ROL 8-K
Rollins Inc (ROL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Item 2.02. Results of Operations and Financial Condition.
On April 27, 2022, the Company issued a press release announcing its unaudited financial results for the first quarter ended March 31, 2022. The Company hereby incorporates by reference herein the information set forth in its Press Release dated April 27, 2022, a copy of which is attached hereto as Exhibit 99.1. Except as otherwise provided in the press release, the press release speaks only as of the date of such press release and such press release shall not create any implication that the affairs of the Company have continued unchanged since such date.
The information in this Item 2.02, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such a filing or document.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. |
| Description |
99.1 |
| |
104 | Cover Page Interactive Data File (embedded with the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Rollins, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ROLLINS, INC.
Date: April 27, 2022 | By: | /s/ Julie Bimmerman |
| Name: | Julie Bimmerman |
| Title: | Interim Chief Financial Officer and Treasurer |
|
| (Principal Financial Officer) |
Exhibit 99.1
For Further Information Contact
Julie Bimmerman (404) 888-2103
FOR IMMEDIATE RELEASE
ROLLINS, INC. REPORTS FIRST QUARTER 2022 FINANCIAL RESULTS
ATLANTA, GEORGIA, April 27, 2022: Rollins, Inc. (NYSE:ROL) (“Rollins” or the “Company”), a premier global consumer and commercial services company, reported strong unaudited financial results for its first quarter ended March 31, 2022.
The Company recorded first quarter 2022 revenues of $590.7 million, an increase of 10.3% over the first quarter 2021 revenue of $535.6 million, with organic revenues* increasing 7.0% to $573.1 million. The Company’s first quarter 2022 reported net income was $72.4 million or $0.15 per diluted share, compared to $92.6 million or $0.19 per diluted share for first quarter of 2021. Adjusted net income* and adjusted earnings per diluted share* for the first quarter ended March 31, 2021 were $69.8 million and $0.14 per diluted share, respectively. The first quarter 2021 results have been adjusted to exclude the gain related to the disposition of properties received through the 2019 acquisition of Clark Pest Control of Stockton, Inc. of $31.1 million ($22.9 million, net of tax).
Gary W. Rollins, Chairman and Chief Executive Officer of Rollins stated, “We are proud of our first quarter results and believe we are well positioned for 2022. Our employees have displayed a strong level of commitment and drive towards taking care of our customers. We are confident in our continued strategic growth and profitability moving forward.”
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 800 locations. You can learn more about Rollins and its subsidiaries by visiting our web site at www.rollins.com, where you can also find this and other news releases by accessing the news releases button.
*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 closely correlated GAAP measure.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements that involve risks and uncertainties concerning the business and financial results of Rollins, Inc. We have based these forward-looking statements largely on our current opinions, expectations, beliefs, plans, objectives, assumptions and projections about future events and financial trends affecting the operating results and financial condition of our business. Such forward looking statements include, but are not limited to, statements regarding the Company’s belief that it is well positioned for 2022 and its confidence in its strategic growth and profitability moving forward.
Our actual results could differ materially from those indicated by the forward-looking statements because of various risks, timing and uncertainties including, without limitation, the failure to maintain and enhance our brands and develop a positive client reputation; our ability to protect our intellectual property and other proprietary rights that are material to our business and our brand recognition; actions taken by our franchisees, subcontractors or vendors that may harm our business; general economic conditions; the impact of the extent and duration of economic contraction related to COVID-19 on general economic activity for the remainder of 2022 and beyond; the impact of future developments related to the COVID-19 pandemic on the Company’s business, results of operations, accounting assumptions and estimates and financial condition, including, without limitation, restrictions in customer discretionary expenditures, disruptions in credit or financial markets, increases in fuel prices, raw material costs or other operating costs; potential increases in labor costs; labor shortages and/or our inability to attract and retain skilled workers; competitive factors and pricing practices; changes in industry practices or technologies; the degree of success of our termite process reforms and pest control selling and treatment methods; our ability to identify, complete and successfully integrate potential acquisitions; unsuccessful expansion into international markets; climate change and unfavorable weather conditions; a breach of data security resulting in the unauthorized access of personal, financial, proprietary, confidential or other personal data or information about our customers, employees, third parties, or of our proprietary confidential information; damage to our brands or reputation; possibility of an adverse ruling against us in pending litigation, regulatory action or investigation; changes in various government laws and regulations, including environmental regulations; the adequacy of our insurance coverage to cover all significant risk exposures; the effectiveness of our risk management and safety program; general market risk; management’s substantial ownership interest and its impact on public stockholders and the availability of the Company’s common stock to the investing public; and the existence of certain anti-takeover provisions in our governance documents, which could make a tender offer, change in control or takeover attempt that is opposed by the Company’s Board of Directors more difficult or expensive. All of the foregoing risks and uncertainties are beyond our ability to control, and in many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. The Company does not undertake to update its forward-looking statements.
ROLLINS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands)
(unaudited)
|
| March 31, |
| December 31, | ||
| | | 2022 | | | 2021 |
ASSETS |
| |
|
| |
|
Cash and cash equivalents | | $ | 258,338 | | $ | 105,301 |
Trade accounts receivables, net | |
| 137,621 | |
| 139,579 |
Financed receivables, net | |
| 26,631 | |
| 26,152 |
Materials and supplies | |
| 29,062 | |
| 28,926 |
Other current assets | |
| 44,860 | |
| 52,422 |
Total Current Assets | |
| 496,512 | |
| 352,380 |
Equipment and property, net | |
| 132,680 | |
| 133,257 |
Goodwill | |
| 730,139 | |
| 721,819 |
Customer contracts, net | |
| 318,806 | |
| 325,929 |
Trademarks and tradenames, net | |
| 109,520 | |
| 108,976 |
Other intangible assets, net | |
| 10,090 | |
| 11,679 |
Operating lease, right-of-use assets | |
| 241,043 | |
| 244,784 |
Financed receivables, long-term, net | |
| 46,192 | |
| 47,097 |
Other assets | |
| 46,161 | |
| 34,949 |
Total Assets | | $ | 2,131,143 | | $ | 1,980,870 |
LIABILITIES | |
|
| |
|
|
Accounts payable | |
| 38,586 | |
| 44,568 |
Accrued insurance, current | |
| 37,724 | |
| 36,414 |
Accrued compensation and related liabilities | |
| 76,291 | |
| 97,862 |
Unearned revenue | |
| 156,516 | |
| 145,122 |
Operating lease liabilities, current | |
| 74,463 | |
| 75,240 |
Current portion of long-term debt | |
| 15,000 | |
| 18,750 |
Other current liabilities | |
| 82,317 | |
| 73,206 |
Total Current Liabilities | |
| 480,897 | |
| 491,162 |
Accrued insurance, less current portion | |
| 32,218 | |
| 31,545 |
Operating lease liabilities, less current portion | |
| 169,839 | |
| 172,520 |
Long-term debt | |
| 280,783 | |
| 136,250 |
Long-term accrued liabilities | |
| 59,877 | |
| 67,345 |
Total Liabilities | |
| 1,023,614 | |
| 898,822 |
STOCKHOLDERS’ EQUITY | |
|
| |
|
|
Common stock | |
| 492,461 | |
| 491,911 |
Retained earnings and other equity | |
| 615,068 | |
| 590,137 |
Total stockholders’ equity | |
| 1,107,529 | |
| 1,082,048 |
Total Liabilities and Stockholders’ Equity | | $ | 2,131,143 | | $ | 1,980,870 |
ROLLINS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited)
|
| Three Months Ended | ||||
| | March 31, | ||||
|
| 2022 |
| 2021 | ||
REVENUES | | | | | | |
Customer services | | $ | 590,680 | | $ | 535,554 |
COSTS AND EXPENSES | |
|
| |
|
|
Cost of services provided (exclusive of depreciation and amortization below) | |
| 295,378 | |
| 261,552 |
Sales, general and administrative | |
| 178,785 | |
| 162,208 |
Depreciation and amortization | |
| 24,847 | |
| 23,596 |
Total operating expenses | | | 499,010 | | | 447,356 |
OPERATING INCOME | | | 91,670 | | | 88,198 |
Interest expense, net | |
| 568 | |
| 606 |
Other income, net | | | (1,279) | | | (32,260) |
CONSOLIDATED INCOME BEFORE INCOME TAXES | | | 92,381 | | | 119,852 |
PROVISION FOR INCOME TAXES | |
| 19,936 | |
| 27,209 |
NET INCOME | | $ | 72,445 | | $ | 92,643 |
NET INCOME PER SHARE - BASIC AND DILUTED | | $ | 0.15 | | $ | 0.19 |
Weighted average shares outstanding - basic | | | 492,213 | | | 492,003 |
Weighted average shares outstanding - diluted | |
| 492,325 | |
| 492,003 |
APPENDIX
Reconciliation of GAAP and non-GAAP Financial Measures
The Company has used the non-GAAP financial measures of organic revenues, adjusted net income and adjusted earnings per share (“EPS”) in this earnings release, and the non-GAAP financial measures of 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 | |||||||||
| | March 31, | |||||||||
| | | | | | | | Variance | |||
|
| 2022 |
| 2021 |
| $ |
| % | |||
Reconciliation of Net Income to Adjusted Net Income and EPS | | | | | | | | | | | |
Net income | | $ | 72,445 | | $ | 92,643 | | $ | (20,198) |
| (21.8) |
Property disposition gains (net of tax $22,893) | |
| — | |
| (31,058) | |
| 31,058 |
| — |
Adjusted income taxes on excluded items | |
| — | |
| 8,165 | |
| (8,165) |
| — |
Adjusted net income | | $ | 72,445 | | $ | 69,750 | | $ | 2,695 |
| 3.9 |
Adjusted earnings per share - basic and diluted | | $ | 0.15 | | $ | 0.14 | | $ | 0.01 |
| 7.1 |
Weighted average shares outstanding - basic | | | 492,213 | | | 492,003 | | | 210 | | 0.0 |
Weighted average shares outstanding - diluted | |
| 492,325 | |
| 492,003 | |
| 322 |
| 0.1 |
| | | | | | | | | | | |
Reconciliation of Net Income to EBITDA and Adjusted EBITDA | | | | | | | | | | | |
Net income | | $ | 72,445 | | $ | 92,643 | | $ | (20,198) |
| (21.8) |
Depreciation and amortization | | | 24,847 | | | 23,596 | | | 1,251 | | 5.3 |
Interest expense, net | | | 568 | | | 606 | | | (38) | | (6.3) |
Provision for income taxes | | | 19,936 | | | 27,209 | | | (7,273) | | (26.7) |
EBITDA | | | 117,796 | | | 144,054 | | | (26,258) | | (18.2) |
Property disposition gains | | | — | | | (31,058) | | | 31,058 | | — |
Adjusted EBITDA | | $ | 117,796 | | $ | 112,996 | | $ | 4,800 | | 4.2 |
| | | | | | | | | | | |
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | | | | | | | | | | | |
Net cash provided by operating activities | | $ | 87,532 | | $ | 119,486 | | $ | (31,954) | | (26.7) |
Capital expenditures | | | (7,995) | | | (7,826) | | | (169) | | (2.1) |
Free Cash Flow | | $ | 79,537 | | $ | 111,660 | | $ | (32,123) | | (28.8) |
| |||||||||||
| | | | | | | | | | | |
|
| Three Months Ended | |||||||||
| | March 31, | |||||||||
| | | | | | | | Variance | |||
|
| 2022 |
| 2021 |
| $ |
| % | |||
Reconciliation of Revenues to Organic Revenues and Organic Revenues in Constant Dollars | | | | | | | | | | | |
Revenues | | $ | 590,680 | | $ | 535,554 | | $ | 55,126 | | 10.3 |
Revenue growth from acquisitions | | | (17,567) | | | — | | | (17,567) | | — |
Organic revenues | | | 573,113 | | | 535,554 | | | 37,559 | | 7.0 |
Adjustment to organic revenues on a constant exchange rate | | | (3,663) | | | — | | | (3,663) | | — |
Organic revenues in constant dollars | | $ | 569,450 | | $ | 535,554 | | $ | 33,896 | | 6.3 |
| | | | | | | | | | | |
Reconciliation of Residential Revenues to Organic Residential Revenues | | | | | | | | | | | |
Residential revenues | | $ | 259,259 | | $ | 235,179 | | $ | 24,080 | | 10.2 |
Residential revenues from acquisitions | | | (10,282) | | | — | | | (10,282) | | — |
Residential organic revenues | | $ | 248,977 | | $ | 235,179 | | $ | 13,798 | | 5.8 |
| | | | | | | | | | | |
Reconciliation of Commercial Revenues to Organic Commercial Revenues | | | | | | | | | | | |
Commercial revenues | | $ | 205,787 | | $ | 188,697 | | $ | 17,090 | | 9.1 |
Commercial revenue growth from acquisitions | | | (2,222) | | | — | | | (2,222) | | — |
Commercial organic revenues | | $ | 203,565 | | $ | 188,697 | | $ | 14,868 | | 7.9 |
| | | | | | | | | | | |
Reconciliation of Termite Revenues to Organic Termite Revenues | | | | | | | | | | | |
Termite revenues | | $ | 119,706 | | $ | 105,694 | | $ | 14,012 | | 13.3 |
Termite revenues from acquisitions | | | (5,063) | | | — | | | (5,063) | | — |
Termite organic revenues | | $ | 114,643 | | $ | 105,694 | | $ | 8,949 | | 8.5 |
CONFERENCE CALL ANNOUNCEMENT
Rollins, Inc.
(NYSE: ROL)
Management will hold a conference call to discuss
First Quarter 2022 results on
Wednesday, April 27, 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 13728548
at least 5 minutes before start time.
REPLAY: available through May 2, 2022
Please dial 1-877-660-6853 / 1-201-612-7415, Passcode 13728548
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 [email protected]