PR Newswire | Oct 27, 2021 07:31AM EDT

10/27 06:30 CDT

Rollins, Inc. Reports Third Quarter And Nine Month 2021 Financial Results ATLANTA, Oct. 27, 2021

ATLANTA, Oct. 27, 2021 /PRNewswire/ -- Rollins, Inc. (NYSE:ROL), a premier global consumer and commercial services company, reported strong unaudited financial results for its third quarter and nine months ended September 30, 2021.

The Company recorded third quarter revenues of $650.2 million, an increase of 11.4% over the prior year's third quarter revenue of $583.7 million. Rollins' reported net income was $93.9 million or $0.19 per diluted share for the third quarter ended September 30, 2021, compared to $79.6 million or $0.16 per diluted share for the same period in 2020.

Rollins' revenues rose 12.2% for the first nine months of 2021 to $1.824 billion compared to $1.625 billion for the prior year. Net income for the first nine months of 2021 was $285.4 million or $0.58 per diluted share compared to $198.2 million or $0.40 per diluted share for the same period last year. Adjusted net income* and adjusted earnings per diluted share* for the nine months ended September 30, 2021 were $262.1 million or $0.53, respectively, compared to $204.9 million or $0.42 per diluted share for the same period last year.

The Company, as planned and previously disclosed, disposed of the majority of the properties received through the 2019 acquisition of Clark Pest Control of Stockton, Inc. The gain related to the disposition of these properties in the nine months ended September 30, 2021 was $31.5 million pre-tax. The third quarter and nine months ended September 30, 2020 included a one-time non-cash expense of $6.7 million for the accelerated restricted stock vesting for our late Chairman, R. Randall Rollins.

Gary W. Rollins, Chairman and Chief Executive Officer of Rollins, Inc. stated, "We are proud of the performance and dedication of our employees and are very pleased with our strong financial results for both the quarter and first nine months of 2021. We remain confident of our continued success for 2021."

Rollins, Inc. is a premier global consumer and commercial services company. Through its family of leading brands, Orkin, HomeTeam Pest Defense, Clark Pest Control, Orkin Canada, Western Pest Services, Northwest Exterminating, McCall Service, Critter Control, The Industrial Fumigant Company, Trutech, Orkin Australia, Waltham Services, OPC Services, PermaTreat, Rollins UK, Aardwolf Pestkare, Crane Pest Control and MissQuito, the Company provides essential pest control services and protection against termite damage, rodents and insects to more than two million customers in North America, South America, Europe, Asia, Africa, and Australia from more than 700 locations. You can learn more about Rollins and its subsidiaries by visiting our web sites at www.orkin.com, www.pestdefense.com, www.clarkpest.com,www.orkincanada.ca, www.westernpest.com, www.callnorthwest.com,www.mccallservice.com,www.crittercontrol.com, www.indfumco.com, www.trutechinc.com, www.orkinau.com, www.walthamservices.com, www.opcpest.com, www.permatreat.com, www.safeguardpestcontrol.co.uk, www.aardwolfpestkare.com,www.cranepestcontrol.com, www.missquito.com and www.rollins.com. You can also find this and other news releases at www.rollins.com by accessing the news releases button.

*Adjusted amounts presented in this release are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial metrics including a reconciliation of the most closely correlated GAAP measure.

CAUTION REGARDING FORWARD-LOOKING STATEMENTSThis press release may contain or incorporate by reference information that includes or is based on forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the Company's confidence in its continued success. Forward-looking statements give expectations or forecasts of future events and can be identified by the fact that they relate to future actions, performance or results rather than strictly to historical or current facts.

Any or all forward-looking statements may turn out to be wrong, and, accordingly, you are cautioned not to place undue reliance on such statements, which speak only as of the date of this press release. Forward-looking statements involve a number of risks and uncertainties that are difficult to predict and are not guarantees of future performance. Among the general factors that could cause actual results and financial condition to differ materially from those indicated by the forward-looking statements and estimated results and financial condition are those factors listed in periodic reports filed by Rollins with the Securities and Exchange Commission ("SEC"), including those factors discussed under Item 1.A., "Risk Factors" of Part I of the Company's Annual Report on Form 10-K, filed with the SEC for the year ended December 31, 2020, which factors include, but are not limited to, the Company's belief that its accounting estimates and assumptions, financial condition and results of operations may change materially in future periods in response to the COVID-19 pandemic; the outcomes of any pending claim, proceeding, litigation, regulatory action or investigation filed against us, which could have a material adverse effect on our business, financial condition and results of operations, including, but not limited to, the Company's ongoing SEC investigation; the Company's belief that the ongoing SEC investigation is primarily focused on how it established accruals and reserves at period-ends and the impact of those accruals and reserves on reported earnings, and the Company's inability to predict the outcome of the SEC investigation; risks related to the Company's belief that its current cash and cash equivalent balances, future cash flows expected to be generated from operating activities and available borrowings under its credit facilities will be sufficient to finance its current operations and obligations, and fund expansion of the business for the foreseeable future; the Company's belief that it maintains adequate liquidity and capital resources that are directed to finance domestic operations and obligations and to fund expansion of its domestic business for the foreseeable future without regard to its foreign deposits; exposure of certain market risks in the ordinary course of our business, including fluctuation in interest rates and foreign currency exchange fluctuations; risks related to changes in industry practices or technologies; and competitive factors and pricing practices.

No assurances can be given that the results and financial condition contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable. Rollins assumes no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent to the date of this press release, including any such statements related to COVID-19. You are advised, however, to consult any further disclosures Rollins makes on related subjects in its filings with the SEC.

(ROL-IR)

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



(in thousands)





At September 30, (unaudited) 2021 2020

ASSETS

Cash and cash equivalents $117,655 $95,440

Trade accounts receivables, net 152,866 138,392

Financed receivables, net 27,294 24,091

Materials and supplies 26,976 30,386

Other current assets 48,663 43,527

Total Current Assets 373,454 331,836

Equipment and property, net 131,549 186,825

Goodwill 665,645 619,656

Customer contracts, net 284,393 275,366

Trademarks and tradenames, net 108,231 104,610

Other intangible assets, net 9,914 9,966

Operating lease, right-of-use assets 251,374 211,345

Financed receivables, long-term, net 45,410 37,430

Benefit plan assets 1,118 1,198

Deferred income tax assets 2,568 2,165

Other assets 31,157 25,669

Total Assets $1,904,813$1,806,066

LIABILITIES

Accounts payable 38,509 56,393

Accrued insurance, current 34,790 31,756

Accrued compensation and related liabilities 96,285 88,566

Unearned revenue 151,645 139,734

Operating lease liabilities, current 76,684 72,197

Current portion of long-term debt 18,750 15,625

Other current liabilities 60,833 64,868

Total Current Liabilities 477,496 469,139

Accrued insurance, less current portion 32,582 36,164

Operating lease liabilities, less current portion 177,381 140,795

Long-term debt 49,250 154,375

Deferred income tax liabilities 13,288 15,244

Long-term accrued liabilities 53,187 57,633

Total Liabilities 803,184 873,350

STOCKHOLDERS' EQUITY

Common stock 492,049 491,624

Retained earnings and other equity 609,580 441,092

Total stockholders' equity 1,101,629 932,716

Total Liabilities and Stockholders' Equity $1,904,813$1,806,066

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands except per share data)

(unaudited)



Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

REVENUES

Customer services $650,199$583,698$1,823,957$1,624,928

COSTS AND EXPENSES

Cost of services provided 305,474 275,474 864,888 782,248

Depreciation and amortization 23,617 22,404 70,519 65,926

Sales, general and 194,261 168,006 539,951 497,121 administrative

Chairman's accelerated stock - 6,691 - 6,691 vesting expense

(Gain) loss on sale of (447) 1,355 (33,598) 629 assets, net

Interest expense, net 222 866 1,334 4,491

INCOME BEFORE INCOME TAXES 127,072 108,902 380,863 267,822

PROVISION FOR INCOME TAXES 33,219 29,323 95,513 69,617

NET INCOME $93,853 $79,579 $285,350 $198,205

NET INCOME PER SHARE - BASIC $0.19 $0.16 $0.58 $0.40 AND DILUTED^1

Weighted average shares outstanding - basic and 492,069 491,631 492,058 491,236 diluted

^1 All prior year share and per share data have been adjusted to account forthe three-for-two stock split effective December 10, 2020.

APPENDIX

Reconciliation of GAAP and non-GAAP Financial Measures

The Company has used the non-GAAP financial measures of adjusted net income and adjusted EPS in today's earnings release, and the non-GAAP financial measures of organic revenues, organic revenues on a constant exchange rate, adjusted EBITDA, and free cash flow in today's conference call. These measures should not be considered in isolation or as a substitute for revenues, net income, earnings per share or other performance measures prepared in accordance with GAAP.

The Company uses adjusted net income, adjusted EPS and adjusted EBITDA as measures of operating performance because they allow it to compare performance consistently over various periods without regard to the impact of the property disposition gains or the accelerated stock vesting expense. The Company uses organic revenues and organic revenues on a constant exchange rate to compare revenues over various periods excluding the impact of acquisitions and the change in foreign currency rates. The Company uses free cash flow to demonstrate its ability to generate cash.

A non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that either 1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows, or 2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

Set forth below is a reconciliation of non-GAAP financial measures used in today's earnings release and conference call with their most comparable GAAP measures.

(unaudited in thousands except EPS)

Three Months Ended Nine Months Ended

September 30, September 30,

Better/ Better/

2021 2020 (Worse) % 2021 2020 (Worse) %

Reconciliation of Net Income to Adjusted Net Income and EPS

Net income $93,853 $79,579 $14,274 17.9 %$285,350 $198,205 $87,145 44.0 %

Property disposition - - - - (31,517) - (31,517)- gains

Chairman's accelerated - 6,691 (6,691) - - 6,691 (6,691) - stock vesting expense

Adjusted income taxes - - - - 8,287 - 8,287 - on excluded items

Adjusted net $93,853 $86,270 $7,583 8.8 %$262,120 $204,896 $57,224 27.9 %income

Adjusted net income per $0.19 $0.18 $0.01 5.6 %$0.53 $0.42 $0.11 26.2 %share - basic and diluted^1

Weighted average shares outstanding - 492,069 491,631 438 0.1 % 492,058 491,236 822 0.2 %basic and diluted^1



Reconciliation of Revenues to Organic Revenues and Organic Revenues on a Constant Exchange Rate

Revenues $650,199 $583,698$66,501 11.4 %$1,823,957$1,624,928$199,029 12.2 %

Revenues from (12,671) - (12,671)- (43,931) - (43,931)- acquisitions

Organic 637,528 583,698 53,830 9.2 % 1,780,026 1,624,928 155,098 9.5 %revenues

Adjustment to organic revenues on a (431) - (431) - (10,314) - (10,314)- constant exchange rate

Organic revenues on a $637,097 $583,698$53,399 9.2 %$1,769,712$1,624,928$144,784 8.9 %constant exchange rate



Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Net income $93,853 $79,579 $14,274 17.9 %$285,350 $198,205 $87,145 44.0 %

Depreciation and 23,617 22,404 1,213 5.4 70,519 65,926 4,593 7.0 amortization

Interest 222 866 (644) (74.4) 1,334 4,491 (3,157) (70.3) expense, net

Provision for 33,219 29,323 3,896 13.3 95,513 69,617 25,896 37.2 income taxes

EBITDA 150,911 132,172 18,739 14.2 % 452,716 338,239 114,477 33.8 %

Property disposition - - - - (31,517) - (31,517)- gains

Chairman's accelerated - 6,691 (6,691) - - 6,691 (6,691) - stock vesting expense

Adjusted $150,911 $138,863$12,048 8.7 %$421,199 $344,930 $76,269 22.1 %EBITDA



Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

Net cash provided by $79,706 $105,835$(26,129)(24.7)%$298,911 $340,607 $(41,696)(12.2)%operating activities

Purchases of equipment and (6,802) (5,249) (1,553) (29.6) (20,031) (17,690) (2,341) (13.2) property

Free Cash Flow$72,904 $100,586$(27,682)(27.5)%$278,880 $322,917 $(44,037)(13.6)%

^1 All prior year share and per share data have been adjusted to account forthe three-for-two stock split effective December 10, 2020.

CONFERENCE CALL ANNOUNCEMENT

Rollins, Inc.(NYSE: ROL)

Management will hold a conference call to discussThird Quarter 2021 results on

Wednesday, October 27, 2021 at:10:00 a.m. Eastern9:00 a.m. Central8:00 a.m. Mountain7:00 a.m. Pacific

TO PARTICIPATE:Please dial 1-877-407-9716 domestic;1-201-493-6779 internationalwith conference ID of 13723477at least 5 minutes before start time.

REPLAY: available through November 3, 2021Please dial 1-844-512-2921 / 1-412-317-6671, Passcode 13723477THIS CALL CAN ALSO BE ACCESSED THROUGH THE INTERNET AT

www.rollins.com

Questions?Contact Samantha Alphonso at Financial Relations Board at 212-827-3746Or email to salphonso@mww.com

For Further Information ContactJulie Bimmerman (404) 888-2103

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SOURCE Rollins, Inc.