Rollins(US:ROL)2026-02-12 21:44Financial Performance - Rollins reported revenues of $3.76 billion for 2025, an increase of 11.0% compared to $3.39 billion in 2024[177]. - Organic revenue growth was 6.9% in 2025, driven by effective sales and service staffing levels[169]. - The company completed 26 transactions in 2025, including 22 acquisitions and 4 franchise buybacks, contributing to 4.1% of revenue growth[170]. - Gross profit margin improved to 52.8% in 2025, up from 52.7% in 2024, while operating margin decreased slightly to 19.3%[172]. - Adjusted operating income for 2025 was $752.2 million, reflecting an 11.4% increase from $675.1 million in 2024[177]. - Net income increased by 12.9% to $526.7 million in 2025, compared to $466.4 million in 2024[177]. - Revenue for the year ended December 31, 2025, was $3.76 billion, an increase of $372.3 million, or 11.0%, from 2024 revenues of $3.39 billion[182]. - Organic revenue growth was 6.9%, with acquisitions contributing an additional 4.1% during the year[182]. - Gross profit for 2025 was $2.0 billion, an increase of $198.5 million, or 11.1%, compared to $1.8 billion in 2024[184]. - Operating income increased by $68.8 million, or 10.5%, for the year, with an operating margin of 19.3%[188]. - The company reported a net income of $526.7 million, or 14.0% of revenue, compared to $466.4 million, or 13.8% in 2024[182]. - Adjusted EPS for 2025 was $1.12, representing a 13.1% increase from $0.99 in 2024[211]. - Free cash flow for 2025 was $650.02 million, up 12.1% from $580.08 million in 2024[211]. - Adjusted free cash flow for 2025 reached $671.73 million, a significant increase of 20.3% from $558.37 million in 2024[211]. Future Outlook - The company expects to achieve 7% to 8% organic revenue growth in 2026, despite a potentially slower start in Q1[162]. - Rollins anticipates an effective tax rate of 24.5% to 25% in 2026 and interest expense of approximately $30 million related to borrowings[162]. - The effective tax rate decreased to 24.9% in 2025 from 26.0% in 2024, with an expected rate of 24.5% to 25% in 2026[191]. - The company expects interest expense to be approximately $30 million in 2026, influenced by borrowings under its 2035 Senior Notes and commercial paper program[189]. Cash Flow and Capital Management - Net cash provided by operating activities increased by $70.5 million, or 11.6%, to $678.1 million for the year ended December 31, 2025, driven by strong operating results[226]. - Cash used in investing activities rose to $326.7 million in 2025 from $176.2 million in 2024, primarily due to the acquisition of Saela Pest Control for $309.5 million[228]. - Cash used in financing activities decreased to $343.6 million in 2025 from $440.7 million in 2024, with cash dividends paid increasing to $327.9 million ($0.68 per share) from $298.0 million ($0.62 per share)[229]. - The Company completed the repurchase of 3,478,260 shares of common stock for approximately $200 million during the year ended December 31, 2025[231]. - The Company maintained $82.4 million in letters of credit as of December 31, 2025, up from $72.0 million as of December 31, 2024, to secure various insurance contracts[224]. - The Company has a remaining authorization of 11.4 million shares under its share repurchase program as of December 31, 2025[234]. - The Company registered $1.5 billion of securities for future issuance under its Form S-3 shelf registration statement, which will expire in June 2026[235]. - The Company had $114.4 million of outstanding commercial paper borrowings as of December 31, 2025, with no material impact expected from a one percent increase in interest rates[243]. - The Company invested $28.1 million in capital expenditures during 2025, compared to $27.6 million in 2024[228]. Debt and Borrowings - The company issued $500 million in 2035 Senior Notes at an interest rate of 5.25%, with proceeds primarily used to repay borrowings[218]. - As of December 31, 2025, the company had $114.4 million in outstanding borrowings under its commercial paper program[220]. - The Company had no outstanding borrowings under the $1.0 billion Revolving Credit Facility as of December 31, 2025, compared to $397.0 million in borrowings as of December 31, 2024[223]. - The leverage ratio improved to 0.9x in 2025 from 0.8x in 2024[214].