ATLANTA, April 27, 2022 /PRNewswire/ -- Rollins, Inc. (NYSE:ROL) ("Rollins" or the "Company"), a premier global consumer and commercial services company, reported strong unaudited financial results for its first quarter ended March 31, 2022.

The Company recorded first quarter 2022 revenues of $590.7 million, an increase of 10.3% over the first quarter 2021 revenue of $535.6 million, with organic revenues* increasing 7.0% to $573.1 million. The Company's first quarter 2022 reported net income was $72.4 million or $0.15 per diluted share, compared to $92.6 million or $0.19 per diluted share for first quarter of 2021. Adjusted net income* and adjusted earnings per diluted share* for the first quarter ended March 31, 2021 were $69.8 million and $0.14 per diluted share, respectively. The first quarter 2021 results have been adjusted to exclude the gain related to the disposition of properties received through the 2019 acquisition of Clark Pest Control of Stockton, Inc. of $31.1 million ($22.9 million, net of tax).

Gary W. Rollins, Chairman and Chief Executive Officer of Rollins stated, "We are proud of our first quarter results and believe we are well positioned for 2022. Our employees have displayed a strong level of commitment and drive towards taking care of our customers. We are confident in our continued strategic growth and profitability moving forward."

Rollins, Inc. is a premier global consumer and commercial services company. Through its family of leading brands, Orkin, HomeTeam Pest Defense, Clark Pest Control, Northwest Exterminating, McCall Service, Trutech, Critter Control, Western Pest Services, Waltham Services, OPC Pest Services, The Industrial Fumigant Company, PermaTreat, Crane Pest Control, Missquito, Orkin Canada, Orkin Australia, Safeguard (UK), Aardwolf Pestkare (Singapore), and more, the Company and its franchises provide 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 800 locations. You can learn more about Rollins and its subsidiaries by visiting our web site at www.rollins.com, where you can also find this and other news releases by accessing the news releases button.

*Amounts 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 STATEMENTS

This press release may contain forward-looking statements that involve risks and uncertainties concerning the business and financial results of Rollins, Inc. We have based these forward-looking statements largely on our current opinions, expectations, beliefs, plans, objectives, assumptions and projections about future events and financial trends affecting the operating results and financial condition of our business. Such forward looking statements include, but are not limited to, statements regarding the Company's belief that it is well positioned for 2022 and its confidence in its strategic growth and profitability moving forward.

Our actual results could differ materially from those indicated by the forward-looking statements because of various risks, timing and uncertainties including, without limitation, the failure to maintain and enhance our brands and develop a positive client reputation; our ability to protect our intellectual property and other proprietary rights that are material to our business and our brand recognition; actions taken by our franchisees, subcontractors or vendors that may harm our business; general economic conditions; the impact of the extent and duration of economic contraction related to COVID-19 on general economic activity for the remainder of 2022 and beyond; the impact of future developments related to the COVID-19 pandemic on the Company's business, results of operations, accounting assumptions and estimates and financial condition, including, without limitation, restrictions in customer discretionary expenditures, disruptions in credit or financial markets, increases in fuel prices, raw material costs or other operating costs; potential increases in labor costs; labor shortages and/or our inability to attract and retain skilled workers; competitive factors and pricing practices; changes in industry practices or technologies; the degree of success of our termite process reforms and pest control selling and treatment methods; our ability to identify, complete and successfully integrate potential acquisitions; unsuccessful expansion into international markets; climate change and unfavorable weather conditions; a breach of data security resulting in the unauthorized access of personal, financial, proprietary, confidential or other personal data or information about our customers, employees, third parties, or of our proprietary confidential information; damage to our brands or reputation; possibility of an adverse ruling against us in pending litigation, regulatory action or investigation; changes in various government laws and regulations, including environmental regulations; the adequacy of our insurance coverage to cover all significant risk exposures; the effectiveness of our risk management and safety program; general market risk; management's substantial ownership interest and its impact on public stockholders and the availability of the Company's common stock to the investing public; and the existence of certain anti-takeover provisions in our governance documents, which could make a tender offer, change in control or takeover attempt that is opposed by the Company's Board of Directors more difficult or expensive. All of the foregoing risks and uncertainties are beyond our ability to control, and in many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. The Company does not undertake to update its forward-looking statements.

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands)

(unaudited)

March 31,

December 31,

2022

2021

ASSETS

Cash and cash equivalents

258,338

105,301

Trade accounts receivables, net

137,621

139,579

Financed receivables, net

26,631

26,152

Materials and supplies

29,062

28,926

Other current assets

44,860

52,422

Total Current Assets

496,512

352,380

Equipment and property, net

132,680

133,257

Goodwill

730,139

721,819

Customer contracts, net

318,806

325,929

Trademarks and tradenames, net

109,520

108,976

Other intangible assets, net

10,090

11,679

Operating lease, right-of-use assets

241,043

244,784

Financed receivables, long-term, net

46,192

47,097

Other assets

46,161

34,949

Total Assets

2,131,143

1,980,870

LIABILITIES

Accounts payable

38,586

44,568

Accrued insurance, current

37,724

36,414

Accrued compensation and related liabilities

76,291

97,862

Unearned revenue

156,516

145,122

Operating lease liabilities, current

74,463

75,240

Current portion of long-term debt

15,000

18,750

Other current liabilities

82,317

73,206

Total Current Liabilities

480,897

491,162

Accrued insurance, less current portion

32,218

31,545

Operating lease liabilities, less current portion

169,839

172,520

Long-term debt

280,783

136,250

Long-term accrued liabilities

59,877

67,345

Total Liabilities

1,023,614

898,822

STOCKHOLDERS' EQUITY

Common stock

492,461

491,911

Retained earnings and other equity

615,068

590,137

Total stockholders' equity

1,107,529

1,082,048

Total Liabilities and Stockholders' Equity

2,131,143

1,980,870

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands except per share data)

(unaudited)

Three Months Ended

March 31,

2022

2021

REVENUES

Customer services

590,680

535,554

COSTS AND EXPENSES

Cost of services provided (exclusive of depreciation and amortization below)

295,378

261,552

Sales, general and administrative

178,785

162,208

Depreciation and amortization

24,847

23,596

Total operating expenses

499,010

447,356

OPERATING INCOME

91,670

88,198

Interest expense, net

568

606

Other income, net

(1,279)

(32,260)

CONSOLIDATED INCOME BEFORE INCOME TAXES

92,381

119,852

PROVISION FOR INCOME TAXES

19,936

27,209

NET INCOME

72,445

92,643

NET INCOME PER SHARE - BASIC AND DILUTED

0.15

0.19

Weighted average shares outstanding - basic

492,213

492,003

Weighted average shares outstanding - diluted

492,325

492,003

APPENDIX

Reconciliation of GAAP and non-GAAP Financial Measures

The Company has used the non-GAAP financial measures of organic revenues, adjusted net income and adjusted earnings per share ("EPS") in this earnings release, and the non-GAAP financial measures of organic revenues by type, organic revenues in constant dollars, adjusted EBITDA, and free cash flow in today's conference call. Organic revenue is calculated as revenue less acquisition revenue. Acquisition revenue is based on the trailing 12-month revenue of our acquired entities. 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.

Management uses adjusted net income, adjusted EPS and adjusted EBITDA as measures of operating performance because these measures allow the Company to compare performance consistently over various periods without regard to the impact of the property disposition gains, the accelerated stock vesting expense or the SEC matter. Management also uses organic revenues, organic revenues by type and organic revenues in constant dollars to compare revenues over various periods excluding the impact of acquisitions and the change in foreign currency rates. Management uses free cash flow, which is calculated as net cash provided by operating activities less capital expenditures, to demonstrate the Company's ability to maintain its asset base and generate future cash flows from operations. Management believes all of these non-GAAP financial measures are useful to provide investors with information about current trends in, and period-over-period comparisons of, the Company's results of operations.

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
	March 31,
					Variance
	2022		2021		$		%
Reconciliation of Net Income to Adjusted Net Income and EPS
Net income	$	72,445	$	92,643	$	(20,198)	(21.8)
Property disposition gains (net of tax $22,893)		—		(31,058)		31,058	—
Adjusted income taxes on excluded items		—		8,165		(8,165)	—
Adjusted net income	$	72,445	$	69,750	$	2,695	3.9
Adjusted earnings per share - basic and diluted	$	0.15	$	0.14	$	0.01	7.1
Weighted average shares outstanding - basic		492,213		492,003		210	0.0
Weighted average shares outstanding - diluted		492,325		492,003		322	0.1

Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Net income	$	72,445	$	92,643	$	(20,198)	(21.8)
Depreciation and amortization		24,847		23,596		1,251	5.3
Interest expense, net		568		606		(38)	(6.3)
Provision for income taxes		19,936		27,209		(7,273)	(26.7)
EBITDA		117,796		144,054		(26,258)	(18.2)
Property disposition gains		—		(31,058)		31,058	—
Adjusted EBITDA	$	117,796	$	112,996	$	4,800	4.2

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Net cash provided by operating activities	$	87,532	$	119,486	$	(31,954)	(26.7)
Capital expenditures		(7,995)		(7,826)		(169)	(2.1)
Free Cash Flow	$	79,537	$	111,660	$	(32,123)	(28.8)


	Three Months Ended
	March 31,
					Variance
	2022		2021		$		%
Reconciliation of Revenues to Organic Revenues and Organic Revenues in Constant Dollars
Revenues	$	590,680	$	535,554	$	55,126	10.3
Revenue growth from acquisitions		(17,567)		—		(17,567)	—
Organic revenues		573,113		535,554		37,559	7.0
Adjustment to organic revenues on a constant exchange rate		(3,663)		—		(3,663)	—
Organic revenues in constant dollars	$	569,450	$	535,554	$	33,896	6.3

Reconciliation of Residential Revenues to Organic Residential Revenues
Residential revenues	$	259,259	$	235,179	$	24,080	10.2
Residential revenues from acquisitions		(10,282)		—		(10,282)	—
Residential organic revenues	$	248,977	$	235,179	$	13,798	5.8

Reconciliation of Commercial Revenues to Organic Commercial Revenues
Commercial revenues	$	205,787	$	188,697	$	17,090	9.1
Commercial revenue growth from acquisitions		(2,222)		—		(2,222)	—
Commercial organic revenues	$	203,565	$	188,697	$	14,868	7.9

Reconciliation of Termite Revenues to Organic Termite Revenues
Termite revenues	$	119,706	$	105,694	$	14,012	13.3
Termite revenues from acquisitions		(5,063)		—		(5,063)	—
Termite organic revenues	$	114,643	$	105,694	$	8,949	8.5

CONFERENCE CALL ANNOUNCEMENT

Rollins, Inc.

(NYSE:ROL)

Management will hold a conference call to discuss

First Quarter 2022 results on

Wednesday, April 27, 2022 at:

10:00 a.m. Eastern

9:00 a.m. Central

8:00 a.m. Mountain

7:00 a.m. Pacific

TO PARTICIPATE:

Please dial 1-877-869-3839 domestic;

1-201-689-8265 international

with conference ID of 13728548

at least 5 minutes before start time.

REPLAY: available through May 2, 2022

Please dial 1-877-660-6853 / 1-201-612-7415, Passcode 13728548

THIS CALL CAN ALSO BE ACCESSED THROUGH THE INTERNET AT

www.rollins.com

Questions?

Contact Samantha Alphonso at Financial Relations Board at 212-827-3746

Or email to salphonso@mww.com

For Further Information Contact

Julie Bimmerman (404) 888-2103

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SOURCE Rollins, Inc.