted operating margin, adjusted net income, adjusted earnings per share ("EPS"), earnings before interest, taxes, depreciation and amortization ("EBITDA"), EBITDA margin, Adjusted EBITDA, adjusted EBITDA margin, incremental EBITDA margin, adjusted incremental EBITDA margin, free cash flow, free cash flow conversion, net debt, net leverage ratio, and adjusted sales, general and administrative expenses ("SG&A") in this earnings release. Organic revenue is calculated as revenue less the revenue from acquisitions completed within the prior 12 months and excluding the revenue from divested businesses. Acquisition revenue is based on the trailing 12-month revenue of our acquired entities. Adjusted operating income and adjusted operating income margin are calculated by adding back to the GAAP measures those 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 ("Fox"). Adjusted net income and adjusted EPS are calculated by adding back to the GAAP measure amortization of certain intangible assets and adjustments to the fair value of contingent consideration resulting from the acquisition of Fox and excluding gains and losses on the sale of non-operational assets and by further subtracting the tax impact of those expenses, gains, or losses. Adjusted EBITDA and adjusted EBITDA margin are calculated by adding back to the GAAP measures those expenses resulting from the adjustments to the fair value of contingent consideration resulting from the acquisition of Fox and excluding gains and losses on the sale of non-operational assets. Incremental margin is calculated as the change in EBITDA divided by the change in revenue. Adjusted incremental margin is calculated as the change in adjusted EBITDA divided by the change in revenue. Free cash flow is calculated by subtracting capital expenditures from cash provided by operating activities. Free cash flow conversion is calculated as free cash flow divided by net income. Net debt is calculated as total long-term debt less cash and cash equivalents. Net leverage ratio is calculated by dividing net debt by trailing twelve-month EBITDA. Adjusted SG&A is calculated by removing the adjustments to the fair value of contingent consideration resulting from the acquisition of Fox. 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 operating income, adjusted operating income margin, adjusted net income, adjusted EPS, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, incremental EBITDA margin, adjusted incremental EBITDA margin, and adjusted SG&A as measures of operating performance because these measures allow the Company to compare performance consistently over various periods. Management also uses organic revenues, and organic revenues by type to compare revenues over various periods excluding the impact of acquisitions and divestitures. Management uses free cash flow to demonstrate the Company's ability to maintain its asset base and generate future cash flows from operations. Management uses free cash flow conversion to demonstrate how much net income is converted into cash. Management uses net debt as an assessment of overall liquidity, financial flexibility, and leverage. Net leverage ratio is useful to investors because it is an indicator of our ability to meet our future financial obligations. 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.
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 the non-GAAP financial measures used in this earnings release with their most directly comparable GAAP measures.
(unaudited, in thousands, except per share data and margins) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
Variance | Variance | ||||||||||||||
2024 | 2023 | $ | % | 2024 | 2023 | $ | % | ||||||||
Reconciliation of Operating Income to Adjusted Operating Income and Adjusted Operating Income Margin | |||||||||||||||
Operating income | $ 182,377 | $ 154,789 | $ 314,801 | $ 267,029 | |||||||||||
Fox acquisition-related expenses (1) | 4,219 | 5,261 | 9,484 | 5,261 | |||||||||||
Adjusted operating income | $ 186,596 | $ 160,050 | 26,546 | 16.6 | $ 324,285 | $ 272,290 | 51,995 | 19.1 | |||||||
Revenues | $ 891,920 | $ 820,750 | $ 1,640,269 | $ 1,478,765 | |||||||||||
Operating income margin | 20.4 % | 18.9 % | 19.2 % | 18.1 % | |||||||||||
Adjusted operating margin | 20.9 % | 19.5 % | 19.8 % | 18.4 % | |||||||||||
Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS (5) | |||||||||||||||
Net income | $ 129,397 | $ 110,143 | $ 223,791 | $ 198,377 | |||||||||||
Fox acquisition-related expenses (1) | 4,219 | 5,261 | 9,484 | 5,261 | |||||||||||
Gain on sale of assets, net (2) | (412) | (1,019) | (351) | (5,733) | |||||||||||
Tax impact of adjustments (3) | (975) | (1,086) | (2,338) | 121 | |||||||||||
Adjusted net income | $ 132,229 | $ 113,299 | 18,930 | 16.7 | $ 230,586 | $ 198,026 | 32,560 | 16.4 | |||||||
EPS - basic and diluted | $ 0.27 | $ 0.22 | $ 0.46 | $ 0.40 | |||||||||||
Fox acquisition-related expenses (1) | 0.01 | $ 0.01 | 0.02 | 0.01 | |||||||||||
Gain on sale of assets, net (2) | — | $ — | — | (0.01) | |||||||||||
Tax impact of adjustments (3) | — | $ — | — | — | |||||||||||
Adjusted EPS - basic and diluted (4) | $ 0.27 | $ 0.23 | 0.04 | 17.4 | $ 0.48 | $ 0.40 | 0.08 | 20.0 | |||||||
Weighted average shares outstanding | 484,244 | 492,700 | 484,187 | 492,593 | |||||||||||
Weighted average shares outstanding | 484,419 | 492,891 | 484,356 | 492,764 | |||||||||||
Reconciliation of Net Income to EBITDA, Adjusted EBITDA, EBITDA Margin, Incremental EBITDA Margin, Adjusted EBITDA | |||||||||||||||
Net income | $ 129,397 | $ 110,143 | $ 223,791 | $ 198,377 | |||||||||||
Depreciation and amortization | 27,711 | 26,439 | 55,021 | 48,941 | |||||||||||
Interest expense, net | 7,775 | 4,785 | 15,500 | 5,250 | |||||||||||
Provision for income taxes | 45,617 | 40,880 | 75,861 | 69,135 | |||||||||||
EBITDA | $ 210,500 | $ 182,247 | 28,253 | 15.5 | $ 370,173 | $ 321,703 | 48,470 | 15.1 | |||||||
Fox acquisition-related expenses (1) | — | 1,047 | 1,049 | 1,047 | |||||||||||
Gain on sale of assets, net (2) | (412) | (1,019) | (351) | (5,733) | |||||||||||
Adjusted EBITDA | $ 210,088 | $ 182,275 | 27,813 | 15.3 | $ 370,871 | $ 317,017 | 53,854 | 17.0 | |||||||
Revenues | $ 891,920 | $ 820,750 | 71,170 | $ 1,640,269 | $ 1,478,765 | 161,504 | |||||||||
EBITDA margin | 23.6 % | 22.2 % | 22.6 % | 21.8 % | |||||||||||
Incremental EBITDA margin | 39.7 % | 30.0 % | |||||||||||||
Adjusted EBITDA margin | 23.6 % | 22.2 % | 22.6 % | 21.4 % | |||||||||||
Adjusted incremental EBITDA margin | 39.1 % | 33.3 % | |||||||||||||
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Free Cash Flow Conversion | |||||||||||||||
Net cash provided by operating activities | $ 145,115 | $ 147,413 | $ 272,548 | $ 248,186 | |||||||||||
Capital expenditures | (8,696) | (6,775) | (15,867) | (14,411) | |||||||||||
Free cash flow | $ 136,419 | $ 140,638 | (4,219) | (3.0) | $ 256,681 | $ 233,775 | 22,906 | 9.8 | |||||||
Free cash flow conversion | 105.4 % | 127.7 % | 114.7 % | 117.8 % | |||||||||||
(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. 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) In the first quarter of 2024, we revised the non-GAAP metrics adjusted net income, adjusted EPS, and adjusted EBITDA to exclude gains and losses related to non-operational asset sales. These measures are of operating performance and we believe excluding the gains and losses on non-operational assets allows us to better compare our operating performance consistently over various periods. Refer to our first quarter 2024 press release for fully revised quarterly metrics. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
Variance | Variance | ||||||||||||||
2024 | 2023 (6) | $ | % | 2024 | 2023 (6) | $ | % | ||||||||
Reconciliation of Revenues to Organic Revenues | |||||||||||||||
Revenues | 71,170 | 8.7 | $ 1,640,269 | $ 1,478,765 | 161,504 | 10.9 | |||||||||
Revenues from acquisitions | (14,153) | — | (14,153) | 1.7 | (60,140) | — | (60,140) | 4.1 | |||||||
Revenues of divestitures | — | (5,924) | 5,924 | (0.7) | — | (10,677) | 10,677 | (0.8) | |||||||
Organic revenues | 62,941 | 7.7 | $ 1,580,129 | $ 1,468,088 | 112,041 | 7.6 | |||||||||
Reconciliation of Residential Revenues to Organic Residential Revenues | |||||||||||||||
Residential revenues | 24,327 | 6.3 | $ 737,752 | $ 666,844 | 70,908 | 10.6 | |||||||||
Residential revenues from acquisitions | (6,977) | — | (6,977) | 1.8 | (44,686) | — | (44,686) | 6.7 | |||||||
Residential revenues of divestitures | — | (3,373) | 3,373 | (0.9) | — | (6,405) | 6,405 | (1.0) | |||||||
Residential organic revenues | 20,723 | 5.4 | $ 693,066 | $ 660,439 | 32,627 | 4.9 | |||||||||
Reconciliation of Commercial Revenues to Organic Commercial Revenues | |||||||||||||||
Commercial revenues | 25,870 | 9.9 | $ 545,884 | $ 493,607 | 52,277 | 10.6 | |||||||||
Commercial revenues from acquisitions | (6,066) | — | (6,066) | 2.3 | (11,022) | — | (11,022) | 2.2 | |||||||
Commercial revenues of divestitures | — | (2,551) | 2,551 | (1.0) | — | (4,272) | 4,272 | (0.9) | |||||||
Commercial organic revenues | 22,355 | 8.6 | $ 534,862 | $ 489,335 | 45,527 | 9.3 | |||||||||
Reconciliation of Termite and Ancillary Revenues to Organic Termite and Ancillary Revenues | |||||||||||||||
Termite and ancillary revenues | 19,626 | 11.8 | $ 338,084 | $ 302,529 | 35,555 | 11.8 | |||||||||
Termite and ancillary revenues from | (1,110) | — | (1,110) | 0.7 | (4,432) | — | (4,432) | 1.5 | |||||||
Termite and ancillary organic revenues | 18,516 | 11.1 | $ 333,652 | $ 302,529 | 31,123 | 10.3 | |||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
Variance | Variance | ||||||||||||||
2023 (6) | 2022 (6) | $ | % | 2023 (6) | 2022 (6) | $ | % | ||||||||
Reconciliation of Revenues to Organic Revenues | |||||||||||||||
Revenues | 106,701 | 14.9 | $ 1,478,765 | $ 1,304,729 | 174,036 | 13.3 | |||||||||
Revenues from acquisitions | (51,147) | — | (51,147) | 7.2 | (64,302) | — | (64,302) | 4.9 | |||||||
Organic revenues | 55,554 | 7.7 | $ 1,414,463 | $ 1,304,729 | 109,734 | 8.4 | |||||||||
Reconciliation of Residential Revenues to Organic Residential Revenues | |||||||||||||||
Residential revenues | 60,392 | 18.7 | $ 666,844 | $ 581,164 | 85,680 | 14.7 | |||||||||
Residential revenues from acquisitions | (42,089) | — | (42,089) | 13.0 | (48,092) | — | (48,092) | 8.3 | |||||||
Residential organic revenues | 18,303 | 5.7 | $ 618,752 | $ 581,164 | 37,588 | 6.5 | |||||||||
Reconciliation of Commercial Revenues to Organic Commercial Revenues | |||||||||||||||
Commercial revenues | 25,361 | 10.7 | $ 493,607 | $ 443,514 | 50,093 | 11.3 | |||||||||
Commercial revenues from acquisitions | (3,038) | — | (3,038) | 1.3 | (7,232) | — | (7,232) | 1.6 | |||||||
Commercial organic revenues | 22,323 | 9.4 | $ 486,375 | $ 443,514 | 42,861 | 9.7 | |||||||||
Reconciliation of Termite and Ancillary Revenues to Organic Termite and Ancillary Revenues | |||||||||||||||
Termite and ancillary revenues | 20,037 | 13.7 | $ 302,529 | $ 265,730 | 36,799 | 13.8 | |||||||||
Termite and ancillary revenues from | (6,020) | — | (6,020) | 4.1 | (8,978) | — | (8,978) | 3.4 | |||||||
Termite and ancillary organic revenues | 14,017 | 9.6 | $ 293,551 | $ 265,730 | 27,821 | 10.4 | |||||||||
(6) Revenues classified by significant product and service offerings for the three and six months ended June 30, 2023 and 2022 were misstated by an immaterial amount and have been restated from the amounts previously reported to correct the classification of such revenues. There was no impact on our condensed consolidated statements of income, financial position, or cash flows. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Reconciliation of SG&A to Adjusted SG&A | |||||||
SG&A | $ 271,547 | $ 255,331 | $ 494,604 | $ 451,762 | |||
Fox acquisition-related expenses (1) | — | 1,047 | 1,049 | 1,047 | |||
Adjusted SG&A | $ 271,547 | $ 254,284 | $ 493,555 | $ 450,715 | |||
Revenues | $ 891,920 | $ 820,750 | $ 1,640,269 | $ 1,478,765 | |||
Adjusted SG&A as a % of revenues | 30.4 % | 31.0 % | 30.1 % | 30.5 % | |||
Period Ended June 30, 2024 | Period Ended December 31, 2023 | ||||||
Reconciliation of Long-term Debt to Net Debt and Net Leverage Ratio | |||||||
Long-term debt (7) | $ 504,000 | $ 493,000 | |||||
Less: cash | 106,697 | 103,825 | |||||
Net debt | $ 397,303 | $ 389,175 | |||||
Trailing twelve-month EBITDA | $ 753,534 | $ 705,064 | |||||
Net leverage ratio | 0.5x | 0.6x | |||||
(7) As of June 30, 2024, the Company had outstanding borrowings of |
For Further Information Contact
Lyndsey Burton (404) 888-2348
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SOURCE Rollins, Inc.
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