Rollins(ROL) - 2025 Q1 - Quarterly Report

Financial Performance - First quarter revenues were $822.5 million, an increase of 9.9% over the first quarter of 2024, with organic revenues increasing 7.4%[85] - Quarterly operating income was$ 142.6 million, a 7.7% increase compared to the prior year, with an operating margin of 17.3%, a decrease of 40 basis points[85] - Adjusted EBITDA was $171.9 million, reflecting a 6.9% increase year-over-year, with an adjusted EBITDA margin of 20.9%, down 60 basis points[85] - Quarterly net income reached$ 105.2 million, an increase of 11.5% over the prior year, with adjusted net income at $107.9 million, up 9.7%[85] - Revenues for Q1 2025 were$ 822.5 million, an increase of 9.9% from $748.3 million in Q1 2024[118] - Organic revenues for Q1 2025 were$ 804.0 million, reflecting a growth of 7.4% compared to $748.3 million in Q1 2024[118] - Adjusted operating income for Q1 2025 was$ 146.9 million, up 6.7% from $137.7 million in Q1 2024[120] - Adjusted net income for Q1 2025 reached$ 107.9 million, a 9.7% increase from $98.4 million in Q1 2024[120] - EBITDA for Q1 2025 was$ 172.5 million, representing an 8.1% increase from $159.7 million in Q1 2024[120] - Free cash flow for Q1 2025 was$ 140.1 million, a 16.5% increase from $120.3 million in Q1 2024[120] - The company reported a basic and diluted EPS of$ 0.22 for Q1 2025, up 10.0% from $0.20 in Q1 2024[120] Revenue Growth - The company aims for 7% to 8% organic revenue growth and 3% to 4% inorganic revenue growth for 2025[81] - Residential pest control revenue increased by 8.2%, while commercial pest control revenue rose by 10.2%[93] Expenses and Cash Flow - Sales, general and administrative expenses were$ 250.5 million, a 12.3% increase compared to the prior year, with SG&A as a percentage of revenue rising to 30.5%[97][98] - Operating cash flow for the quarter was $146.9 million, a 15.3% increase compared to the prior year[85] - Adjusted SG&A as a percentage of revenues was 30.5% in Q1 2025, compared to 29.7% in Q1 2024[122] - Net cash provided by operating activities increased to$ 146.9 million for the three months ended March 31, 2025, up 15.3% from $127.4 million in the same period of 2024[135] Investments and Acquisitions - The company invested$ 27.2 million in acquisitions and $6.8 million in capital expenditures during the quarter[85] - Cash used in investing activities decreased to$ 32.6 million for the three months ended March 31, 2025, compared to $52.5 million in 2024, with acquisitions totaling$ 27.2 million[138] - Capital expenditures for Q1 2025 were $6.8 million, slightly down from$ 7.2 million in Q1 2024[120] Debt and Financing - The company established a commercial paper program allowing for the issuance of up to $1 billion, with no outstanding borrowings as of March 31, 2025[130] - The company issued$ 500 million in 2035 Senior Notes at a discount of $7.8 million, with interest payable at 5.25% per annum starting August 24, 2025[129] - The company had no outstanding borrowings under the Revolving Credit Facility as of March 31, 2025, compared to$ 397.0 million at the end of 2024[133] - The company has the ability to expand its borrowing availability under the Revolving Credit Facility by up to an additional $750 million[132] Tax and Cash Management - The effective tax rate for the first quarter was 23.5%, down from 24.3% in the prior year, with an expected rate of approximately 26% for 2025[103] - Cash dividends paid increased to$ 79.9 million ( $0.165 per share) for the three months ended March 31, 2025, compared to$ 72.6 million ( $0.150 per share) in 2024[139] - The company maintained$ 82.4 million in letters of credit as of March 31, 2025, up from $72.0 million at the end of 2024[134] - The company expects cash flows from operating activities to be negatively impacted by the timing of federal income tax payments in the second quarter of 2025[137]