Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both. The Style Scores are broken down into four categories: Value Score Finding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiple ...

Monumental symphony performance in Springfield, Illinois, will feature curated songs that harmonize with the singing and rhythm of trillions of cicadas ATLANTA, May 22, 2024 /PRNewswire/ -- Trillions of newly-emerged cicadas are about to crank up the volume on the sweet sounds of summer in much of the country – particularly across the Southeast and Midwest. For the first time in 221 years, two broods of periodic cicadas will emerge from the ground at the same time. To commemorate this historic event, Orkin ...

ATLANTA, May 20, 2024 /PRNewswire/ -- Rollins, Inc. (NYSE:ROL) ("Rollins" or the "Company"), a premier global consumer and commercial services company, held its 2024 Investor and Analyst Conference on Friday, May 17th at the New York Stock Exchange (NYSE). During the event, members of leadership presented on topics underscoring five key points: As a scaled player in the North American pest control market, Rollins intends to leverage a number of distinct competitive advantages to strengthen its position and ...

Core Insights - Orkin has released its annual ranking of the most mosquito-prone cities, with Los Angeles taking the top spot, followed by New York City, Chicago, Dallas, and Atlanta [1][2] - The data for this ranking was collected from April 1, 2023, to March 31, 2024, focusing on new residential mosquito treatments to assess the likelihood of mosquito problems in various cities [2] Company Initiatives - Orkin is partnering with the American Red Cross for the "Mosquitoes Don't Deserve a Drop" campaign, which aims to raise awareness about the health risks associated with mosquitoes while supporting the blood supply [5] - For every mosquito control service purchased between May 20 and June 30, 2024, Orkin will donate $25 to the Red Cross, with a total contribution cap of $250,000 [5] Health Risks - Mosquitoes are identified as the deadliest animals on earth, responsible for over 600,000 malaria-related deaths annually, along with spreading other serious diseases such as West Nile virus and Zika [2][4] - The presence of standing water is highlighted as a significant breeding ground for mosquitoes, which thrive in warm, damp environments [3] Preventative Measures - Regular mosquito treatments are recommended as a primary method to reduce mosquito-related health risks [5] - Additional tips for homeowners include wearing protective clothing, using EPA-registered repellents, and eliminating standing water around properties [9]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company's unaudited condensed consolidated financial statements reflect its financial position, income, equity, and cash flows for Q1 2024 [Condensed Consolidated Statements of Financial Position](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20FINANCIAL%20POSITION) Total assets grew to $2.66 billion, driven by increases in Goodwill and operating lease right-of-use assets Condensed Consolidated Statements of Financial Position (in thousands) | | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total current assets** | $424,353 | $406,639 | | **Goodwill** | $1,095,141 | $1,070,310 | | **Total assets** | **$2,658,619** | **$2,595,460** | | **Total current liabilities** | $591,936 | $576,689 | | **Long-term debt** | $510,909 | $490,776 | | **Total liabilities** | **$1,491,123** | **$1,439,893** | | **Total stockholders' equity** | **$1,167,496** | **$1,155,567** | [Condensed Consolidated Statements of Income](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Revenues grew 13.7% to $748.3 million in Q1 2024, with net income rising 7.0% to $94.4 million Q1 2024 vs Q1 2023 Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $748,349 | $658,015 | 13.7% | | **Operating Income** | $132,424 | $112,240 | 18.0% | | **Net Income** | $94,394 | $88,234 | 7.0% | | **Net Income Per Share - Diluted** | $0.19 | $0.18 | 5.6% | | **Dividends Paid Per Share** | $0.15 | $0.13 | 15.4% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Comprehensive income remained flat at $88.7 million, as net income growth was offset by foreign currency translation losses Comprehensive Income (in thousands) | | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **Net Income** | $94,394 | $88,234 | | **Other comprehensive (loss) income, net of tax** | $(5,717) | $259 | | **Comprehensive income** | **$88,677** | **$88,493** | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY) Stockholders' equity increased to $1.17 billion, reflecting net income additions partially offset by dividend payments - Key changes in stockholders' equity for Q1 2024 include the addition of **$94.4 million in net income**, offset by **$72.6 million in cash dividends** and **$11.3 million for shares withheld for employee taxes**[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Operating cash flow increased 26.5% to $127.4 million, while investing cash use rose due to higher acquisition spending Summary of Cash Flows (in thousands) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $127,433 | $100,773 | | **Net cash used in investing activities** | $(52,465) | $(13,590) | | **Net cash used in financing activities** | $(64,254) | $(71,082) | | **Net increase in cash and cash equivalents** | $9,146 | $17,157 | | **Cash and cash equivalents at end of period** | $112,971 | $112,503 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Notes detail accounting policies, acquisitions, revenue, and debt, including the impact of the Fox Pest Control acquisition - The company made **12 acquisitions** during Q1 2024 for a total consideration of **$53.8 million**[28](index=28&type=chunk) - The Fox Pest Control acquisition, completed in April 2023, contributed **$35.5 million in revenues** and **$1.5 million in net earnings** during Q1 2024[31](index=31&type=chunk) - As of March 31, 2024, the company had **$513.0 million in outstanding borrowings** under its $1.0 billion revolving credit facility at an effective interest rate of **6.4%**[56](index=56&type=chunk) - The company paid cash dividends of **$0.15 per share** in Q1 2024, up from $0.13 per share in Q1 2023[62](index=62&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=17&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses a 13.7% revenue increase driven by organic growth and acquisitions, alongside improved operating margins Q1 2024 Key Performance Metrics | Metric | Q1 2024 | Change vs Q1 2023 | | :--- | :--- | :--- | | **Revenues** | $748.3M | +13.7% | | **Organic Revenues*** | - | +7.5% | | **Operating Income** | $132.4M | +18.0% | | **Operating Margin** | 17.7% | +60 bps | | **Adjusted EBITDA*** | $160.8M | +19.3% | | **Adjusted EBITDA Margin*** | 21.5% | +100 bps | | **EPS** | $0.19 | +5.6% | | **Adjusted EPS*** | $0.20 | +17.6% | | **Operating Cash Flow** | $127.4M | +26.5% | *Non-GAAP measure. - The company is targeting **7% to 8% organic growth** and **2% to 3% inorganic growth** for the full year 2024[73](index=73&type=chunk) - Revenue growth was strong across all major service lines: Residential pest control grew approximately **16%**, commercial pest control grew **11%**, and termite/ancillary services grew **12%**[81](index=81&type=chunk) - Gross margin improved by **90 basis points to 51.2%**, with 40 basis points of the improvement attributed to the accretive Fox Pest Control acquisition[84](index=84&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company reports no material changes to its market risk exposure compared to the 2023 year-end disclosures - There were **no material changes** to the company's market risk exposure during the first quarter of 2024[128](index=128&type=chunk) [Controls and Procedures](index=28&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of the quarter-end, excluding recent acquisitions - The principal executive and financial officers concluded that **disclosure controls and procedures were effective** as of March 31, 2024[129](index=129&type=chunk) - The assessment of internal controls over financial reporting **excludes Fox Pest Control**, which was acquired in the second quarter of 2023 and is still being integrated[130](index=130&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[131](index=131&type=chunk) [PART II - OTHER INFORMATION](index=29&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=29&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in routine litigation and a specific California environmental inquiry, none deemed materially adverse - The company is involved in various **routine legal matters** arising from its business operations[133](index=133&type=chunk) - The company is currently working with local governments in California regarding an **investigation into compliance with environmental regulations** for waste and pesticide disposal for its Orkin and Clark Pest Control operations[135](index=135&type=chunk) - Management does not believe any pending legal proceeding will have a **material adverse effect** on the company's financial condition or results[136](index=136&type=chunk) [Risk Factors](index=29&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors disclosed in the 2023 Annual Report on Form 10-K - There have been **no material changes** to the risk factors disclosed in the company's 2023 Form 10-K[137](index=137&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company withheld shares for employee taxes but made no open market repurchases, with 11.4 million shares remaining authorized Share Repurchase Activity (Q1 2024) | Period | Total Shares Purchased(1) | Weighted Average Price Paid | Shares Purchased as Part of Publicly Announced Plan | | :--- | :--- | :--- | :--- | | Jan 2024 | 213,181 | $43.52 | — | | Feb 2024 | 48,075 | $41.05 | — | | Mar 2024 | 324 | $46.70 | — | | **Total** | **261,580** | | **—** | (1) Shares withheld for employee tax obligations. - As of March 31, 2024, the company has authorization to repurchase an additional **11.4 million shares** under its share repurchase program[139](index=139&type=chunk) [Defaults Upon Senior Securities](index=30&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon senior securities during the period - None[140](index=140&type=chunk) [Mine Safety Disclosures](index=30&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) The company reported no mine safety disclosures for the period - None[141](index=141&type=chunk) [Other Information](index=31&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The CEO and President adopted a Rule 10b5-1 trading plan for the potential sale of company securities - CEO and President Jerry E. Gahlhoff, Jr. adopted a **Rule 10b5-1 trading plan** on March 8, 2024, for the sale of up to **12,000 shares** of common stock[143](index=143&type=chunk) [Exhibits](index=32&type=section&id=ITEM%206.%20EXHIBITS) This section lists filed exhibits, including Sarbanes-Oxley certifications and Inline XBRL data files - The exhibits include **CEO and CFO certifications** pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[145](index=145&type=chunk)

Financial Data and Key Metrics Changes - Rollins reported a revenue increase of nearly 14% to $748 million for Q1 2024, with organic growth of 7.5% despite adverse weather conditions in January [10][15] - Adjusted operating margins improved to 18.4%, up 130 basis points year-over-year, driven by strong gross profit performance and solid expense leverage [16][22] - Free cash flow increased by 29% to $120 million, reflecting strong cash flow generation [27] Business Line Data and Key Metrics Changes - Residential revenue increased by 16.5%, commercial pest control rose by 11.4%, and termite and ancillary services increased by 11.7% [4][17] - Organic growth in residential services was 4.3%, while commercial and termite services saw organic growth of 10.1% and 9.3%, respectively [17][18] Market Data and Key Metrics Changes - The company closed 12 tuck-in deals in the first three months of the year, indicating a healthy M&A pipeline [5] - The effective tax rate for the quarter was approximately 24%, consistent with the prior year [24] Company Strategy and Development Direction - Rollins continues to invest in sales staffing and marketing activities ahead of peak season to enhance customer service and drive growth [4][5] - The company aims for at least 2% growth from M&A activity in 2024, reflecting a commitment to operational efficiency and continuous improvement [5][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a long-term organic growth rate of 7% to 8%, despite fluctuations in quarterly performance [34][56] - Demand for services remains strong, with expectations for continued healthy levels of demand in April [51] Other Important Information - The company announced changes to its Board of Directors, welcoming new members and expressing gratitude to retiring members [13][14] - Rollins is focused on enhancing safety protocols, resulting in improved safety scores and fewer incidents compared to the previous year [12] Q&A Session Summary Question: Trends in organic growth rates - Management indicated that while February and March showed improved growth, the long-term expectation remains around 7% to 8% organic growth [34][36] Question: Increase in sales and marketing expenses - The increase is primarily due to staffing up sales teams rather than defensive marketing strategies, aimed at capturing growth opportunities [35][36] Question: Trends in the residential business - Management noted that organic growth in residential services was impacted by weather in January but improved significantly in February and March [39][41] Question: Factors affecting termite and ancillary services growth - The growth in this segment remains strong, but productivity challenges due to weather-related branch closures affected performance [42][43] Question: Sustainability of commercial organic growth - Management emphasized ongoing investments in the sales force and training as key to sustaining strong commercial growth [44][45] Question: Pricing strategy and pushback - Rollins is implementing CPI-plus pricing, expecting to maintain price increases without significant pushback from customers [63] Question: Capital allocation and M&A pipeline - The M&A pipeline is healthy, with expectations of 2% to 3% revenue growth contribution from acquisitions in 2024 [53] Question: Residential growth expectations - Management anticipates that residential growth may lag behind commercial and termite growth, reflecting historical trends [56][58]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2023 Commission file No. 1-4422 _____________________________ ROLLINS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 2170 Piedmont Road, N.E., Atlanta, Georgia 30324 (Address of principal executive offices) (Zip ...

Financial Data and Key Metrics Changes - The company achieved a revenue milestone of $3.1 billion for fiscal 2023, reflecting a robust revenue growth of 14% year-over-year [17][24] - Adjusted net income for the fourth quarter was $101 million, or $0.21 per share, an increase of over 23% from the same period a year ago [8][54] - Full-year earnings per share grew by over 18%, with adjusted earnings per share increasing by 20% [17][51] - Operating cash flow for the year was $528 million, and free cash flow was $495 million, both up over 13% compared to the previous year [24][27] Business Line Data and Key Metrics Changes - In the fourth quarter, Residential revenues increased approximately 18%, Commercial Pest Controls rose nearly 11%, and Termite and Ancillary services were up over 13% [25] - Organic growth was reported at nearly 5% in Residential, approximately 9% in Commercial, and over 11% in Termite and Ancillary [25][23] - The company experienced a deceleration in residential organic growth from 7% in Q3 to 5% in Q4, attributed to seasonal factors and a slowdown in one-time services [57][58] Market Data and Key Metrics Changes - The company noted a competitive environment in the pest control industry, with no significant shifts in competitiveness [38] - The commercial revenue growth for the year was approximately 11%, indicating strong demand in that segment [46] Company Strategy and Development Direction - The company is focused on organic growth complemented by strategic M&A, having welcomed 24 new businesses through acquisition in 2023, including the significant acquisition of Fox Pest Control [19][24] - Investments have been made in the commercial side of the business, including growing the sales force and enhancing training and tools for success [18] - The company is committed to continuous improvement and safety, implementing initiatives to modernize back-office functions and improve driver safety scores [20][21][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum heading into 2024, highlighting strong execution and demand across service offerings [7][49] - The company plans to continue raising prices in line with previous years, monitoring customer sensitivity to these increases [64][93] - Management remains confident in delivering healthy growth rates and incremental margins, supported by disciplined pricing and M&A strategies [77][119] Other Important Information - The company divested its lawn care business for $18 million, recognizing a pretax gain of $15 million, aligning with its strategy to focus on core pest control operations [34][47] - The effective tax rate for the quarter and full year was 25.8%, with expectations for a similar rate in 2024 [54] Q&A Session Summary Question: What level of price increase was implemented last year? - The company passed along a 3% to 4% price increase last year and plans to implement a similar increase in the first quarter of this year [64] Question: How does the growth rate in Q4 compare to the industry? - Management expressed confidence in their growth rates, indicating they continue to gain market share despite a competitive landscape [65][69] Question: What are the trends in recurring revenue growth? - Recurring revenue growth remains healthy, with no significant deceleration observed compared to prior quarters [67][68] Question: What is the outlook for M&A activity? - The company sees a healthy pipeline for M&A, expecting a carryover of approximately 2% growth from acquisitions into 2024 [118] Question: How is the company addressing unit cost inflation? - Management noted ongoing challenges with inflation but remains cautiously optimistic about managing costs effectively [149][152]

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The financial statements for the nine months ended September 30, 2023, show significant growth driven by acquisitions, with total assets increasing to $2.64 billion and Q3 revenues rising 15.2% to $840.4 million [Condensed Consolidated Statements of Financial Position](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20FINANCIAL%20POSITION) Key Balance Sheet Items (in thousands of dollars) | Account | Sep 30, 2023 | Dec 31, 2022 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$2,639,957** | **$2,122,028** | **+24.4%** | | Goodwill | $1,053,965 | $846,704 | +24.5% | | Customer contracts, net | $402,349 | $298,559 | +34.8% | | **Total Liabilities** | **$1,537,114** | **$854,831** | **+79.8%** | | Long-term debt | $596,642 | $39,898 | +1395.4% | | **Total Stockholders' Equity** | **$1,102,843** | **$1,267,197** | **-13.0%** | - The significant increase in **Goodwill**, **Customer Contracts**, and **Long-term Debt** is primarily attributable to the acquisition of **Fox Pest Control**, while the decrease in **Stockholders' Equity** reflects the impact of a large share repurchase[11](index=11&type=chunk)[24](index=24&type=chunk)[82](index=82&type=chunk) [Condensed Consolidated Statements of Income](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Q3 2023 vs Q3 2022 Performance (in thousands of dollars, except per share data) | Metric | Q3 2023 | Q3 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | $840,427 | $729,704 | +15.2% | | Operating Income | $177,124 | $145,404 | +21.8% | | Net Income | $127,777 | $108,943 | +17.3% | | Diluted EPS | $0.26 | $0.22 | +18.2% | Nine Months 2023 vs 2022 Performance (in thousands of dollars, except per share data) | Metric | Nine Months 2023 | Nine Months 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | $2,319,192 | $2,034,433 | +14.0% | | Operating Income | $444,153 | $373,471 | +18.9% | | Net Income | $326,154 | $284,329 | +14.7% | | Diluted EPS | $0.66 | $0.58 | +13.8% | - The company incurred **$5.2 million** in restructuring costs during the third quarter of 2023, which were not present in the prior year[12](index=12&type=chunk)[98](index=98&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Cash Flow Summary for Nine Months Ended Sep 30 (in thousands of dollars) | Activity | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $375,541 | $342,537 | +$33,004 | | Net cash (used in) investing activities | ($362,334) | ($123,378) | -$238,956 | | Net cash provided by (used in) financing activities | $33,743 | ($196,285) | +$230,028 | | **Net increase in cash** | **$46,901** | **$16,575** | **+$30,326** | - The significant increase in cash used for **investing activities** was driven by acquisitions, which totaled **$349.3 million**, primarily for **Fox Pest Control**, while the shift in **financing activities** from a use of cash to a source was due to net borrowings of **$599 million** funding acquisitions and a **$314.9 million** share repurchase, also covering **$191.8 million** in dividends[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) - On April 1, 2023, the Company acquired 100% of **Fox Pest Control** for **$339.5 million**, funded by borrowing **$305.0 million** under its Credit Agreement, with Fox contributing **$81.0 million** in revenues and **$1.9 million** in net earnings from April 1 to September 30, 2023[24](index=24&type=chunk)[26](index=26&type=chunk) - The company entered into a new **$1.0 billion** revolving credit facility on February 24, 2023, with outstanding borrowings of **$599.0 million** at an effective interest rate of **6.4%** as of September 30, 2023[66](index=66&type=chunk)[67](index=67&type=chunk)[69](index=69&type=chunk) - In September 2023, the Company repurchased **8,724,100 shares** of its common stock from LOR, Inc. for approximately **$300 million**[82](index=82&type=chunk)[95](index=95&type=chunk) - A restructuring program was executed in Q3 2023 to modernize the workforce, resulting in **$5.2 million** in costs, primarily for one-time termination benefits[98](index=98&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=22&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management reported strong Q3 2023 results with revenues up 15.2% to $840.4 million, driven by 8.4% organic growth and acquisitions, while operating margin expanded 120 basis points to 21.1% [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Q3 2023 vs Q3 2022 Performance Summary | Metric | Q3 2023 | Q3 2022 | Change | Key Drivers | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | **$840.4M** | **$729.7M** | **+15.2%** | 8.4% organic growth, 6.8% from acquisitions | | Residential Revenue | - | - | +20% | Strong demand and acquisition contribution | | Commercial Revenue | - | - | +12% | Continued market penetration | | Termite & Ancillary | - | - | +11% | Solid growth in services | | **Gross Margin** | **53.8%** | **52.3%** | **+150 bps** | Accretive Fox acquisition, favorable claims experience | | **Operating Margin** | **21.1%** | **19.9%** | **+120 bps** | Gross margin improvement, offset by restructuring costs | Nine Months 2023 vs 2022 Performance Summary | Metric | Nine Months 2023 | Nine Months 2022 | Change | Key Drivers | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | **$2.32B** | **$2.03B** | **+14.0%** | 8.4% organic growth, 5.6% from acquisitions | | **Gross Margin** | **52.6%** | **51.8%** | **+80 bps** | Accretive acquisitions and pricing initiatives | | **Operating Margin** | **19.2%** | **18.4%** | **+80 bps** | Gross profit improvement and SG&A leverage | [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) - The company uses **non-GAAP measures** such as **organic revenues**, **adjusted operating income**, **adjusted net income**, **adjusted EPS**, and **adjusted EBITDA** to provide a consistent comparison of performance over various periods, excluding items like acquisition-related expenses and restructuring costs[134](index=134&type=chunk)[135](index=135&type=chunk) Q3 2023 GAAP to Non-GAAP Reconciliation (in thousands of dollars) | Metric | GAAP | Adjustments | Non-GAAP (Adjusted) | | :--- | :--- | :--- | :--- | | Operating Income | $177,124 | $10,458 | $187,582 | | Net Income | $127,777 | $7,781 | $135,558 | | EBITDA | $202,285 | $6,246 | $208,531 | [Liquidity and Capital Resources](index=33&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - The company's primary source of liquidity is **cash from operations**, which increased **9.6%** to **$375.5 million** for the first nine months of 2023[149](index=149&type=chunk)[150](index=150&type=chunk) - A new **$1.0 billion** revolving credit facility was established in February 2023, with **$599.0 million** outstanding as of September 30, 2023, used to fund the **Fox acquisition** and a **$300 million** share repurchase[144](index=144&type=chunk)[145](index=145&type=chunk)[152](index=152&type=chunk) - **Cash used in investing activities** increased significantly to **$362.3 million** from **$123.4 million** year-over-year, driven by **$349.3 million** in acquisition spending[149](index=149&type=chunk)[151](index=151&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company reported no material changes to its market risk exposure during the nine months ended September 30, 2023, compared to its 2022 Form 10-K disclosure - There were **no material changes** to the company's market risk exposure during the first nine months of 2023[168](index=168&type=chunk) [Controls and Procedures](index=35&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, excluding the recently acquired Fox Pest Control due to ongoing integration - The principal executive and financial officers concluded that disclosure controls and procedures were **effective** as of September 30, 2023[169](index=169&type=chunk) - The assessment of internal controls over financial reporting **excludes** the recently acquired **Fox Pest Control**, as the **integration process is ongoing**[170](index=170&type=chunk) [PART II OTHER INFORMATION](index=36&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=36&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in various legal proceedings, including a California investigation into hazardous waste and pesticide disposal, but management anticipates no material adverse effect - The company is **under investigation** by **California authorities** regarding compliance with **environmental regulations** for **hazardous waste and pesticide disposal**[174](index=174&type=chunk) - Management does **not believe** that any pending legal proceedings, including the California investigation, will have a **material adverse effect** on the company's financial position or results of operations[175](index=175&type=chunk) [Risk Factors](index=36&type=section&id=ITEM%201A.%20RISK%20FACTORS) Following a share sale by LOR, Inc., the company is no longer a 'controlled company' under NYSE and SEC rules, necessitating compliance with new corporate governance standards - Following a sale of common stock by LOR, Inc., the company is **no longer a "controlled company"** under NYSE and SEC rules[177](index=177&type=chunk) - As a result, the company must now meet **heightened corporate governance standards**, including requirements for a **majority-independent board** and **fully independent nominating and compensation committees**, subject to phase-in periods ending in **September 2024**[178](index=178&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) In Q3 2023, the company repurchased 8,725,003 shares, including a special September repurchase of 8.7 million shares for approximately $300 million Share Repurchase Activity (Q3 2023) | Period | Total Shares Purchased | Weighted Average Price | | :--- | :--- | :--- | | July 2023 | 903 | $44.84 | | August 2023 | 0 | $0.00 | | September 2023 | 8,724,100 | $34.39 | | **Total Q3** | **8,725,003** | **-** | - The September repurchase of **8.7 million shares** for **~$300 million** was made concurrently with a secondary offering by LOR, Inc. and was approved under a **special, one-time authorization**, not the main repurchase plan[183](index=183&type=chunk) [Other Information](index=39&type=section&id=ITEM%205.%20OTHER%20INFORMATION) Chief Administrative Officer Thomas D. Tesh adopted a Rule 10b5-1 trading plan on August 10, 2023, for the potential sale of company shares - On August 10, 2023, Chief Administrative Officer Thomas D. Tesh entered into a **Rule 10b5-1 trading plan** for the sale of company securities[186](index=186&type=chunk)[187](index=187&type=chunk)

ThirdQuarter 2023 Earnings Webcast Presentation Rollins, Inc. October 26, 2023 Statements made in this earnings presentation may contain forward-looking statements that involve risks and uncertainties concerning the Company's business and financial results. 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 ...