Double-Digit Revenue Growth Drives Solid Increase in Earnings and Cash Flow ATLANTA, April 24, 2024 /PRNewswire/ -- Rollins, Inc. (NYSE:ROL) ("Rollins" or the "Company"), a premier global consumer and commercial services company, reported unaudited financial results for the first quarter of 2024. Key Highlights First quarter revenues were $748 million, an increase of 13.7% over the first quarter 2023 with organic revenues* increasing 7.5%. Quarterly operating income was $132 million, an increase of 18.0% over the first quarter of 2023. Quarterly operating margin was 17.7% of revenue, an increase of 60 basis points over the first quarter of 2023. Adjusted operating income* was $138 million, an increase of 22.7% over the prior year. Adjusted operating income margin* was 18.4%, an increase of 130 basis points over the prior year. Adjusted EBITDA* was $161 million, an increase 19.3%. Adjusted EBITDA margin* was 21.5% of revenue, an increase of 100 basis points over the first quarter of 2023. Quarterly net income was $94 million, an increase of 7.0% over the prior year net income. Adjusted net income* was $98 million, an increase of 16.1% over the prior year. Quarterly EPS was $0.19 per diluted share, a 5.6% increase over the prior year EPS of $0.18. Adjusted EPS* was $0.20 per diluted share, an increase of 17.6% over the prior year. Operating cash flow was $127 million for the quarter, an increase of 26.5% over the prior year. The Company invested $47 million in acquisitions, $7 million in capital expenditures, and paid dividends totaling $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 "The team delivered a strong first quarter with double-digit revenue across all major service lines and an improving margin and cash flow profile," said Jerry Gahlhoff, Jr., President and CEO. "While there was some unfavorable and erratic weather in January compared to last year, we delivered a healthy 7.5 percent organic growth rate for the quarter. We saw significant improvement moving through the quarter, as organic revenue growth accelerated to over 10 percent for February and March, with solid performance across our residential, commercial, and termite and ancillary businesses. Demand for our services remains strong and our pipeline for acquisitions is robust. We are well positioned for continued growth in 2024, both organically, as well as through acquisitions, and remain focused on continuous improvement initiatives to enhance profitability across our business," Mr. Gahlhoff added. "It was encouraging to see the strong growth in revenue, profitability, and cash flow in the quarter, as the team delivered healthy revenue growth, 130 basis points of improvement in adjusted operating margins, and a 29 percent increase in free cash flow in the quarter," said Kenneth Krause, Executive Vice President and CFO. "We achieved a healthy first quarter gross margin level and saw further leverage in SG&A costs while also making incremental investments in resources and programs to drive growth," Mr. Krause concluded. Three Months Ended Financial Highlights Three Months Ended March 31, Variance (in thousands, except per share data) 2024 2023 $ % GAAP Metrics Revenues $   748,349 $   658,015 $    90,334 13.7 % Gross profit (1) $   382,791 $   331,173 $    51,618 15.6 % Gross profit margin (1) 51.2 % 50.3 % 90 bps Operating income $   132,424 $   112,240 $    20,184 18.0 % Operating income margin 17.7 % 17.1 % 60 bps Net income $    94,394 $    88,234 $      6,160 7.0 % EPS $        0.19 $        0.18 $        0.01 5.6 % Operating cash flow $   127,433 $   100,773 $    26,660 26.5 % Non-GAAP Metrics Adjusted operating income (2) $   137,689 $   112,240 $    25,449 22.7 % Adjusted operating margin (2) 18.4 % 17.1 % 130 bps Adjusted net income (2) $    98,357 $    84,727 $    13,630 16.1 % Adjusted EPS (2) $        0.20 $        0.17 $        0.03 17.6 % Adjusted EBITDA (2) $   160,783 $   134,742 $    26,041 19.3 % Adjusted EBITDA margin (2) 21.5 % 20.5 % 100 bps Free cash flow (2) $   120,262 $    93,137 $    27,125 29.1 % (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 North America, South America, Europe, Asia, Africa, and Australia, with more than 19,000 employees from more than 800 locations. Rollins is parent to 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, Fox Pest Control, Orkin Canada, Orkin Australia, Safeguard (UK), Aardwolf Pestkare (Singapore), and more. You can learn more about Rollins and its subsidiaries by visiting www.rollins.com.  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, April 25, 2024 at 8:30 a.m. Eastern Time to discuss the first 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 13745380. 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 31,2024 December 31,2023 ASSETS Cash and cash equivalents $      112,971 $      103,825 Trade receivables, net 177,254 178,214 Financed receivables, short-term, net 35,717 37,025 Materials and supplies 35,698 33,383 Other current assets 62,713 54,192 Total current assets 424,353 406,639 Equipment and property, net 127,116 126,661 Goodwill 1,095,141 1,070,310 Intangibles, net 549,390 545,734 Operating lease right-of-use assets 341,639 323,390 Financed receivables, long-term, net 79,040 75,909 Other assets 41,940 46,817 Total assets $   2,658,619 $   2,595,460 LIABILITIES Accounts payable $        40,038 $        49,200 Accrued insurance – current 51,660 46,807 Accrued compensation and related liabilities 79,372 114,355 Unearned revenues 186,021 172,380 Operating lease liabilities – current 97,394 92,203 Other current liabilities 137,451 101,744 Total current liabilities 591,936 576,689 Accrued insurance, less current portion 51,928 48,060 Operating lease liabilities, less current portion 246,614 233,369 Long-term debt 510,909 490,776 Other long-term accrued liabilities 89,736 90,999 Total liabilities 1,491,123 1,439,893 STOCKHOLDERS' EQUITY Common stock 484,230 484,080 Retained earnings and other equity 683,266 671,487 Total stockholders' equity 1,167,496 1,155,567 Total liabilities and stockholders' equity $   2,658,619 $   2,595,460   ROLLINS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share data) (unaudited) Three Months Ended March 31, 2024 2023 REVENUES Customer services $      748,349 $      658,015 COSTS AND EXPENSES Cost of services provided (exclusive of depreciation and amortization below) 365,558 326,842 Sales, general and administrative 223,057 196,431 Depreciation and amortization 27,310 22,502 Total operating expenses 615,925 545,775 OPERATING INCOME 132,424 112,240 Interest expense, net 7,725 465 Other expense (income), net 61 (4,714) CONSOLIDATED INCOME BEFORE INCOME TAXES 124,638 116,489 PROVISION FOR INCOME TAXES 30,244 28,255 NET INCOME $        94,394 $        88,234 NET INCOME PER SHARE - BASIC AND DILUTED $           0.19 $           0.18 Weighted average shares outstanding - basic 484,131 492,516 Weighted average shares outstanding - diluted 484,318