It has been about a month since the last earnings report for Rollins (ROL) . Shares have added about 7.5% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Rollins due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Rollins Q2 Earnings Meet Estimates Rollins, Inc. seco ...

bymuratdeniz Investment overview I give a buy rating for Rollins, Inc. (NYSE:ROL) as the organic growth outlook is very positive and is higher than pre-covid levels. This, along with cost savings initiatives, pave the way for ROL to continue expanding adj EBITDA margins at 50bps/year. Given this performance outlook, I expect forward EBITDA multiples to trade up to 30x. Business description ROL is a leading provider of pest control services with a variety of leading brands, most notably Orkin. The company pr ...

While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Revenues- Commercial: $287.77 million versus the four-analyst average estimate of $285.84 million. The reported number represents a year-over-year change of +10.7%. Revenues- Termite completions, bait monitoring, & renewals: $186.02 million versus the four-analyst average ...

PART I FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Rollins, Inc.'s unaudited condensed consolidated financial statements for Q2 and H1 2024, including statements of financial position, income, cash flows, and related notes [Condensed Consolidated Statements of Financial Position](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20FINANCIAL%20POSITION) | (in thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $474,292 | $406,639 | | **Total Assets** | **$2,766,502** | **$2,595,460** | | **Total Current Liabilities** | $609,950 | $576,689 | | **Total Liabilities** | $1,530,444 | $1,439,893 | | **Total Stockholders' Equity** | $1,236,058 | $1,155,567 | | **Total Liabilities and Stockholders' Equity** | **$2,766,502** | **$2,595,460** | - Total assets increased to **$2.77 billion** as of June 30, 2024, from **$2.60 billion** at the end of 2023, primarily driven by increases in Goodwill and Operating lease right-of-use assets[24](index=24&type=chunk) [Condensed Consolidated Statements of Income](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) | (in thousands except per share data) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $891,920 | $820,750 | $1,640,269 | $1,478,765 | | **Operating Income** | $182,377 | $154,789 | $314,801 | $267,029 | | **Net Income** | $129,397 | $110,143 | $223,791 | $198,377 | | **Net Income Per Share - Diluted** | $0.27 | $0.22 | $0.46 | $0.40 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) | (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $272,548 | $248,186 | | **Net cash used in investing activities** | ($93,621) | ($331,622) | | **Net cash (used in) provided by financing activities** | ($173,886) | $140,195 | | **Net increase in cash and cash equivalents** | $2,872 | $59,401 | - Cash used in investing activities decreased significantly in the first six months of 2024 to **$93.6 million** from **$331.6 million** in the prior year, primarily due to lower cash paid for acquisitions (**$81.7 million** in 2024 vs. **$327.9 million** in 2023)[45](index=45&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) - The company completed **26 acquisitions** during the first six months of 2024, with total preliminary consideration of **$92.2 million**[50](index=50&type=chunk) - The valuation for the Fox Pest Control acquisition, which occurred on April 1, 2023, was finalized as of March 31, 2024, with a total purchase price of **$339.5 million**, resulting in **$188.2 million** of goodwill and **$118.0 million** of customer contracts[51](index=51&type=chunk)[72](index=72&type=chunk)[52](index=52&type=chunk) | (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | **Residential revenue** | $737,752 | $666,844 | | **Commercial revenue** | $545,884 | $493,607 | | **Termite completions, bait monitoring, & renewals** | $338,084 | $302,529 | | **Total Revenues** | **$1,640,269** | **$1,478,765** | - As of June 30, 2024, the company had **$504.0 million** in outstanding borrowings under its **$1.0 billion** revolving credit facility, with an effective interest rate of **6.4%**[86](index=86&type=chunk)[88](index=88&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=19&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q2 and H1 2024 financial results, emphasizing strong revenue growth, margin expansion, profitability, liquidity, and non-GAAP reconciliations [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Q2 2024 Key Metrics vs. Q2 2023 | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $891.9M | $820.8M | +8.7% | | **Organic Revenues** | - | - | +7.7% | | **Operating Income** | $182.4M | $154.8M | +17.8% | | **Net Income** | $129.4M | $110.1M | +17.5% | | **Diluted EPS** | $0.27 | $0.22 | +22.7% | H1 2024 Key Metrics vs. H1 2023 | (in thousands) | H1 2024 | H1 2023 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $1,640,269 | $1,478,765 | +10.9% | | **Operating Income** | $314,801 | $267,029 | +17.9% | | **Net Income** | $223,791 | $198,377 | +12.8% | | **Diluted EPS** | $0.46 | $0.40 | +15.0% | - For Q2 2024, revenue growth was driven by strong performance across all major service lines: Residential pest control grew **6.3%**, commercial pest control grew **9.9%**, and termite and ancillary services grew **11.8%**[156](index=156&type=chunk) - Gross margin improved by **80 basis points** in both Q2 and H1 2024 compared to the prior year periods, reaching **54.0%** and **52.7%** respectively, as pricing actions more than offset inflationary pressures[157](index=157&type=chunk)[190](index=190&type=chunk) [Non-GAAP Financial Measures](index=26&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 investors with information about current trends and period-over-period comparisons of its operating results[169](index=169&type=chunk)[194](index=194&type=chunk) Reconciliation of Revenues to Organic Revenues (Q2 2024 vs Q2 2023) | (in thousands) | Q2 2024 | Q2 2023 | Variance $ | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $891,920 | $820,750 | $71,170 | 8.7% | | Revenues from acquisitions | ($14,153) | — | ($14,153) | 1.7% | | Revenues of divestitures | — | ($5,924) | $5,924 | (0.7)% | | **Organic revenues** | **$877,767** | **$814,826** | **$62,941** | **7.7%** | Reconciliation of Net Income to Adjusted EBITDA (Q2 2024 vs Q2 2023) | (in thousands) | Q2 2024 | Q2 2023 | Variance $ | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net income** | $129,397 | $110,143 | - | - | | Depreciation & amortization | $27,711 | $26,439 | - | - | | Interest expense, net | $7,775 | $4,785 | - | - | | Provision for income taxes | $45,617 | $40,880 | - | - | | **EBITDA** | $210,500 | $182,247 | $28,253 | 15.5% | | Adjustments | ($412) | $35 | - | - | | **Adjusted EBITDA** | **$210,088** | **$182,275** | **$27,813** | **15.3%** | [Liquidity and Capital Resources](index=30&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - The company believes its current cash, future operating cash flows, and available borrowings under its **$1.0 billion** Credit Facility are sufficient to finance current operations and fund expansion for the foreseeable future[224](index=224&type=chunk)[201](index=201&type=chunk) Cash Flow Summary (Six Months Ended June 30) | (in thousands) | 2024 | 2023 | Change $ | | :--- | :--- | :--- | :--- | | **Net cash provided by operating activities** | $272,548 | $248,186 | $24,362 | | **Net cash used in investing activities** | ($93,621) | ($331,622) | $238,001 | | **Net cash (used in) provided by financing activities** | ($173,886) | $140,195 | ($314,081) | - Cash from operating activities increased by **$24.4 million** in H1 2024 compared to H1 2023, driven by strong operating results and timing of cash receipts and payments[180](index=180&type=chunk) - As of June 30, 2024, **11.4 million shares** may still be purchased under the company's authorized share repurchase program[227](index=227&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes to the company's market risk exposure occurred during the six months ended June 30, 2024, compared to the 2023 Form 10-K - There were no material changes to the Company's market risk exposure during the six months ended June 30, 2024[233](index=233&type=chunk) [Controls and Procedures](index=33&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes in internal control over financial reporting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2024[13](index=13&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, these controls[210](index=210&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=34&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in various legal proceedings, including an ongoing environmental investigation, which management does not expect to materially impact financial position - The company is involved in various claims, arbitrations, and litigation arising from its normal business operations[14](index=14&type=chunk) - An investigation by local governmental authorities in California concerning compliance with environmental regulations for hazardous waste and pesticide disposal is ongoing, with the company not expecting a material effect on its financials[212](index=212&type=chunk) [Risk Factors](index=34&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to the company's risk factors have occurred since the filing of the 2023 Annual Report on Form 10-K - No material changes have occurred in the risk factors since the filing of the 2023 Annual Report on Form 10-K[213](index=213&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details Q2 2024 share repurchase activity, primarily for employee tax obligations, not open market purchases Share Repurchase Activity (Q2 2024) | Period | Total Shares Purchased | Weighted-Average Price Paid | Shares Purchased as Part of Publicly Announced Plan | | :--- | :--- | :--- | :--- | | April 2024 | 3,883 | $45.62 | — | | May 2024 | 727 | $45.82 | — | | June 2024 | — | $— | — | | **Total** | **4,610** | **-** | **—** | - As of June 30, 2024, the company has remaining authorization to repurchase **11.4 million shares** under its share repurchase plan[238](index=238&type=chunk) [Other Information](index=36&type=section&id=ITEM%205.%20OTHER%20INFORMATION) An executive officer adopted a 10b5-1 trading plan, and the Board approved amended by-laws to declassify the board and update governance provisions - On May 1, 2024, Elizabeth B. Chandler, VP and General Counsel, adopted a Rule 10b5-1 trading plan for the sale of **14,056 shares** of common stock, with sales eligible to begin on or after August 1, 2024[19](index=19&type=chunk)[241](index=241&type=chunk) - On July 23, 2024, the Board approved amended by-laws to declassify the Board, phasing in one-year terms for all directors by 2027[20](index=20&type=chunk) [Exhibits](index=37&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including Amended and Restated By-Laws and CEO/CFO certifications - Key exhibits filed with this report include the Amended and Restated By-Laws (Exhibit 3.8), CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1), and various Inline XBRL documents[219](index=219&type=chunk) Signatures

Financial Performance Highlights - Q2 2024 revenue reached $892 million, a 9% increase year-over-year[28, 40] - The company achieved a gross margin of 54%[10, 29] - Q2 2024 adjusted EBITDA margin was 23.6%[41] - Q2 Free Cash Flow was $136 million, a decrease of 3%[27, 62] - Q2 Free Cash Flow Conversion was approximately 105%[32, 40] - EPS of $0.27, a 23% increase[12] Growth and Margins - Organic revenue growth was 7.7% in Q2 2024[27, 28] - Incremental EBITDA margins for the first six months of the year were 30%[46] - Adjusted SG&A saw an improvement of 60 basis points[13] Capital Allocation and Debt - The company closed 14 acquisitions in Q2 2024 and 26 year-to-date[44] - Net leverage is well below 1x of EBITDA[44] - Outstanding borrowings of $504 million under the Credit Facility as of June 30, 2024[6]

Rollins, Inc. (NYSE:ROL) Q2 2024 Earnings Conference Call July 25, 2024 8:30 AM ET Company Participants Lyndsey Burton - Vice President, Investor Relations Jerry Gahlhoff - Chief Executive Officer and President Kenneth Krause - Executive Vice President, Chief Financial Officer and Treasurer Conference Call Participants Tim Mulrooney - William Blair Ashish Sabadra - RBC Capital Markets George Tong - Goldman Sachs Hilary Lee - Morgan Stanley Heather Balsky - Bank of America Joshua Chan - UBS Aadit Shrestha - ...

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Rollins, Inc. achieved robust Q2 2024 financial results, marked by strong revenue growth, significant margin expansion, and improved profitability Q2 2024 Key Financial Metrics (vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $892 million | $821 million | +8.7% | | Organic Revenues | - | - | +7.7% | | Operating Income | $182 million | $155 million | +17.8% | | Net Income | $129 million | $110 million | +17.5% | | Adjusted EBITDA | $210 million | $182 million | +15.3% | | Diluted EPS | $0.27 | $0.22 | +22.7% | | Adjusted EPS | $0.27 | $0.23 | +17.4% | - The company maintained strong cash flow, deploying capital towards strategic initiatives. In Q2 2024, Rollins generated **$145 million** in operating cash flow, invested **$35 million** in acquisitions, spent **$9 million** on capital expenditures, and returned **$73 million** to shareholders through dividends[33](index=33&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management expressed satisfaction with strong organic growth and margin improvements, emphasizing continued investment and a healthy market outlook - CEO Jerry Gahlhoff, Jr. credited the team for delivering **strong organic growth** and an improving margin profile, positioning the company for another year of healthy growth in 2024[10](index=10&type=chunk) - CFO Kenneth Krause highlighted the solid performance in revenue and profitability, specifically pointing to the **140 basis point improvement** in EBITDA margins and strong incremental EBITDA margin performance[13](index=13&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) The unaudited consolidated financial statements reflect the company's strong financial health, consistent cash generation, and strategic capital deployment [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The income statement for Q2 2024 shows significant revenue growth and improved profitability, leading to higher net income and diluted EPS Income Statement Highlights (in thousands) | Account | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $891,920 | $820,750 | $1,640,269 | $1,478,765 | | Operating Income | $182,377 | $154,789 | $314,801 | $267,029 | | Net Income | $129,397 | $110,143 | $223,791 | $198,377 | | Net Income Per Share - Diluted | $0.27 | $0.22 | $0.46 | $0.40 | [Condensed Consolidated Statements of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position) The balance sheet as of June 30, 2024, indicates a solid financial position with increased total assets and stockholders' equity, alongside managed liabilities Balance Sheet Summary (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $474,292 | $406,639 | | Total Assets | $2,766,502 | $2,595,460 | | Total Current Liabilities | $609,950 | $576,689 | | Long-term Debt | $502,043 | $490,776 | | Total Liabilities | $1,530,444 | $1,439,893 | | Total Stockholders' Equity | $1,236,058 | $1,155,567 | [Condensed Consolidated Cash Flow Information](index=5&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Information) Cash flow from operations significantly increased for the six months ended June 30, 2024, supporting strategic investments and shareholder returns Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $272,548 | $248,186 | | Net cash used in investing activities | ($93,621) | ($331,622) | | Net cash (used in) provided by financing activities | ($173,886) | $140,195 | [Appendix: Reconciliation of GAAP and Non-GAAP Financial Measures](index=6&type=section&id=Appendix%3A%20Reconciliation%20of%20GAAP%20and%20Non-GAAP%20Financial%20Measures) This appendix provides detailed reconciliations of non-GAAP financial measures, offering a clearer view of the company's core operating performance - Management uses non-GAAP measures like organic revenues, adjusted operating income, adjusted EBITDA, and free cash flow to compare performance consistently over various periods, excluding impacts from acquisitions, divestitures, and other non-operational items[23](index=23&type=chunk)[43](index=43&type=chunk) - In Q1 2024, the company revised its non-GAAP metrics (adjusted net income, adjusted EPS, and adjusted EBITDA) to exclude gains and losses from non-operational asset sales to better reflect core operating performance[28](index=28&type=chunk) [Reconciliation of Operating Income, Net Income, and EPS](index=7&type=section&id=Reconciliation%20of%20Operating%20Income%2C%20Net%20Income%2C%20and%20EPS) Reconciliations show adjusted operating income and net income for Q2 2024, reflecting core performance after excluding specific non-operational items Q2 2024 Reconciliation of GAAP to Adjusted Operating and Net Income (in thousands) | Metric | GAAP | Adjustments | Non-GAAP (Adjusted) | | :--- | :--- | :--- | :--- | | Operating Income | $182,377 | $4,219 | $186,596 | | Net Income | $129,397 | $2,832 | $132,229 | | Diluted EPS | $0.27 | $0.00 | $0.27 | [Reconciliation of EBITDA and Free Cash Flow](index=7&type=section&id=Reconciliation%20of%20EBITDA%20and%20Free%20Cash%20Flow) Adjusted EBITDA and free cash flow reconciliations for Q2 2024 demonstrate strong profitability and cash generation after specific adjustments Q2 2024 EBITDA and Free Cash Flow Reconciliation (in thousands) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Income | $129,397 | $110,143 | 17.5% | | EBITDA | $210,500 | $182,247 | 15.5% | | Adjusted EBITDA | $210,088 | $182,275 | 15.3% | | Free Cash Flow | $136,419 | $140,638 | (3.0)% | [Reconciliation of Revenues to Organic Revenues](index=9&type=section&id=Reconciliation%20of%20Revenues%20to%20Organic%20Revenues) This section details the reconciliation of reported revenues to organic revenues, highlighting growth drivers excluding acquisition impacts Q2 2024 Revenue to Organic Revenue Reconciliation (in thousands) | Description | Amount | % of Revenue | | :--- | :--- | :--- | | Reported Revenues | $891,920 | 100.0% | | Less: Revenues from acquisitions | ($14,153) | (1.7)% | | Impact of Divestitures | $5,924 (vs PY) | 0.7% | | Organic Revenues | $877,767 | 98.4% | Q2 2024 Organic Revenue Growth by Segment | Segment | Organic Growth % | | :--- | :--- | | Residential | 5.4% | | Commercial | 8.6% | [Reconciliation of SG&A and Net Debt](index=10&type=section&id=Reconciliation%20of%20SG%26A%20and%20Net%20Debt) Reconciliations show improved adjusted SG&A as a percentage of revenues and a lower net leverage ratio, indicating enhanced operational efficiency and balance sheet strength Net Debt and Leverage Ratio | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Long-term debt | $504,000 | $493,000 | | Less: cash | $106,697 | $103,825 | | Net debt | $397,303 | $389,175 | | Net leverage ratio | 0.5x | 0.6x |

Rollins, Inc. (ROL) is scheduled to report its second-quarter 2024 results on Jul 24, after market close. Our estimate for Residential revenues is pegged at $401.9 million, indicating 4.2% growth from the year-ago quarter's actual. Commercial revenues are anticipated to increase 9.1% year over year to $283.7 million. We expect revenues from Termite Completions, Bait Monitoring & Renewals to be pegged at $187.7 million, suggesting a 12.5% growth on a year-over-year basis. Franchise revenues are estimated at ...

Company Overview - Rollins is headquartered in Atlanta, GA, and provides pest and termite control services to both residential and commercial customers, including food manufacturers, hotels, and retailers [4]. Investment Insights - Rollins has a Zacks Rank of 2 (Buy) and a VGM Score of B, indicating it is a strong candidate for investors [19]. - The company has a Growth Style Score of A, forecasting a year-over-year earnings growth of 12.2% for the current fiscal year [9]. - In the last 60 days, one analyst revised their earnings estimate higher for fiscal 2024, with the Zacks Consensus Estimate increasing by $0.01 to $1.01 per share [24]. - Rollins boasts an average earnings surprise of 4.2%, suggesting a positive trend in earnings performance [24]. Style Scores - The Zacks Style Scores include Value, Growth, Momentum, and VGM Scores, which help investors identify stocks with the best chances of outperforming the market [1][17]. - The Value Style Score focuses on identifying attractive and discounted stocks using various financial ratios [20]. - The Growth Style Score evaluates projected and historical earnings, sales, and cash flow to find stocks with sustainable growth potential [12]. - The Momentum Style Score assesses price trends and earnings outlook to identify favorable buying opportunities [6].

Company Overview - Rollins, Inc. is a premier global consumer and commercial services company providing essential pest control services to over 2.8 million customers across multiple continents [4] - The company operates through a family of leading brands, including Orkin, HomeTeam Pest Defense, and Clark Pest Control, among others, with more than 20,000 employees and over 800 locations worldwide [4] Financial Announcement - Rollins, Inc. will release its second quarter results for the period ended June 30, 2024, after the market closes on July 24, 2024 [5] - A conference call to review the financial and operating results will take place on July 25, 2024, at 8:30 a.m. Eastern Time [5]