Core Insights - Rollins, Inc. (ROL) reported better-than-expected second-quarter 2025 results with adjusted earnings of 30 cents per share, beating consensus estimates by 3.5% and increasing 11% year over year [1] - Revenues reached $999.5 million, surpassing consensus by 2.1% and improving 12.1% year over year, with organic revenues of $956.9 million rising 7.3% year over year [1] Financial Performance - Residential revenues increased 4.9% year over year to $428.5 million, missing the estimate of $431.6 million [3] - Commercial revenues rose 11.4% year over year to $320.5 million, exceeding the estimate of $310.3 million [3] - Termite and ancillary revenues increased 13.9% year over year to $211.9 million, beating the estimate of $211.6 million [3] - Adjusted EBITDA was $231 million, a 10% increase year over year, compared to the expectation of $227.5 million [4] - The adjusted EBITDA margin was 23.1%, a decrease of 50 basis points year over year, compared to the expected margin of 23.6% [4] Cash Flow and Debt - Rollins ended the quarter with cash and cash equivalents of $123.04 million, up from $89.6 million in the previous quarter [5] - Long-term debt increased to $485.3 million from $395.3 million at the end of the previous quarter [5] - The company generated $175.22 million in cash from operating activities, with capital expenditures of $7.08 million, resulting in free cash flow of $168.01 million [5] - Rollins paid dividends totaling $79 million during the quarter [5] Stock Performance - Rollins shares have risen 23.5% over the past year, slightly underperforming the industry growth of 24.4% [2]

Financial Data and Key Metrics Changes - The company reported total revenue growth of 12.1% year-over-year and organic growth of 7.3% [5][12] - Gross margin was reported at 53.8%, slightly down by 20 basis points compared to the previous year [14] - GAAP earnings per share were $0.29, with adjusted earnings per share at $0.30, reflecting an 11.1% increase from the same period last year [13][18] - Operating cash flow increased by 21% to $175 million, while free cash flow rose over 23% to $168 million [18][19] Business Line Data and Key Metrics Changes - Residential revenues increased by 11.6%, commercial pest control rose by 11.4%, and termite and ancillary services grew by 13.9% [13] - Organic growth in residential was 4.9%, in commercial it was 8.4%, and in termite and ancillary it was 10.3% [14] Market Data and Key Metrics Changes - The company experienced a strong demand recovery in June, leading to a robust backlog entering July [5][6] - The impact of weather was noted, particularly in May, which affected productivity in various regions [10][97] Company Strategy and Development Direction - The company is focused on strategic M&A opportunities and organic growth investments, with the recent acquisition of Saila enhancing competitive advantages [8][20] - The company aims to maintain organic growth in the range of 7% to 8% for the year, with M&A contributing an additional 3% to 4% [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strength of markets and the company's recession-resilient business model, despite macroeconomic uncertainties [20] - The company anticipates improving margin profiles in the second half of the year, with a focus on maintaining double-digit earnings growth [21][88] Other Important Information - The company has a healthy leverage ratio of 0.9 times and continues to prioritize capital allocation while maintaining a disciplined approach to debt [20][75] - The company has seen improvements in employee retention, which positively impacts customer service and operational efficiency [113] Q&A Session Summary Question: Can you unpack the residential performance a little bit in the quarter? - Management noted that residential organic growth was 4.9%, with a strong backlog exiting June, indicating robust demand [26][28] Question: What are the impacts of generative AI on your business? - Management acknowledged adjustments in marketing strategies due to generative AI, leading to higher quality leads and improved closing rates [36][39] Question: Can you provide context on contributions from pricing and volume? - The pricing strategy targets a CPI plus level of 3% to 4%, with volume growth outpacing the underlying market [44][46] Question: What was the impact of legacy auto claims on margins? - Management indicated that legacy auto claims are difficult to predict and can impact margins, but they are actively working on improving safety to reduce claims [61][64] Question: How is the commercial segment performing? - The commercial segment continues to show strong growth, with ongoing investments in staffing and marketing to capture opportunities [70] Question: How are you balancing debt repayment and capital return? - The company maintains a disciplined approach to managing debt while investing in growth and returning capital to shareholders [75] Question: What are the trends in ancillary services? - The ancillary business has performed well, with strong organic growth and no signs of consumer slowdown [90][91]

Financial Data and Key Metrics Changes - The company reported total revenue growth of 12.1% and organic growth of 7.3% for the second quarter [4][11] - Gross margin was reported at 53.8%, slightly down by 20 basis points compared to the previous year [13] - GAAP earnings were $0.29 per share, while adjusted earnings were $0.30 per share, reflecting an 11.1% increase from the same period last year [15][16] - Operating cash flow increased by 21% to $175 million, and free cash flow rose over 23% to $168 million [16][17] Business Line Data and Key Metrics Changes - Residential revenues increased by 11.6%, commercial pest control rose by 11.4%, and termite and ancillary services increased by 13.9% [12] - Organic growth in residential was 4.9%, in commercial it was 8.4%, and in termite and ancillary it was 10.3% [13] Market Data and Key Metrics Changes - The company experienced a strong backlog of work entering July, indicating robust demand across all segments [5][49] - The company anticipates organic growth in the range of 7% to 8% for the year, with M&A contributing an additional 3% to 4% [19] Company Strategy and Development Direction - The company is focused on strategic M&A opportunities and organic growth, with the recent acquisition of Saila enhancing competitive advantages [5][18] - Investments in sales staffing and marketing activities are ongoing to ensure readiness for peak season [6][10] - The company aims to improve its incremental margin profile while continuing to invest in growth opportunities [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strength of markets and the company's recession-resilient business model [18] - The company is positioned well to deliver on financial objectives despite macroeconomic uncertainties [18] - Management noted improvements in teammate retention and operational efficiency, which are expected to positively impact margins [9][106] Other Important Information - The company has a healthy leverage ratio of 0.9 times and plans to maintain a disciplined approach to capital allocation [17][68] - The company is actively addressing legacy auto claims, which have impacted margins, and is implementing safety measures to reduce future claims [56][57] Q&A Session Summary Question: Can you unpack the residential performance in the quarter? - Management noted that residential organic growth was 4.9%, with a strong backlog exiting June, indicating robust demand [22][24] Question: What are the contributions from pricing and volume in organic growth? - The pricing strategy targets a CPI plus level of 3% to 4%, with volume growth outpacing the underlying market [38][40] Question: Can you elaborate on the impact of legacy auto claims on margins? - Management indicated that these claims are difficult to predict and can mature over time, impacting financials [54][56] Question: How is the company addressing SG&A as a percentage of sales? - Management highlighted ongoing efforts to improve cost structures and reduce SG&A, which currently stands at around 30% of sales [98][99] Question: What is the outlook for M&A activity and valuations? - The company noted a competitive marketplace for acquisitions but remains optimistic about strategic opportunities [46][47] Question: How did the weather impact performance in the quarter? - Management acknowledged that weather conditions in May were challenging but noted a strong recovery in June [88][90]

Financial Performance - Revenue reached $999.5 million, up 12.1% year-over-year[18] - Adjusted EPS increased by 11.1% to $0.30[18] - Free cash flow increased by 23.2% to $168.0 million[18] - Adjusted EBITDA was $231 million, an increase of 10.0%[32] Revenue Growth - Total revenue growth was 12.1%, with 7.3% organic growth and 4.8% from acquisitions[20] - Residential revenue increased 11.6% to $455.7 million[68] - Commercial revenue increased 11.4% to $320.5 million[68] - Termite and ancillary revenue increased 13.9% to $211.9 million[68] Cash Flow and Capital Allocation - Year-to-date free cash flow reached $308 million, a 20.1% increase[35] - Q2 free cash flow conversion was 119%[20] - Year-to-date free cash flow conversion was 125%[37] - The company's leverage ratio stands at 0.9x[38] Strategic Focus - The company completed 9 acquisitions in Q2, including Saela[42] - The company anticipates 3-4% growth from M&A in 2025[52]

Group 1 - Rollins reported quarterly earnings of $0.30 per share, exceeding the Zacks Consensus Estimate of $0.29 per share, and up from $0.27 per share a year ago, representing an earnings surprise of +3.45% [1] - The company achieved revenues of $999.53 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.05%, compared to $891.92 million in the same quarter last year [2] - Rollins has outperformed the S&P 500, with shares increasing approximately 19.8% since the beginning of the year, compared to the S&P 500's gain of 7.3% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $0.32 on revenues of $1.01 billion, and for the current fiscal year, it is $1.10 on revenues of $3.73 billion [7] - The Building Products - Maintenance Service industry, to which Rollins belongs, is currently ranked in the top 6% of over 250 Zacks industries, indicating a favorable outlook for the sector [8]

[Executive Summary & Company Overview](index=1&type=section&id=FOR%20IMMEDIATE%20RELEASE) Rollins, Inc. achieved strong Q2 2025 financial results with double-digit revenue growth and improved earnings, while detailing its global pest control services [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Key%20Highlights) Rollins, Inc. reported strong second-quarter 2025 financial results, driven by double-digit revenue growth across all major service lines, leading to healthy improvements in earnings and cash flow - Rollins, Inc. reported strong second quarter 2025 financial results with **double-digit revenue growth** across all major service lines[1](index=1&type=chunk)[5](index=5&type=chunk) - Management is focused on driving growth while also improving profitability and expects **strong results in 2025 and beyond**[5](index=5&type=chunk) - EBITDA margins were pressured by **70 basis points** due to developments on legacy auto claims, but underlying operations showed **healthy margin performance**[6](index=6&type=chunk) - The Company invested **$226 million** in acquisitions, **$7 million** in capital expenditures, and paid **$79 million** in dividends during the quarter[7](index=7&type=chunk) Q2 2025 Key Financial Metrics (YoY Growth) | Metric | Q2 2025 Value | YoY Growth | | :-------------------------------- | :------------ | :--------- | | Revenues | $1 billion | 12.1% | | Organic Revenues* | N/A | 7.3% | | Operating Income | $198 million | 8.7% | | Operating Margin | 19.8% | (60) bps | | Adjusted Operating Income* | $206 million | 10.3% | | Adjusted Operating Margin* | 20.6% | (30) bps | | Adjusted EBITDA* | $231 million | 10.0% | | Adjusted EBITDA Margin* | 23.1% | (50) bps | | Net Income | $141 million | 9.3% | | Adjusted Net Income* | $147 million | 11.1% | | EPS (diluted) | $0.29 | 7.4% | | Adjusted EPS* (diluted) | $0.30 | 11.1% | | Operating Cash Flow | $175 million | 20.7% | [Consolidated Financial Performance](index=2&type=section&id=Three%20and%20Six%20Months%20Ended%20Financial%20Highlights) Rollins reported strong GAAP and non-GAAP financial results for Q2 and YTD June 2025, with double-digit revenue growth and improved profitability across key metrics [GAAP Financial Metrics](index=2&type=section&id=GAAP%20Metrics) Rollins reported strong GAAP financial results for Q2 and YTD June 2025, with double-digit revenue growth and healthy increases in gross profit, operating income, net income, and EPS GAAP Financial Performance (Q2 and YTD June 30, 2025 vs. 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | Q2 % Change | YTD 2025 | YTD 2024 | YTD % Change | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Revenues | $999,527 | $891,920 | 12.1% | $1,822,031 | $1,640,269 | 11.1% | | Gross profit | $537,666 | $481,635 | 11.6% | $960,036 | $864,426 | 11.1% | | Gross profit margin | 53.8% | 54.0% | (20) bps | 52.7% | 52.7% | — bps | | Operating income | $198,333 | $182,377 | 8.7% | $340,981 | $314,801 | 8.3% | | Operating margin | 19.8% | 20.4% | (60) bps | 18.7% | 19.2% | (50) bps | | Net income | $141,489 | $129,397 | 9.3% | $246,737 | $223,791 | 10.3% | | EPS | $0.29 | $0.27 | 7.4% | $0.51 | $0.46 | 10.9% | | Net cash provided by operating activities | $175,122 | $145,115 | 20.7% | $322,014 | $272,548 | 18.1% | [Non-GAAP Financial Metrics](index=2&type=section&id=Non-GAAP%20Metrics) Rollins' non-GAAP metrics for Q2 and YTD June 2025 also showed strong growth, with adjusted operating income, adjusted net income, adjusted EPS, and adjusted EBITDA all increasing double-digits year-over-year Non-GAAP Financial Performance (Q2 and YTD June 30, 2025 vs. 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | Q2 % Change | YTD 2025 | YTD 2024 | YTD % Change | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Adjusted operating income | $205,900 | $186,596 | 10.3% | $352,769 | $324,285 | 8.8% | | Adjusted operating margin | 20.6% | 20.9% | (30) bps | 19.4% | 19.8% | (40) bps | | Adjusted net income | $146,902 | $132,229 | 11.1% | $254,775 | $230,586 | 10.5% | | Adjusted EPS | $0.30 | $0.27 | 11.1% | $0.53 | $0.48 | 10.4% | | Adjusted EBITDA | $231,152 | $210,088 | 10.0% | $403,009 | $370,871 | 8.7% | | Adjusted EBITDA margin | 23.1% | 23.6% | (50) bps | 22.1% | 22.6% | (50) bps | | Free cash flow | $168,046 | $136,419 | 23.2% | $308,157 | $256,681 | 20.1% | [Significant Expense Categories](index=3&type=section&id=Significant%20Expense%20Categories) An analysis of expense categories for Q2 and YTD 2025 shows that employee expenses remain the largest cost component, with insurance and claims costs increasing as a percentage of revenue in Q2 2025 - Insurance and claims expenses, both within cost of services and SG&A, **increased as a percentage of revenue** in Q2 2025 compared to Q2 2024[10](index=10&type=chunk) Key Expense Categories as % of Revenue (Q2 2025 vs. Q2 2024) | Expense Category | Q2 2025 (% of Revenue) | Q2 2024 (% of Revenue) | | :-------------------------------- | :----------------------- | :----------------------- | | Employee expenses (Cost of services) | 29.8% | 30.1% | | Materials and supplies | 6.0% | 6.4% | | Insurance and claims (Cost of services) | 2.1% | 1.7% | | Fleet expenses (Cost of services) | 4.2% | 3.9% | | Total cost of services provided | 46.2% | 46.0% | | Selling and marketing expenses | 14.0% | 14.1% | | Administrative employee expenses | 8.9% | 8.9% | | Insurance and claims (SG&A) | 1.3% | 1.0% | | Total sales, general and administrative | 30.8% | 30.4% | | Depreciation and amortization | 3.2% | 3.1% | [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Rollins' condensed consolidated financial statements for Q2 and YTD June 2025 reflect increased assets, liabilities, revenues, and net income, with strong operating cash flow and significant acquisition spending [Condensed Consolidated Statements of Financial Position](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20FINANCIAL%20POSITION) As of June 30, 2025, Rollins' total assets increased to $3.18 billion from $2.82 billion at December 31, 2024, primarily driven by increases in goodwill, intangibles, and current assets Key Balance Sheet Items (June 30, 2025 vs. December 31, 2024, in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Total assets | $3,180,040 | $2,819,695 | +$360,345 | | Cash and cash equivalents | $123,035 | $89,630 | +$33,405 | | Trade receivables, net | $229,735 | $196,081 | +$33,654 | | Goodwill | $1,337,903 | $1,161,085 | +$176,818 | | Intangibles, net | $600,970 | $541,589 | +$59,381 | | Total current assets | $537,907 | $442,623 | +$95,284 | | Total liabilities | $1,736,169 | $1,489,102 | +$247,067 | | Short-term debt | $59,989 | $0 | +$59,989 | | Long-term debt | $485,278 | $395,310 | +$89,968 | | Unearned revenues | $200,110 | $180,851 | +$19,259 | | Total stockholders' equity | $1,443,871 | $1,330,593 | +$113,278 | [Condensed Consolidated Statements of Income](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) For the three months ended June 30, 2025, Rollins reported revenues of $999.5 million, an increase from $891.9 million in the prior year, with net income growing to $141.5 million Key Income Statement Items (Q2 and YTD June 30, 2025 vs. 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | | Revenues | $999,527 | $891,920 | $1,822,031 | $1,640,269 | | Total operating expenses | $801,194 | $709,543 | $1,481,050 | $1,325,468 | | Operating income | $198,333 | $182,377 | $340,981 | $314,801 | | Consolidated income before income taxes | $191,245 | $175,014 | $328,789 | $299,652 | | Net income | $141,489 | $129,397 | $246,737 | $223,791 | | Net income per share - diluted | $0.29 | $0.27 | $0.51 | $0.46 | | Dividends paid per share | $0.165 | $0.150 | $0.330 | $0.300 | [Condensed Consolidated Cash Flow Information](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20CASH%20FLOW%20INFORMATION) Rollins generated $175.1 million in net cash from operating activities in Q2 2025, a 20.7% increase year-over-year, with significant acquisition spending impacting investing activities - Acquisition spending significantly increased in Q2 2025 to **$226.4 million**, compared to **$34.5 million** in Q2 2024[21](index=21&type=chunk) Key Cash Flow Items (Q2 and YTD June 30, 2025 vs. 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | | Net cash provided by operating activities | $175,122 | $145,115 | $322,014 | $272,548 | | Net cash used in investing activities | $(230,524) | $(41,156) | $(263,091) | $(93,621) | | Acquisitions, net of cash acquired | $(226,387) | $(34,522) | $(253,578) | $(81,654) | | Capital expenditures | $(7,076) | $(8,696) | $(13,857) | $(15,867) | | Net cash used in financing activities | $(23,958) | $(109,632) | $(28,570) | $(173,886) | | Payment of dividends | $(79,463) | $(72,578) | $(159,373) | $(145,167) | | Net (decrease) increase in cash and cash equivalents | $(78,142) | $(6,274) | $33,405 | $2,872 | [Company Information & Forward-Looking Statements](index=4&type=section&id=About%20Rollins%2C%20Inc.) Rollins, Inc. outlines its global operations, provides a cautionary statement on forward-looking information, and details the upcoming conference call for Q2 2025 results [About Rollins, Inc.](index=4&type=section&id=About%20Rollins%2C%20Inc.) Rollins, Inc. is a premier global consumer and commercial services company, offering essential pest control services and protection against various pests to over 2.8 million customers across multiple continents - Rollins, Inc. provides **essential pest control services** and protection against termite damage, rodents, and insects[11](index=11&type=chunk) - The company serves over **2.8 million customers** in North America, South America, Europe, Asia, Africa, and Australia, with more than **20,000 employees** from over **800 locations**[11](index=11&type=chunk) - Rollins operates through a family of leading brands including Orkin, HomeTeam Pest Defense, Clark Pest Control, and many others[11](index=11&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This section advises readers that the press release may contain forward-looking statements based on current expectations and assumptions, which involve risks and uncertainties, and actual results could differ materially - Forward-looking statements are based on current opinions, expectations, intentions, beliefs, plans, objectives, assumptions, and projections about future events and financial trends[12](index=12&type=chunk) - Important factors could cause **actual results to differ materially** from forward-looking statements, as detailed in the 'Risk Factors' section of the Annual Report on Form 10-K[13](index=13&type=chunk) - The company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law[14](index=14&type=chunk) [Conference Call Information](index=4&type=section&id=Conference%20Call) Rollins will host a conference call on July 24, 2025, at 8:30 a.m. Eastern Time to discuss the second quarter 2025 results, with a live broadcast and replay available - Rollins will host a conference call on **Thursday, July 24, 2025, at 8:30 a.m. Eastern Time** to discuss Q2 2025 results[15](index=15&type=chunk) - The conference call will be broadcast live on www.rollins.com, and a replay will be available for **180 days**[15](index=15&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=8&type=section&id=APPENDIX) Rollins defines its non-GAAP financial measures and provides detailed reconciliations for key metrics such as organic revenue, adjusted operating income, net income, EPS, EBITDA, free cash flow, SG&A, and leverage ratio [Non-GAAP Financial Measures Definitions](index=8&type=section&id=Reconciliation%20of%20GAAP%20and%20non-GAAP%20Financial%20Measures) This section defines Rollins' non-GAAP financial measures, explaining their calculation and management's rationale for their use in evaluating performance and liquidity - Non-GAAP measures are used to provide investors with information about current trends and period-over-period comparisons, excluding certain items like acquisition impacts or amortization of intangibles[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - Organic revenues exclude revenues from acquisitions completed within the prior 12 months and divested businesses[26](index=26&type=chunk) - Adjusted operating income, net income, and EPS add back amortization of intangible assets and adjustments to contingent consideration from Fox Pest Control and Saela Pest Control acquisitions[27](index=27&type=chunk)[28](index=28&type=chunk) - Free cash flow is calculated by subtracting capital expenditures from cash provided by operating activities, used to demonstrate the Company's ability to maintain its asset base and generate future cash flows[30](index=30&type=chunk) [Organic Revenue Reconciliations](index=9&type=section&id=Reconciliation%20of%20Revenues%20to%20Organic%20Revenues) Rollins' total revenues increased by 12.1% in Q2 2025, with organic revenue growth of 7.3% after excluding $42.6 million from acquisitions, demonstrating strong organic growth across all service lines Organic Revenue Growth (Q2 and YTD June 30, 2025 vs. 2024, in thousands) | Metric | Q2 2025 Revenues | Q2 2024 Revenues | Q2 Acq. Revenues | Q2 Organic Revenues | Q2 Organic % Change | YTD 2025 Revenues | YTD 2024 Revenues | YTD Acq. Revenues | YTD Organic Revenues | YTD Organic % Change | | :-------------------------------- | :--------------- | :--------------- | :--------------- | :------------------ | :------------------ | :---------------- | :---------------- | :---------------- | :------------------- | :------------------- | | Total Revenues | $999,527 | $891,920 | $42,602 | $956,925 | 7.3% | $1,822,031 | $1,640,269 | $61,152 | $1,760,879 | 7.4% | | Residential Revenues | $455,665 | $408,414 | $27,208 | $428,457 | 4.9% | $811,978 | $737,752 | $35,574 | $776,404 | 5.2% | | Commercial Revenues | $320,490 | $287,770 | $8,689 | $311,801 | 8.4% | $604,847 | $545,884 | $15,721 | $589,126 | 7.9% | | Termite and Ancillary Revenues | $211,855 | $186,024 | $6,705 | $205,150 | 10.3% | $383,985 | $338,084 | $9,857 | $374,128 | 10.7% | [Adjusted Operating Income & Margin Reconciliations](index=10&type=section&id=Reconciliation%20of%20Operating%20Income%20and%20Operating%20Income%20Margin%20to%20Adjusted%20Operating%20Income%20and%20Adjusted%20Operating%20Margin) Adjusted operating income for Q2 2025 was $205.9 million, an increase of 10.3% year-over-year, after adding back $7.6 million in acquisition-related expenses, with a slight decrease in adjusted operating margin Adjusted Operating Income & Margin (Q2 and YTD June 30, 2025 vs. 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | Q2 % Change | YTD 2025 | YTD 2024 | YTD % Change | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Operating income | $198,333 | $182,377 | N/A | $340,981 | $314,801 | N/A | | Acquisition-related expenses | $7,567 | $4,219 | N/A | $11,788 | $9,484 | N/A | | Adjusted operating income | $205,900 | $186,596 | 10.3% | $352,769 | $324,285 | 8.8% | | Operating margin | 19.8% | 20.4% | N/A | 18.7% | 19.2% | N/A | | Adjusted operating margin | 20.6% | 20.9% | (30) bps | 19.4% | 19.8% | (40) bps | [Adjusted Net Income & EPS Reconciliations](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20and%20EPS%20to%20Adjusted%20Net%20Income%20and%20Adjusted%20EPS) Adjusted net income for Q2 2025 increased by 11.1% to $146.9 million, and adjusted EPS rose by 11.1% to $0.30 per diluted share, after accounting for acquisition-related expenses and their tax impact Adjusted Net Income & EPS (Q2 and YTD June 30, 2025 vs. 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | Q2 % Change | YTD 2025 | YTD 2024 | YTD % Change | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Net income | $141,489 | $129,397 | N/A | $246,737 | $223,791 | N/A | | Acquisition-related expenses | $7,567 | $4,219 | N/A | $11,788 | $9,484 | N/A | | Gain on sale of assets, net | $(292) | $(412) | N/A | $(984) | $(351) | N/A | | Tax impact of adjustments | $(1,862) | $(975) | N/A | $(2,766) | $(2,338) | N/A | | Adjusted net income | $146,902 | $132,229 | 11.1% | $254,775 | $230,586 | 10.5% | | EPS - diluted | $0.29 | $0.27 | N/A | $0.51 | $0.46 | N/A | | Adjusted EPS - diluted | $0.30 | $0.27 | 11.1% | $0.53 | $0.48 | 10.4% | [EBITDA & Adjusted EBITDA Reconciliations](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20to%20EBITDA%2C%20Adjusted%20EBITDA%2C%20EBITDA%20Margin%2C%20Incremental%20EBITDA%20Margin%2C%20Adjusted%20EBITDA%20Margin%2C%20and%20Adjusted%20Incremental%20EBITDA%20Margin) Rollins reported Q2 2025 EBITDA of $230.4 million, a 9.4% increase, and Adjusted EBITDA of $231.2 million, a 10.0% increase, after adjustments, though both EBITDA and Adjusted EBITDA margins saw slight declines EBITDA & Adjusted EBITDA (Q2 and YTD June 30, 2025 vs. 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | Q2 % Change | YTD 2025 | YTD 2024 | YTD % Change | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Net income | $141,489 | $129,397 | N/A | $246,737 | $223,791 | N/A | | Depreciation and amortization | $31,737 | $27,711 | N/A | $60,946 | $55,021 | N/A | | Interest expense, net | $7,380 | $7,775 | N/A | $13,176 | $15,500 | N/A | | Provision for income taxes | $49,756 | $45,617 | N/A | $82,052 | $75,861 | N/A | | EBITDA | $230,362 | $210,500 | 9.4% | $402,911 | $370,173 | 8.8% | | Acquisition-related expenses | $1,082 | $0 | N/A | $1,082 | $1,049 | N/A | | Gain on sale of assets, net | $(292) | $(412) | N/A | $(984) | $(351) | N/A | | Adjusted EBITDA | $231,152 | $210,088 | 10.0% | $403,009 | $370,871 | 8.7% | | EBITDA margin | 23.0% | 23.6% | N/A | 22.1% | 22.6% | N/A | | Adjusted EBITDA margin | 23.1% | 23.6% | N/A | 22.1% | 22.6% | N/A | | Incremental EBITDA margin | N/A | N/A | 18.5% | N/A | N/A | 18.0% | | Adjusted incremental EBITDA margin | N/A | N/A | 19.6% | N/A | N/A | 17.7% | [Free Cash Flow Reconciliations](index=10&type=section&id=Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Free%20Cash%20Flow%20and%20Free%20Cash%20Flow%20Conversion) Free cash flow for Q2 2025 increased by 23.2% to $168.0 million, driven by strong operating cash flow and a decrease in capital expenditures, leading to improved free cash flow conversion Free Cash Flow & Conversion (Q2 and YTD June 30, 2025 vs. 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | Q2 % Change | YTD 2025 | YTD 2024 | YTD % Change | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Net cash provided by operating activities | $175,122 | $145,115 | N/A | $322,014 | $272,548 | N/A | | Capital expenditures | $(7,076) | $(8,696) | N/A | $(13,857) | $(15,867) | N/A | | Free cash flow | $168,046 | $136,419 | 23.2% | $308,157 | $256,681 | 20.1% | | Free cash flow conversion | 118.8% | 105.4% | N/A | 124.9% | 114.7% | N/A | [Adjusted SG&A Reconciliations](index=11&type=section&id=Reconciliation%20of%20SG%26A%20to%20Adjusted%20SG%26A) Adjusted SG&A for Q2 2025 was $306.5 million, slightly lower than reported SG&A after removing $1.1 million in acquisition-related expenses, with adjusted SG&A as a percentage of revenues increasing slightly Adjusted SG&A (Q2 and YTD June 30, 2025 vs. 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | | SG&A | $307,596 | $271,547 | $558,109 | $494,604 | | Acquisition-related expenses | $1,082 | $0 | $1,082 | $1,049 | | Adjusted SG&A | $306,514 | $271,547 | $557,027 | $493,555 | | Adjusted SG&A as a % of revenues | 30.7% | 30.4% | 30.6% | 30.1% | [Leverage Ratio Reconciliations](index=11&type=section&id=Reconciliation%20of%20Debt%20and%20Net%20Income%20to%20Leverage%20Ratio) As of June 30, 2025, Rollins' leverage ratio increased to 0.9x from 0.8x at December 31, 2024, reflecting an increase in adjusted net debt primarily due to new short-term and long-term borrowings - Short-term debt increased to **$60.0 million** as of June 30, 2025, from no outstanding borrowings at December 31, 2024, under the commercial paper program[39](index=39&type=chunk)[41](index=41&type=chunk) - Long-term debt increased to **$500.0 million** from **$397.0 million**, primarily due to the issuance of 2035 Senior Notes[39](index=39&type=chunk)[42](index=42&type=chunk) Leverage Ratio (June 30, 2025 vs. December 31, 2024, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Adjusted net debt | $871,183 | $733,551 | | Adjusted EBITDAR | $986,339 | $934,531 | | Leverage ratio | 0.9x | 0.8x |

Core Insights - Rollins, Inc. reported strong financial results for Q2 2025, with double-digit revenue growth across all major service lines, indicating a healthy demand environment [4][8] - The company achieved a revenue of $999.5 million, a 12.1% increase from Q2 2024, with organic revenues rising by 7.3% [8][31] - Adjusted net income for the quarter was $146.9 million, reflecting an 11.1% increase year-over-year, while adjusted EPS rose to $0.30, a 11.1% increase [8][32] Financial Performance - Revenues for the first six months of 2025 reached $1.82 billion, up 11.1% from $1.64 billion in the same period of 2024 [6][8] - Operating income for Q2 2025 was $198.3 million, an 8.7% increase from the previous year, with an operating margin of 19.8%, down 60 basis points [8][32] - Net cash provided by operating activities was $175.1 million for the quarter, a 20.7% increase compared to the prior year [8][19] Cost and Expenses - Total cost of services provided for Q2 2025 was $461.9 million, representing 46.2% of revenues, compared to 46.0% in Q2 2024 [7][18] - Sales, general, and administrative expenses were $307.6 million, accounting for 30.8% of revenues, slightly up from 30.4% in the previous year [9][18] Cash Flow and Investments - The company invested $226 million in acquisitions during the quarter, alongside $7 million in capital expenditures [8][19] - Free cash flow for Q2 2025 was $168 million, a 23.2% increase from the previous year [8][27] Market Position and Outlook - Management expressed confidence in the company's ability to drive growth and improve profitability in the second half of 2025 and beyond [4][5] - Rollins, Inc. continues to maintain a strong balance sheet and access to investment-grade credit markets, supporting its balanced capital allocation strategy [5][8]

Core Points - Rollins, Inc. declared a regular quarterly cash dividend of $0.165 per share, payable on September 10, 2025, to shareholders of record as of August 11, 2025 [1] Company Overview - Rollins, Inc. is a premier global consumer and commercial services company providing essential pest control services and protection against termite damage, rodents, and insects to over 2.8 million customers across multiple continents [2] - The company employs more than 20,000 individuals and operates from over 800 locations worldwide [2] - Rollins is the parent company of several leading brands in the pest control industry, including Orkin, Aardwolf Pestkare, and Clark Pest Control, among others [2]

Core Insights - Rollins (ROL) is expected to report quarterly earnings of $0.29 per share, reflecting a 7.4% increase year-over-year, with revenues forecasted at $979.41 million, a 9.8% increase from the previous year [1] - The consensus EPS estimate has been revised upward by 0.8% in the last 30 days, indicating a reassessment by analysts [2] - Changes in earnings estimates are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate revisions and short-term stock performance [3] Revenue Projections - Analysts predict 'Revenues- Commercial' to be $313.78 million, indicating a 9% year-over-year change [5] - 'Revenues- Termite completions, bait monitoring, & renewals' are expected to reach $208.45 million, reflecting a 12.1% increase from the prior-year quarter [5] - 'Revenues- Residential' is projected at $443.99 million, showing an 8.7% year-over-year change [5] - 'Revenues- Franchise' is estimated at $4.50 million, indicating a 1.2% increase from the previous year [6] - 'Revenues- Other' is expected to be $6.04 million, reflecting a 14.6% year-over-year change [6] - 'Revenues- Other countries' are projected at $70.89 million, indicating a 10.6% increase from the prior-year quarter [6] - 'Revenues- United States' are expected to reach $905.47 million, reflecting a 9.4% year-over-year change [7] Market Performance - Rollins shares have shown a return of -1.2% over the past month, compared to a +5.4% change in the Zacks S&P 500 composite [7] - With a Zacks Rank 2 (Buy), Rollins is expected to outperform the overall market in the near future [7]

Core Insights - Rollins, Inc. (ROL) is set to report its Q2 2025 results on July 23, with earnings estimated at 29 cents per share, reflecting a 7.4% year-over-year increase, and revenues projected at $979.4 million, indicating a 9.8% rise year-over-year [1][8]. Revenue Expectations - Improved revenues from Commercial, Residential, Termite, and Ancillary services are expected to positively impact the company's overall revenue for the upcoming quarter [3]. - Residential revenues are estimated at $431.6 million, showing a 5.7% growth from the previous year. Commercial revenues are anticipated to rise by 5.4% to $423.2 million. Revenues from Termite Completions, Bait Monitoring & Renewals are projected at $211.6 million, suggesting a 13.7% year-over-year growth. Franchise revenues are expected to reach $4.5 million, up 0.5% from the year-ago quarter [4][8]. Earnings Performance - The company's earnings surprise history has been mixed, with one quarter lagging behind the Zacks Consensus Estimate and three quarters matching it, resulting in an average negative surprise of 0.8% [2]. - Despite expectations of revenue growth and strong margins benefiting the bottom line, the model does not predict a definitive earnings beat for ROL this time, with an Earnings ESP of -0.69% and a Zacks Rank of 2 [5][6].