Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 16, 2019 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 1-4422 | |
Entity Registrant Name | ROLLINS INC | |
Entity Central Index Key | 0000084839 | |
Entity Tax Identification Number | 51-0068479 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 2170 Piedmont Road | |
Entity Address, Address Line Two | 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 | true | |
Entity Common Stock, Shares Outstanding | 327,441,726 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 104,362 | $ 115,485 |
Trade receivables, net of allowance for doubtful accounts of $15,736 and $13,080, respectively | 132,065 | 104,016 |
Financed receivables, short-term, net of allowance for doubtful accounts of $1,726 and $1,691, respectively | 23,821 | 18,454 |
Materials and supplies | 17,500 | 15,788 |
Other current assets | 46,440 | 32,278 |
Total current assets | 324,188 | 286,021 |
Equipment and property, net | 197,549 | 136,885 |
Goodwill | 570,759 | 368,481 |
Customer contracts, net | 283,830 | 178,075 |
Trademarks & tradenames, net | 102,657 | 54,140 |
Other intangible assets, net | 11,008 | 11,043 |
Operating lease, right-of-use assets | 196,854 | |
Financed receivables, long-term, net of allowance for doubtful accounts of $1,342 and $1,416 respectively | 30,750 | 28,227 |
Benefit plan assets | 25,949 | |
Prepaid pension | 5,274 | |
Deferred income taxes | 6,915 | |
Other assets | 21,249 | 19,063 |
Total assets | 1,764,793 | 1,094,124 |
LIABILITIES | ||
Accounts payable | 32,932 | 27,168 |
Accrued insurance | 29,817 | 27,709 |
Accrued compensation and related liabilities | 78,699 | 77,741 |
Unearned revenues | 132,915 | 116,005 |
Operating lease liabilities - current | 63,952 | |
Current portion of long-term debt | 12,500 | |
Other current liabilities | 60,065 | 50,406 |
Total current liabilities | 410,880 | 299,029 |
Accrued insurance, less current portion | 34,157 | 33,867 |
Operating lease liabilities, less current portion | 133,703 | |
Long-term debt | 313,500 | |
Deferred income tax liability | 7,971 | |
Long-term accrued liabilities | 57,685 | 49,320 |
Total liabilities | 957,896 | 382,216 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, without par value; 500,000 shares authorized, zero shares issued | ||
Common stock, par value $1 per share; 550,000,000 and 375,000,000 shares authorized, 327,441,726 and 327,308,079 shares issued and outstanding, respectively | 327,442 | 327,308 |
Paid in capital | 86,208 | 85,386 |
Accumulated other comprehensive loss | (26,746) | (71,078) |
Retained earnings | 419,993 | 370,292 |
Total stockholders' equity | 806,897 | 711,908 |
Total liabilities and stockholders' equity | $ 1,764,793 | $ 1,094,124 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Trade receivables, allowance for doubtful accounts | $ 15,736 | $ 13,080 |
Financing receivables, short-term, allowance for doubtful accounts | 1,726 | 1,691 |
Financing receivables, long-term, allowance for doubtful accounts | $ 1,342 | $ 1,416 |
Preferred Stock, Shares Authorized | 500,000 | 500,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Par Value | $ 1 | $ 1 |
Common Stock, Shares Authorized | 550,000,000 | 375,000,000 |
Common Stock, Shares Issued | 327,441,726 | 327,308,079 |
Common Stock, Shares Outstanding | 327,441,726 | 327,308,079 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
REVENUES | ||||
Customer services | $ 556,466 | $ 487,739 | $ 1,509,492 | $ 1,376,942 |
COSTS AND EXPENSES | ||||
Cost of services provided | 268,718 | 236,287 | 739,309 | 673,202 |
Depreciation and amortization | 21,690 | 16,867 | 58,505 | 50,149 |
Pension settlement loss | 49,898 | 49,898 | ||
Sales, general and administrative | 167,168 | 145,072 | 468,584 | 414,938 |
Gain on sale of assets, net | 27 | (314) | (406) | (678) |
Interest expense, net | 2,826 | (63) | 4,451 | 70 |
INCOME BEFORE INCOME TAXES | 46,139 | 89,890 | 189,151 | 239,261 |
PROVISION FOR INCOME TAXES | 2,078 | 23,262 | 36,569 | 58,566 |
NET INCOME | $ 44,061 | $ 66,628 | $ 152,582 | $ 180,695 |
NET INCOME PER SHARE - BASIC AND DILUTED | $ 0.13 | $ 0.20 | $ 0.47 | $ 0.55 |
DIVIDENDS PAID PER SHARE | $ 0.11 | $ 0.09 | $ 0.32 | $ 0.28 |
Weighted average participating shares outstanding - basic and diluted | 327,459,000 | 327,321,000 | 327,490,000 | 327,283,000 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
NET INCOME | $ 44,061 | $ 66,628 | $ 152,582 | $ 180,695 |
Other comprehensive earnings (loss) | ||||
Pension settlement | 45,990 | 45,990 | ||
Change in derivative values | (118) | (375) | ||
Foreign currency translation adjustments | (4,110) | (611) | (1,283) | (8,681) |
Other comprehensive earnings (loss) | 41,762 | (611) | 44,332 | (8,681) |
Comprehensive earnings | $ 85,823 | $ 66,017 | $ 196,914 | $ 172,014 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Total |
Beginning Balance (in Shares) at Dec. 31, 2017 | 326,988,000 | ||||
Beginning Balance at Dec. 31, 2017 | $ 326,988 | $ 81,405 | $ (45,956) | $ 291,487 | $ 653,924 |
Net Income | 180,695 | 180,695 | |||
Other comprehensive income, net of tax | |||||
Foreign currency translation adjustments | (8,681) | (8,681) | |||
Cash dividends | (91,677) | (91,677) | |||
Stock compensation | $ 613 | 9,621 | (204) | 10,030 | |
Stock Compensation (in shares) | 613,000 | ||||
Employee stock buybacks | $ (283) | (9,344) | 94 | (9,533) | |
Employee Stock Buybacks (in shares) | (283,000) | ||||
Ending Balance (in Shares) at Sep. 30, 2018 | 327,318,000 | ||||
Ending Balance at Sep. 30, 2018 | $ 327,318 | 81,682 | (54,637) | 380,395 | 734,758 |
Other comprehensive income, net of tax | |||||
Pension settlement | |||||
Change in derivatives | |||||
Beginning Balance (in Shares) at Jun. 30, 2018 | 327,326,000 | ||||
Beginning Balance at Jun. 30, 2018 | $ 327,326 | 78,212 | (54,026) | 344,299 | 695,811 |
Net Income | 66,628 | 66,628 | |||
Other comprehensive income, net of tax | |||||
Foreign currency translation adjustments | (611) | (611) | |||
Cash dividends | (30,535) | (30,535) | |||
Stock compensation | $ (4) | 3,662 | 2 | 3,660 | |
Stock Compensation (in shares) | (4,000) | ||||
Employee stock buybacks | $ (4) | (192) | 1 | (195) | |
Employee Stock Buybacks (in shares) | (4,000) | ||||
Ending Balance (in Shares) at Sep. 30, 2018 | 327,318,000 | ||||
Ending Balance at Sep. 30, 2018 | $ 327,318 | 81,682 | (54,637) | 380,395 | 734,758 |
Other comprehensive income, net of tax | |||||
Pension settlement | |||||
Change in derivatives | |||||
Beginning Balance (in Shares) at Dec. 31, 2018 | 327,308,000 | ||||
Beginning Balance at Dec. 31, 2018 | $ 327,308 | 85,386 | (71,078) | 370,292 | 711,908 |
Net Income | 152,582 | 152,582 | |||
Other comprehensive income, net of tax | |||||
Foreign currency translation adjustments | (1,283) | (1,283) | |||
Cash dividends | (103,093) | (103,093) | |||
Stock compensation | $ 395 | 10,496 | 10,891 | ||
Stock Compensation (in shares) | 395,000 | ||||
Employee stock buybacks | $ (261) | (9,674) | (9,935) | ||
Employee Stock Buybacks (in shares) | (261,000) | ||||
Ending Balance (in Shares) at Sep. 30, 2019 | 327,442,000 | ||||
Ending Balance at Sep. 30, 2019 | $ 327,442 | 86,208 | (26,746) | 419,993 | 806,897 |
Other comprehensive income, net of tax | |||||
Pension settlement | 45,990 | 45,990 | |||
Change in derivatives | (375) | (375) | |||
Impact of adoption of ASC 842 | 212 | 212 | |||
Beginning Balance (in Shares) at Jun. 30, 2019 | 327,486,000 | ||||
Beginning Balance at Jun. 30, 2019 | $ 327,486 | 82,960 | (68,508) | 410,326 | 752,264 |
Net Income | 44,061 | 44,061 | |||
Other comprehensive income, net of tax | |||||
Foreign currency translation adjustments | (4,110) | (4,110) | |||
Cash dividends | (34,394) | (34,394) | |||
Stock compensation | $ (42) | 3,347 | 3,305 | ||
Stock Compensation (in shares) | (42,000) | ||||
Employee stock buybacks | $ (2) | (99) | (101) | ||
Employee Stock Buybacks (in shares) | (2,000) | ||||
Ending Balance (in Shares) at Sep. 30, 2019 | 327,442,000 | ||||
Ending Balance at Sep. 30, 2019 | $ 327,442 | 86,208 | (26,746) | 419,993 | 806,897 |
Other comprehensive income, net of tax | |||||
Pension settlement | 45,990 | 45,990 | |||
Change in derivatives | $ (118) | $ (118) |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
OPERATING ACTIVITIES | ||
Net income | $ 152,582 | $ 180,695 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 58,505 | 50,149 |
Provision for deferred income taxes | (6,972) | 4,604 |
Provision for bad debts | 10,216 | 9,509 |
Stock-based compensation expense | 10,891 | 10,030 |
Other, net | (951) | (1,920) |
Benefit settlement | 25,949 | |
Changes in operating assets and liabilities | (19,902) | (39,793) |
Net cash provided by operating activities | 230,318 | 213,274 |
INVESTING ACTIVITIES | ||
Cash used for acquisitions of companies, net of cash acquired | (431,249) | (71,785) |
Purchases of equipment and property | (18,701) | (19,645) |
Proceeds from sales of franchises | 612 | 343 |
Other | 1,370 | 1,002 |
Net cash used in investing activities | (447,968) | (90,085) |
FINANCING ACTIVITIES | ||
Cash paid for common stock purchased | (9,935) | (9,533) |
Dividends paid | (103,093) | (91,677) |
Repayment of Term Loan | (27,000) | |
Repayment of Revolving Commitment | (45,000) | |
Borrowings under Term Loan | 250,000 | |
Borrowings under Revolving Commitment | 148,000 | |
Net cash provided by/(used in) financing activities | 212,972 | (101,210) |
Effect of exchange rate changes on cash | (6,445) | (10,377) |
Net increase/(decrease) in cash and cash equivalents | (11,123) | 11,602 |
Cash and cash equivalents at beginning of period | 115,485 | 107,050 |
Cash and cash equivalents at end of period | 104,362 | 118,652 |
Supplemental disclosure of cash flow information: | ||
Non-cash additions to operating lease right-of-use assets | $ 23,415 |
BASIS OF PREPARATION AND OTHER
BASIS OF PREPARATION AND OTHER | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PREPARATION AND OTHER | NOTE 1. BASIS OF PREPARATION AND OTHER Basis of Preparation The preparation of interim financial statements requires management to make estimates and assumptions for the amounts reported in the condensed consolidated financial statements. Specifically, the Company makes estimates in its interim condensed consolidated financial statements for the termite accrual, which includes future costs including termiticide life expectancy and government regulations, the insurance accrual, which includes self-insurance and worker's compensation, inventory adjustments, discounts and volume incentives earned, among others. In the opinion of management, all adjustments necessary for a fair presentation of the Company's financial results for the interim periods have been made. These adjustments are of a normal recurring nature. The results of operations for the three and nine month periods ended September 30, 2019 are not necessarily indicative of results for the entire year. The Company has only one Derivative Instruments and Hedging Activities Accounting Policy for Derivative Instruments and Hedging Activities FASB ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company's objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In accordance with the FASB's fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. ROLLINS, INC. AND SUBSIDIARIES Three-for-Two Stock Split All share and per share data presented have been adjusted to account for the three-for-two stock split effective December 10, 2018. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS Recently adopted accounting standards The Company adopted ASU 2016-02, Leases (ASC 842), on January 1, 2019 using the modified retrospective approach and did not restate comparative periods as permitted by ASU 2018-11, Leases (Topic 842): Targeted Improvements. We have elected the transition package of practical expedients, which permitted us not to reassess our prior conclusions regarding lease identification, lease classification and initial direct cost. Upon adoption, the Company recognized operating lease right-of-use assets and liabilities of $ 195.7 195.5 The Company adopted ASU 2018-02, “Income Statement—Reporting Comprehensive Income (ASC 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (“Tax Reform Act”). The Company adopted ASU 2018-02 effective January 1, 2019 and elected not to recognize a cumulative-effect adjustment. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (ASC 815), which provides new guidance intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. This ASU was adopted by the Company in 2019. The adoption of this ASU did not have an impact on the Company's consolidated financial statements. Recently issued accounting standards to be adopted in 2020 or later In June of 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments.” The updated accounting guidance requires changes to the recognition of credit losses on financial instruments not accounted for at fair value through net income. The guidance is effective for interim and annual periods beginning after December 15, 2019. The Company is currently evaluating the effect the guidance will have on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (ASC 350): Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of the current goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value (i.e., measure the charge based on the current Step 1). The standard in this update is effective for the Company's financial statements issued for fiscal years beginning in 2020. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (ASC 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The updated accounting guidance modifies the disclosure requirements on fair value measurements by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements. The standard in this update is effective for the Companys financial statements issued for fiscal years beginning in 2020. The Company is currently evaluating the effect the guidance will have on its consolidated financial statements. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | NOTE 3. REVENUE On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. The following tables present our revenues disaggregated by revenue source (in thousands). Sales and usage-based taxes are excluded from revenues. No sales to an individual customer or in a country other than the United States accounted for more than 10% of the sales for the periods listed on the following table. Revenue, classified by the major geographic areas in which our customers are located (In thousands) Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 United States $ 516,022 $ 448,910 $ 1,395,189 $ 1,268,652 Other countries 40,444 38,829 114,303 108,290 Total Revenues $ 556,466 $ 487,739 $ 1,509,492 $ 1,376,942 Revenue from external customers, classified by significant product and service offerings, was as follows: (In thousands) Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Residential revenue $ 249,227 $ 211,906 $ 646,420 $ 578,464 Commercial revenue 204,595 187,378 565,720 527,311 Termite completions, bait monitoring, & renewals 96,145 83,297 278,746 253,665 Franchise revenues 3,433 3,105 10,136 10,349 Other revenues 3,066 2,053 8,470 7,153 Total Revenues $ 556,466 $ 487,739 $ 1,509,492 $ 1,376,942 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 4. EARNINGS PER SHARE The Company follows ASC 260, Earnings Per Share Basic and diluted earnings per share Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Basic and diluted earnings per share Common stock $ 0.13 $ 0.20 $ 0.47 $ 0.55 Restricted shares of common stock $ 0.14 $ 0.20 $ 0.43 $ 0.56 |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | NOTE 5. CONTINGENCIES In the normal course of business, certain of the Company's subsidiaries are defendants in a number of lawsuits, claims or arbitrations which allege that the subsidiaries' services caused damage. In addition, the Company defends employment related cases and claims from time to time. We are involved in certain environmental matters primarily arising in the normal course of business. We are actively contesting each of these matters. Management does not believe that any pending claim, proceeding or litigation, 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, however unlikely, could result in a charge that might be material to the results of an individual quarter or year. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 6. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments consist of cash and cash equivalents, trade receivables, notes receivable, accounts payable and other short-term liabilities. The carrying amounts of these financial instruments approximate their respective fair values. At September 30, the Company had $21.0 million of earnout liability with the former owners of acquired companies. The earnouts were discounted on the Company's books at $21.0 million and are considered level 3 liabilities. The table below presents a summary of the changes in fair value for level 3 assets and liabilities. Recurring Fair Value Measurements Quoted Prices in Active Markets for Identical Significant Other Significant Unobservable Assets and Liabilities Observable Inputs Inputs at September 30, at September 30, at September 30, Total Fair Value (Level 1) (Level 2) (Level 3) at September 30, 2019 2018 2019 2018 2019 2018 2019 2018 Liabilities Acquisition earnouts $ — $ — $ — $ — $ 21,030 $ 15,640 $ 21,030 $ 15,640 The table below shows the rollforward activity for the level 3 liabilities in the summary table above. Nine Months Ended September 30, 2019 (in thousands) 2019 2018 Acquisition earnouts: Beginning balance $ 14,339 $ 17,959 New acquisition earnouts 12,700 3,025 Adjustments and Accrued Interest 2,121 685 Earnout payments (8,130 ) (6,029 ) Ending balance $ 21,030 $ 15,640 | |||
Fair Value, Recurring [Member] | Liability [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Acquisition earnouts | $ 21,030 | $ 15,640 | ||
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Liability [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Acquisition earnouts | ||||
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Liability [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Acquisition earnouts | ||||
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Liability [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Acquisition earnouts | $ 21,030 | $ 14,339 | $ 15,640 | $ 17,959 |
UNEARNED REVENUE
UNEARNED REVENUE | 9 Months Ended |
Sep. 30, 2019 | |
UNEARNED REVENUE | NOTE 7. UNEARNED REVENUE Changes in unearned revenue For the period ended September 30, December 31 September 30, (in thousands) 2019 2018 2018 Balance at beginning of year $ 127,075 $ 117,614 $ 117,614 Deferral of unearned revenue 141,867 166,053 134,527 Recognition of unearned revenue (122,465 ) (156,592 ) (117,297 ) Balance at end of period $ 146,477 $ 127,075 $ 134,844 Deferred revenue recognized in the three and nine months ended September 30, 2019 and 2018 were $ 42.0 39.0 122.5 117.3 Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized (“contracted not recognized revenue”), which includes both unearned revenue and revenue that will be invoiced and recognized in future periods. The Company has no material contracted not recognized revenue as of September 30, 2019 or December 31, 2018. At September 30, 2019 and December 31, 2018, the Company had long-term unearned revenue of $ 13.5 11.1 five |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2019 | |
LEASES | NOTE 8. LEASES The Company leases certain buildings, vehicles, and equipment in order to reduce the risk associated with ownership. The Company elected the practical expedient approach permitted under ASC 842 not to include short-term leases with a duration of 12 months or less on the balance sheet. As of September 30, 2019, and December 31, 2018, all leases were classified as operating leases. Building leases generally carry terms of 5 to 10 years with annual rent escalations at fixed amounts per the lease. Vehicle leases generally carry a fixed term of one year with renewal options to extend the lease on a monthly basis resulting in lease terms up to 5 years depending on the class of vehicle. The exercise of renewal options is at the Company's sole discretion. It is reasonably certain that the Company will exercise the renewal options on its vehicle leases. The measurement of right-of-use assets and liabilities for vehicle leases includes the fixed payments associated with such renewal periods. We separate lease and nonlease components of contracts. Our lease agreements do not contain any material variable payments, residual value guarantees, early termination penalties or restrictive covenants. The Company uses the rate implicit in the lease when available; however, most of our leases do not provide a readily determinable implicit rate. Accordingly, we estimate our incremental borrowing rate based on information available at lease commencement. (in thousands) Lease Classification Financial Statement Classification Nine Months Ended Short-term lease cost Cost of services provided, Sales, general, and administrative expenses $ 135 Operating lease cost Cost of services provided, Sales, general, and administrative expenses 19,361 Total lease expense $ 19,496 Other Information Weighted-average remaining lease term - operating leases 4.00 Weighted-average discount rate - operating leases 3.94 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases 19,091 ROLLINS, INC. AND SUBSIDIARIES Lease Commitments Future minimum lease payments (in thousands) Operating 2019 (excluding the nine months ended September 30, 2019) $ 18,791 2020 66,981 2021 51,969 2022 33,688 2023 17,716 2024 9,492 Thereafter 15,257 Total future minimum lease payments 213,894 Less: Amount representing interest 16,239 Total future minimum lease payments, net of interest $ 197,655 Total future minimum lease payments for operating leases, including the amount representing interest, are comprised of $ 96.4 117.5 Future commitments under operating leases (in thousands) Operating 2019 $ 28,751 2020 18,024 2021 14,463 2022 11,142 2023 8,998 Thereafter 16,234 Total future minimum lease payments, net of interest $ 97,612 Future commitments presented in the table above exclude lease payments in renewal periods for which it is reasonably certain that the Company will exercise the renewal option. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 9. DEBT The Company entered into a new Credit Agreement with SunTrust Bank and Bank of America, N.A. for an unsecured Revolving Commitment of up to $ 175.0 75.0 25.0 250.0 103.0 223.0 In order to comply with applicable debt covenants, the Company will maintain at all times a Leverage Ratio of not greater than 3.00:1.00. The Leverage Ratio is calculated as of the last day of the fiscal quarter most recently ended. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 10. STOCKHOLDERS' EQUITY During the nine months ended September 30, 2019, the Company paid $103.1 million or $ 0.315 0.28 During the third quarter ended September 30, 2019 and during the same period in 2018 the Company did not repurchase shares on the open market. The Company repurchases shares from employees for the payment of taxes on restricted shares that have vested. The Company repurchased $ 0.1 0.2 9.9 9.5 As more fully discussed in Note 17 of the Company's notes to the consolidated financial statements in its 2018 Annual Report on Form 10-K, time-lapse restricted shares and restricted stock units have been issued to officers and other management employees under the Company's Employee Stock Incentive Plans. The Company issues new shares from its authorized but unissued share pool. At September 30, 2019, approximately 5.5 ROLLINS, INC. AND SUBSIDIARIES Time Lapse Restricted Shares and Restricted Stock Units The following table summarizes the components of the Company's stock-based compensation Three Months Ended Nine months ended September 30, September 30, (in thousands) 2019 2018 2019 2018 Time lapse restricted stock: Pre-tax compensation expense $ 3,305 $ 3,660 $ 10,891 $ 10,030 Tax benefit (982 ) (947 ) (2,728 ) (2,766 ) Restricted stock expense, net of tax $ 2,323 $ 2,713 $ 8,163 $ (8,125 ) The following table summarizes information on unvested restricted stock Number of Average Grant- Unvested Restricted Stock at December 31, 2018 2,724 $ 21.08 Forfeited (87 ) 25.01 Vested (791 ) 15.84 Granted 484 38.40 Unvested Restricted Stock at September 30, 2019 2,330 $ 26.32 At September 30, 2019 and December 31, 2018, the Company had $ 44.7 39.2 4.2 4.1 |
PENSION AND POST RETIREMENT BEN
PENSION AND POST RETIREMENT BENEFIT PLAN | 9 Months Ended |
Sep. 30, 2019 | |
Retirement Benefits [Abstract] | |
PENSION AND POST RETIREMENT BENEFIT PLAN | NOTE 11. PENSION AND POST RETIREMENT BENEFIT PLAN During September 2019, the Company settled its fully-funded pension plan through a combination of lump sum payments to participants, payments to the Pension Benefit Guaranty Corporation (PBGC), and the purchase of a group annuity contract. With the completed funding of the plan payout settlements, the Company had approximately $31.8 million of pension assets remaining. The remaining assets were the result of the funded status of the plan, higher take rate of lump sum payment election by participants and optimal pricing of the group annuity contract. The Company has evaluated the ERISA allowable opportunities for utilization of the excess pension assets including funding other employee benefits. The Company used $5.2 million of the $31.8 million to fund its 401(k) match obligation during the quarter ended September 30, 2019, and plans to continue funding future benefit plan obligations, with a possible reversion of any remaining pension assets to the Company per ERISA regulations. The Company recognized a $49.9 million non-cash pension settlement expense from this transition, which is the accounting treatment of the accumulated sum of unrealized losses due to change in actuarial assumptions over the life of the plan. Net of tax, the expense was $26.6 million. As of September 30, 2019, the Company had approximately $ 25.9 Components of Net Pension Benefit Loss/(Gain) Three Months Ended Nine Months Ended September 30, September 30, (in thousands) 2019 2018 2019 2018 Interest and service cost $ 1,175 $ 1,995 $ 4,699 $ 5,985 Expected return on plan assets (2,285 ) (3,443 ) (7,565 ) (10,329 ) Amortization of net loss 1,110 826 2,866 2,478 Pension settlement loss 49,898 — 49,898 — Net periodic loss $ 49,898 $ (622 ) $ 49,898 $ (1,866 ) During the nine months ended September 30, 2019 and the same period in 2018 the Company made no contributions to its defined benefit retirement plans (the “Plans”). The Company made no contributions for the year ended December 31, 2018. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | NOTE 12. BUSINESS COMBINATIONS The Company made 29 38 Acquisition of Clark Pest Control: On April 30, 2019, the Company acquired Clark Pest Control of Stockton, Inc. Clark Pest Control is a leading pest management company in California and the nation's 8th largest pest management company according to PCT 100 rankings. Clark Pest Control has a customer base of approximately 145,000 26 2 139.2 The Company engaged an independent valuation firm to determine the allocation of the purchase price to Goodwill and identifiable Intangible assets. The preliminary valuation resulted in the allocation of $191.9 million to goodwill, $112.7 million to customer contracts, and $49.8 million to other intangible assets, principally tradenames. The Company is in the process of analyzing the estimated values of assets and liabilities acquired, evaluating third-party valuations of certain tangible and intangible assets and finalizing its operating plans and, thus, the allocation of the purchase price is subject to material revision in its future financial statements. The finite-lived intangible assets, principally customer contracts, are being amortized over periods principally ranging from 5 10 The preliminary fair values of Clark Pest Control's assets and liabilities, at the date of acquisition at April 30 (dollars in thousands) 2019 Assets and liabilities: Trade accounts receivables $ 6,974 Materials and supplies 900 Other current assets 5,367 Equipment and property, net 65,535 Goodwill 191,853 Customer contracts 112,700 Trademarks & tradenames 49,300 Non-compete agreements 500 Accounts payable (1,929 ) Accrued compensation and related liabilities (5,678 ) Unearned revenues (879 ) Contingent Consideration, short-term (6,777 ) Other current liabilities (5,452 ) Other long term liabilities (9,352 ) Accrued insurance, less current portion (1,870 ) Contingent Consideration, long-term (5,923 ) $ 395,269 ROLLINS, INC. AND SUBSIDIARIES The unaudited pro forma financial information presented below gives effect to the Clark Pest Control acquisition Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 REVENUES Customer services $ 593,830 $ 523,957 $ 1,615,922 $ 1,481,329 COSTS AND EXPENSES 548,111 430,970 1,427,851 1,231,662 INCOME BEFORE INCOME TAXES 45,719 92,987 188,071 249,667 PROVISION FOR INCOME TAXES 2,078 23,262 36,569 58,566 NET INCOME $ 43,641 $ 69,725 $ 151,502 $ 191,101 NET INCOME PER SHARE - BASIC AND DILUTED $ 0.13 $ 0.21 $ 0.46 $ 0.58 DIVIDENDS PAID PER SHARE $ 0.11 $ 0.09 $ 0.32 $ 0.28 Weighted average participating shares outstanding - basic and diluted 327,459 327,320 327,490 327,283 The preliminary values of major classes of assets acquired and liabilities assumed recorded at the date of acquisition, as adjusted during the valuation period September 30, 2019 Accounts receivable, net $ 8,535 Materials & supplies 1,378 Equipment and property 68,704 Goodwill 201,443 Customer contracts and other intangible assets 189,581 Current liabilities (18,180 ) Other assets and liabilities, net (7,512 ) Total purchase price $ 443,949 Less: Contingent consideration liability (12,700 ) Total cash purchase price $ 431,249 Goodwill from acquisitions represents the excess of the purchase price over the fair value of net assets of businesses acquired. The carrying amount of goodwill was $570.8 million and $368.5 million at September 30, 2019 and December 31, 2018, respectively. Goodwill generally changes due to the timing of acquisitions, finalization of allocation of purchase prices of previous acquisitions and foreign currency translations. The carrying amount of goodwill in foreign countries was $ 53.8 54.9 The Company completed its most recent annual impairment analysis as of September 30, 2019. Based upon the results of this analysis, the Company has concluded that no impairment of its goodwill or other intangible assets was indicated. The carrying amount of customer contracts was $ 283.8 million and $ 178.1 million at September 30, 2019 and December 31, 2018, respectively. The carrying amount of trademarks and tradenames was $ 102.7 million and $ 54.1 million at September 30, 2019, and December 31, 2018, respectively. The carrying amount of other intangible assets was $ 11.0 million at both September 30, 2019 and December 31, 2018. The carrying amount of customer contracts in foreign countries was $ 33.4 million and $ 37.1 million at September 30, 2019 and December 31, 2018, respectively. The carrying amount of trademarks and tradenames in foreign countries was $ 3.4 million and $ 3.7 million at September 30, 2019 and December 31, 2018, respectively. The carrying amount of other intangible assets in foreign countries was $ 1.3 million and $ 1.6 million at September 30, 2019 and December 31, 2018, respectively. ROLLINS, INC. AND SUBSIDIARIES Customer contracts and other amortizable intangible assets are amortized on a straight-line basis over their economic useful lives. The following table sets forth the components of intangible assets Intangible Asset Carrying Useful Life Customer contracts $ 283,830 3 12 Trademarks and tradenames 102,657 N/A- 20 Non-compete agreements 4,877 3 20 Patents 1,613 3 15 Other assets 2,291 10 Internet domains 2,227 N/A Total customer contracts and other intangible assets $ 397,495 |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 13. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Risk Management Objective of Using Derivatives The Company is exposed to certain risks arising from both its business operations and economic conditions. To manage this risk, the Company enters into derivative financial instruments from time to time. Certain of the Company's foreign operations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value of the Company's cash receipts and payments in terms of the Company's functional currency. The Company enters into derivative financial instruments from time to time to protect the value or fix the amount of certain obligations in terms of its functional currency, the U.S. dollar. Cash Flow Hedges of Interest Rate Risk The Company's objectives in using interest rate derivatives are to add stability to interest and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During 2019, such derivatives were used to hedge the cash flows associated with existing unsecured variable rate debt. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense/income in the same period(s) during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized currently in earnings recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company's accounting policy election. The earnings recognition of excluded components is presented in interest expense/income. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense/income as interest payments are made/received on the Company's variable-rate debt/assets. During 2019, the Company estimates that an additional $ 0.4 ROLLINS, INC. AND SUBSIDIARIES As of September 30, 2019, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk Number of Notional Interest Rate Derivative Instruments Amount Interest Rate Floors 1 $ 90,000 The table below presents the effect of fair value and cash flow hedge accounting on Accumulated Other Comprehensive Income as of September 30, 2019 and September 30, 2018. The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income: Derivatives in Subtopic 815-20 Hedging Amount of Gain or (Loss) Relationships Recognized in OCI on Derivative Three Months Ended September 30, Nine Months Ended September 30, Derivatives in Cash Flow Hedging Relationships 2019 2018 2019 2018 Interest Rate Products $ (118 ) $ — $ (375 ) $ — Total $ (118 ) $ — $ (375 ) $ — Hedges of Foreign Exchange Risk The Company is exposed to fluctuations in various foreign currencies against its functional currency, the U.S. dollar. The Company uses foreign currency derivatives, specifically vanilla foreign currency forwards, to manage its exposure to fluctuations in the USD-CAD and AUD-USD exchange rates. Currency forward agreements involve fixing the foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date. The currency forward agreements are typically cash settled in U.S. dollars for their fair value at or close to their settlement date. The Company does not currently designate any of these foreign exchange forwards under hedge accounting, but rather reflects the changes in fair value immediately in earnings. Derivatives not designated as hedges are not speculative and are used to manage the Company's exposure to foreign exchange rates. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings and were equal to a net gain of $ 144 72 12 225 As of September 30, 2019, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships Non-Designated Derivative Summary FX Forward Contracts Number of Sell Buy Sell AUD/Buy USD Fwd Contract 7 $ 800 $ 544 Sell CAD/Buy USD Fwd Contract 12 $ 14,750 $ 11,161 Total 19 $ 11,705 ROLLINS, INC. AND SUBSIDIARIES The table below presents the fair value of the Company's derivative financial instruments Tabular Disclosure of Fair Values of Derivative Instruments Derivative Assets Derivative Liabilities Fair Value as of: Derivatives Not Designated as September 30, December 31, September 30, December 31, FX Forward Contracts (375) Balance Sheet Location Other Other Other Other Sell AUD/Buy USD Fwd Contract $ 3 $ 18 $ (1 ) $ (1 ) Sell CAD/Buy USD Fwd Contract 39 121 (32 ) (4 ) Total $ 42 $ 139 $ (33 ) $ (5 ) The table below presents the effect of the Companys derivative financial instruments on the income statement as of September 30, 2019 and September 30, 2018 (in thousands): Effect of Derivative Instruments on the Income Statement for Derivatives Designated as Hedging Instruments Amount of Gain or (Loss) Recognized in Income Derivatives Designated as Location of Gain or (Loss) Three Months Ended Nine Months Ended 2019 2018 2019 2018 Swap Other inc/(exp) $ 77 $ — $ 78 $ — Total $ 77 $ — $ 78 $ — Effect of Derivative Instruments on the Income Statement for Derivatives Not Designated as Hedging Instruments Amount of Gain or (Loss) Recognized in Income Derivatives Not Designated as Location of Gain or (Loss) Three Months Ended Nine Months Ended 2019 2018 2019 2018 Sell AUD/Buy USD Fwd Contract Other inc/(exp) $ 1 $ 9 $ 1 $ 47 Sell CAD/Buy USD Fwd Contract Other inc/(exp) 66 (81 ) (91 ) 178 Total $ 67 $ (72 ) $ (90 ) $ 225 The table below presents the total fair value classification within the fair value hierarchy for the complete portfolio of derivative transactions Recurring Fair Value Measurements Quoted Prices in Active Markets for Identical Significant Other Significant Unobservable Assets and Liabilities Observable Inputs Inputs at September 30, at September 30, at September 30, Total Fair Value (Level 1) (Level 2) (Level 3) at September 30, 2019 2018 2019 2018 2019 2018 2019 2018 Assets Derivative Financial Instruments $ — $ — $ 42 $ 32 $ — $ — $ 42 $ 32 Liabilities Derivative Financial Instruments $ — $ — $ (33 ) $ (41 ) $ — $ — $ (33 ) $ (41 ) ROLLINS, INC. AND SUBSIDIARIES As of September 30, 2019, the fair value of derivatives in a net asset position was nine thousand dollars inclusive of counterparty credit risk. As of the balance sheet date, the Company has not posted any collateral related to these agreements. If the Company had breached any of these provisions at September 30, 2019, it could have been required to settle its instruments under the agreements at their termination value and yielded nine thousand dollars. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14. SUBSEQUENT EVENTS On October 23, 2019, the Company announced that the Board of Directors declared a regular quarterly cash dividend on its common stock of $ 0.105 |
BASIS OF PREPARATION AND OTHER
BASIS OF PREPARATION AND OTHER (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Preparation | Basis of Preparation The preparation of interim financial statements requires management to make estimates and assumptions for the amounts reported in the condensed consolidated financial statements. Specifically, the Company makes estimates in its interim condensed consolidated financial statements for the termite accrual, which includes future costs including termiticide life expectancy and government regulations, the insurance accrual, which includes self-insurance and worker's compensation, inventory adjustments, discounts and volume incentives earned, among others. In the opinion of management, all adjustments necessary for a fair presentation of the Company's financial results for the interim periods have been made. These adjustments are of a normal recurring nature. The results of operations for the three and nine month periods ended September 30, 2019 are not necessarily indicative of results for the entire year. The Company has only one |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities Accounting Policy for Derivative Instruments and Hedging Activities FASB ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company's objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In accordance with the FASB's fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. |
Three-for-Two Stock Split | Three-for-Two Stock Split All share and per share data presented have been adjusted to account for the three-for-two stock split effective December 10, 2018. |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, classified by the major geographic areas in which our customers are located | Sales and usage-based taxes are excluded from revenues. No sales to an individual customer or in a country other than the United States accounted for more than 10% of the sales for the periods listed on the following table. Revenue, classified by the major geographic areas in which our customers are located (In thousands) Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 United States $ 516,022 $ 448,910 $ 1,395,189 $ 1,268,652 Other countries 40,444 38,829 114,303 108,290 Total Revenues $ 556,466 $ 487,739 $ 1,509,492 $ 1,376,942 Revenue from external customers, classified by significant product and service offerings, was as follows: (In thousands) Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Residential revenue $ 249,227 $ 211,906 $ 646,420 $ 578,464 Commercial revenue 204,595 187,378 565,720 527,311 Termite completions, bait monitoring, & renewals 96,145 83,297 278,746 253,665 Franchise revenues 3,433 3,105 10,136 10,349 Other revenues 3,066 2,053 8,470 7,153 Total Revenues $ 556,466 $ 487,739 $ 1,509,492 $ 1,376,942 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Basic and diluted earnings per share | Basic and diluted earnings per share Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Basic and diluted earnings per share Common stock $ 0.13 $ 0.20 $ 0.47 $ 0.55 Restricted shares of common stock $ 0.14 $ 0.20 $ 0.43 $ 0.56 |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
The table below shows the rollforward activity for the level 3 liabilities in the summary table above. | The table below shows the rollforward activity for the level 3 liabilities in the summary table above. Nine Months Ended September 30, 2019 (in thousands) 2019 2018 Acquisition earnouts: Beginning balance $ 14,339 $ 17,959 New acquisition earnouts 12,700 3,025 Adjustments and Accrued Interest 2,121 685 Earnout payments (8,130 ) (6,029 ) Ending balance $ 21,030 $ 15,640 |
UNEARNED REVENUE (Tables)
UNEARNED REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Changes in unearned revenue | Changes in unearned revenue For the period ended September 30, December 31 September 30, (in thousands) 2019 2018 2018 Balance at beginning of year $ 127,075 $ 117,614 $ 117,614 Deferral of unearned revenue 141,867 166,053 134,527 Recognition of unearned revenue (122,465 ) (156,592 ) (117,297 ) Balance at end of period $ 146,477 $ 127,075 $ 134,844 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Lease Classification | (in thousands) Lease Classification Financial Statement Classification Nine Months Ended Short-term lease cost Cost of services provided, Sales, general, and administrative expenses $ 135 Operating lease cost Cost of services provided, Sales, general, and administrative expenses 19,361 Total lease expense $ 19,496 Other Information Weighted-average remaining lease term - operating leases 4.00 Weighted-average discount rate - operating leases 3.94 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases 19,091 |
Future minimum lease payments | Future minimum lease payments (in thousands) Operating 2019 (excluding the nine months ended September 30, 2019) $ 18,791 2020 66,981 2021 51,969 2022 33,688 2023 17,716 2024 9,492 Thereafter 15,257 Total future minimum lease payments 213,894 Less: Amount representing interest 16,239 Total future minimum lease payments, net of interest $ 197,655 |
Future commitments under operating leases | Future commitments under operating leases (in thousands) Operating 2019 $ 28,751 2020 18,024 2021 14,463 2022 11,142 2023 8,998 Thereafter 16,234 Total future minimum lease payments, net of interest $ 97,612 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
components of the Company's stock-based compensation | The following table summarizes the components of the Company's stock-based compensation Three Months Ended Nine months ended September 30, September 30, (in thousands) 2019 2018 2019 2018 Time lapse restricted stock: Pre-tax compensation expense $ 3,305 $ 3,660 $ 10,891 $ 10,030 Tax benefit (982 ) (947 ) (2,728 ) (2,766 ) Restricted stock expense, net of tax $ 2,323 $ 2,713 $ 8,163 $ (8,125 ) |
unvested restricted stock | The following table summarizes information on unvested restricted stock Number of Average Grant- Unvested Restricted Stock at December 31, 2018 2,724 $ 21.08 Forfeited (87 ) 25.01 Vested (791 ) 15.84 Granted 484 38.40 Unvested Restricted Stock at September 30, 2019 2,330 $ 26.32 |
PENSION AND POST RETIREMENT B_2
PENSION AND POST RETIREMENT BENEFIT PLAN (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Retirement Benefits [Abstract] | |
Components of Net Pension Benefit Loss/(Gain) | Components of Net Pension Benefit Loss/(Gain) Three Months Ended Nine Months Ended September 30, September 30, (in thousands) 2019 2018 2019 2018 Interest and service cost $ 1,175 $ 1,995 $ 4,699 $ 5,985 Expected return on plan assets (2,285 ) (3,443 ) (7,565 ) (10,329 ) Amortization of net loss 1,110 826 2,866 2,478 Pension settlement loss 49,898 — 49,898 — Net periodic loss $ 49,898 $ (622 ) $ 49,898 $ (1,866 ) |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
The preliminary fair values of Clark Pest Control's assets and liabilities, at the date of acquisition | The preliminary fair values of Clark Pest Control's assets and liabilities, at the date of acquisition at April 30 (dollars in thousands) 2019 Assets and liabilities: Trade accounts receivables $ 6,974 Materials and supplies 900 Other current assets 5,367 Equipment and property, net 65,535 Goodwill 191,853 Customer contracts 112,700 Trademarks & tradenames 49,300 Non-compete agreements 500 Accounts payable (1,929 ) Accrued compensation and related liabilities (5,678 ) Unearned revenues (879 ) Contingent Consideration, short-term (6,777 ) Other current liabilities (5,452 ) Other long term liabilities (9,352 ) Accrued insurance, less current portion (1,870 ) Contingent Consideration, long-term (5,923 ) $ 395,269 |
The unaudited pro forma financial information presented below gives effect to the Clark Pest Control acquisition | The unaudited pro forma financial information presented below gives effect to the Clark Pest Control acquisition Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 REVENUES Customer services $ 593,830 $ 523,957 $ 1,615,922 $ 1,481,329 COSTS AND EXPENSES 548,111 430,970 1,427,851 1,231,662 INCOME BEFORE INCOME TAXES 45,719 92,987 188,071 249,667 PROVISION FOR INCOME TAXES 2,078 23,262 36,569 58,566 NET INCOME $ 43,641 $ 69,725 $ 151,502 $ 191,101 NET INCOME PER SHARE - BASIC AND DILUTED $ 0.13 $ 0.21 $ 0.46 $ 0.58 DIVIDENDS PAID PER SHARE $ 0.11 $ 0.09 $ 0.32 $ 0.28 Weighted average participating shares outstanding - basic and diluted 327,459 327,320 327,490 327,283 |
The preliminary values of major classes of assets acquired and liabilities assumed recorded at the date of acquisition, as adjusted during the valuation period | The preliminary values of major classes of assets acquired and liabilities assumed recorded at the date of acquisition, as adjusted during the valuation period September 30, 2019 Accounts receivable, net $ 8,535 Materials & supplies 1,378 Equipment and property 68,704 Goodwill 201,443 Customer contracts and other intangible assets 189,581 Current liabilities (18,180 ) Other assets and liabilities, net (7,512 ) Total purchase price $ 443,949 Less: Contingent consideration liability (12,700 ) Total cash purchase price $ 431,249 |
DERIVATIVE INSTRUMENTS AND HE_2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk | As of September 30, 2019, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk Number of Notional Interest Rate Derivative Instruments Amount Interest Rate Floors 1 $ 90,000 |
The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income: | The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income: Derivatives in Subtopic 815-20 Hedging Amount of Gain or (Loss) Relationships Recognized in OCI on Derivative Three Months Ended September 30, Nine Months Ended September 30, Derivatives in Cash Flow Hedging Relationships 2019 2018 2019 2018 Interest Rate Products $ (118 ) $ — $ (375 ) $ — Total $ (118 ) $ — $ (375 ) $ — |
fair value of the Company's derivative financial instruments | The table below presents the fair value of the Company's derivative financial instruments Tabular Disclosure of Fair Values of Derivative Instruments Derivative Assets Derivative Liabilities Fair Value as of: Derivatives Not Designated as September 30, December 31, September 30, December 31, FX Forward Contracts (375) Balance Sheet Location Other Other Other Other Sell AUD/Buy USD Fwd Contract $ 3 $ 18 $ (1 ) $ (1 ) Sell CAD/Buy USD Fwd Contract 39 121 (32 ) (4 ) Total $ 42 $ 139 $ (33 ) $ (5 ) |
Effect of Derivative Instruments on the Income Statement | Effect of Derivative Instruments on the Income Statement for Derivatives Designated as Hedging Instruments Amount of Gain or (Loss) Recognized in Income Derivatives Designated as Location of Gain or (Loss) Three Months Ended Nine Months Ended 2019 2018 2019 2018 Swap Other inc/(exp) $ 77 $ — $ 78 $ — Total $ 77 $ — $ 78 $ — Effect of Derivative Instruments on the Income Statement for Derivatives Not Designated as Hedging Instruments Amount of Gain or (Loss) Recognized in Income Derivatives Not Designated as Location of Gain or (Loss) Three Months Ended Nine Months Ended 2019 2018 2019 2018 Sell AUD/Buy USD Fwd Contract Other inc/(exp) $ 1 $ 9 $ 1 $ 47 Sell CAD/Buy USD Fwd Contract Other inc/(exp) 66 (81 ) (91 ) 178 Total $ 67 $ (72 ) $ (90 ) $ 225 |
total fair value classification within the fair value hierarchy for the complete portfolio of derivative transactions | The table below presents the total fair value classification within the fair value hierarchy for the complete portfolio of derivative transactions Recurring Fair Value Measurements Quoted Prices in Active Markets for Identical Significant Other Significant Unobservable Assets and Liabilities Observable Inputs Inputs at September 30, at September 30, at September 30, Total Fair Value (Level 1) (Level 2) (Level 3) at September 30, 2019 2018 2019 2018 2019 2018 2019 2018 Assets Derivative Financial Instruments $ — $ — $ 42 $ 32 $ — $ — $ 42 $ 32 Liabilities Derivative Financial Instruments $ — $ — $ (33 ) $ (41 ) $ — $ — $ (33 ) $ (41 ) |
BASIS OF PREPARATION AND OTHE_2
BASIS OF PREPARATION AND OTHER (Details Narrative) | 9 Months Ended |
Sep. 30, 2019Number | |
Accounting Policies [Abstract] | |
Number of Reportable Segment | 1 |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Details Narrative) $ in Thousands | Sep. 30, 2019USD ($) |
Accounting Changes and Error Corrections [Abstract] | |
Operating Lease Right-Of-Use Assets | $ 195,700 |
Operating Lease Right-Of-Use Liabilities | $ 195,500 |
Revenue, classified by the majo
Revenue, classified by the major geographic areas in which our customers are located (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 556,466 | $ 487,739 | $ 1,509,492 | $ 1,376,942 |
Residential Contract Revenue [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 249,227 | 211,906 | 646,420 | 578,464 |
Commercial Contract Revenue [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 204,595 | 187,378 | 565,720 | 527,311 |
Termite Completions Bait Monitoring Renewals [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 96,145 | 83,297 | 278,746 | 253,665 |
Franchise Revenues [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 3,433 | 3,105 | 10,136 | 10,349 |
Other Revenues [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 3,066 | 2,053 | 8,470 | 7,153 |
UNITED STATES | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 516,022 | 448,910 | 1,395,189 | 1,268,652 |
Non-US [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 40,444 | $ 38,829 | $ 114,303 | $ 108,290 |
Basic and diluted earnings per
Basic and diluted earnings per share (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Earning Per Share | $ 0.13 | $ 0.20 | $ 0.47 | $ 0.55 |
Common Stock [Member] | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Earning Per Share | 0.13 | 0.20 | 0.47 | 0.55 |
Restricted Stock [Member] | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Earning Per Share | $ 0.14 | $ 0.20 | $ 0.43 | $ 0.56 |
The table below shows the rollf
The table below shows the rollforward activity for the level 3 liabilities in the summary table above. (Details) - Fair Value, Recurring [Member] - Liability [Member] - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Ending balance | $ 21,030 | $ 15,640 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Beginning balance | 14,339 | 17,959 |
New acquisition earnouts | 12,700 | 3,025 |
Adjustments and Accrued Interest | 2,121 | 685 |
Earnout payments | (8,130) | (6,029) |
Ending balance | $ 21,030 | $ 15,640 |
Changes in unearned revenue (De
Changes in unearned revenue (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Balance at beginning of year | $ 127,075 | $ 117,614 | $ 117,614 |
Deferral of unearned revenue | 141,867 | 134,527 | 166,053 |
Recognition of unearned revenue | (122,465) | (117,297) | (156,592) |
Balance at end of period | $ 146,477 | $ 134,844 | $ 127,075 |
UNEARNED REVENUE (Details Narra
UNEARNED REVENUE (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Deferred Revenue Recognized | $ 42,000 | $ 39,000 | $ 122,500 | $ 117,300 | |
Long-term unearned revenue | $ 13,500 | $ 13,500 | $ 11,100 |
Lease Classification (Details)
Lease Classification (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Lease Classification | |
Short-term lease cost | $ 135 |
Operating lease cost | 19,361 |
Total lease expense | $ 19,496 |
Weighted-average remaining lease term - operating leases | 4 years |
Weighted-average discount rate - operating leases | 3.94% |
Operating cash flows for operating leases | $ 19,091 |
Future minimum lease payments (
Future minimum lease payments (Details) $ in Thousands | Sep. 30, 2019USD ($) |
2019 (excluding the nine months ended September 30, 2019) | $ 18,791 |
2020 | 66,981 |
2021 | 51,969 |
2022 | 33,688 |
2023 | 17,716 |
2024 | 9,492 |
Thereafter | 15,257 |
Total future minimum lease payments | 213,894 |
Less: Amount representing interest | 16,239 |
Total future minimum lease payments, net of interest | $ 197,655 |
Future commitments under operat
Future commitments under operating leases (Details) $ in Thousands | Dec. 31, 2018USD ($) |
2019 | $ 28,751 |
2020 | 18,024 |
2021 | 14,463 |
2022 | 11,142 |
2023 | 8,998 |
Thereafter | 16,234 |
Total future minimum lease payments, net of interest | $ 97,612 |
LEASES (Details Narrative)
LEASES (Details Narrative) $ in Thousands | Sep. 30, 2019USD ($) |
Property, Plant and Equipment [Line Items] | |
Total future minimum lease payments | $ 213,894 |
Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Total future minimum lease payments | 96,400 |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Total future minimum lease payments | $ 117,500 |
DEBT (Details Narrative)
DEBT (Details Narrative) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Line of Credit Facility [Line Items] | |
Debt Instrument, Restrictive Covenants | In order to comply with applicable debt covenants, the Company will maintain at all times a Leverage Ratio of not greater than 3.00:1.00. The Leverage Ratio is calculated as of the last day of the fiscal quarter most recently ended. |
Revolving Credit Facility [Member] | Line of Credit [Member] | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 175,000,000 |
Long-term Line of Credit | 103,000,000 |
Revolving Credit Facility [Member] | Letter of Credit [Member] | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility, Maximum Borrowing Capacity | 75,000,000 |
Revolving Credit Facility [Member] | Swingline Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility, Maximum Borrowing Capacity | 25,000,000 |
Sun Trust Bank And Bank Of America [Member] | |
Line of Credit Facility [Line Items] | |
Long-term Line of Credit | 250,000,000 |
Term Loan [Member] | |
Line of Credit Facility [Line Items] | |
Long-term Line of Credit | $ 223,000 |
components of the Company's sto
components of the Company's stock-based compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Time lapse restricted stock: | ||||
Pre-tax compensation expense | $ 3,305 | $ 3,660 | $ 10,891 | $ 10,030 |
Tax benefit | (982) | (947) | (2,728) | (2,766) |
Restricted stock expense, net of tax | $ 2,323 | $ 2,713 | $ 8,163 | $ (8,125) |
unvested restricted stock (Deta
unvested restricted stock (Details) - Restricted Stock Units (RSUs) [Member] | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unvested Restricted Stock at December 31, 2018 | shares | 2,724,000 |
Unvested Restricted Stock at December 31, 2018 ($ per Shares) | $ / shares | $ 21.08 |
Forfeited | shares | (87,000) |
Forfeited ($ per Shares) | $ / shares | $ 25.01 |
Vested | shares | (791,000) |
Vested ($ per Shares) | $ / shares | $ 15.84 |
Granted | shares | 484,000 |
Granted ($ per Shares) | $ / shares | $ 38.40 |
Unvested Restricted Stock at September 30, 2019 | shares | 2,330,000 |
Unvested Restricted Stock at September 30, 2019 ($ per Shares) | $ / shares | $ 26.32 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.11 | $ 0.09 | $ 0.32 | $ 0.28 | |
Shares repurchased | $ 100 | $ 200 | $ 9,900 | $ 9,500 | |
Common Stock, Capital Shares Reserved for Future Issuance | 5,500 | 5,500 | |||
Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation cost | $ 44,700 | $ 44,700 | $ 39,200 | ||
Unrecognized compensation cost, period for recognition | 4 years 2 months 12 days | 4 years 1 month 6 days |
Components of Net Pension Benef
Components of Net Pension Benefit Loss/(Gain) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Retirement Benefits [Abstract] | ||||
Interest and service cost | $ 1,175 | $ 1,995 | $ 4,699 | $ 5,985 |
Expected return on plan assets | (2,285) | (3,443) | (7,565) | (10,329) |
Amortization of net loss | 1,110 | 826 | 2,866 | 2,478 |
Pension settlement loss | 49,898 | 49,898 | ||
Net periodic loss | $ 49,898 | $ (622) | $ 49,898 | $ (1,866) |
PENSION AND POST RETIREMENT B_3
PENSION AND POST RETIREMENT BENEFIT PLAN (Details Narrative) $ in Thousands | Sep. 30, 2019USD ($) |
Retirement Benefits [Abstract] | |
Remaining Pension Assets | $ 25,900 |
The preliminary fair values of
The preliminary fair values of Clark Pest Control's assets and liabilities, at the date of acquisition (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Apr. 30, 2019 | Dec. 31, 2018 |
Assets and liabilities: | |||
Goodwill | $ 570,759 | $ 368,481 | |
Clark Pest Control [Member] | |||
Assets and liabilities: | |||
Trade accounts receivables | $ 6,974 | ||
Materials and supplies | 900 | ||
Other current assets | 5,367 | ||
Equipment and property, net | 65,535 | ||
Goodwill | 191,853 | ||
Customer contracts | 112,700 | ||
Trademarks & tradenames | 49,300 | ||
Non-compete agreements | 500 | ||
Accounts payable | (1,929) | ||
Accrued compensation and related liabilities | (5,678) | ||
Unearned revenues | (879) | ||
Contingent Consideration, short-term | (6,777) | ||
Other current liabilities | (5,452) | ||
Other long term liabilities | (9,352) | ||
Accrued insurance, less current portion | (1,870) | ||
Contingent Consideration, long-term | (5,923) | ||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | $ 395,269 |
The unaudited pro forma financi
The unaudited pro forma financial information presented below gives effect to the Clark Pest Control acquisition (Details) - Clark Pest Control [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
REVENUES | ||||
Customer services | $ 593,830 | $ 523,957 | $ 1,615,922 | $ 1,481,329 |
COSTS AND EXPENSES | 548,111 | 430,970 | 1,427,851 | 1,231,662 |
INCOME BEFORE INCOME TAXES | 45,719 | 92,987 | 188,071 | 249,667 |
PROVISION FOR INCOME TAXES | 2,078 | 23,262 | 36,569 | 58,566 |
NET INCOME | $ 43,641 | $ 69,725 | $ 151,502 | $ 191,101 |
NET INCOME PER SHARE - BASIC AND DILUTED | $ 0.13 | $ 0.21 | $ 0.46 | $ 0.58 |
DIVIDENDS PAID PER SHARE | $ 0.11 | $ 0.09 | $ 0.32 | $ 0.28 |
Weighted average participating shares outstanding - basic and diluted | 327,459,000 | 327,320,000 | 327,490,000 | 327,283,000 |
The preliminary values of major
The preliminary values of major classes of assets acquired and liabilities assumed recorded at the date of acquisition, as adjusted during the valuation period (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Business Acquisition [Line Items] | ||
Materials & supplies | $ 17,500 | $ 15,788 |
Goodwill | 570,759 | $ 368,481 |
Finite-lived Intangible Assets Acquired | 397,495 | |
Customer Contracts [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived Intangible Assets Acquired | $ 283,830 | |
Customer Contracts [Member] | Minimum [Member] | ||
Business Acquisition [Line Items] | ||
Finite lived intangible assets useful life | 3 years | |
Customer Contracts [Member] | Maximum [Member] | ||
Business Acquisition [Line Items] | ||
Finite lived intangible assets useful life | 12 years | |
Trademarks and Trade Names [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived Intangible Assets Acquired | $ 102,657 | |
Trademarks and Trade Names [Member] | Maximum [Member] | ||
Business Acquisition [Line Items] | ||
Finite lived intangible assets useful life | 20 years | |
Noncompete Agreements [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived Intangible Assets Acquired | $ 4,877 | |
Noncompete Agreements [Member] | Minimum [Member] | ||
Business Acquisition [Line Items] | ||
Finite lived intangible assets useful life | 3 years | |
Noncompete Agreements [Member] | Maximum [Member] | ||
Business Acquisition [Line Items] | ||
Finite lived intangible assets useful life | 20 years | |
Patents [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived Intangible Assets Acquired | $ 1,613 | |
Patents [Member] | Minimum [Member] | ||
Business Acquisition [Line Items] | ||
Finite lived intangible assets useful life | 3 years | |
Patents [Member] | Maximum [Member] | ||
Business Acquisition [Line Items] | ||
Finite lived intangible assets useful life | 15 years | |
Other Intangible Assets [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived Intangible Assets Acquired | $ 2,291 | |
Finite lived intangible assets useful life | 10 years | |
Internet Domain Names [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived Intangible Assets Acquired | $ 2,227 | |
Acquisitions [Member] | ||
Business Acquisition [Line Items] | ||
Accounts receivable, net | 8,535 | |
Materials & supplies | 1,378 | |
Equipment and property | 68,704 | |
Goodwill | 201,443 | |
Customer contracts and other intangible assets | 189,581 | |
Current liabilities | (18,180) | |
Other assets and liabilities, net | (7,512) | |
Total purchase price | 443,949 | |
Less: Contingent consideration liability | (12,700) | |
Total cash purchase price | $ 431,249 |
BUSINESS COMBINATIONS (Details
BUSINESS COMBINATIONS (Details Narrative) $ in Thousands | Apr. 30, 2019Number | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)Number | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)Number |
Business Acquisition [Line Items] | ||||||
Number of acquisitions | Number | 29 | 38 | ||||
Business Acquisition, Name of Acquired Entity | Clark Pest Control of Stockton, Inc. | |||||
Business Acquisition, Description of Acquired Entity | Clark Pest Control is a leading pest management company in California and the nation's 8th largest pest management company according to PCT 100 rankings. | |||||
Revenues | $ 556,466 | $ 487,739 | $ 1,509,492 | $ 1,376,942 | ||
Carrying Amount of Goodwill in Foreign Countries | 53,800 | 53,800 | $ 54,900 | |||
Customer Contracts [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Carrying Amount of Goodwill in Foreign Countries | 33,400 | 33,400 | 37,100 | |||
Other Intangible Assets | 283,800 | 283,800 | 178,100 | |||
Trademarks and Trade Names [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Carrying Amount of Goodwill in Foreign Countries | 3,400 | 3,400 | 3,700 | |||
Other Intangible Assets | 102,700 | 102,700 | 54,100 | |||
Other Intangible Assets [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Carrying Amount of Goodwill in Foreign Countries | 1,300 | 1,300 | 1,600 | |||
Other Intangible Assets | $ 11,000 | $ 11,000 | 11,000 | |||
Clark Pest Control [Member] | ||||||
Business Acquisition [Line Items] | ||||||
No. of Customers | Number | 145,000 | |||||
Number of Service Location | Number | 26 | |||||
Number Of States | Number | 2 | |||||
Revenues | $ 139,200 |
outstanding interest rate deriv
outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (Details) - Cash Flow Hedging [Member] - Interest Rate Floor [Member] $ in Thousands | Sep. 30, 2019USD ($)Number |
Derivative Instruments, Gain (Loss) [Line Items] | |
Number of Instruments | Number | 1 |
Notional Amount | $ | $ 90,000 |
The Effect of Fair Value and Ca
The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income: (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($)Number | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)Number | Sep. 30, 2018USD ($) | |
Not Designated as Hedging Instrument [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Number of Instruments | Number | 19 | 19 | ||
Buy Notional | $ 11,705 | $ 11,705 | ||
Sell AUD/Buy USD Fwd Contract [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Number of Instruments | Number | 7 | 7 | ||
Sell Notional | $ 800 | $ 800 | ||
Buy Notional | $ 544 | $ 544 | ||
Sell CAD/Buy USD Fwd Contract [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Number of Instruments | Number | 12 | 12 | ||
Sell Notional | $ 14,750 | $ 14,750 | ||
Buy Notional | 11,161 | 11,161 | ||
Cash Flow Hedging [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivative | (118) | |||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | (375) | |||
Cash Flow Hedging [Member] | Interest Rate Floor [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivative | $ (118) | |||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | $ (375) | |||
Number of Instruments | Number | 1 | 1 |
fair value of the Company's der
fair value of the Company's derivative financial instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative Liabilities | $ 957,896 | $ 382,216 |
Other Current Liabilities | (60,065) | (50,406) |
Not Designated as Hedging Instrument [Member] | Other Assets [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other Assets | 42 | 139 |
Not Designated as Hedging Instrument [Member] | Other Current Liabilities [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other Current Liabilities | (33) | (5) |
Not Designated as Hedging Instrument [Member] | Forward Contracts [Member] | Liability [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative Liabilities | (375) | |
Not Designated as Hedging Instrument [Member] | Sell AUD/Buy USD Fwd Contract [Member] | Other Assets [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other Assets | 3 | 18 |
Not Designated as Hedging Instrument [Member] | Sell AUD/Buy USD Fwd Contract [Member] | Other Current Liabilities [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other Current Liabilities | (1) | (1) |
Not Designated as Hedging Instrument [Member] | Sell CAD/Buy USD Fwd Contract [Member] | Other Assets [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other Assets | 39 | 121 |
Not Designated as Hedging Instrument [Member] | Sell CAD/Buy USD Fwd Contract [Member] | Other Current Liabilities [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other Current Liabilities | $ (32) | $ (4) |
Effect of Derivative Instrument
Effect of Derivative Instruments on the Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Designated as Hedging Instrument [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain or (Loss) Recognized in Income | $ 77 | $ 78 | ||
Designated as Hedging Instrument [Member] | Swap [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Location of Gain or (Loss) Recognized in Income | Other inc/(exp) | |||
Amount of Gain or (Loss) Recognized in Income | 77 | $ 78 | ||
Not Designated as Hedging Instrument [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain or (Loss) Recognized in Income | 67 | (72) | $ (90) | 225 |
Not Designated as Hedging Instrument [Member] | Sell AUD/Buy USD Fwd Contract [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
[custom:DerivativeInstrumentsNotDesignatedAsHedgingInstrumentsLineItemOnIncomeStatementForGainLoss1] | Other inc/(exp) | |||
Amount of Gain or (Loss) Recognized in Income | 1 | 9 | $ 1 | 47 |
Not Designated as Hedging Instrument [Member] | Sell CAD/Buy USD Fwd Contract [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
[custom:DerivativeInstrumentsNotDesignatedAsHedgingInstrumentsLineItemOnIncomeStatementForGainLoss1] | Other inc/(exp) | |||
Amount of Gain or (Loss) Recognized in Income | $ 66 | $ (81) | $ (91) | $ 178 |
total fair value classification
total fair value classification within the fair value hierarchy for the complete portfolio of derivative transactions (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands | Sep. 30, 2019 | Sep. 30, 2018 |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Derivative Financial Instruments | $ 42 | $ 32 |
Derivative Financial Instruments | (33) | (41) |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Derivative Financial Instruments | ||
Derivative Financial Instruments | ||
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Derivative Financial Instruments | 42 | 32 |
Derivative Financial Instruments | (33) | (41) |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | ||
Derivative Financial Instruments | ||
Derivative Financial Instruments |
DERIVATIVE INSTRUMENTS AND HE_3
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Estimated Reclassified Increase to Interest Expense | $ 400 | |||
Derivative [Member] | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Changes in the fair value of derivatives not designated in hedging relationships | $ 144 | $ (72) | $ 12 | $ (225) |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Oct. 23, 2019$ / shares |
Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Dividend declared quarterly (in dollars per share) | $ 0.105 |