Rollins(US:ROL)2022-04-28 20:33Financial Performance - Revenues for Q1 2022 increased by 10.3% to $590.7 million compared to $535.6 million in Q1 2021[86] - Net income decreased by 21.8% to $72.4 million, with earnings per diluted share of $0.15 compared to $0.19 in the prior year[91] - Residential pest control revenue grew by 10%, commercial pest control revenue increased by 9%, and termite and ancillary services rose by 13%[92] - Cost of services provided rose by 12.9% to $295.4 million, driven by increased personnel and material costs[94] - Sales, general and administrative expenses increased by 10.2% to $178.8 million, primarily due to higher personnel costs[96] - Other income decreased by $31.0 million due to a prior year gain from sale-leaseback transactions[98] Cash Flow and Investments - Net cash provided by operating activities was $87.5 million, down 26.7% from $119.5 million in Q1 2021[102] - Cash used in investing activities was $19.9 million, compared to cash provided of $40.1 million in the prior year[106] - Total cash at March 31, 2022, was $258.3 million, with $86.1 million held in international accounts[109] Debt and Financial Position - The company maintained a leverage ratio compliant with debt covenants at 3.00:1.00 as of March 31, 2022[111] - The company believes that its current cash and cash equivalents, along with future cash flows and available borrowings of $175.0 million from its revolving credit facility and $300.0 million from its term loan facility, will be sufficient to finance operations and fund business expansion for the foreseeable future[122] Legal and Regulatory Matters - The company reached a settlement with the SEC, paying an $8.0 million civil penalty related to the investigation of accruals and reserves for the periods from January 1, 2016, to December 31, 2018[116] - The company does not expect any pending claims or investigations to have a material adverse effect on its financial position or results of operations[117] Accounting and Estimates - The company has no changes to its critical accounting estimates since the last Form 10-K filing for the year ended December 31, 2021[118] - The company anticipates that total unrecognized compensation costs related to time-lapse restricted shares will be recognized over a weighted average period of approximately 4.1 years[122] - The company expects that acquisition-related goodwill recognized during the quarter will be deductible for tax purposes[122] - The company has established loss contingency reserves based on outcomes it currently believes to be probable and reasonably estimable[122] - The company has not identified any impairments of its goodwill or other intangible assets[122] Market Risks - The company maintains an investment portfolio subject to short-term interest rate risk exposure and is also exposed to market risks from changes in foreign exchange rates[125] - The company believes that foreign exchange rate risk will not have a material effect on its results of operations going forward[122]