Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | Apr. 15, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 1-4422 | |
Entity Registrant Name | ROLLINS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 51-0068479 | |
Entity Address, Address Line One | 2170 Piedmont Road, N.E. | |
Entity Address, City or Town | Atlanta | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30324 | |
City Area Code | 404 | |
Local Phone Number | 888-2000 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | ROL | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 484,230,396 | |
Entity Central Index Key | 0000084839 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
ASSETS | ||
Cash and cash equivalents | $ 112,971 | $ 103,825 |
Trade receivables, net of allowance for expected credit losses of $14,864 and $15,797, respectively | 177,254 | 178,214 |
Financed receivables, short-term, net of allowance for expected credit losses of $1,914 and $1,874, respectively | 35,717 | 37,025 |
Materials and supplies | 35,698 | 33,383 |
Other current assets | 62,713 | 54,192 |
Total current assets | 424,353 | 406,639 |
Equipment and property, net of accumulated depreciation of $366,779 and $360,421, respectively | 127,116 | 126,661 |
Goodwill | 1,095,141 | 1,070,310 |
Intangible assets, net | 549,390 | 545,734 |
Operating lease right-of-use assets | 341,639 | 323,390 |
Financed receivables, long-term, net of allowance for expected credit losses of $4,342 and $3,728, respectively | 79,040 | 75,909 |
Other assets | 41,940 | 46,817 |
Total assets | 2,658,619 | 2,595,460 |
LIABILITIES | ||
Accounts payable | 40,038 | 49,200 |
Accrued insurance - current | 51,660 | 46,807 |
Accrued compensation and related liabilities | 79,372 | 114,355 |
Unearned revenues | 186,021 | 172,380 |
Operating lease liabilities - current | 97,394 | 92,203 |
Other current liabilities | 137,451 | 101,744 |
Total current liabilities | 591,936 | 576,689 |
Accrued insurance, less current portion | 51,928 | 48,060 |
Operating lease liabilities, less current portion | 246,614 | 233,369 |
Long-term debt | 510,909 | 490,776 |
Other long-term accrued liabilities | 89,736 | 90,999 |
Total liabilities | 1,491,123 | 1,439,893 |
Commitments and contingencies | ||
STOCKHOLDERS’ EQUITY | ||
Preferred stock, without par value; 500,000 shares authorized, zero shares issued | 0 | 0 |
Common stock, par value $1 per share; 800,000,000 shares authorized, 484,230,396 and 484,080,014 shares issued and outstanding, respectively | 484,230 | 484,080 |
Additional paid in capital | 127,531 | 131,840 |
Accumulated other comprehensive loss | (32,472) | (26,755) |
Retained earnings | 588,207 | 566,402 |
Total stockholders’ equity | 1,167,496 | 1,155,567 |
Total liabilities and stockholders’ equity | 2,658,619 | 2,595,460 |
Customer contracts, net | ||
ASSETS | ||
Intangible assets, net | 389,199 | 386,152 |
Trademarks & tradenames, net | ||
ASSETS | ||
Intangible assets, net | 151,821 | 151,368 |
Other intangible assets, net | ||
ASSETS | ||
Intangible assets, net | $ 8,370 | $ 8,214 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Trade receivables, allowance for expected credit losses | $ 14,864 | $ 15,797 |
Financed receivables, allowance for expected credit losses | 1,914 | 1,874 |
Equipment and property, net of accumulated depreciation | 366,779 | 360,421 |
Financed receivables, allowance for expected credit losses | $ 4,342 | $ 3,728 |
Preferred stock, shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 800,000,000 | 800,000,000 |
Common stock, shares issued (in shares) | 484,230,396 | 484,080,014 |
Common stock, shares outstanding (in shares) | 484,230,396 | 484,080,014 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
REVENUES | ||
Revenue from Contract with Customer, Product and Service [Extensible Enumeration] | Customer Services [Member] | Customer Services [Member] |
Customer services | $ 748,349 | $ 658,015 |
COSTS AND EXPENSES | ||
Cost of services provided (exclusive of depreciation and amortization below) | 365,558 | 326,842 |
Sales, general and administrative | 223,057 | 196,431 |
Depreciation and amortization | 27,310 | 22,502 |
Total operating expenses | 615,925 | 545,775 |
OPERATING INCOME | 132,424 | 112,240 |
Interest expense, net | 7,725 | 465 |
Other expense (income), net | 61 | (4,714) |
CONSOLIDATED INCOME BEFORE INCOME TAXES | 124,638 | 116,489 |
PROVISION FOR INCOME TAXES | 30,244 | 28,255 |
NET INCOME | $ 94,394 | $ 88,234 |
NET INCOME PER SHARE - BASIC (in USD per share) | $ 0.19 | $ 0.18 |
NET INCOME PER SHARE - DILUTED (in USD per share) | $ 0.19 | $ 0.18 |
Weighted average shares outstanding - basic (in shares) | 484,131 | 492,516 |
Weighted average shares outstanding - diluted (in shares) | 484,318 | 492,701 |
DIVIDENDS PAID PER SHARE (in USD per share) | $ 0.15 | $ 0.13 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
NET INCOME | $ 94,394 | $ 88,234 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustments | (5,774) | 97 |
Unrealized gain on available for sale securities | 57 | 162 |
Other comprehensive (loss) income, net of tax | (5,717) | 259 |
Comprehensive income | $ 88,677 | $ 88,493 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) $ in Thousands | Total | Common Stock | Paid-in- Capital | Accumulated Other Comprehensive Income / (Loss) | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2022 | 492,448,000 | ||||
Beginning balance at Dec. 31, 2022 | $ 1,267,197 | $ 492,448 | $ 119,242 | $ (31,562) | $ 687,069 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 88,234 | 88,234 | |||
Other comprehensive (loss) income, net of tax: | |||||
Foreign currency translation adjustments | 97 | 97 | |||
Unrealized gains on available for sale securities | 162 | 162 | |||
Cash dividends | (64,053) | (64,053) | |||
Stock compensation (in shares) | 601,000 | ||||
Stock compensation | 5,947 | $ 601 | 5,346 | ||
Shares withheld for payment of employee taxes (in shares) | (262,000) | ||||
Shares withheld for payment of employee taxes | (9,832) | $ (262) | (9,570) | ||
Ending balance (in shares) at Mar. 31, 2023 | 492,787,000 | ||||
Ending balance at Mar. 31, 2023 | $ 1,287,752 | $ 492,787 | 115,018 | (31,303) | 711,250 |
Beginning balance (in shares) at Dec. 31, 2023 | 484,080,014 | 484,080,000 | |||
Beginning balance at Dec. 31, 2023 | $ 1,155,567 | $ 484,080 | 131,840 | (26,755) | 566,402 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 94,394 | 94,394 | |||
Other comprehensive (loss) income, net of tax: | |||||
Foreign currency translation adjustments | (5,774) | (5,774) | |||
Unrealized gains on available for sale securities | 57 | 57 | |||
Cash dividends | (72,589) | (72,589) | |||
Stock compensation (in shares) | 414,000 | ||||
Stock compensation | 7,181 | $ 414 | 6,767 | ||
Shares withheld for payment of employee taxes (in shares) | (264,000) | ||||
Shares withheld for payment of employee taxes | $ (11,340) | $ (264) | (11,076) | ||
Ending balance (in shares) at Mar. 31, 2024 | 484,230,396 | 484,230,000 | |||
Ending balance at Mar. 31, 2024 | $ 1,167,496 | $ 484,230 | $ 127,531 | $ (32,472) | $ 588,207 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
OPERATING ACTIVITIES | ||
Net income | $ 94,394 | $ 88,234 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 27,310 | 22,502 |
Stock-based compensation expense | 7,181 | 5,947 |
Provision for expected credit losses | 7,693 | 3,896 |
Gain on sale of assets, net | (368) | (4,714) |
Provision for deferred income taxes | 0 | 6,929 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | (6,400) | 1,533 |
Financing receivables | (1,822) | (4,421) |
Materials and supplies | (2,286) | (1,043) |
Other current assets | (8,867) | (1,501) |
Accounts payable and accrued expenses | (9,396) | (17,548) |
Unearned revenue | 13,691 | 8,656 |
Other long-term assets and liabilities | 6,303 | (7,697) |
Net cash provided by operating activities | 127,433 | 100,773 |
INVESTING ACTIVITIES | ||
Acquisitions, net of cash acquired | (47,132) | (15,480) |
Capital expenditures | (7,171) | (7,636) |
Proceeds from sale of assets | 712 | 8,886 |
Other investing activities, net | 1,126 | 640 |
Net cash used in investing activities | (52,465) | (13,590) |
FINANCING ACTIVITIES | ||
Payment of contingent consideration | (1,474) | (4,098) |
Borrowings under revolving commitment | 110,000 | 180,000 |
Repayments of term loan | 0 | (55,000) |
Repayments of revolving commitment | (90,000) | (115,000) |
Payment of dividends | (72,589) | (64,053) |
Cash paid for common stock purchased | (11,340) | (11,443) |
Other financing activities, net | 1,149 | (1,488) |
Net cash used in financing activities | (64,254) | (71,082) |
Effect of exchange rate changes on cash | (1,568) | 1,056 |
Net increase in cash and cash equivalents | 9,146 | 17,157 |
Cash and cash equivalents at beginning of period | 103,825 | 95,346 |
Cash and cash equivalents at end of period | 112,971 | 112,503 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 8,707 | 429 |
Cash paid for income taxes, net | 5,591 | 12,572 |
Non-cash additions to operating lease right-of-use assets | $ 45,531 | $ 20,828 |
BASIS OF PREPARATION
BASIS OF PREPARATION | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
BASIS OF PREPARATION | Basis of Preparation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, the instructions to Form 10-Q and applicable sections of Securities and Exchange Commission ("SEC") regulation S-X, and therefore do not include all information and footnotes required by U.S. GAAP for complete financial statements. There have been no material changes in the Company’s significant accounting policies or the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of Rollins, Inc. (including its subsidiaries unless the context otherwise requires, “Rollins,” “we,” “us,” “our,” or the “Company”) for the year ended December 31, 2023. Accordingly, the quarterly condensed consolidated financial statements and related disclosures herein should be read in conjunction with the 2023 Annual Report on Form 10-K. The Company’s condensed consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and related disclosures as of the date of the condensed consolidated financial statements. The Company considered the impact of economic trends on the assumptions and estimates used in preparing the condensed consolidated financial statements. In the opinion of management, all material adjustments necessary for a fair presentation of the Company’s financial results for the quarter have been made. These adjustments are of a normal recurring nature but complicated by the continued uncertainty surrounding economic trends. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of results for the entire year. The severity, magnitude and duration of certain economic trends continue to be uncertain and are difficult to predict. Therefore, our accounting estimates and assumptions may change over time in response to economic trends and may change materially in future periods. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | Accounting standards and disclosure rules issued but not yet adopted In October 2023, the FASB issued Accounting Standards Update ("ASU") 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” to amend certain disclosure and presentation requirements for a variety of topics within the Accounting Standards Codification ("ASC"). These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company does not expect that the application of this standard will have a material impact on its disclosures. In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through additional and more detailed information about a reportable segment's expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the potential impact of adopting this new guidance on its disclosures. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. This amendment modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, (2) the amount of income taxes paid (net of refunds received) (disaggregated by federal, state, and foreign taxes) as well as individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid net of refunds, (3) the income or loss from continuing operations before income tax expense or benefit (disaggregated between domestic and foreign) and (4) income tax expense or benefit from continuing operations (disaggregated by federal, state and foreign). The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, while retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its disclosures. In March 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule will require registrants to disclose certain climate-related information in registration statements and annual reports. The disclosure requirements will apply to the Company's fiscal year beginning January 1, 2025. The Company is currently evaluating the final rule to determine its impact on the Company's disclosures. |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Mar. 31, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | 2024 Acquisitions The Company made 12 acquisitions during the three months ended March 31, 2024. The aggregate preliminary values of major classes of assets acquired and liabilities assumed recorded at the dates of acquisition are included in the reconciliation of the total preliminary consideration as follows (in thousands): March 31, 2024 Accounts receivable $ 921 Materials and supplies 206 Other current assets 210 Equipment and property 2,258 Goodwill 27,337 Customer contracts 21,514 Trademarks & tradenames 1,012 Other intangible assets 762 Current liabilities (364) Unearned revenue (58) Other assets and liabilities, net (2) Assets acquired and liabilities assumed $ 53,796 Included in the total consideration of $53.8 million are acquisition holdback liabilities of $6.7 million. Goodwill from acquisitions represents the excess of the purchase price over the fair value of net assets of businesses acquired. The factors contributing to the amount of goodwill are based on strategic and synergistic benefits that are expected to be realized. A majority of the recognized goodwill is expected to be deductible for tax purposes. Valuations of certain assets and liabilities, including intangible assets and goodwill, as of the acquisition date have not been finalized at this time and are provisional. Fox Pest Control Acquisition On April 1, 2023, the Company acquired 100% of FPC Holdings, LLC (“Fox Pest Control”, or "Fox"). As part of funding the Fox acquisition, on April 3, 2023, the Company borrowed incremental amounts under the Credit Agreement of $305.0 million. The proceeds were used to pay cash consideration at closing. Management believes that the acquisition will expand the Rollins family of brands and drive long term value given Fox's attractive financial profile and complementary end market exposure. The Fox acquisition has been accounted for as a business combination, and the Fox results of operations are included in the Company's results of operations for the three months ended March 31, 2024. Fox contributed revenues of $35.5 million and net earnings of $1.5 million during the three months ended March 31, 2024. The valuation of the Fox acquisition was performed by a third-party valuation specialist under our management’s supervision. The values of identified assets acquired and liabilities assumed were finalized as of March 31, 2024 and are summarized in the table below (in thousands). Final Fair Value as of March 31, 2024 Cash $ 4,560 Accounts receivable 1,542 Materials and supplies 431 Operating lease right-of-use assets 8,689 Other current assets 487 Goodwill 188,176 Customer contracts 118,000 Trademarks & tradenames 38,000 Current liabilities (5,538) Unearned revenue (6,144) Operating lease liabilities (8,689) Assets acquired and liabilities assumed $ 339,514 The Company purchased Fox for $339.5 million. Included in the total consideration are cash payments of $302.8 million made upon closing, contingent consideration valued at $28.0 million that is based on Fox's financial performance in the twelve months following acquisition, and holdback liabilities valued at $8.7 million to be held by the Company to settle indemnity claims and working capital adjustments. The fair value of the contingent consideration was estimated using a Monte Carlo simulation. During the three months ended March 31, 2024, we recognized a charge of $1.0 million related to adjustments to the fair value of contingent consideration resulting from the acquisition of Fox. This charge is reported within sales, general and administrative expenses in our condensed consolidated statement of income. Acquired customer contracts are estimated to have a remaining useful life of 7 years. The acquired trademarks and tradenames are expected to have an indefinite useful life. |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | Revenue, classified by the major geographic areas in which our customers are located, was as follows: Three Months Ended (in thousands) 2024 2023 United States $ 693,860 $ 609,311 Other countries 54,489 48,704 Total Revenues $ 748,349 $ 658,015 Revenue from external customers, classified by significant product and service offerings, was as follows: Three Months Ended (in thousands) 2024 2023 Residential revenue $ 329,338 $ 282,757 Commercial revenue 258,114 231,707 Termite completions, bait monitoring, & renewals 152,060 136,131 Franchise revenues 3,961 3,789 Other revenues 4,876 3,631 Total Revenues $ 748,349 $ 658,015 Revenues classified by significant product and service offerings for the three months ended March 31, 2023 were misstated by an immaterial amount and have been restated from the amounts previously reported to correct the classification of such revenues. There was no impact on our condensed consolidated statements of income, financial position, or cash flows. The Company records unearned revenue when we have either received payment or contractually have the right to bill for services in advance of the services or performance obligations being performed. Unearned revenue recognized in the three months ended March 31, 2024 and 2023 was $61.9 million and $55.5 million, respectively. Changes in unearned revenue were as follows: Three Months Ended (in thousands) 2024 2023 Beginning balance $ 210,059 $ 187,994 Deferral of unearned revenue 74,796 65,626 Recognition of unearned revenue (61,888) (55,466) Ending balance $ 222,967 $ 198,154 As of March 31, 2024 and December 31, 2023, the Company had long-term unearned revenue of $36.9 million and $37.7 million, respectively, recorded in other long-term accrued liabilities. Unearned short-term revenue is recognized over the next 12-month period. The majority of unearned long-term revenue is recognized over a period of five years or less with immaterial amounts recognized through 2034. Incremental Costs of Obtaining a Contract with a Customer Incremental costs of obtaining a contract include only those costs that we incur to obtain a contract that we would not have incurred if the contract had not been obtained, primarily sales commissions. These costs are recorded as an asset and amortized to expense over the life of the contract to the extent such costs are expected to be recovered. As of March 31, 2024, we have $18.4 million of unamortized capitalized costs to obtain a contract, of which $15.4 million is recorded within other current assets and $3.0 million is recorded within other assets on our condensed consolidated statement of financial position. During the quarter ended March 31, 2024, we recorded approximately $3.8 million amortization of capitalized costs, which is recorded within sales, general and administrative expense on our condensed consolidated statement of income. During the quarter ended March 31, 2023, we had no unamortized capitalized costs to obtain a contract and we recorded no amortization of capitalized costs. |
ALLOWANCE FOR CREDIT LOSSES
ALLOWANCE FOR CREDIT LOSSES | 3 Months Ended |
Mar. 31, 2024 | |
Receivables [Abstract] | |
ALLOWANCE FOR CREDIT LOSSES | The Company is exposed to credit losses primarily related to accounts receivables and financed receivables derived from customer services revenue. To reduce credit risk for residential pest control accounts receivable, we promote enrollment in our auto-pay programs. In general, we may suspend future services for customers with past due balances. The Company’s credit risk is generally low with a large number of individuals and entities comprising Rollins’ customer base and dispersion across many different geographical regions. The Company manages its financed receivables on an aggregate basis when assessing and monitoring credit risks. The Company’s established credit evaluation and monitoring procedures seek to minimize the amount of business we conduct with higher risk customers. The credit quality of a potential obligor is evaluated at the loan origination based on an assessment of the individual’s Beacon/credit bureau score. Rollins requires a potential obligor to have good credit worthiness with low risk before entering into a contract. Depending upon the individual’s credit score, the Company may accept with 100% financing, require a significant down payment or turn down the contract. Delinquencies of accounts are monitored each month. Financed receivables include installment receivable amounts, some of which are due subsequent to one year from the balance sheet dates. The Company’s allowances for credit losses for trade accounts receivable and financed receivables are developed using historical collection experience, current economic and market conditions, reasonable and supportable forecasts, and a review of the current status of customers’ receivables. The Company’s receivable pools are classified between residential customers, commercial customers, large commercial customers, and financed receivables. Accounts are written off against the allowance for credit losses when the Company determines that amounts are uncollectible, and recoveries of amounts previously written off are recorded when collected. The Company stops accruing interest to these receivables when they are deemed uncollectible. Below is a roll forward of the Company’s allowance for credit losses for the three months ended March 31, 2024 and 2023. Allowance for Credit Losses (in thousands) Trade Financed Total Balance at December 31, 2023 $ 15,797 $ 5,602 $ 21,399 Provision for expected credit losses 4,823 2,870 7,693 Write-offs charged against the allowance (7,184) (2,362) (9,546) Recoveries collected 1,429 146 1,575 Balance at March 31, 2024 $ 14,865 $ 6,256 $ 21,121 Allowance for Credit Losses (in thousands) Trade Financed Total Balance at December 31, 2022 $ 14,073 $ 4,968 $ 19,041 Provision for expected credit losses 1,461 2,435 3,896 Write-offs charged against the allowance (4,687) (1,927) (6,614) Recoveries collected 1,629 — 1,629 Balance at March 31, 2023 $ 12,476 $ 5,476 $ 17,952 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | The following table summarizes changes in goodwill during the three months ended March 31, 2024 (in thousands): Goodwill: Balance at December 31, 2023 $ 1,070,310 Additions 27,337 Adjustments due to currency translation and other (2,506) Balance at March 31, 2024 $ 1,095,141 The following table sets forth the components of indefinite-lived and amortizable intangible assets as of March 31, 2024, and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Gross Accumulated Carrying Gross Accumulated Carrying Useful Life Amortizable intangible assets: Customer contracts $ 645,021 $ (255,822) $ 389,199 $ 625,920 $ (239,768) $ 386,152 3-20 Trademarks and tradenames 22,413 (10,324) 12,089 21,566 (9,933) 11,633 7-20 Other intangible assets 25,376 (19,233) 6,143 24,766 (18,779) 5,987 3-20 Total amortizable intangible assets $ 692,810 $ (285,379) $ 407,431 $ 672,252 $ (268,480) 403,772 Indefinite-lived intangible assets 141,959 141,962 Total customer contracts and other intangible assets $ 549,390 $ 545,734 Amortization expense related to intangible assets was $18.7 million and $14.0 million for the three months ended March 31, 2024 and 2023, respectively. Customer contracts and other amortizable intangible assets are amortized on a straight-line basis over their economic useful lives. Estimated amortization expense for the existing carrying amount of customer contracts and other intangible assets for each of the five succeeding fiscal years as of March 31, 2024 are as follows: (in thousands) 2024 (excluding the three months ended March 31, 2024) $ 61,384 2025 72,147 2026 68,042 2027 64,176 2028 62,165 |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENT | The Company’s financial instruments consist of cash and cash equivalents, trade receivables, financed and notes receivable, accounts payable, other short-term liabilities, and debt. The carrying amounts of these financial instruments approximate their respective fair values. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant non-observable inputs. As of March 31, 2024 and December 31, 2023, we had investments in international bonds of $9.4 million and $10.2 million, respectively. These bonds are accounted for as available for sale securities and are level 2 assets under the fair value hierarchy. The bonds are recorded at their fair market values and reported within other current assets and other assets in our condensed consolidated statement of financial position. The unrealized gain or loss activity during the three months ended March 31, 2024 and 2023 was not significant. As of March 31, 2024 and December 31, 2023, the Company had $51.9 million and $46.1 million of acquisition holdback and earnout liabilities payable to former owners of acquired companies, respectively. The earnout liabilities were discounted to reflect the expected probability of payout, and both earnout and holdback liabilities were discounted to their net present value on the Company’s books and are considered level 3 liabilities. The table below presents a summary of the changes in fair value for these liabilities. Three Months Ended (in thousands) 2024 2023 Beginning balance $ 46,104 $ 13,496 New acquisitions and revaluations 6,664 1,300 Payouts (1,474) (4,098) Interest on outstanding contingencies 534 22 Charge offset, forfeit and other 30 (187) Ending balance $ 51,858 $ 10,533 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
DEBT | On February 24, 2023, the Company entered into a revolving credit agreement (the "Credit Agreement") with, among others, JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as administrative agent (in such capacity, the “Administrative Agent”), which refinanced its previous credit facility described below. The Credit Agreement provides for a $1.0 billion revolving credit facility (the “Credit Facility”), which may be denominated in U.S. Dollars and other currencies, including Euros, Australian Dollars, Canadian Dollars, New Zealand Dollars, Pounds Sterling and Japanese Yen, subject to a $400 million foreign currency sublimit. The Credit Facility also includes sub-facilities for the issuance of letters of credit of up to $150 million and swing line loans at the Administrative Agent’s discretion of up to $50 million. Certain subsidiaries of Rollins provide unsecured guarantees of the Credit Facility. Rollins has the ability to expand its borrowing availability under the Credit Agreement in the form of increased revolving commitments or one or more tranches of term loans by up to an additional $750 million, subject to the agreement of the participating lenders and certain other customary conditions. The maturity date of the loans under the Credit Agreement is February 24, 2028. Loans under the Credit Agreement bear interest, at Rollins’ election, at (i) for loans denominated in U.S. Dollars, (A) an alternate base rate (subject to a floor of 0.00%), which is the greatest of (x) the prime rate publicly announced from time to time by JPMorgan Chase, (y) the greater of the federal funds effective rate and the Federal Reserve Bank of New York overnight bank funding rate, plus 50 basis points, and (z) Adjusted Term SOFR for a one month interest period, plus a margin ranging from 0.00% to 0.50% per annum based on Rollins’ consolidated total net leverage ratio; or (B) the greater of term SOFR for the applicable interest period plus 10 basis points (“Adjusted Term SOFR”) and zero, plus a margin ranging from 1.00% to 1.50% per annum based on Rollins’ consolidated total net leverage ratio; and (ii) for loans denominated in other currencies, including Euros, Australian Dollars, Canadian Dollars, New Zealand Dollars, Pounds Sterling and Japanese Yen, such interest rates as set forth in the Credit Agreement. As of March 31, 2024, the Company had outstanding borrowings of $513.0 million under the Credit Facility. Borrowings under the Credit Facility are presented under the long-term debt caption of our condensed consolidated balance sheet, net of $2.1 million in unamortized debt issuance costs as of March 31, 2024. The aggregate effective interest rate on the debt outstanding as of March 31, 2024 was 6.4%. As of December 31, 2023, the Company had outstanding borrowings of $493.0 million under the Credit Facility. Borrowings under the Credit Facility are presented under the long-term debt caption of our condensed consolidated balance sheet, net of $2.2 million in unamortized debt issuance costs as of December 31, 2023. The aggregate effective interest rate on the debt outstanding as of December 31, 2023 was 6.5%. The Company maintains $68.4 million in letters of credit as of March 31, 2024. These letters of credit are required by the Company’s insurance companies, due to the Company’s high deductible insurance program, to secure various workers’ compensation and casualty insurance contracts coverage and were decreased from $71.7 million as of December 31, 2023. The Company believes that it has adequate liquid assets, funding sources and insurance accruals to accommodate potential future insurance claims. The Credit Agreement contains customary terms and conditions, including, without limitation, certain financial covenants including covenants restricting Rollins’ ability to incur certain indebtedness or liens, or to merge or consolidate with or sell substantially all of its assets to another entity. Further, the Credit Agreement contains a financial covenant restricting Rollins’ ability to permit the ratio of Rollins’ consolidated total net debt to EBITDA to exceed 3.50 to 1.00. Following certain acquisitions, Rollins may elect to increase the financial covenant level to 4.00 to 1.00 temporarily. The ratio is calculated as of the last day of the fiscal quarter most recently ended. The Credit Agreement also contains provisions permitting a future environmental, social and governance amendment, subject to certain terms and conditions contained therein, by which pricing may be adjusted pursuant to the Company's performance measured against certain sustainability-linked metrics. The Company is in compliance with applicable debt covenants as of March 31, 2024. |
CONTINGENCIES
CONTINGENCIES | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | In the normal course of business, the Company and its subsidiaries are involved in, and will continue to be involved in, various claims, arbitrations, contractual disputes, investigations, and regulatory and litigation matters relating to, and arising out of, our businesses and our operations. These matters may involve, but are not limited to, allegations that our services or vehicles caused damage or injury, claims that our services did not achieve the desired results, claims related to acquisitions and allegations by federal, state or local authorities, including taxing authorities, of violations of regulations or statutes. In addition, we are parties to employment-related cases and claims from time to time, which may include claims on a representative or class action basis alleging wage and hour law violations. We are also involved from time to time in certain environmental matters primarily arising in the normal course of business. We evaluate pending and threatened claims and establish loss contingency reserves based upon outcomes we currently believe to be probable and reasonably estimable. The Company retains, up to specified limits, certain risks related to general liability, workers’ compensation and auto liability. The estimated costs of existing and future claims under the retained loss program are accrued based upon historical trends as incidents occur, whether reported or unreported (although actual settlement of the claims may not be made until future periods) and may be subsequently revised based on developments relating to such claims. The Company contracts with an independent third party to provide the Company an estimated liability based upon historical claims information. The actuarial study is a major consideration in establishing the reserve, along with management’s knowledge of changes in business practice and existing claims compared to current balances. Management’s judgment is inherently subjective as a number of factors are outside management’s knowledge and control. Additionally, historical information is not always an accurate indication of future events. The accruals and reserves we hold are based on estimates that involve a degree of judgment and are inherently variable and could be overestimated or insufficient. If actual claims exceed our estimates, our operating results could be materially affected, and our ability to take timely corrective actions to limit future costs may be limited. Management does not believe that any pending claim, proceeding or litigation, regulatory action or investigation, either alone or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or liquidity; however, it is possible that an unfavorable outcome of some or all of the matters could result in a charge that might be material to the results of an individual quarter or year. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | During the three months ended March 31, 2024, the Company paid $72.6 million, or $0.15 per share, in cash dividends compared to $64.1 million, or $0.13 per share, during the same period in 2023. The Company withholds shares from employees for the payment of their taxes on equity awards that have vested. The Company withheld $11.3 million and $9.8 million in connection with employee tax obligations during the three month periods ended March 31, 2024 and 2023, respectively. The Company did not repurchase shares on the open market during the three months ended March 31, 2024 and March 31, 2023. The following table summarizes the components of the Company’s stock-based compensation programs recorded as expense: Three Months Ended (in thousands) 2024 2023 Restricted shares and PSUs: Compensation expense $ 6,607 $ 5,755 Employee Stock Purchase Plan As more fully discussed in Note 13 of the Company’s notes to the consolidated financial statements in its 2023 Annual Report on Form 10-K, shareholders approved the Rollins, Inc. 2022 Employee Stock Purchase Plan which provides eligible employees with the option to purchase shares of Company common stock, at a discount, through payroll deductions during six-month offering periods. The most recent purchase period for the ESPP began on January 1, 2024, and will end on June 30, 2024. The Company recorded compensation expense associated with its ESPP of $0.6 million during the three months ended March 31, 2024. Compensation expense for the ESPP is included in cost of services provided and sales, general and administrative expenses in our condensed consolidated statements of income. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | The Company reports both basic and diluted earnings per share. Basic earnings per share is computed by dividing net income available to participating common stockholders by the weighted average number of participating common shares outstanding for the period. Diluted earnings per share is calculated by dividing the net income available to participating common shareholders by the diluted weighted average number of shares outstanding for the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive equity. A reconciliation of weighted average shares outstanding is as follows (in thousands): Three Months Ended 2024 2023 Weighted-average outstanding common shares 481,877 490,209 Add participating securities: Weighted-average time-lapse restricted awards 2,254 2,307 Total weighted-average shares outstanding – basic 484,131 492,516 Dilutive effect of restricted stock units and PSUs 187 185 Weighted-average shares outstanding – diluted 484,318 492,701 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s provision for income taxes is recorded on an interim basis based upon the Company’s estimate of the annual effective income tax rate for the full year applied to “ordinary” income or loss, adjusted each quarter for discrete items. The Company recorded a provision for income taxes of $30.2 million and $28.3 million for the three months ended March 31, 2024 and 2023, respectively. The Company’s effective tax rate was 24.3% in the first quarter of 2024, consistent with the 24.3% rate in the first quarter of 2023. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Quarterly Dividend On April 23, 2024, the Company’s Board of Directors declared a regular quarterly cash dividend on its common stock of $0.15 per share payable on June 10, 2024 to stockholders of record at the close of business on May 10, 2024. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
NET INCOME | $ 94,394 | $ 88,234 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 shares | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | true |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Jerry E. Gahlhoff, Jr. [Member] | |
Trading Arrangements, by Individual | |
Name | Jerry E. Gahlhoff, Jr. |
Title | Chief Executive Officer and President |
Adoption Date | March 8, 2024 |
Termination Date | November 1, 2024 |
Aggregate Available | 12,000 |
Officer Trading Arrangement [Member] | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | OTHER INFORMATION Rule 10b5-1 Trading Plans Securities Trading Plans of Directors and Executive Officers During the three months ended March 31, 2024, the following executive officer entered into, modified or terminated, contracts, instructions or written plans for the sale of the Company’s securities, which is intended to satisfy the affirmative defense conditions of Rule 10b5-1 of the Exchange Act, referred to as Rule 10b5-1 trading plans. Name and Title Date of Adoption of the Rule 10b5-1 Trading Plan Scheduled Expiration Date of the Rule 10b5-1 Trading Plan Total Amount of Securities to Be Sold Transactions Pursuant to 10b5-1 Trading Plan Early Termination of the Rule 10b5-1 Trading Plan Jerry E. Gahlhoff, Jr. Chief Executive Officer and President March 8, 2024 November 1, 2024 12,000 shares of Company common stock Sales to occur on or after June 7, 2024, if certain limit prices are met If all 12,000 shares of Company common stock are sold prior to the scheduled expiration date, the trading plan will terminate on such earlier date |
Officer Trading Arrangement [Member] | Thomas D Tesh [Member] | |
Trading Arrangements, by Individual | |
Arrangement Duration | 238 days |
BASIS OF PREPARATION (Policies)
BASIS OF PREPARATION (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Preparation | Basis of Preparation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, the instructions to Form 10-Q and applicable sections of Securities and Exchange Commission ("SEC") regulation S-X, and therefore do not include all information and footnotes required by U.S. GAAP for complete financial statements. There have been no material changes in the Company’s significant accounting policies or the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of Rollins, Inc. (including its subsidiaries unless the context otherwise requires, “Rollins,” “we,” “us,” “our,” or the “Company”) for the year ended December 31, 2023. Accordingly, the quarterly condensed consolidated financial statements and related disclosures herein should be read in conjunction with the 2023 Annual Report on Form 10-K. The Company’s condensed consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and related disclosures as of the date of the condensed consolidated financial statements. The Company considered the impact of economic trends on the assumptions and estimates used in preparing the condensed consolidated financial statements. In the opinion of management, all material adjustments necessary for a fair presentation of the Company’s financial results for the quarter have been made. These adjustments are of a normal recurring nature but complicated by the continued uncertainty surrounding economic trends. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of results for the entire year. The severity, magnitude and duration of certain economic trends continue to be uncertain and are difficult to predict. Therefore, our accounting estimates and assumptions may change over time in response to economic trends and may change materially in future periods. |
Recently standards and disclosure rules issued but not yet adopted | Accounting standards and disclosure rules issued but not yet adopted In October 2023, the FASB issued Accounting Standards Update ("ASU") 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” to amend certain disclosure and presentation requirements for a variety of topics within the Accounting Standards Codification ("ASC"). These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company does not expect that the application of this standard will have a material impact on its disclosures. In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through additional and more detailed information about a reportable segment's expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the potential impact of adopting this new guidance on its disclosures. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. This amendment modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, (2) the amount of income taxes paid (net of refunds received) (disaggregated by federal, state, and foreign taxes) as well as individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid net of refunds, (3) the income or loss from continuing operations before income tax expense or benefit (disaggregated between domestic and foreign) and (4) income tax expense or benefit from continuing operations (disaggregated by federal, state and foreign). The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, while retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its disclosures. In March 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule will require registrants to disclose certain climate-related information in registration statements and annual reports. The disclosure requirements will apply to the Company's fiscal year beginning January 1, 2025. The Company is currently evaluating the final rule to determine its impact on the Company's disclosures. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed Recorded at the Date of Acquisition | The aggregate preliminary values of major classes of assets acquired and liabilities assumed recorded at the dates of acquisition are included in the reconciliation of the total preliminary consideration as follows (in thousands): March 31, 2024 Accounts receivable $ 921 Materials and supplies 206 Other current assets 210 Equipment and property 2,258 Goodwill 27,337 Customer contracts 21,514 Trademarks & tradenames 1,012 Other intangible assets 762 Current liabilities (364) Unearned revenue (58) Other assets and liabilities, net (2) Assets acquired and liabilities assumed $ 53,796 Final Fair Value as of March 31, 2024 Cash $ 4,560 Accounts receivable 1,542 Materials and supplies 431 Operating lease right-of-use assets 8,689 Other current assets 487 Goodwill 188,176 Customer contracts 118,000 Trademarks & tradenames 38,000 Current liabilities (5,538) Unearned revenue (6,144) Operating lease liabilities (8,689) Assets acquired and liabilities assumed $ 339,514 |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue by Major Geographic Area, and by Significant Product and Service Offerings | Revenue, classified by the major geographic areas in which our customers are located, was as follows: Three Months Ended (in thousands) 2024 2023 United States $ 693,860 $ 609,311 Other countries 54,489 48,704 Total Revenues $ 748,349 $ 658,015 Revenue from external customers, classified by significant product and service offerings, was as follows: Three Months Ended (in thousands) 2024 2023 Residential revenue $ 329,338 $ 282,757 Commercial revenue 258,114 231,707 Termite completions, bait monitoring, & renewals 152,060 136,131 Franchise revenues 3,961 3,789 Other revenues 4,876 3,631 Total Revenues $ 748,349 $ 658,015 |
Schedule of Changes in Unearned Revenue | Changes in unearned revenue were as follows: Three Months Ended (in thousands) 2024 2023 Beginning balance $ 210,059 $ 187,994 Deferral of unearned revenue 74,796 65,626 Recognition of unearned revenue (61,888) (55,466) Ending balance $ 222,967 $ 198,154 |
ALLOWANCE FOR CREDIT LOSSES (Ta
ALLOWANCE FOR CREDIT LOSSES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Receivables [Abstract] | |
Schedule of Allowance For Credit Losses | Below is a roll forward of the Company’s allowance for credit losses for the three months ended March 31, 2024 and 2023. Allowance for Credit Losses (in thousands) Trade Financed Total Balance at December 31, 2023 $ 15,797 $ 5,602 $ 21,399 Provision for expected credit losses 4,823 2,870 7,693 Write-offs charged against the allowance (7,184) (2,362) (9,546) Recoveries collected 1,429 146 1,575 Balance at March 31, 2024 $ 14,865 $ 6,256 $ 21,121 Allowance for Credit Losses (in thousands) Trade Financed Total Balance at December 31, 2022 $ 14,073 $ 4,968 $ 19,041 Provision for expected credit losses 1,461 2,435 3,896 Write-offs charged against the allowance (4,687) (1,927) (6,614) Recoveries collected 1,629 — 1,629 Balance at March 31, 2023 $ 12,476 $ 5,476 $ 17,952 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Goodwill | The following table summarizes changes in goodwill during the three months ended March 31, 2024 (in thousands): Goodwill: Balance at December 31, 2023 $ 1,070,310 Additions 27,337 Adjustments due to currency translation and other (2,506) Balance at March 31, 2024 $ 1,095,141 |
Schedule of Components of Indefinite-lived and Amortizable Intangible Assets | The following table sets forth the components of indefinite-lived and amortizable intangible assets as of March 31, 2024, and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Gross Accumulated Carrying Gross Accumulated Carrying Useful Life Amortizable intangible assets: Customer contracts $ 645,021 $ (255,822) $ 389,199 $ 625,920 $ (239,768) $ 386,152 3-20 Trademarks and tradenames 22,413 (10,324) 12,089 21,566 (9,933) 11,633 7-20 Other intangible assets 25,376 (19,233) 6,143 24,766 (18,779) 5,987 3-20 Total amortizable intangible assets $ 692,810 $ (285,379) $ 407,431 $ 672,252 $ (268,480) 403,772 Indefinite-lived intangible assets 141,959 141,962 Total customer contracts and other intangible assets $ 549,390 $ 545,734 |
Schedule of Estimated Amortization Expense | Estimated amortization expense for the existing carrying amount of customer contracts and other intangible assets for each of the five succeeding fiscal years as of March 31, 2024 are as follows: (in thousands) 2024 (excluding the three months ended March 31, 2024) $ 61,384 2025 72,147 2026 68,042 2027 64,176 2028 62,165 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Schedule of Changes in Fair Value | The table below presents a summary of the changes in fair value for these liabilities. Three Months Ended (in thousands) 2024 2023 Beginning balance $ 46,104 $ 13,496 New acquisitions and revaluations 6,664 1,300 Payouts (1,474) (4,098) Interest on outstanding contingencies 534 22 Charge offset, forfeit and other 30 (187) Ending balance $ 51,858 $ 10,533 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Schedule of Components of Stock-based Compensation | The following table summarizes the components of the Company’s stock-based compensation programs recorded as expense: Three Months Ended (in thousands) 2024 2023 Restricted shares and PSUs: Compensation expense $ 6,607 $ 5,755 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Weighted Average Shares Outstanding | A reconciliation of weighted average shares outstanding is as follows (in thousands): Three Months Ended 2024 2023 Weighted-average outstanding common shares 481,877 490,209 Add participating securities: Weighted-average time-lapse restricted awards 2,254 2,307 Total weighted-average shares outstanding – basic 484,131 492,516 Dilutive effect of restricted stock units and PSUs 187 185 Weighted-average shares outstanding – diluted 484,318 492,701 |
ACQUISITIONS - Narrative (Detai
ACQUISITIONS - Narrative (Details) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 USD ($) | Mar. 31, 2024 USD ($) business | Apr. 03, 2023 USD ($) | |
Business Acquisition [Line Items] | |||
Number of businesses acquired | business | 12 | ||
Long-term line of credit | $ 305,000 | ||
Customer contracts, net | |||
Business Acquisition [Line Items] | |||
Useful life of customer contracts | 7 years | ||
FPC Holdings, LLC | |||
Business Acquisition [Line Items] | |||
Assets acquired and liabilities assumed | $ 339,514 | ||
Contingent consideration | 8,700 | ||
Percentage of voting interests acquired | 100% | ||
Contributed revenues | $ 35,500 | ||
Net earnings | 1,500 | ||
Contingent consideration transferred | $ 302,800 | ||
Earnout liabilities | (28,000) | ||
Adjustments fair value contingent consideration | 1,000 | ||
2024 Acquisitions | |||
Business Acquisition [Line Items] | |||
Assets acquired and liabilities assumed | 53,796 | ||
Contingent consideration | $ 6,700 |
ACQUISITIONS - Assets Acquired
ACQUISITIONS - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Business Acquisition [Line Items] | ||
Goodwill | $ 1,095,141 | $ 1,070,310 |
FPC Holdings, LLC | ||
Business Acquisition [Line Items] | ||
Cash | 4,560 | |
Accounts receivable | 1,542 | |
Materials and supplies | 431 | |
Operating lease right-of-use assets | 8,689 | |
Other current assets | 487 | |
Goodwill | 188,176 | |
Customer contracts | 118,000 | |
Current liabilities | 5,538 | |
Unearned revenue | (6,144) | |
Operating lease liabilities | (8,689) | |
Assets acquired and liabilities assumed | 339,514 | |
FPC Holdings, LLC | Trademarks & tradenames, net | ||
Business Acquisition [Line Items] | ||
Intangible assets | 38,000 | |
2024 Acquisitions | ||
Business Acquisition [Line Items] | ||
Accounts receivable | 921 | |
Materials and supplies | 206 | |
Other current assets | 210 | |
Equipment and property | 2,258 | |
Goodwill | 27,337 | |
Current liabilities | 364 | |
Unearned revenue | (58) | |
Other assets and liabilities, net | (2) | |
Assets acquired and liabilities assumed | 53,796 | |
2024 Acquisitions | Customer contracts, net | ||
Business Acquisition [Line Items] | ||
Customer contracts | 21,514 | |
2024 Acquisitions | Trademarks & tradenames, net | ||
Business Acquisition [Line Items] | ||
Intangible assets | 1,012 | |
2024 Acquisitions | Other intangible assets, net | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 762 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 748,349 | $ 658,015 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 693,860 | 609,311 |
Other countries | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 54,489 | $ 48,704 |
REVENUE - Significant Product A
REVENUE - Significant Product And Service Offerings (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 748,349 | $ 658,015 |
Residential revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 329,338 | 282,757 |
Commercial revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 258,114 | 231,707 |
Termite completions, bait monitoring, & renewals | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 152,060 | 136,131 |
Franchise revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 3,961 | 3,789 |
Other revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 4,876 | $ 3,631 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue recognized from both the beginning balance and current period increase in contract liability | $ (61,888,000) | $ (55,466,000) | ||
Long-term unearned revenue | $ 36,900,000 | $ 37,700,000 | ||
Unearned long-term revenue recognized period | 5 years | |||
Capitalized contract cost | $ 18,400,000 | $ 0 | ||
Capitalized contract cost, amortization | 3,800,000 | $ 0 | ||
Other Current Assets | ||||
Disaggregation of Revenue [Line Items] | ||||
Capitalized contract cost | 15,400,000 | |||
Other Assets | ||||
Disaggregation of Revenue [Line Items] | ||||
Capitalized contract cost | $ 3,000,000 |
REVENUE - Changes in Unearned R
REVENUE - Changes in Unearned Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Contract with Customer, Liability [Roll Forward] | ||
Beginning balance | $ 210,059 | $ 187,994 |
Deferral of unearned revenue | 74,796 | 65,626 |
Recognition of unearned revenue | (61,888) | (55,466) |
Ending balance | $ 222,967 | $ 198,154 |
ALLOWANCE FOR CREDIT LOSSES (De
ALLOWANCE FOR CREDIT LOSSES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Receivables [Abstract] | ||
Financing receivable, percentage of finance subject to credit score | 100% | |
Accounts and Financing Receivable, after Allowance for Credit Loss, Current and Noncurrent [Roll Forward] | ||
Beginning Balance | $ 21,399 | $ 19,041 |
Provision for expected credit losses | 7,693 | 3,896 |
Write-offs charged against the allowance | (9,546) | (6,614) |
Recoveries collected | 1,575 | 1,629 |
Ending Balance | 21,121 | 17,952 |
Trade Receivables | ||
Accounts and Financing Receivable, after Allowance for Credit Loss, Current and Noncurrent [Roll Forward] | ||
Beginning Balance | 15,797 | 14,073 |
Provision for expected credit losses | 4,823 | 1,461 |
Write-offs charged against the allowance | (7,184) | (4,687) |
Recoveries collected | 1,429 | 1,629 |
Ending Balance | 14,865 | 12,476 |
Financed Receivables | ||
Accounts and Financing Receivable, after Allowance for Credit Loss, Current and Noncurrent [Roll Forward] | ||
Beginning Balance | 5,602 | 4,968 |
Provision for expected credit losses | 2,870 | 2,435 |
Write-offs charged against the allowance | (2,362) | (1,927) |
Recoveries collected | 146 | 0 |
Ending Balance | $ 6,256 | $ 5,476 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 1,070,310 |
Additions | 27,337 |
Adjustments due to currency translation and other | (2,506) |
Goodwill, ending balance | $ 1,095,141 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Components of Indefinite-lived and Amortizable Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 692,810 | $ 672,252 |
Accumulated Amortization | (285,379) | (268,480) |
Carrying Value | 407,431 | 403,772 |
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract] | ||
Indefinite-lived intangible assets | 141,959 | 141,962 |
Total customer contracts and other intangible assets | 549,390 | 545,734 |
Customer contracts, net | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 645,021 | 625,920 |
Accumulated Amortization | (255,822) | (239,768) |
Carrying Value | $ 389,199 | $ 386,152 |
Useful Life in Years | 7 years | |
Customer contracts, net | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life in Years | 3 years | 3 years |
Customer contracts, net | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life in Years | 20 years | 20 years |
Trademarks & tradenames, net | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 22,413 | $ 21,566 |
Accumulated Amortization | (10,324) | (9,933) |
Carrying Value | $ 12,089 | $ 11,633 |
Trademarks & tradenames, net | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life in Years | 7 years | 7 years |
Trademarks & tradenames, net | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life in Years | 20 years | 20 years |
Other intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 25,376 | $ 24,766 |
Accumulated Amortization | (19,233) | (18,779) |
Carrying Value | $ 6,143 | $ 5,987 |
Other intangible assets | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life in Years | 3 years | 3 years |
Other intangible assets | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life in Years | 20 years | 20 years |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 18.7 | $ 14 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS - Estimated Amortization Expense (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2024 (excluding the three months ended March 31, 2024) | $ 61,384 |
2025 | 72,147 |
2026 | 68,042 |
2027 | 64,176 |
2028 | $ 62,165 |
FAIR VALUE MEASUREMENT - Narrat
FAIR VALUE MEASUREMENT - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Assets, fair value disclosure | $ 9,400 | $ 10,200 | ||
Fair Value, Recurring | Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Acquisition holdback and earn out liabilities | $ 51,858 | $ 46,104 | $ 10,533 | $ 13,496 |
FAIR VALUE MEASUREMENT - Change
FAIR VALUE MEASUREMENT - Changes in Fair Value (Details) - Fair Value, Recurring - Level 3 - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 46,104 | $ 13,496 |
New acquisitions and revaluations | 6,664 | 1,300 |
Payouts | (1,474) | (4,098) |
Interest on outstanding contingencies | 534 | 22 |
Charge offset, forfeit and other | 30 | (187) |
Ending balance | $ 51,858 | $ 10,533 |
DEBT (Details)
DEBT (Details) | 3 Months Ended | |||
Feb. 24, 2023 USD ($) | Mar. 31, 2024 USD ($) | Dec. 31, 2023 USD ($) | Apr. 03, 2023 USD ($) | |
Line of Credit Facility [Line Items] | ||||
Long-term line of credit | $ 305,000,000 | |||
Letter of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Letters of credit outstanding | $ 68,400,000 | $ 71,700,000 | ||
Revolving Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Current borrowing capacity | $ 1,000,000,000 | |||
Foreign currency sublimit | 400,000,000 | |||
Letters of credit outstanding | $ 150,000,000 | |||
Leverage ratio | 0 | |||
Long-term line of credit | 513,000,000 | 493,000,000 | ||
Unamortized debt issuance costs | $ 2,100,000 | $ 2,200,000 | ||
Effective interest rate | 6.40% | |||
Revolving Credit Agreement | Interest Rate Floor | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate | 0% | |||
Revolving Credit Agreement | Fed Funds Effective Rate Overnight Index Swap Rate | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate | 0.50% | |||
Revolving Credit Agreement | One Month Secured Overnight Financing Rate (SOFR) | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate | 0.10% | |||
Revolving Credit Agreement | One Month Secured Overnight Financing Rate (SOFR) | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate | 0% | |||
Revolving Credit Agreement | One Month Secured Overnight Financing Rate (SOFR) | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Variable interest rate | 0.50% | |||
Revolving Credit Agreement | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Leverage ratio | 0.0100 | |||
Revolving Credit Agreement | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Leverage ratio | 0.0150 | |||
Revolving Credit Agreement | Swing line Loans | ||||
Line of Credit Facility [Line Items] | ||||
Letters of credit outstanding | $ 50,000,000 | |||
Revolving Credit Agreement | Tranches Term Loan | ||||
Line of Credit Facility [Line Items] | ||||
Available increase in borrowing capacity | $ 750,000,000 | |||
Revolving Credit Agreement | 2019 Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Effective interest rate | 6.50% | |||
Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Leverage ratio | 3.50 | |||
Covenant leverage ratio | 4 |
STOCKHOLDERS' EQUITY - Narrativ
STOCKHOLDERS' EQUITY - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Class of Stock [Line Items] | ||
Payment of dividends | $ 72,589 | $ 64,053 |
Dividends paid (in USD per share) | $ 0.15 | $ 0.13 |
Stock redeemed | $ 11,300 | $ 9,800 |
Employee Stock | ||
Class of Stock [Line Items] | ||
Compensation expense | $ 600 |
STOCKHOLDERS' EQUITY - Componen
STOCKHOLDERS' EQUITY - Components of Stock-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Restricted Shares and Performance Shares | ||
Restricted shares and PSUs: | ||
Compensation expense | $ 6,607 | $ 5,755 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Weighted average shares outstanding - basic (in shares) | 484,131 | 492,516 |
Dilutive effect of restricted stock units and PSUs | $ 187 | $ 185 |
Weighted-average shares outstanding - diluted (in shares) | 484,318 | 492,701 |
Common Stock | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Weighted average shares outstanding - basic (in shares) | 481,877 | 490,209 |
Time Lapse Restricted Shares | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Weighted average shares outstanding - basic (in shares) | 2,254 | 2,307 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ 30,244 | $ 28,255 |
Effective income tax rate | 24.30% | 24.30% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Apr. 23, 2024 $ / shares |
Subsequent Event | |
Subsequent Event [Line Items] | |
Dividends declared (in USD per share) | $ 0.15 |