EX-99 2 earn3q991.htm EXHIBIT - PRESS RELEASE

Exhibit 99.1

For Further Information Contact

Harry J. Cynkus

(404) 888-2922

 

FOR IMMEDIATE RELEASE

 

 

ROLLINS, INC.

REPORTS THIRD QUARTER FINANCIAL RESULTS

REVENUES INCREASED 4.5%, EPS ROSE 12%  

 

ATLANTA, GEORGIA, October 24, 2007 -- Rollins, Inc. (NYSE:ROL), a premier North American consumer and commercial services company, today reported revenues for the third quarter ended September 30, 2007 grew 4.5% to $238.1 million compared to $227.8 million for the third quarter ended September 30, 2006.

 

Net income rose 10.1% to a record $18.8 million or $0.28 per diluted share for the third quarter 2007, compared to $17.0 million or $0.25 per diluted share for the same period in 2006.

 

Commenting on the Company’s results, Gary W. Rollins, President and Chief Executive Officer of Rollins, Inc. said, “We are pleased by the increased rate of organic revenue growth for the quarter. Our sales and service programs are working and have resulted in improvements in both recurring revenues and customer retention. Commercial pest control, which now represents 44% of our business, continued to accelerate during the second quarter and we expect this area to perform well going forward.”

 

“We continued to expand our footprint globally this quarter having announced two international franchises: one in the Dominican Republic and another in South Korea. We have established four international franchises this year and expect to continue to develop our worldwide presence. Likewise, the Company’s strong free cash flow supports our ability to pursue acquisition opportunities. We remain optimistic about having a successful 2007.”

 

Rollins, Inc. is a premier North American consumer and commercial services company. Through its wholly owned subsidiaries, Orkin, Inc., PCO Services, Western Pest Services, and The Industrial Fumigant Company, the Company provides essential pest control services and protection against termite damage, rodents and insects to approximately 1.7 million customers in the United States, Canada, Mexico, Panama, Costa Rica, Honduras, the United Arab Emirates, the Dominican Republic and South Korea from over 400 locations. You can learn more about our subsidiaries by visiting our Web sites at www.orkin.com, www.westernpest.com, www.indfumco.com and www.rollins.com. You can also find this and other news releases at www.rollins.com by accessing the news releases button.

 

 

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This release contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include the Company’s expectation that its commercial pest control area will perform well going forward, the Company’s expectation to continue to develop its worldwide presence, and the Company’s continuing optimism about having a very successful 2007. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties, including without limitation, general economic conditions; market risk; changes in industry practices or technologies; the degree of success of the Company’s pest and termite process reforms and pest control selling and treatment methods; the Company’s ability to identify and integrate potential acquisitions; climate and weather trends; competitive factors and pricing practices; expected benefits of the commercial re-engineering project may not be realized; potential increases in labor costs; uncertainties of litigation; and changes in various government laws and regulations, including environmental regulations. All of the foregoing risks and uncertainties are beyond the ability of the Company to control, and in many cases the Company cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. A more detailed discussion of potential risks facing the Company can be found in the Company’s Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2006.

 

 

 

ROLLINS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

(in thousands)

 

 

 

2007

 

 

 

2006

 

At September 30,

 

(unaudited)

 

 

 

(unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

81,821

 

 

 

$

53,787

 

Trade receivables, short-term

 

 

61,430

 

 

 

 

57,817

 

Materials and supplies

 

 

8,244

 

 

 

 

8,398

 

Deferred income taxes

 

 

16,969

 

 

 

 

21,053

 

Other current assets

 

 

8,382

 

 

 

 

8,974

 

Total Current Assets

 

 

176,846

 

 

 

 

150,029

 

Equipment and property, net

 

 

77,633

 

 

 

 

72,090

 

Goodwill

 

 

126,577

 

 

 

 

125,536

 

Other Intangible Assets

 

 

9,167

 

 

 

 

9,219

 

Customer Contracts

 

 

65,641

 

 

 

 

66,801

 

Deferred income taxes

 

 

12,588

 

 

 

 

16,867

 

Trade receivables, long-term

 

 

8,921

 

 

 

 

9,111

 

Other assets

 

 

6,039

 

 

 

 

4,532

 

Total Assets

 

$

483,412

 

 

 

$

454,185

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Capital leases

 

$

1,240

 

 

 

$

623

 

Accounts payable

 

 

22,589

 

 

 

 

14,092

 

Accrued insurance

 

 

13,277

 

 

 

 

16,633

 

Accrued compensation and related liabilities

 

 

42,533

 

 

 

 

42,813

 

Other current liabilities

 

 

26,627

 

 

 

 

31,759

 

Unearned revenue

 

 

90,191

 

 

 

 

88,945

 

Total Current Liabilities

 

 

196,457

 

 

 

 

194,865

 

 

 

 

 

 

 

 

 

 

 

Capital leases, less current portion

 

 

881

 

 

 

 

197

 

Accrued pension

 

 

6,946

 

 

 

 

15,651

 

Long-term accrued liabilities

 

 

54,466

 

 

 

 

44,593

 

Total Liabilities

 

 

258,750

 

 

 

 

255,306

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Common stock

 

 

67,456

 

 

 

 

67,783

 

Retained earnings and other equity

 

 

157,206

 

 

 

 

131,096

 

Total Stockholders’ Equity

 

 

224,662

 

 

 

 

198,879

 

Total Liabilities and Stockholders’ Equity

 

$

483,412

 

 

 

$

454,185

 

 

 

 

ROLLINS, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF INCOME

 

FOR THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30,

 

(in thousands except per share data)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months ended

 

 

 

Nine Months ended

 

 

 

September 30,

 

 

 

September 30,

 

 

 

2007

 

 

 

2006

 

 

 

2007

 

 

 

2006

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer services

 

$

238,116

 

 

 

$

227,816

 

 

 

$

678,966

 

 

 

$

654,225

 

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services provided

 

 

123,029

 

 

 

 

119,206

 

 

 

 

351,466

 

 

 

 

345,255

 

Depreciation and amortization

 

 

6,885

 

 

 

 

6,662

 

 

 

 

20,482

 

 

 

 

20,400

 

Sales, general and administrative

 

 

78,154

 

 

 

 

74,472

 

 

 

 

221,982

 

 

 

 

211,340

 

(Gain)/loss on sales of assets

 

 

(17

)

 

 

 

(17

)

 

 

 

(113

)

 

 

 

(15

)

Interest income

 

 

(466

)

 

 

 

(332

)

 

 

 

(1,540

)

 

 

 

(968

)

 

 

 

207,585

 

 

 

 

199,991

 

 

 

 

592,277

 

 

 

 

576,012

 

INCOME BEFORE TAXES

 

 

30,531

 

 

 

 

27,825

 

 

 

 

86,689

 

 

 

 

78,213

 

PROVISION FOR INCOME TAXES

 

 

11,766

 

 

 

 

10,788

 

 

 

 

33,892

 

 

 

 

30,943

 

NET INCOME

 

$

18,765

 

 

 

$

17,037

 

 

 

$

52,797

 

 

 

$

47,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE - BASIC

 

$

0.28

 

 

 

$

0.25

 

 

 

$

0.79

 

 

 

$

0.70

 

NET INCOME PER SHARE - DILUTED

 

$

0.28

 

 

 

$

0.25

 

 

 

$

0.78

 

 

 

$

0.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

66,608

 

 

 

 

67,068

 

 

 

 

66,966

 

 

 

 

67,184

 

Weighted average shares outstanding - Diluted

 

 

67,318

 

 

 

 

68,700

 

 

 

 

67,687

 

 

 

 

68,926

 

 

 

 

 

ROLLINS, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

 

(in thousands)

 

 

 

 

 

2007

 

 

 

2006

 

 

 

 

 

(unaudited)

 

 

 

(unaudited)

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

$

52,797

 

 

 

$

47,270

 

Adjustments to reconcile net income to net cash

 

 

 

 

 

 

 

 

 

 

 

provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

20,482

 

 

 

 

20,400

 

Provision for deferred income taxes

 

 

 

 

3,389

 

 

 

 

5,144

 

Stock based compensation

 

 

 

 

2,381

 

 

 

 

(1,357

)

(Gain)/loss on sales of assets

 

 

 

 

(113

)

 

 

 

(15

)

Excess tax benefits from share-based payments

 

 

 

 

(2,924

)

 

 

 

(50

)

Other, net

 

 

 

 

(113

)

 

 

 

3

 

(Increase)/decrease in assets

 

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

 

 

 

(8,675

)

 

 

 

(9,747

)

Materials and supplies

 

 

 

 

276

 

 

 

 

685

 

Other current assets

 

 

 

 

(1,153

)

 

 

 

138

 

Other non-current assets

 

 

 

 

(2,593

)

 

 

 

735

 

Increase/(decrease) in liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

 

 

850

 

 

 

 

3,461

 

Unearned revenue

 

 

 

 

10,751

 

 

 

 

8,955

 

Accrued insurance

 

 

 

 

488

 

 

 

 

1,398

 

Accrual for termite contracts

 

 

 

 

(600

)

 

 

 

(3,900

)

Accrued pension

 

 

 

 

 

 

 

 

(5,000

)

Long-term accrued liabilities

 

 

 

 

3,295

 

 

 

 

(6,666

)

Net cash provided by operating activities

 

 

 

 

78,538

 

 

 

 

61,454

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Purchase of equipment and property

 

 

 

 

(13,512

)

 

 

 

(15,657

)

Acquisitions of companies

 

 

 

 

(5,950

)

 

 

 

(5,050

)

Cash from sales of franchises

 

 

 

 

 

 

 

 

550

 

Proceeds from sales of assets

 

 

 

 

79

 

 

 

 

20

 

Net cash used in investing activities

 

 

 

 

(19,383

)

 

 

 

(20,137

)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Dividends paid

 

 

 

 

(15,274

)

 

 

 

(12,790

)

Common stock purchased

 

 

 

 

(30,895

)

 

 

 

(19,761

)

Common stock options exercised

 

 

 

 

1,379

 

 

 

 

435

 

Principal payments on capital leases

 

 

 

 

(1,532

)

 

 

 

(566

)

Excess tax benefits from share-based payments

 

 

 

 

2,924

 

 

 

 

50

 

Other

 

 

 

 

 

 

 

 

1,430

 

Net cash used in financing activities

 

 

 

 

(43,398

)

 

 

 

(31,202

)

Effect of exchange rate changes on cash

 

 

 

 

2,720

 

 

 

 

607

 

Net increase in cash and cash equivalents

 

 

 

 

18,477

 

 

 

 

10,722

 

Cash and cash equivalents at beginning of period

 

 

 

 

63,344

 

 

 

 

43,065

 

Cash and cash equivalents at end of period

 

 

 

$

81,821

 

 

 

$

53,787

 

 

 

 

 

CONFERENCE CALL ANNOUNCEMENT

Rollins, Inc.

(NYSE: ROL)

 

 

 

Management will hold a conference call to discuss

Third Quarter results on:

 

Wednesday, OCTOBER 24, 2007 at:

10:00 a.m. Eastern

9:00 a.m. Central

8:00 a.m. Mountain

7:00 a.m. Pacific

 

TO PARTICIPATE:

Please dial 800-257-7087 domestic;

303-262-2131 international

at least 5 minutes before start time.

 

REPLAY: available through October 31, 2007

Please dial 800-405-2236/303-590-3000, Pass code: 11099316

THIS CALL CAN ALSO BE ACCESSED THROUGH THE INTERNET AT

www.viavid.net

 

Questions?

Contact Janet Jazmin at Financial Relations Board at 212-827-3777

Or email to jjazmin@frbir.com