Rollins, Inc. Reports Third Quarter And Nine Month 2021 Financial Results

Published: Oct. 5, 2021 at 3:30 PM CDT|Updated: Oct. 27, 2021 at 6:30 AM CDT

ATLANTA, Oct. 27, 2021 /PRNewswire/ -- Rollins, Inc. (NYSE:ROL), a premier global consumer and commercial services company, reported strong unaudited financial results for its third quarter and nine months ended September 30, 2021.

The Company recorded third quarter revenues of $650.2 million, an increase of 11.4% over the prior year's third quarter revenue of $583.7 million. Rollins' reported net income was $93.9 million or $0.19 per diluted share for the third quarter ended September 30, 2021, compared to $79.6 million or $0.16 per diluted share for the same period in 2020.

Rollins' revenues rose 12.2% for the first nine months of 2021 to $1.824 billion compared to $1.625 billion for the prior year. Net income for the first nine months of 2021 was $285.4 million or $0.58 per diluted share compared to $198.2 million or $0.40 per diluted share for the same period last year. Adjusted net income* and adjusted earnings per diluted share* for the nine months ended September 30, 2021 were $262.1 million or $0.53, respectively, compared to $204.9 million or $0.42 per diluted share for the same period last year.

The Company, as planned and previously disclosed, disposed of the majority of the properties received through the 2019 acquisition of Clark Pest Control of Stockton, Inc. The gain related to the disposition of these properties in the nine months ended September 30, 2021 was $31.5 million pre-tax. The third quarter and nine months ended September 30, 2020 included a one-time non-cash expense of $6.7 million for the accelerated restricted stock vesting for our late Chairman, R. Randall Rollins.

Gary W. Rollins, Chairman and Chief Executive Officer of Rollins, Inc. 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 first nine months of 2021. We remain confident of our continued success for 2021."

Rollins, Inc. is a premier global consumer and commercial services company. Through its family of leading brands, Orkin, HomeTeam Pest Defense, Clark Pest Control, Orkin Canada, Western Pest Services, Northwest Exterminating, McCall Service, Critter Control, The Industrial Fumigant Company, Trutech, Orkin Australia, Waltham Services, OPC Services, PermaTreat, Rollins UK, Aardwolf Pestkare, Crane Pest Control and MissQuito, the Company provides 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.orkincanada.ca, www.westernpest.comwww.callnorthwest.com, www.mccallservice.com, www.crittercontrol.com, www.indfumco.com, www.trutechinc.com, www.orkinau.com, www.walthamservices.com, www.opcpest.com, www.permatreat.com, www.safeguardpestcontrol.co.uk, www.aardwolfpestkare.com, www.cranepestcontrol.com, www.missquito.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"), including those factors discussed under Item 1.A., "Risk Factors" of Part I of the Company's Annual Report on Form 10-K, filed with the SEC for the year ended December 31, 2020, 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 outcomes of any pending 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, and the Company's inability to predict the outcome of the SEC investigation; 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; risks related to changes in industry practices or technologies; and competitive factors and pricing practices.

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.

(ROL-IR)

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


(in thousands)









At September 30, (unaudited)



2021



2020

ASSETS







Cash and cash equivalents


$

117,655


$

95,440

Trade accounts receivables, net



152,866



138,392

Financed receivables, net



27,294



24,091

Materials and supplies



26,976



30,386

Other current assets



48,663



43,527

Total Current Assets



373,454



331,836

Equipment and property, net



131,549



186,825

Goodwill



665,645



619,656

Customer contracts, net



284,393



275,366

Trademarks and tradenames, net



108,231



104,610

Other intangible assets, net



9,914



9,966

Operating lease, right-of-use assets



251,374



211,345

Financed receivables, long-term, net



45,410



37,430

Benefit plan assets



1,118



1,198

Deferred income tax assets



2,568



2,165

Other assets



31,157



25,669

Total Assets


$

1,904,813


$

1,806,066

LIABILITIES







Accounts payable



38,509



56,393

Accrued insurance, current



34,790



31,756

Accrued compensation and related liabilities



96,285



88,566

Unearned revenue



151,645



139,734

Operating lease liabilities, current



76,684



72,197

Current portion of long-term debt



18,750



15,625

Other current liabilities



60,833



64,868

Total Current Liabilities



477,496



469,139

Accrued insurance, less current portion



32,582



36,164

Operating lease liabilities, less current portion



177,381



140,795

Long-term debt



49,250



154,375

Deferred income tax liabilities



13,288



15,244

Long-term accrued liabilities



53,187



57,633

Total Liabilities



803,184



873,350

STOCKHOLDERS' EQUITY







Common stock



492,049



491,624

Retained earnings and other equity



609,580



441,092

Total stockholders' equity



1,101,629



932,716

Total Liabilities and Stockholders' Equity


$

1,904,813


$

1,806,066

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands except per share data)

(unaudited)




Three Months Ended


Nine Months Ended



September 30, 


September 30, 



2021


2020


2021


2020

REVENUES













Customer services


$

650,199


$

583,698


$

1,823,957


$

1,624,928

COSTS AND EXPENSES













Cost of services provided



305,474



275,474



864,888



782,248

Depreciation and amortization



23,617



22,404



70,519



65,926

Sales, general and administrative



194,261



168,006



539,951



497,121

Chairman's accelerated stock vesting expense





6,691





6,691

(Gain) loss on sale of assets, net



(447)



1,355



(33,598)



629

Interest expense, net



222



866



1,334



4,491

INCOME BEFORE INCOME TAXES



127,072



108,902



380,863



267,822

PROVISION FOR INCOME TAXES



33,219



29,323



95,513



69,617

NET INCOME


$

93,853


$

79,579


$

285,350


$

198,205

NET INCOME PER SHARE - BASIC AND DILUTED1


$

0.19


$

0.16


$

0.58


$

0.40

Weighted average shares outstanding - basic and diluted



492,069



491,631



492,058



491,236

1 All prior year share and per share data have been adjusted to account for the three-for-two stock split effective December 10, 2020.

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 today's earnings release, and the non-GAAP financial measures of organic revenues, organic revenues on a constant exchange rate, adjusted EBITDA, and free cash flow in today's conference call. 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.

The Company uses adjusted net income, adjusted EPS and adjusted EBITDA as measures of operating performance because they allow it to compare performance consistently over various periods without regard to the impact of the property disposition gains or the accelerated stock vesting expense. The Company uses organic revenues and organic revenues on a constant exchange rate to compare revenues over various periods excluding the impact of acquisitions and the change in foreign currency rates. The Company uses free cash flow to demonstrate its ability to generate cash.

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


Nine Months Ended




September 30, 


September 30, 










Better/










Better/






2021


2020


(Worse)


%


2021


2020


(Worse)


%


Reconciliation of Net Income to Adjusted Net Income and EPS
























Net income


$

93,853


$

79,579


$

14,274


17.9

%

$

285,350


$

198,205


$

87,145


44.0

%

Property disposition gains










(31,517)





(31,517)



Chairman's accelerated stock vesting expense





6,691



(6,691)






6,691



(6,691)



Adjusted income taxes on excluded items










8,287





8,287



Adjusted net income


$

93,853


$

86,270


$

7,583


8.8

%

$

262,120


$

204,896


$

57,224


27.9

%

Adjusted net income per share - basic and diluted1


$

0.19


$

0.18


$

0.01


5.6

%

$

0.53


$

0.42


$

0.11


26.2

%

Weighted average shares outstanding - basic and diluted1



492,069



491,631



438


0.1

%


492,058



491,236



822


0.2

%

























Reconciliation of Revenues to Organic Revenues and Organic Revenues on a Constant Exchange Rate
























Revenues


$

650,199


$

583,698


$

66,501


11.4

%

$

1,823,957


$

1,624,928


$

199,029


12.2

%

Revenues from acquisitions



(12,671)





(12,671)




(43,931)





(43,931)



Organic revenues



637,528



583,698



53,830


9.2

%


1,780,026



1,624,928



155,098


9.5

%

Adjustment to organic revenues on a constant exchange rate



(431)





(431)




(10,314)





(10,314)



Organic revenues on a constant exchange rate


$

637,097


$

583,698


$

53,399


9.2

%

$

1,769,712


$

1,624,928


$

144,784


8.9

%

























Reconciliation of Net Income to EBITDA and Adjusted EBITDA
























Net income


$

93,853


$

79,579


$

14,274


17.9

%

$

285,350


$

198,205


$

87,145


44.0

%

Depreciation and amortization



23,617



22,404



1,213


5.4



70,519



65,926



4,593


7.0


Interest expense, net



222



866



(644)


(74.4)



1,334



4,491



(3,157)


(70.3)


Provision for income taxes



33,219



29,323



3,896


13.3



95,513



69,617



25,896


37.2


EBITDA



150,911



132,172



18,739


14.2

%


452,716



338,239



114,477


33.8

%

Property disposition gains










(31,517)





(31,517)



Chairman's accelerated stock vesting expense





6,691



(6,691)






6,691



(6,691)



Adjusted EBITDA


$

150,911


$

138,863


$

12,048


8.7

%

$

421,199


$

344,930


$

76,269


22.1

%

























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
























Net cash provided by operating activities


$

79,706


$

105,835


$

(26,129)


(24.7)

%

$

298,911


$

340,607


$

(41,696)


(12.2)

%

Purchases of equipment and property



(6,802)



(5,249)



(1,553)


(29.6)



(20,031)



(17,690)



(2,341)


(13.2)


Free Cash Flow


$

72,904


$

100,586


$

(27,682)


(27.5)

%

$

278,880


$

322,917


$

(44,037)


(13.6)

%

1 All prior year share and per share data have been adjusted to account for the three-for-two stock split effective December 10, 2020.

CONFERENCE CALL ANNOUNCEMENT 

Rollins, Inc.
(NYSE: ROL)

Management will hold a conference call to discuss
Third Quarter 2021 results on

Wednesday, October 27, 2021 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 1-877-407-9716 domestic;
1-201-493-6779 international
with conference ID of 13723477
at least 5 minutes before start time.

REPLAY: available through November 3, 2021
Please dial 1-844-512-2921 / 1-412-317-6671, Passcode 13723477
THIS CALL CAN ALSO BE ACCESSED THROUGH THE INTERNET AT

www.rollins.com

Questions?
Contact Samantha Alphonso at Financial Relations Board at 212-827-3746
Or email to salphonso@mww.com

For Further Information Contact
Julie Bimmerman (404) 888-2103

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SOURCE Rollins, Inc.

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