Financial Performance - Third quarter revenues were $1.0 billion, an increase of 12.0% over the third quarter of 2024, with organic revenues increasing 7.2%[99] - Quarterly operating income was $225.0 million, a 17.3% increase compared to the prior year, with an operating margin of 21.9%, up 100 basis points[99] - Adjusted EBITDA was $258.3 million, reflecting a 17.7% increase year-over-year, with an adjusted EBITDA margin of 25.2%, an increase of 120 basis points[99] - Quarterly net income reached $163.5 million, a 19.4% increase from the previous year, with adjusted net income at $168.5 million, up 20.7%[99] - Revenues for the nine months ended September 30, 2025, were $2.848 billion, an increase of $291.6 million, or 11.4%, from $2.556 billion in 2024[124] - Gross profit for the same period was $1.519 billion, up $159.9 million, or 11.8%, compared to $1.359 billion in 2024[126] - Operating income increased to $566.0 million, reflecting an increase of $59.4 million, or 11.7%, from $506.6 million in 2024[131] - Net income for the nine months ended September 30, 2025, was $410.3 million, a rise of $49.6 million, or 13.7%, compared to $360.7 million in 2024[121] - Adjusted EBITDA for the nine months ended September 30, 2025, was $661.3 million, an increase of $71.0 million, or 12.0%, from $590.3 million in 2024[124] Revenue Growth - Organic revenue growth was strong across service offerings, with residential pest control growing 5.2%, commercial pest control 8.3%, and termite and ancillary services 10.8%[106] - Organic revenue growth was 7.3%, with acquisitions contributing an additional 4.1% during the nine months ended September 30, 2025[124] - The company is targeting 7% to 8% organic revenue growth and 3% to 4% inorganic revenue growth for 2025[95] Cash Flow and Investments - Operating cash flow for the quarter was $191.3 million, a 30.2% increase compared to the prior year, with investments of $34.7 million in acquisitions[99] - Free cash flow for the nine months ended September 30, 2025, was $491.0 million, an increase of $94.9 million, or 24.0%, from $396.1 million in 2024[124] - Free cash flow for the three months ended September 30, 2025, was $182,846, representing a 31.1% increase from $139,425 in 2024[150] - Free cash flow conversion improved to 111.8% for the three months ended September 30, 2025, compared to 101.8% in 2024[150] - Cash used in investing activities rose significantly to $302.8 million for the nine months ended September 30, 2025, compared to $123.6 million in 2024, primarily due to acquisitions[171] - The company invested $22.4 million in capital expenditures during the nine months ended September 30, 2025[171] Expenses and Margins - Sales, general and administrative expenses increased by 9.6% to $301.4 million, but as a percentage of revenue, SG&A decreased to 29.4% from 30.0%[111] - Gross profit for the quarter was $558.7 million, a 13.0% increase compared to the prior year, with a gross margin of 54.4%[109] - SG&A expenses increased by $90.0 million, or 11.7%, to $859.5 million, representing 30.2% of revenue[128] - Adjusted SG&A as a percentage of revenues decreased to 29.3% for the three months ended September 30, 2025, compared to 30.0% in 2024[152] Tax and Effective Rates - The effective tax rate decreased to 24.8% in the third quarter of 2025 from 26.1% in the prior year, primarily due to the purchase of transferable federal income tax credits[117] - The effective tax rate decreased to 24.9% in 2025 from 25.6% in 2024, primarily due to the purchase of transferable federal income tax credits[135] Debt and Liquidity - As of September 30, 2025, the company had outstanding long-term debt of $500 million from the issuance of 2035 Senior Notes[155] - The leverage ratio remained stable at 0.8x as of September 30, 2025, consistent with the previous period[152] - The company maintained $127.4 million in total cash, with $55.2 million held by foreign subsidiaries[157] - The company has $1 billion available under its commercial paper program, with no outstanding borrowings as of September 30, 2025[162] Risks and Liabilities - The Company retains certain risks related to general liability, workers' compensation, and auto liability, with costs accrued based on historical trends[178] - Estimated liabilities are based on historical claims information provided by an independent third-party actuary, which is a major consideration in establishing reserves[178] - Management's judgment in estimating reserves is subjective and may lead to overestimation or insufficient accruals, potentially affecting operating results[178] - There were no material changes to the Company's market risk exposure during the nine months ended September 30, 2025[185]

Financial Data and Key Metrics Changes - The company reported total revenue growth of 12% year-over-year and organic growth of 7.2% [5][11] - Adjusted EBITDA margin improved by 120 basis points to 25.2% [11] - GAAP earnings increased over 21% to $0.34 per share, while adjusted earnings were $0.35 per share [11][15] - Operating cash flow improved by over 30%, with free cash flow up 31% compared to the same period last year [11][16] - The effective tax rate decreased to 24.8% from 26.1% a year ago [15] Business Line Data and Key Metrics Changes - Residential revenues increased by 11.2%, commercial pest control rose by 11.8%, and termite and ancillary services increased by 15.2% [12] - Organic growth rates were 5.2% in residential, 8.3% in commercial, and 10.8% in termite and ancillary services [12] Market Data and Key Metrics Changes - The company experienced double-digit growth across all service offerings in the third quarter [11][12] - The integration of Saela has exceeded expectations, contributing to overall growth and performance [5][18] Company Strategy and Development Direction - The company is focused on both organic growth and strategic M&A opportunities, with a strong emphasis on operational efficiency and continuous improvement [5][6] - Investments in the commercial division have led to double-digit recurring growth, indicating a successful strategy in that area [7][36] - The company aims to maintain a balanced approach to capital allocation, including reinvestment in the business and dividend growth [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the markets and growth opportunities, expecting organic growth in the range of 7%-8% for the year [19] - The company anticipates continued improvements in margins and cash flow conversion above 100% for 2025 [19] - Management highlighted the importance of talent development and leadership initiatives to sustain growth [8][9] Other Important Information - The company has raised its quarterly cash dividend by more than 80% since the beginning of 2022, reflecting strong cash flow performance [17] - The company closed seven acquisitions in the third quarter, indicating a robust M&A pipeline [87] Q&A Session Summary Question: Performance in residential and momentum into October - Management confirmed that the momentum from June and July was sustained through the quarter, with early indications for October remaining positive [25][26] Question: Details on Saela's performance - Saela is expected to generate mid-$70 million in revenue in its first year, outperforming initial expectations [28][30] Question: Investments in commercial and competitive dynamics - Significant investments in the commercial sector have led to strong growth, with a focus on improving productivity and sales effectiveness [36][39] Question: Pricing strategy and customer acceptance - The company is targeting CPI-plus pricing, with expectations that this strategy will continue to contribute to margins [45][46] Question: Competitive landscape and modernization efforts - The competitive landscape remains healthy, with the company focusing on leveraging its multiple brands to capture market share [64][66] Question: Cash flow drivers and sustainability - Cash flow growth is driven by improved receivables management and lower tax payments, with expectations for sustainable mid-teens growth [70][71] Question: Incremental margin sustainability - While the company has achieved above 30% incremental margins, management indicated that fluctuations are expected as investments continue [74] Question: Strength in termite and ancillary services - The performance in termite and ancillary services reflects a healthy residential consumer willing to invest in essential services [78] Question: M&A pipeline and competitive environment - The company remains active in M&A, with a strong pipeline and a focus on being an acquirer of choice in the pest control industry [87][89]

Financial Data and Key Metrics Changes - The company reported total revenue growth of 12% year-over-year, with organic growth of 7.2% [5][15] - Adjusted EBITDA margin improved by 120 basis points to 25.2%, driven by leverage across the P&L [15][18] - GAAP earnings increased over 21% to $0.34 per share, while adjusted earnings were $0.35 per share [15][20] - Operating cash flow improved by over 30%, and free cash flow was up 31% compared to the same period last year [15][20] Business Line Data and Key Metrics Changes - Residential revenues increased by 11.2%, commercial pest control rose by 11.8%, and termite and ancillary services increased by 15.2% [15][16] - Organic growth rates were 5.2% in residential, 8.3% in commercial, and 10.8% in termite and ancillary services [15][16] Market Data and Key Metrics Changes - The company experienced double-digit growth across all service offerings in the third quarter [15][16] - The effective tax rate decreased to 24.8% from 26.1% a year ago, benefiting from tax planning efforts [19] Company Strategy and Development Direction - The company is focused on continuous improvement initiatives to develop its workforce and enhance profitability [12][22] - Strategic investments in M&A and organic growth are expected to drive future growth, with a target of 7% to 8% organic growth and 3% to 4% from acquisitions [23][22] - The company is enhancing its talent development programs to create a robust pipeline of future leaders [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position for continued growth, both organically and through acquisitions [12][22] - The integration of Saela has exceeded expectations, contributing positively to revenue and margins [31][33] - The company anticipates maintaining a healthy backlog and strong demand as it enters Q4 [56] Other Important Information - The company announced an 11% increase in its quarterly cash dividend, marking an 80% increase since early 2022 [21][22] - The company has made acquisitions totaling nearly $300 million year-to-date and paid approximately $250 million in dividends [21] Q&A Session Summary Question: Performance in residential and momentum into October - Management noted that the momentum from June and July was sustained through the quarter, with early indications for October remaining positive [29] Question: Details on Saela's performance - Saela is expected to generate mid-$70 million in revenue in its first year, outperforming initial expectations [31] Question: Investments in commercial and competitive dynamics - Significant investments in the commercial division have resulted in strong growth, with double-digit recurring revenue growth reported [39][40] Question: Pricing strategy and customer acceptance - The company is targeting consumer price inflation plus, with expectations for continued margin contributions [48] Question: Competitive landscape in the pest control industry - The competitive landscape remains healthy, with the company focused on leveraging its multiple brands to capture market share [66][68] Question: Cash flow drivers and sustainability - Cash flow growth is attributed to better receivables management and is expected to remain sustainable [78][80] Question: Cost inflation and expectations for 2026 - The company is not seeing significant changes in inflation for materials and labor, with pricing strategies effectively managing costs [116]

Third Quarter 2025 October 30, 2025 Earnings Webcast Presentation Rollins, Inc. 1 © 2025 Rollins, Inc. All rights reserved. Cautionary Statement Regarding Forward-Looking Statements balanced capital allocation strategy; and healthy dividend. This presentation 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 ...

Core Viewpoint - Rollins reported quarterly earnings of $0.35 per share, exceeding the Zacks Consensus Estimate of $0.32 per share, and showing an increase from $0.29 per share a year ago [1][2] Financial Performance - The company achieved revenues of $1.03 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.42%, compared to $916.27 million in the same quarter last year [3] - Rollins has surpassed consensus revenue estimates four times over the last four quarters [3] Earnings Surprise - The earnings surprise for the quarter was +9.38%, with the company previously expected to post earnings of $0.29 per share but actually reporting $0.30 per share, resulting in a surprise of +3.45% [2] Stock Performance - Rollins shares have increased approximately 20.9% since the beginning of the year, outperforming the S&P 500's gain of 17.2% [4] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $921.59 million, and for the current fiscal year, it is $1.12 on revenues of $3.77 billion [8] - The estimate revisions trend for Rollins was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [7] Industry Context - The Building Products - Maintenance Service industry, to which Rollins belongs, is currently in the top 39% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [9]

Financial Performance - Third quarter revenues reached $1 billion, a 12.0% increase compared to Q3 2024, with organic revenues up 7.2%[7] - Quarterly operating income was $225 million, reflecting a 17.3% increase year-over-year, with an operating margin of 21.9%, up 100 basis points[7] - Adjusted EBITDA was $258 million, a 17.7% increase from the prior year, with an adjusted EBITDA margin of 25.2%, up 120 basis points[7] - Net income for the quarter was $164 million, a 19.4% increase year-over-year, with adjusted net income at $169 million, up 20.7%[7] - Quarterly EPS was $0.34 per diluted share, a 21.4% increase from the prior year, while adjusted EPS was $0.35, up 20.7%[7] - Adjusted operating income was $232 million, an 18.4% increase year-over-year, with an adjusted operating margin of 22.6%, up 120 basis points[8] - Adjusted net income for the nine months ended September 30, 2025, was $423 million, a 14.3% increase compared to the same period in 2024[8] - Net income for Q3 2025 was $163,527, representing a 19.5% increase from $136,913 in Q3 2024[19] - Operating income for the nine months ended September 30, 2025, was $566,002, up 11.7% from $506,597 in the same period of 2024[19] - Adjusted net income for the nine months ended September 30, 2025, was $410,264, up from $360,704 in the same period of 2024[19] - Net income for the nine months ended September 30, 2025, was $515.9 million, compared to $466.4 million for the same period in 2024, reflecting a 10.6% increase[41] Cash Flow and Investments - Operating cash flow increased by 30.2% to $191 million, with $35 million invested in acquisitions and $9 million in capital expenditures[7] - Free cash flow for the quarter was $182.8 million, a 31.1% increase year-over-year, contributing to a strong balance sheet and access to investment-grade credit markets[8] - Free cash flow for Q3 2025 was $182,846, reflecting a 31.1% increase from $139,425 in Q3 2024[40] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $513,363, compared to $419,495 in the same period of 2024, marking a 22.4% increase[22] - The company reported a free cash flow conversion rate of 111.8% for Q3 2025, up from 101.8% in Q3 2024[40] Assets and Liabilities - Total assets increased to $3,219,660 as of September 30, 2025, compared to $2,819,695 at the end of 2024, reflecting a growth of 14.2%[17] - Total liabilities increased to $1,687,612 as of September 30, 2025, from $1,489,102 at the end of 2024, reflecting a growth of 13.3%[17] - Cash and cash equivalents rose to $127,357, up 42.0% from $89,630 at the end of 2024[17] - Adjusted net debt as of September 30, 2025, was $811.8 million, up from $733.6 million as of December 31, 2024[41] - Long-term debt increased to $500.0 million as of September 30, 2025, from $397.0 million as of December 31, 2024[44] - Operating lease liabilities were $426.4 million as of September 30, 2025, compared to $417.2 million as of December 31, 2024[45] Operational Efficiency - The company is focused on continuous improvement initiatives to enhance profitability and is well-positioned for continued growth through organic means and acquisitions[5] - Adjusted SG&A as a percentage of revenues decreased to 29.3% in Q3 2025 from 30.0% in Q3 2024[41] - The leverage ratio remained stable at 0.8x for both September 30, 2025, and December 31, 2024[41] Acquisitions and Expenses - The company reported acquisitions net of cash acquired totaling $34,730 in Q3 2025, compared to $23,875 in Q3 2024[22] - The company incurred acquisition-related expenses of $1.1 million in Q3 2025, compared to no such expenses in Q3 2024[41] - Stock-based compensation expense increased to $37.1 million in Q3 2025 from $30.0 million in Q3 2024[41] Revenue Breakdown - Revenues for Q3 2025 reached $1,026,106, representing a 12.0% increase from $916,270 in Q3 2024[36] - Organic revenues increased by 7.2% to $982,120 in Q3 2025, compared to $916,270 in Q3 2024[36] - Residential organic revenues increased by 5.2% to $450,651 in Q3 2025, compared to $428,290 in Q3 2024[36] - EBITDA for Q3 2025 was $257,602, a 17.1% increase from $220,042 in Q3 2024[39] - The EBITDA margin improved to 25.1% in Q3 2025, compared to 24.0% in Q3 2024[39] - The company reported adjusted EBITDAR of $1,032.7 million for the three months ended September 30, 2025, compared to $934.5 million in the same period of 2024[41]

Core Insights - Rollins, Inc. reported strong financial performance for Q3 2025, with double-digit revenue growth leading to over 20% growth in earnings per share (EPS) and over 30% growth in cash flow [1][4][7] Financial Highlights - Revenues for Q3 2025 reached $1,026.1 million, a 12.0% increase from Q3 2024, with organic revenues growing by 7.2% [5][7] - Gross profit for the quarter was $558.7 million, reflecting a 13.0% increase year-over-year, with a gross profit margin of 54.4% [5][7] - Operating income was $225.0 million, up 17.3% from the previous year, with an operating margin of 21.9%, an increase of 100 basis points [5][7] - Net income for the quarter was $163.5 million, a 19.4% increase compared to Q3 2024, with an adjusted net income of $168.5 million, up 20.7% [5][7] - EPS for Q3 2025 was $0.34, a 21.4% increase from $0.28 in Q3 2024, while adjusted EPS was $0.35, reflecting a 20.7% increase [5][7] Cash Flow and Capital Allocation - Operating cash flow for the quarter was $191.3 million, a 30.2% increase year-over-year [5][7] - The company invested $35 million in acquisitions and $9 million in capital expenditures, while paying dividends totaling $80 million [5][7] Management Commentary - Management expressed confidence in the company's growth trajectory, emphasizing a commitment to continuous improvement and a balanced capital allocation strategy [4][7]

Core Points - Rollins, Inc. announced a quarterly cash dividend of $0.1825 per share, payable on December 10, 2025, reflecting an 11% increase from the same quarter last year [1] - The company has raised its regular dividend by over 80% since the beginning of 2022, demonstrating a commitment to returning capital to shareholders while investing in business growth [2] Company Overview - Rollins, Inc. is a global consumer and commercial services company providing pest control services to over 2.8 million customers across multiple continents, employing more than 20,000 staff from over 800 locations [3]

Core Insights - Rollins, Inc. (ROL) is set to report its third-quarter 2025 results on October 29, with earnings expected at 32 cents per share, reflecting a year-over-year increase of 10.34% and revenues projected at $1.02 billion, indicating an 11.5% rise year-over-year [1][10] Revenue Expectations - Higher revenues from Commercial, Residential, Termite, and Ancillary services are anticipated to enhance the company's overall performance in the upcoming quarter [3] - Residential revenues are estimated at $466.8 million, representing a 9% growth from the previous year [4] - Commercial revenues are expected to rise by 8.9% year-over-year to $326.2 million [4] - Revenues from Termite Completions, Bait Monitoring & Renewals are projected at $207.7 million, suggesting a 16.9% year-over-year growth [4] - Franchise revenues are estimated to be $4.2 million, down 1.3% from the year-ago quarter [4] Earnings Performance - ROL has beaten the Zacks Consensus Estimate in one of the last four quarters, matched it three times, and missed once, with an average surprise of 0.03% [2] - An increase in segment revenues and robust margins is expected to support the company's bottom-line performance [5] Earnings Prediction Model - The model predicts an earnings beat for ROL, supported by a positive Earnings ESP of +4.94% and a Zacks Rank of 3 (Hold) [6][10]

Core Insights - Rollins, Inc. (NYSE: ROL) is identified as a strong business in the current market, characterized by stability and high growth with minimal fluctuations [1] Company Analysis - The company is recognized for its competitive advantage, often referred to as an economic moat, which allows it to outperform the market over the long term [1] - Rollins, Inc. operates in both European and North American markets, with no restrictions on market capitalization, encompassing both large and small cap companies [1] Analyst Background - The analysis is conducted by an individual with a Master's Degree in Sociology, focusing on organizational and economic sociology, and a Bachelor's Degree in Sociology and History [1]