Delaware | 51-0068479 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | ý | Accelerated filer | o |
Non-accelerated filer | o | Smaller reporting company | o |
Emerging growth company | o |
Yes | o | No | ý |
June 30, 2018 | December 31, 2017 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 87,885 | $ | 107,050 | |||
Trade receivables, net of allowance for doubtful accounts of $10,897 and $11,814, respectively | 115,672 | 97,802 | |||||
Financed receivables, short-term, net of allowance for doubtful accounts of $1,765 and $1,535, respectively | 18,359 | 17,263 | |||||
Materials and supplies | 16,098 | 14,983 | |||||
Other current assets | 50,458 | 25,697 | |||||
Total current assets | 288,472 | 262,795 | |||||
Equipment and property, net | 137,654 | 134,088 | |||||
Goodwill | 359,107 | 346,514 | |||||
Customer contracts | 182,522 | 152,869 | |||||
Trademarks & tradenames | 52,323 | 49,998 | |||||
Other intangible assets | 11,578 | 11,550 | |||||
Financed receivables, long-term, net of allowance for doubtful accounts of $1,368 and $1,357, respectively | 26,235 | 20,414 | |||||
Prepaid Pension | 18,880 | 17,595 | |||||
Deferred income taxes | 7,923 | 18,420 | |||||
Other assets | 20,488 | 19,420 | |||||
Total assets | $ | 1,105,182 | $ | 1,033,663 | |||
LIABILITIES | |||||||
Accounts payable | $ | 32,073 | $ | 26,161 | |||
Accrued insurance | 28,732 | 28,018 | |||||
Accrued compensation and related liabilities | 72,558 | 73,016 | |||||
Unearned revenues | 124,784 | 109,029 | |||||
Other current liabilities | 61,084 | 58,345 | |||||
Total current liabilities | 319,231 | 294,569 | |||||
Accrued insurance, less current portion | 35,117 | 34,245 | |||||
Accrued pension | 39 | — | |||||
Long-term accrued liabilities | 54,984 | 50,925 | |||||
Total liabilities | 409,371 | 379,739 | |||||
Commitments and contingencies | |||||||
STOCKHOLDERS’ EQUITY | |||||||
Preferred stock, without par value; 500,000 shares authorized, zero shares issued | — | — | |||||
Common stock, par value $1 per share; 375,000,000 shares authorized, 218,217,444 and 217,992,177 shares issued and outstanding, respectively | 218,217 | 217,992 | |||||
Paid in capital | 78,212 | 81,405 | |||||
Accumulated other comprehensive loss | (54,026 | ) | (45,956 | ) | |||
Retained earnings | 453,408 | 400,483 | |||||
Total stockholders’ equity | 695,811 | 653,924 | |||||
Total liabilities and stockholders’ equity | $ | 1,105,182 | $ | 1,033,663 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
REVENUES | |||||||||||||||
Customer services | $ | 480,461 | $ | 433,555 | $ | 889,203 | $ | 808,802 | |||||||
COSTS AND EXPENSES | |||||||||||||||
Cost of services provided | 230,772 | 204,480 | 436,915 | 393,643 | |||||||||||
Depreciation and amortization | 16,366 | 13,547 | 33,282 | 27,317 | |||||||||||
Sales, general and administrative | 143,379 | 129,667 | 269,866 | 244,821 | |||||||||||
Gain on sale of assets, net | (308 | ) | (88 | ) | (364 | ) | (113 | ) | |||||||
Interest expense / (income), net | 75 | (190 | ) | 133 | (263 | ) | |||||||||
INCOME BEFORE INCOME TAXES | 90,177 | 86,139 | 149,371 | 143,397 | |||||||||||
PROVISION FOR INCOME TAXES | 24,635 | 32,450 | 35,304 | 49,438 | |||||||||||
NET INCOME | $ | 65,542 | $ | 53,689 | $ | 114,067 | $ | 93,959 | |||||||
NET INCOME PER SHARE - BASIC AND DILUTED | $ | 0.30 | $ | 0.25 | $ | 0.52 | $ | 0.43 | |||||||
DIVIDENDS PAID PER SHARE | $ | 0.14 | $ | 0.12 | $ | 0.28 | $ | 0.23 | |||||||
Weighted average participating shares outstanding - basic and diluted | 218,188 | 218,002 | 218,175 | 217,987 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||
NET INCOME | $ | 65,542 | $ | 53,689 | $ | 114,067 | $ | 93,959 | ||||||
Other comprehensive earnings (loss), net of tax | ||||||||||||||
Foreign currency translation adjustments | (5,118 | ) | 2,382 | (8,070 | ) | 6,389 | ||||||||
Other comprehensive earnings (loss) | (5,118 | ) | 2,382 | (8,070 | ) | 6,389 | ||||||||
Comprehensive earnings | $ | 60,424 | $ | 56,071 | $ | 105,997 | $ | 100,348 |
Common Stock | Paid- | Accumulated Other Comprehensive | Retained | |||||||||||||||||||
Shares | Amount | In-Capital | Income / (Loss) | Earnings | Total | |||||||||||||||||
Balance at December 31, 2016 | 217,792 | $ | 217,792 | $ | 77,452 | $ | (70,075 | ) | $ | 343,376 | $ | 568,545 | ||||||||||
Net income | 179,124 | $ | 179,124 | |||||||||||||||||||
Other comprehensive income, net of tax | ||||||||||||||||||||||
Pension liability adjustment | — | — | — | 14,159 | — | $ | 14,159 | |||||||||||||||
Foreign currency translation adjustments | — | — | — | 9,960 | — | $ | 9,960 | |||||||||||||||
Cash dividends | — | — | — | — | (122,017 | ) | $ | (122,017 | ) | |||||||||||||
Stock compensation | 434 | 434 | 11,965 | — | — | $ | 12,399 | |||||||||||||||
Employee stock buybacks | (234 | ) | (234 | ) | (8,012 | ) | — | — | $ | (8,246 | ) | |||||||||||
Balance at December 31, 2017 | 217,992 | 217,992 | 81,405 | (45,956 | ) | 400,483 | 653,924 | |||||||||||||||
Net income | 114,067 | 114,067 | ||||||||||||||||||||
Other comprehensive income, net of tax | ||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | (8,070 | ) | — | (8,070 | ) | ||||||||||||||
Cash dividends | — | — | — | — | (61,142 | ) | (61,142 | ) | ||||||||||||||
Stock compensation | 411 | 411 | 5,959 | — | — | 6,370 | ||||||||||||||||
Employee stock buybacks | (186 | ) | (186 | ) | (9,152 | ) | — | — | (9,338 | ) | ||||||||||||
Balance at June 30, 2018 | 218,217 | 218,217 | 78,212 | (54,026 | ) | 453,408 | 695,811 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | 114,067 | $ | 93,959 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 33,282 | 27,317 | |||||
Provision for deferred income taxes | 4,508 | 7,674 | |||||
Provision for bad debts | 4,190 | 2,564 | |||||
Stock - based compensation expense | 6,370 | 6,375 | |||||
Other, net | (1,535 | ) | (265 | ) | |||
Changes in operating assets and liabilities | (30,373 | ) | (17,716 | ) | |||
Net cash provided by operating activities | 130,509 | 119,908 | |||||
INVESTING ACTIVITIES | |||||||
Cash used for acquisitions of companies, net of cash acquired | (54,619 | ) | (6,165 | ) | |||
Purchases of equipment and property | (14,246 | ) | (11,222 | ) | |||
Proceeds from sales of franchises | 228 | 245 | |||||
Other | 425 | 295 | |||||
Net cash used in investing activities | (68,212 | ) | (16,847 | ) | |||
FINANCING ACTIVITIES | |||||||
Cash paid for common stock purchased | (9,338 | ) | (7,689 | ) | |||
Dividends paid | (61,142 | ) | (50,117 | ) | |||
Net cash used in financing activities | (70,480 | ) | (57,806 | ) | |||
Effect of exchange rate changes on cash | (10,982 | ) | 6,797 | ||||
Net increase/(decrease) in cash and cash equivalents | (19,165 | ) | 52,052 | ||||
Cash and cash equivalents at beginning of period | 107,050 | 142,785 | |||||
Cash and cash equivalents at end of period | $ | 87,885 | $ | 194,837 |
(In thousands) | |||
Six Months ended June 30,2018 | |||
Balance at December 31, 2017 | $ | 14,706 | |
Charged to costs and expenses | 4,190 | ||
Net (deductions) recoveries | (4,866 | ) | |
Balance at June 30, 2018 | $ | 14,030 |
(In thousands) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
United States | $ | 443,782 | $ | 400,300 | $ | 819,741 | $ | 745,880 | |||||||
Other countries | 36,679 | 33,255 | 69,462 | 62,922 | |||||||||||
Total Revenues | $ | 480,461 | $ | 433,555 | $ | 889,203 | $ | 808,802 |
(In thousands) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Residential contract revenue | $ | 169,411 | $ | 151,252 | $ | 313,445 | $ | 283,596 | |||||||
Commercial contract revenue | 136,839 | 129,174 | 268,918 | 254,006 | |||||||||||
Termite completions, bait monitoring, & renewals | 93,874 | 80,950 | 170,365 | 146,602 | |||||||||||
Other revenues | 80,337 | 72,179 | 136,475 | 124,598 | |||||||||||
Total Revenues | $ | 480,461 | $ | 433,555 | $ | 889,203 | $ | 808,802 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Basic and diluted earnings per share | |||||||||||||||
Common stock | $ | 0.30 | $ | 0.25 | $ | 0.52 | $ | 0.43 | |||||||
Restricted shares of common stock | $ | 0.29 | $ | 0.24 | $ | 0.55 | $ | 0.41 |
(In thousands) | |||
Six Months ended June 30, 2018 | |||
Balance at December 31, 2017 | $ | 117,614 | |
Deferral of unearned revenue | 95,948 | ||
Recognition of unearned revenue | (78,290 | ) | |
Balance at June 30, 2018 | 135,272 | ||
Year ended December 31, 2017 | |||
Balance at December 31, 2016 | $ | 106,323 | |
Deferral of unearned revenue | 140,019 | ||
Recognition of unearned revenue | (128,728 | ) | |
Balance at December 31, 2017 | 117,614 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Time lapse restricted stock: | |||||||||||||||
Pre-tax compensation expense | $ | 3,277 | $ | 3,107 | $ | 6,370 | 6,375 | ||||||||
Tax benefit | (717 | ) | (1,202 | ) | (1,503 | ) | (2,467 | ) | |||||||
Restricted stock expense, net of tax | $ | 2,560 | $ | 1,905 | $ | 4,867 | $ | 3,908 |
Number of Shares | Average Grant- Date Fair Value | |||||
Unvested Restricted Stock at December 31, 2017 | 2,017 | $ | 24.50 | |||
Forfeited | (17 | ) | 25.42 | |||
Vested | (593 | ) | 19.86 | |||
Granted | 428 | 48.36 | ||||
Unvested Restricted Stock at June 30, 2018 | 1,835 | $ | 31.55 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Interest and service cost | $ | 1,995 | $ | 2,138 | $ | 3,990 | $ | 4,276 | |||||||
Expected return on plan assets | (3,443 | ) | (3,342 | ) | (6,886 | ) | (6,684 | ) | |||||||
Amortization of net loss | 826 | 830 | 1,652 | 1,660 | |||||||||||
Net periodic benefit | $ | (622 | ) | $ | (374 | ) | $ | (1,244 | ) | $ | (748 | ) |
June 30, 2018 | |||
Accounts receivable | $ | 1,982 | |
Current assets | 413 | ||
Equipment and property | 4,690 | ||
Goodwill | 12,886 | ||
Customer contracts and other intangible assets | 53,564 | ||
Current liabilities | (13,920 | ) | |
Other assets and liabilities, net | (438 | ) | |
Total consideration paid | $ | 59,177 | |
Less: Contingent consideration liability | (4,558 | ) | |
Total cash purchase price | $ | 54,619 |
Intangible Asset | Carrying Value | Useful Life in Years | |||||
Customer contracts | $ | 182,522 | 3 - 12 | ||||
Trademarks and tradenames | 52,323 | 0 - 20 | |||||
Non-compete agreements | 4,432 | 3 - 20 | |||||
Patents | 2,270 | 3 - 15 | |||||
Other assets | 2,649 | 10 | |||||
Internet domains | 2,227 | n/a | |||||
Total customer contracts and other intangible assets | $ | 246,423 |
Non-Designated Derivative Summary | ||||||||||
Number of Instruments | Sell Notional | Buy Notional | ||||||||
FX Forward Contracts | ||||||||||
Sell AUD/Buy USD Fwd Contract | 6 | $ | 750 | $ | 564 | |||||
Sell CAD/Buy USD Fwd Contract | 10 | $ | 7,250 | $ | 5,637 | |||||
Total | 16 | $ | — | $ | 6,201 |
Tabular Disclosure of Fair Values of Derivative Instruments | |||||||||||||||
Derivatives Asset | Derivative Liabilities | ||||||||||||||
Fair Value as of: | |||||||||||||||
June 30, 2018 | December 31, 2017 | June 30, 2018 | December 31, 2017 | ||||||||||||
Derivatives Not Designated as Hedging Instruments | |||||||||||||||
FX Forward Contracts | |||||||||||||||
Balance Sheet Location | |||||||||||||||
Other Assets | Other Assets | Other Current Liabilities | Other Current Liabilities | ||||||||||||
Sell AUD/Buy USD Fwd Contract | $ | 10 | $ | — | $ | (2 | ) | $ | (9 | ) | |||||
Sell CAD/Buy USD Fwd Contract | $ | 112 | $ | — | $ | (8 | ) | $ | (61 | ) | |||||
Total | $ | 122 | $ | — | $ | (10 | ) | $ | (70 | ) |
Derivatives Not Designated as Hedging Instruments | Location of Gain or (Loss) Recognized in Income | Amount of Gain or (Loss) Recognized in Income Three Months Ended June 30, | Amount of Gain or (Loss) Recognized in Income Six Months Ended June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Sell AUD/Buy USD Fwd Contract | Other inc/(exp) | $ | 27 | $ | (15 | ) | $ | 38 | $ | (23 | ) | |||||
Sell CAD/Buy USD Fwd Contract | Other inc/(exp) | 123 | (251 | ) | 259 | (213 | ) | |||||||||
Total | $ | 150 | $ | (266 | ) | $ | 297 | $ | (236 | ) |
Recurring Fair Value Measurements | |||||||||||||||||||||||||||||||
Quoted Prices in Active | |||||||||||||||||||||||||||||||
Markets for Identical Assets and Liabilities | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||||||||||||||||||
(Level 1) June 30, | (Level 2) June 30, | (Level 3) June 30, | Total Fair Value at As of June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Derivative Financial Instruments | $ | — | $ | — | $ | 122 | $ | — | $ | — | $ | — | $ | 122 | $ | — | |||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||
Derivative Financial Instruments | $ | — | $ | — | $ | (10 | ) | $ | (77 | ) | $ | — | $ | — | $ | (10 | ) | $ | (77 | ) |
Consolidated Net Revenues | |||||||||||
(in thousands) | |||||||||||
2018 | 2017 | 2016 | |||||||||
First Quarter | $ | 408,742 | $ | 375,247 | $ | 352,736 | |||||
Second Quarter | 480,461 | 433,555 | 411,133 | ||||||||
Third Quarter | — | 450,442 | 423,994 | ||||||||
Fourth Quarter | — | 414,713 | 385,614 | ||||||||
Year ended December 31, | $ | 889,203 | $ | 1,673,957 | $ | 1,573,477 |
Total Number of shares | Weighted-Average Price paid per | Total number of shares purchased as part of publicly announced | Maximum number of shares that may yet be purchased under the repurchase plans | |||||||||
Period | Purchased (1) | Share | repurchases (2) | |||||||||
April 1 to 30, 2018 | 1,926 | $ | 49.03 | — | 5,073,611 | |||||||
May 1 to 31, 2018 | — | — | — | 5,073,611 | ||||||||
June 1 to 30, 2018 | 300 | 51.71 | — | 5,073,611 | ||||||||
Total | 2,226 | $ | 49.39 | — | 5,073,611 |
(1) | Includes repurchases from employees for the payment of taxes on vesting of restricted shares in the following amounts: April 2018: 1,926; May 2018: 0; and June 2018: 300. |
(2) | The Company has a share repurchase plan, adopted in 2012, to repurchase up to 7.5 million shares of the Company’s common stock. The plan has no expiration date. |
Item 5. | Exhibits. | |||||
(a) | Exhibits | |||||
(3) (i) | ||||||
(ii) | ||||||
(4) | ||||||
(31.1) | ||
(31.2) | ||
(32.1) | ||
(101.INS) | XBRL Instance Document | |
(101.SCH) | XBRL Taxonomy Extension Schema Document | |
(101.CAL) | XBRL Taxonomy Extension Calculation Linkbase Document | |
(101.DEF) | XBRL Taxonomy Extension Definition Linkbase Document | |
(101.LAB) | XBRL Taxonomy Extension Label Linkbase Document | |
(101.PRE) | XBRL Taxonomy Extension Presentation Linkbase Document | |
+ | Confidential treatment has been requested for certain portions of this exhibit (indicated by asterisks). Such information has been omitted and was filed separately with the securities and Exchange Commission. |
ROLLINS, INC. | ||||
(Registrant) | ||||
Date: July 27, 2018 | By: | /s/ Gary W. Rollins | ||
Gary W. Rollins | ||||
Vice Chairman and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
Date: July 27, 2018 | By: | /s/ Paul E. Northen | ||
Paul E. Northen | ||||
Senior Vice President, Chief Financial Officer and Treasurer | ||||
(Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Rollins, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 27, 2018 | /s/ Gary W. Rollins |
Gary W. Rollins, Vice Chairman and Chief Executive Officer | |
(Principle Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Rollins, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 27, 2018 | /s/ Paul E. Northen |
Paul E. Northen | |
Senior Vice President, Chief Financial Officer and Treasurer | |
(Principal Financial and Accounting Officer) |
Date: July27, 2018 | By: | /s/ Gary W. Rollins |
Gary W. Rollins Vice Chairman and Chief Executive Officer (Principle Executive Officer) | ||
Date: July 27, 2018 | By: | /s/ Paul E. Northen |
Paul E. Northen Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 16, 2018 |
|
Document And Entity Information | ||
Entity Registrant Name | ROLLINS INC | |
Entity Central Index Key | 0000084839 | |
Trading Symbol | rol | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 218,174,643 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2018 |
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Trade receivables, short-term, allowance for doubtful accounts | $ 10,897 | $ 11,814 |
Financed receivables, short-term, allowance for doubtful accounts | 1,765 | 1,535 |
Financed receivables, long-term, allowance for doubtful accounts | $ 1,368 | $ 1,357 |
Preferred stock, authorized (in shares) | 500,000 | 500,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, authorized (in shares) | 375,000,000 | 375,000,000 |
Common stock, issued (in shares) | 218,217,444 | 217,992,177 |
Common stock, outstanding (in shares) | 218,217,444 | 217,992,177 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
REVENUES | ||||
Customer services | $ 480,461 | $ 433,555 | $ 889,203 | $ 808,802 |
COSTS AND EXPENSES | ||||
Cost of services provided | 230,772 | 204,480 | 436,915 | 393,643 |
Depreciation and amortization | 16,366 | 13,547 | 33,282 | 27,317 |
Sales, general and administrative | 143,379 | 129,667 | 269,866 | 244,821 |
Gain on sale of assets, net | (308) | (88) | (364) | (113) |
Interest expense / (income), net | 75 | (190) | 133 | (263) |
INCOME BEFORE INCOME TAXES | 90,177 | 86,139 | 149,371 | 143,397 |
PROVISION FOR INCOME TAXES | 24,635 | 32,450 | 35,304 | 49,438 |
NET INCOME | $ 65,542 | $ 53,689 | $ 114,067 | $ 93,959 |
NET INCOME PER SHARE - BASIC AND DILUTED (in dollars per share) | $ 0.30 | $ 0.25 | $ 0.52 | $ 0.43 |
DIVIDENDS PAID PER SHARE (in dollars per share) | $ 0.14 | $ 0.115 | $ 0.28 | $ 0.23 |
Weighted average participating shares outstanding - basic and diluted (in share) | 218,188 | 218,002 | 218,175 | 217,987 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Thousands |
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Statement of Comprehensive Income [Abstract] | ||||
NET INCOME | $ 65,542 | $ 53,689 | $ 114,067 | $ 93,959 |
Other comprehensive earnings (loss), net of tax | ||||
Foreign currency translation adjustments | (5,118) | 2,382 | (8,070) | 6,389 |
Other comprehensive earnings (loss) | (5,118) | 2,382 | (8,070) | 6,389 |
Comprehensive earnings | $ 60,424 | $ 56,071 | $ 105,997 | $ 100,348 |
BASIS OF PREPARATION AND OTHER |
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Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Preparation and Other | BASIS OF PREPARATION AND OTHER Basis of Preparation -The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. There has been no material change in the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of Rollins, Inc. (the “Company”) for the year ended December 31, 2017 other than updates related to Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (ASC 606) as noted below. Accordingly, the quarterly condensed consolidated financial statements and related disclosures herein should be read in conjunction with the 2017 Annual Report on Form 10-K. 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 six month periods ended June 30, 2018 are not necessarily indicative of results for the entire year. The Company has only one reportable segment, its pest and termite control business. The Company’s results of operations and its financial condition are not reliant upon any single customer, or a few customers, or the Company’s foreign operations. |
RECENT ACCOUNTING PRONOUNCEMENTS |
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Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS Revenue Service Revenue and Other Revenue Rollins’ revenues are sourced primarily from the sale of pest control and other protection services to residential and commercial consumers. Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, each of which are distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. Nature of Goods and Services and Performance Obligations The Company contracts with its customers to provide the following goods and services, each of which is a distinct performance obligation: Pest control services - Rollins provides pest control services to protect residential and commercial properties from common pests, including rodents and insects. Pest control generally consists of assessing a customer’s property for conditions that invite pests, tackling current infestations, and stopping the life cycle to prevent future invaders. Revenue from pest control services is recognized as services are rendered. The Company’s revenue recognition policies are designed to recognize revenues upon transfer of control at the time services are performed. For certain revenue types, because of the timing of billing and the receipt of cash versus the timing of performing services, certain accounting estimates are utilized. Residential and commercial pest control services are primarily recurring in nature on a monthly, bi-monthly or quarterly basis, while certain types of commercial customers may receive multiple treatments within a given month. In general, pest control customers sign an initial one-year contract, and revenues are recognized at the time services are performed. The Company defers recognition of advance payments and recognizes the revenue as the services are rendered. The Company classifies discounts related to the advance payments as a reduction in revenues. Termite control services (including traditional and baiting) - Rollins provides both conventional and baiting termite protection services. Traditional termite protection uses “Termidor” liquid treatment and/or dry foam and Orkin foam to treat voids and spaces around the property, while baiting termite protection uses baits to disrupt the molting process termites require for growth and offers ongoing protection. Revenue from initial termite treatment services is recognized as services are provided. Maintenance/monitoring/inspection - In connection with the initial service offerings, Rollins provides recurring maintenance, monitoring or inspection services to help protect consumer’s property for any future sign of termite activities after the original treatment. This recurring service is a service-type warranty under ASC 606 as it is routinely sold and purchased separately from the initial treatment services and is typically purchased or renewed annually. Termite baiting revenues are recognized based on the transfer of control of the individual units of accounting. At the inception of a new baiting services contract, upon quality control review of the installation, the Company recognizes revenue for the installation of the monitoring stations, initial directed liquid termiticide treatment and servicing of the monitoring stations. A portion of the contract amount is deferred for the undelivered monitoring element. This portion is recognized as income on a straight-line basis over the remaining contract term, which results in recognition of revenue that depicts the Company's performance in transferring control of the service. The allocation of the purchase price to the two deliverables is based on the relative stand-alone selling price. There are no contingencies related to the delivery of additional items or meeting other specified performance conditions. Baiting renewal revenue is deferred and recognized over the annual contract period on a straight-line basis that depicts the Company's performance in transferring control of the service. Revenue received for conventional termite renewals is deferred and recognized on a straight-line basis over the remaining contract term that depicts the Company's performance in transferring control of the service; and, the cost of reinspections, reapplications and repairs and associated labor and chemicals are expensed as incurred. For outstanding claims, an estimate is made of the costs to be incurred (including legal costs) based upon current factors and historical information. The performance of reinspections tends to be close to the contract renewal date and while reapplications and repairs involve an insubstantial number of the contracts, these costs are incurred over the contract term. As the revenue is being deferred, the future cost of reinspections, reapplications and repairs and associated labor and chemicals applicable to the deferred revenue are expensed as incurred. The Company accrues for noticed claims. The costs of providing termite services upon renewal are compared to the expected revenue to be received and a provision is made for any expected losses. Miscellaneous services (e.g., cleaning, etc.) - In certain agreements with customers, Rollins may offer other miscellaneous services, including restroom cleaning (e.g., eliminating foul odors, grease and grime which could attract pests), training (e.g., seminar covering Good Manufacturing Practices and product stewardship), etc. Revenue from miscellaneous services is recognized when services are provided. Products - Depending on customer demand, Rollins may separately sell pest control and/or termite protection products, such as baits. Revenue from product sales is recognized upon transfer of control of the asset. Equipment rental (or lease) - Depending on customer demand, Rollins may lease certain pest control and/or termite protection equipment. Revenue from equipment rentals are recognized over the period of the rental/lease. Revenue from equipment rentals are not material and represent less than 1.0% of the Company's revenues for each reported period. Right to access intellectual property (Franchise) - The right to access Rollins’ intellectual property is an essential part of Orkin’s franchising agreements. These agreements provide the franchisee (the customer) a license to use the Rollins’ name and trademark when advertising and selling services to end customers in their normal course of business. Orkin Franchise agreements contain a clause allowing Orkin to purchase certain assets of the franchisee. This is only an offer for Orkin to re-purchase the assets originally provided by Orkin to the franchisee and is not a performance obligation or a form of consideration. International and domestic franchising revenue was less than 1.0% of the Company’s annual revenues. All Orkin domestic franchises have a guaranteed repurchase clause that the Orkin franchise may be repurchased by Orkin at a later date once it has been established. The Company amortizes the initial franchise fee over the initial franchise term. Deferred Orkin franchise fees of $1.9 million at June 30, 2018 and $3.4 million December 31, 2017 were not material to the Company's financial statements. Royalties from Orkin franchises are accrued and recognized as revenues are earned on a monthly basis. Revenue from Orkin franchises was $3.7 million for the three month period ended June 30, 2018 and $1.4 million for the same period in 2017 and $5.0 million and $2.7 million for the six month periods ended in June 30, 2018 and 2017, respectively. Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. For multi-year agreements, we generally invoice customers annually at the beginning of each annual coverage period. The balance of long-term accounts receivable, net of allowance for doubtful accounts, was $26.2 million as of June 30, 2018. As of December 31, 2017, long-term accounts receivable, net of allowance for doubtful accounts, was $20.4 million and is included in financed receivables as a long-term asset on our consolidated statements of financial position. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence. Activity in the allowance for doubtful accounts was as follows:
Unearned revenue is comprised mainly of unearned revenue related to the Company’s termite baiting offering and year-in-advance pest control services for which we have been paid in advance and earn the revenue when we transfer control of the product or service. Refer to Note 7 - Unearned Revenue for further information, including changes in unearned revenue during the period. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing. Practical Expedients and Exemptions We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Recently issued accounting standards to be adopted in 2018 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 February 2016, the FASB issued ASU 2016-02, Leases (ASC 842). In September 2017, the FASB issued ASU 2017-13, Revenue Recognition (ASC 605), Revenue from Contracts with Customers (ASC 606), Leases (ASC 840), and Leases (ASC 842), which provides additional implementation guidance on the previously issued ASU 2016-02 Leases (ASC 842). ASU 2016-02 requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. Based on a preliminary assessment, the Company expects the adoption of this guidance to have a material impact on its assets and liabilities due to the recognition of right-of-use assets and lease liabilities on its consolidated balance sheets at the beginning of the earliest period presented. The Company is continuing its assessment, which may identify additional impacts this guidance will have on its consolidated financial statements and disclosures. 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 is effective for the Company beginning in fiscal year 2020. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. |
REVENUE |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | REVENUE Adoption of ASC 606, "Revenue from Contracts with Customers". On January 1, 2018, and the Company adopted ASC 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2017. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605. There was no material impact on the Company’s financial statements as a result of adopting ASC 606 for the six months ended June 30, 2018 and 2017, or the twelve months ended December 31, 2017. The following tables present our revenues disaggregated by revenue source (in thousands, unaudited). Sales and usage-based taxes are excluded from revenues. No sales to an individual customer or country other than the United States accounted for more than 10% of the six months ended June 30, 2018 and 2017, respectively. Revenue, classified by the major geographic areas in which our customers are located, was as follows:
Revenue from external customers, classified by significant product and service offerings, was as follows:
UNEARNED REVENUE Changes in unearned revenue were as follows:
Deferred revenue recognized in the three months ended June 30, 2018 and 2017 was $39.5 million and $32.8 million, respectively, and was $78.3 million and $65.4 million for the six month period ended June 30, 2018 and June 30, 2017, respectively. Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized (“contracted not recognized revenue”), which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. The Company has no material contracted not recognized revenue as of June 30, 2018 or December 31, 2017. At June 30, 2018 and December 31, 2017, the Company had long-term unearned revenue of $10.5 million and $8.6 million, respectively. Unearned short-term revenue is recognized over the next 12 month period. The majority of unearned long-term revenue is recognized over a period of five years or less with immaterial amounts recognized through 2025. |
EARNINGS PER SHARE |
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Earnings Per Share | EARNINGS PER SHARE The Company follows ASC 260, Earnings Per Share (ASC 260) that requires the reporting of both basic and diluted earnings per share. Basic earnings per share is computed by dividing net income available to participating common stockholders by the weighted average number of participating common shares outstanding for the period. Basic and diluted earnings per share attributable to common and restricted shares of common stock for the period were as follows:
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CONTINGENCIES |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | 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 INSTRUMENTS |
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Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 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 fair values. The Company has a Revolving Credit Agreement with SunTrust Bank and Bank of America, N.A. for an unsecured line of credit of up to $175.0 million, which includes a $75.0 million letter of credit subfacility and a $25.0 million swingline subfacility. There were no outstanding borrowings at June 30, 2018 and December 31, 2017. The Company remained in compliance with applicable debt covenants through the date of this filing and expects to maintain compliance through 2018. |
UNEARNED REVENUE |
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Unearned Revenue | REVENUE Adoption of ASC 606, "Revenue from Contracts with Customers". On January 1, 2018, and the Company adopted ASC 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2017. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605. There was no material impact on the Company’s financial statements as a result of adopting ASC 606 for the six months ended June 30, 2018 and 2017, or the twelve months ended December 31, 2017. The following tables present our revenues disaggregated by revenue source (in thousands, unaudited). Sales and usage-based taxes are excluded from revenues. No sales to an individual customer or country other than the United States accounted for more than 10% of the six months ended June 30, 2018 and 2017, respectively. Revenue, classified by the major geographic areas in which our customers are located, was as follows:
Revenue from external customers, classified by significant product and service offerings, was as follows:
UNEARNED REVENUE Changes in unearned revenue were as follows:
Deferred revenue recognized in the three months ended June 30, 2018 and 2017 was $39.5 million and $32.8 million, respectively, and was $78.3 million and $65.4 million for the six month period ended June 30, 2018 and June 30, 2017, respectively. Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized (“contracted not recognized revenue”), which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. The Company has no material contracted not recognized revenue as of June 30, 2018 or December 31, 2017. At June 30, 2018 and December 31, 2017, the Company had long-term unearned revenue of $10.5 million and $8.6 million, respectively. Unearned short-term revenue is recognized over the next 12 month period. The majority of unearned long-term revenue is recognized over a period of five years or less with immaterial amounts recognized through 2025. |
STOCKHOLDERS' EQUITY |
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Stockholders' Equity | STOCKHOLDERS' EQUITY During the six months ended June 30, 2018, the Company paid $61.1 million or $0.28 per share in cash dividends compared to $50.1 million or $0.23 per share during the same period in 2017. During the first six months ended June 30, 2018 and during the same period in 2017 the Company did not repurchase shares on the open market. The Company repurchases shares from employees for the payment of taxes on vesting restricted shares. The Company repurchased $0.1 million and $0.2 million of common stock for the quarter ended June 30, 2018 and June 30, 2017, respectively, from employees for the payment of taxes on vesting restricted shares and $9.3 million and $7.7 million for the six months ended June 30, 2017 and 2016, respectively. As more fully discussed in Note 15 of the Company’s notes to the consolidated financial statements in its 2017 Annual Report on Form 10-K, stock options, 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 June 30, 2018, approximately 6.0 million shares of the Company’s common stock were reserved for issuance. Time Lapse Restricted Shares and Restricted Stock Units The following table summarizes the components of the Company’s stock-based compensation programs recorded as expense:
The following table summarizes information on unvested restricted stock outstanding as of June 30, 2018:
At June 30, 2018 and December 31, 2017, the Company had $46.9 million and $32.9 million of total unrecognized compensation cost, respectively, related to time-lapse restricted shares that are expected to be recognized over a weighted average period of approximately 4.3 years and 3.9 years, respectively. |
PENSION AND POST RETIREMENT BENEFIT PLANS |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Post Retirement Benefit Plans | PENSION AND POST RETIREMENT BENEFIT PLANS The following table represents the net periodic pension benefit costs and related components in accordance with FASB ASC 715 “Compensation Retirement Benefits”: Components of Net Pension Benefit Gain
During the six months ended June 30, 2018 and the same period in 2017 the Company made no contributions to its defined benefit retirement plans (the “Plans”). The Company made no contributions for the year ended December 31, 2017. The Company is adequately funded on its Plans and is not expecting to make further contributions in 2018. The Company has initiated the process to transition its Pension Plan to an Insurance provider. The timeline will take approximately 16-18 months. The Company’s Pension Plan is currently more than 100% funded. |
BUSINESS COMBINATIONS |
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Business Combinations | BUSINESS COMBINATIONS The Company made 26 acquisitions during the six month period ended June 30, 2018, and 23 acquisitions for the year ended December 31, 2017, respectively, some of which have been disclosed on various press releases and related Current Reports on Form 8-K. On August 1, 2017, the Company completed the acquisition of Northwest Exterminating Co., Inc. Northwest has 23 offices in five southeastern states and was the nation’s 17th largest pest management company. Northwest performs services for approximately 120,000 customers. On February 28, 2018, the Company announced that it purchased the stock of AMES Group Limited and Kestrel Pest Control Limited, both companies operating in the UK. AMES Group Limited is a long established pest control company, with a rich history of providing superior pest control, bird control, and specialist services to commercial customers throughout the midlands, including London. Kestrel Pest Control provides superior commercial pest control to customers in South Hampton and surrounding areas of southwest England. On March 1, 2018, the Company announced that it acquired OPC Services. On May 17, 2018, the Company announced that it purchased the stock of Guardian Pest Control, operating in the UK. On July 2, 2018, the Company acquired the stock of Aardwolf Pestkare (Singapore) Pte Ltd. Aardwolf Pestkare is Rollins’ first company-owned operation in Singapore. The preliminary values of major classes of assets acquired and liabilities assumed recorded at the date of acquisition, as adjusted during the valuation period, are included in the reconciliation of the total consideration as follows (in thousands):
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 $359.1 million and $346.5 million at June 30, 2018 and December 31, 2017, 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 $45.6 million at June 30, 2018 and $46.3 million at December 31, 2017. The Company completed its most recent annual impairment analysis as of September 30, 2017. 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 $182.5 million and $152.9 million at June 30, 2018 and December 31, 2017, respectively. The carrying amount of trademarks and tradenames was $52.3 million and $50.0 million at June 30, 2018 and December 31, 2017, respectively. The carrying amount of other intangible assets was $11.6 million and $11.6 million at June 30, 2018 and December 31, 2017, respectively. The carrying amount of customer contracts in foreign countries was $35.3 million and $29.8 million at June 30, 2018 and December 31, 2017, respectively. The carrying amount of trademarks and tradenames in foreign countries was $1.5 million and $1.7 million at June 30, 2018 and December 31, 2017, respectively. The carrying amount of other intangible assets in foreign countries was $1.5 million and $1.7 million at June 30, 2018 and December 31, 2017, respectively. 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 as of June 30, 2018 (in thousands):
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | 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. 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 gain of $0.2 million for the quarter ended June 30, 2018 and a net loss of $0.3 million for the same quarter in the prior year. Changes in the fair value of derivatives for the six months ended June 30, 2018 and during the same period in 2017 were equal to a gain of $0.3 million and a net loss of $0.2 million, respectively. As of June 30, 2018, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (in thousands except for number of instruments):
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet as of June 30, 2018 and December 31, 2017 (in thousands):
The table below presents the effect of the Company’s derivative financial instruments on the income statement as of June 30, 2018 and June 30, 2017 (in thousands): Effect of Derivative Instruments on the Income Statement for Derivatives Not Designated as Hedging Instruments for the Three and Six Months Ended June 30, 2018 and 2017
The table below presents the total fair value classification within the fair value hierarchy for the complete portfolio of derivative transactions at June 30, 2018 (in thousands):
As of June 30, 2018, the fair value of derivatives in a net asset position was $122,000 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 June 30, 2018, it could have been required to settle its obligations under the agreements at their termination value of $122,000. |
SUBSEQUENT EVENTS |
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Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS On July 24, 2018, the Company announced that the Board of Directors declared a regular quarterly cash dividend on its common stock of $0.14 per share payable September 10, 2018 to stockholders of record at the close of business August 10, 2018. |
RECENT ACCOUNTING PRONOUNCEMENTS (Policies) |
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Accounting Changes and Error Corrections [Abstract] | |
Revenue | Revenue Service Revenue and Other Revenue Rollins’ revenues are sourced primarily from the sale of pest control and other protection services to residential and commercial consumers. Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, each of which are distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. Nature of Goods and Services and Performance Obligations The Company contracts with its customers to provide the following goods and services, each of which is a distinct performance obligation: Pest control services - Rollins provides pest control services to protect residential and commercial properties from common pests, including rodents and insects. Pest control generally consists of assessing a customer’s property for conditions that invite pests, tackling current infestations, and stopping the life cycle to prevent future invaders. Revenue from pest control services is recognized as services are rendered. The Company’s revenue recognition policies are designed to recognize revenues upon transfer of control at the time services are performed. For certain revenue types, because of the timing of billing and the receipt of cash versus the timing of performing services, certain accounting estimates are utilized. Residential and commercial pest control services are primarily recurring in nature on a monthly, bi-monthly or quarterly basis, while certain types of commercial customers may receive multiple treatments within a given month. In general, pest control customers sign an initial one-year contract, and revenues are recognized at the time services are performed. The Company defers recognition of advance payments and recognizes the revenue as the services are rendered. The Company classifies discounts related to the advance payments as a reduction in revenues. Termite control services (including traditional and baiting) - Rollins provides both conventional and baiting termite protection services. Traditional termite protection uses “Termidor” liquid treatment and/or dry foam and Orkin foam to treat voids and spaces around the property, while baiting termite protection uses baits to disrupt the molting process termites require for growth and offers ongoing protection. Revenue from initial termite treatment services is recognized as services are provided. Maintenance/monitoring/inspection - In connection with the initial service offerings, Rollins provides recurring maintenance, monitoring or inspection services to help protect consumer’s property for any future sign of termite activities after the original treatment. This recurring service is a service-type warranty under ASC 606 as it is routinely sold and purchased separately from the initial treatment services and is typically purchased or renewed annually. Termite baiting revenues are recognized based on the transfer of control of the individual units of accounting. At the inception of a new baiting services contract, upon quality control review of the installation, the Company recognizes revenue for the installation of the monitoring stations, initial directed liquid termiticide treatment and servicing of the monitoring stations. A portion of the contract amount is deferred for the undelivered monitoring element. This portion is recognized as income on a straight-line basis over the remaining contract term, which results in recognition of revenue that depicts the Company's performance in transferring control of the service. The allocation of the purchase price to the two deliverables is based on the relative stand-alone selling price. There are no contingencies related to the delivery of additional items or meeting other specified performance conditions. Baiting renewal revenue is deferred and recognized over the annual contract period on a straight-line basis that depicts the Company's performance in transferring control of the service. Revenue received for conventional termite renewals is deferred and recognized on a straight-line basis over the remaining contract term that depicts the Company's performance in transferring control of the service; and, the cost of reinspections, reapplications and repairs and associated labor and chemicals are expensed as incurred. For outstanding claims, an estimate is made of the costs to be incurred (including legal costs) based upon current factors and historical information. The performance of reinspections tends to be close to the contract renewal date and while reapplications and repairs involve an insubstantial number of the contracts, these costs are incurred over the contract term. As the revenue is being deferred, the future cost of reinspections, reapplications and repairs and associated labor and chemicals applicable to the deferred revenue are expensed as incurred. The Company accrues for noticed claims. The costs of providing termite services upon renewal are compared to the expected revenue to be received and a provision is made for any expected losses. Miscellaneous services (e.g., cleaning, etc.) - In certain agreements with customers, Rollins may offer other miscellaneous services, including restroom cleaning (e.g., eliminating foul odors, grease and grime which could attract pests), training (e.g., seminar covering Good Manufacturing Practices and product stewardship), etc. Revenue from miscellaneous services is recognized when services are provided. Products - Depending on customer demand, Rollins may separately sell pest control and/or termite protection products, such as baits. Revenue from product sales is recognized upon transfer of control of the asset. Equipment rental (or lease) - Depending on customer demand, Rollins may lease certain pest control and/or termite protection equipment. Revenue from equipment rentals are recognized over the period of the rental/lease. Revenue from equipment rentals are not material and represent less than 1.0% of the Company's revenues for each reported period. Right to access intellectual property (Franchise) - The right to access Rollins’ intellectual property is an essential part of Orkin’s franchising agreements. These agreements provide the franchisee (the customer) a license to use the Rollins’ name and trademark when advertising and selling services to end customers in their normal course of business. Orkin Franchise agreements contain a clause allowing Orkin to purchase certain assets of the franchisee. This is only an offer for Orkin to re-purchase the assets originally provided by Orkin to the franchisee and is not a performance obligation or a form of consideration. International and domestic franchising revenue was less than 1.0% of the Company’s annual revenues. All Orkin domestic franchises have a guaranteed repurchase clause that the Orkin franchise may be repurchased by Orkin at a later date once it has been established. The Company amortizes the initial franchise fee over the initial franchise term. Deferred Orkin franchise fees of $1.9 million at June 30, 2018 and $3.4 million December 31, 2017 were not material to the Company's financial statements. Royalties from Orkin franchises are accrued and recognized as revenues are earned on a monthly basis. Revenue from Orkin franchises was $3.7 million for the three month period ended June 30, 2018 and $1.4 million for the same period in 2017 and $5.0 million and $2.7 million for the six month periods ended in June 30, 2018 and 2017, respectively. Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. For multi-year agreements, we generally invoice customers annually at the beginning of each annual coverage period. The balance of long-term accounts receivable, net of allowance for doubtful accounts, was $26.2 million as of June 30, 2018. As of December 31, 2017, long-term accounts receivable, net of allowance for doubtful accounts, was $20.4 million and is included in financed receivables as a long-term asset on our consolidated statements of financial position. Unearned revenue is comprised mainly of unearned revenue related to the Company’s termite baiting offering and year-in-advance pest control services for which we have been paid in advance and earn the revenue when we transfer control of the product or service. Refer to Note 7 - Unearned Revenue for further information, including changes in unearned revenue during the period. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing. Practical Expedients and Exemptions We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. |
Allowance for doubtful accounts | The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence. |
Recently issued accounting standards | Recently issued accounting standards to be adopted in 2018 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 February 2016, the FASB issued ASU 2016-02, Leases (ASC 842). In September 2017, the FASB issued ASU 2017-13, Revenue Recognition (ASC 605), Revenue from Contracts with Customers (ASC 606), Leases (ASC 840), and Leases (ASC 842), which provides additional implementation guidance on the previously issued ASU 2016-02 Leases (ASC 842). ASU 2016-02 requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. Based on a preliminary assessment, the Company expects the adoption of this guidance to have a material impact on its assets and liabilities due to the recognition of right-of-use assets and lease liabilities on its consolidated balance sheets at the beginning of the earliest period presented. The Company is continuing its assessment, which may identify additional impacts this guidance will have on its consolidated financial statements and disclosures. 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 is effective for the Company beginning in fiscal year 2020. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. |
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Receivables and allowance for doubtful accounts | Activity in the allowance for doubtful accounts was as follows:
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REVENUE (Tables) |
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Revenue by major geographic area, and by significant product and service offerings | Revenue, classified by the major geographic areas in which our customers are located, was as follows:
Revenue from external customers, classified by significant product and service offerings, was as follows:
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EARNINGS PER SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted earnings per share | Basic and diluted earnings per share attributable to common and restricted shares of common stock for the period were as follows:
|
UNEARNED REVENUE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in unearned revenue | Changes in unearned revenue were as follows:
|
STOCKHOLDERS' EQUITY (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of stock-based compensation | The following table summarizes the components of the Company’s stock-based compensation programs recorded as expense:
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Unvested restricted stock activity | The following table summarizes information on unvested restricted stock outstanding as of June 30, 2018:
|
PENSION AND POST RETIREMENT BENEFIT PLANS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic benefit | The following table represents the net periodic pension benefit costs and related components in accordance with FASB ASC 715 “Compensation Retirement Benefits”: Components of Net Pension Benefit Gain
|
BUSINESS COMBINATIONS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets acquired and liabilities assumed | The preliminary values of major classes of assets acquired and liabilities assumed recorded at the date of acquisition, as adjusted during the valuation period, are included in the reconciliation of the total consideration as follows (in thousands):
|
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Components of intangible assets | 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 as of June 30, 2018 (in thousands):
|
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding derivative instruments | As of June 30, 2018, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (in thousands except for number of instruments):
|
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Fair value of derivative instruments and classification on the balance sheet | The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet as of June 30, 2018 and December 31, 2017 (in thousands):
|
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Effects of derivative instruments on income statement | The table below presents the effect of the Company’s derivative financial instruments on the income statement as of June 30, 2018 and June 30, 2017 (in thousands): Effect of Derivative Instruments on the Income Statement for Derivatives Not Designated as Hedging Instruments for the Three and Six Months Ended June 30, 2018 and 2017
|
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Derivative instruments classification within fair value hierarchy | The table below presents the total fair value classification within the fair value hierarchy for the complete portfolio of derivative transactions at June 30, 2018 (in thousands):
|
BASIS OF PREPARATION AND OTHER (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
segment
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 1 |
RECENT ACCOUNTING PRONOUNCEMENTS - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Disaggregation of Revenue [Line Items] | |||||
Deferred revenue | $ 124,784 | $ 124,784 | $ 109,029 | ||
Revenue | 480,461 | $ 433,555 | 889,203 | $ 808,802 | |
Long-term accounts receivable, net | 26,200 | $ 26,200 | 20,400 | ||
Equipment Rental | |||||
Disaggregation of Revenue [Line Items] | |||||
Percentage of revenue (less than) | 1.00% | ||||
Pest Control | |||||
Disaggregation of Revenue [Line Items] | |||||
Contract with customer, term | 1 year | ||||
Franchise | |||||
Disaggregation of Revenue [Line Items] | |||||
Percentage of revenue (less than) | 1.00% | ||||
Deferred revenue | 1,900 | $ 1,900 | $ 3,400 | ||
Revenue | $ 3,700 | $ 1,400 | $ 5,000 | $ 2,700 | |
Minimum | |||||
Disaggregation of Revenue [Line Items] | |||||
Contract with customer, payment term | 30 days | ||||
Maximum | |||||
Disaggregation of Revenue [Line Items] | |||||
Contract with customer, payment term | 60 days |
RECENT ACCOUNTING PRONOUNCEMENTS - Receivables and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Accounts, Notes, Loans and Financing Receivable, Net [Roll Forward] | ||
Balance at December 31, 2017 | $ 14,706 | |
Charged to costs and expenses | 4,190 | $ 2,564 |
Net (deductions) recoveries | (4,866) | |
Balance at June 30, 2018 | $ 14,030 |
REVENUE (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 480,461 | $ 433,555 | $ 889,203 | $ 808,802 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 443,782 | 400,300 | 819,741 | 745,880 |
Other countries | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 36,679 | 33,255 | 69,462 | 62,922 |
Residential contract revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 169,411 | 151,252 | 313,445 | 283,596 |
Commercial contract revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 136,839 | 129,174 | 268,918 | 254,006 |
Termite completions, bait monitoring, & renewals | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 93,874 | 80,950 | 170,365 | 146,602 |
Other revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 80,337 | $ 72,179 | $ 136,475 | $ 124,598 |
EARNINGS PER SHARE (Details) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Earnings per share - basic and diluted (in dollars per share) | $ 0.30 | $ 0.25 | $ 0.52 | $ 0.43 |
Common stock | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Earnings per share - basic and diluted (in dollars per share) | 0.30 | 0.25 | 0.52 | 0.43 |
Restricted shares of common stock | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Earnings per share - basic and diluted (in dollars per share) | $ 0.29 | $ 0.24 | $ 0.55 | $ 0.41 |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Line of Credit | ||
Short-term Debt [Line Items] | ||
Maximum borrowing capacity | $ 175,000,000.0 | |
Outstanding borrowings | 0 | $ 0 |
Letter of Credit | ||
Short-term Debt [Line Items] | ||
Maximum borrowing capacity | 75,000,000.0 | |
Swingline Credit Facility | ||
Short-term Debt [Line Items] | ||
Maximum borrowing capacity | $ 25,000,000.0 |
UNEARNED REVENUE (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Change in Contract with Customer, Liability [Roll Forward] | |||||
Balance, beginning of period | $ 117,614 | $ 106,323 | $ 106,323 | ||
Deferral of unearned revenue | 95,948 | 140,019 | |||
Recognition of unearned revenue | $ 39,500 | $ 32,800 | 78,290 | $ 65,400 | 128,728 |
Balance, end of period | 135,272 | 135,272 | 117,614 | ||
Long-term unearned revenue | $ 10,500 | $ 10,500 | $ 8,600 | ||
Long-term unearned revenue, recognition period (or less) | 5 years |
STOCKHOLDERS' EQUITY - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Payment of dividends | $ 61,142 | $ 50,117 | |||
Dividends paid (in dollars per share) | $ 0.14 | $ 0.115 | $ 0.28 | $ 0.23 | |
Number of shares repurchased (in shares) | 0 | 0 | |||
Repurchase of common stock | $ 100 | $ 200 | $ 9,338 | $ 7,700 | $ 8,246 |
Common stock reserved for issuance (in shares) | 6,000,000 | 6,000,000 | |||
Unvested restricted stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation cost | $ 46,900 | $ 46,900 | $ 32,900 | ||
Unrecognized compensation cost, period for recognition | 4 years 3 months 18 days | 3 years 10 months 24 days |
STOCKHOLDERS' EQUITY - Components of Stock-Based Compensation (Details) - Time lapse restricted stock - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Pre-tax compensation expense | $ 3,277 | $ 3,107 | $ 6,370 | $ 6,375 |
Tax benefit | (717) | (1,202) | (1,503) | (2,467) |
Restricted stock expense, net of tax | $ 2,560 | $ 1,905 | $ 4,867 | $ 3,908 |
PENSION AND POST RETIREMENT BENEFIT PLANS - Net Periodic Benefit (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract] | ||||
Interest and service cost | $ 1,995 | $ 2,138 | $ 3,990 | $ 4,276 |
Expected return on plan assets | (3,443) | (3,342) | (6,886) | (6,684) |
Amortization of net loss | 826 | 830 | 1,652 | 1,660 |
Net periodic benefit | $ (622) | $ (374) | $ (1,244) | $ (748) |
PENSION AND POST RETIREMENT BENEFIT PLANS - Narrative (Details) - USD ($) |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Retirement Benefits [Abstract] | |||
Company contributions to defined benefit plan | $ 0 | $ 0 | $ 0 |
BUSINESS COMBINATIONS - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Business Acquisition [Line Items] | ||
Goodwill | $ 359,107 | $ 346,514 |
Series of Individually Immaterial Business Acquisitions | ||
Business Acquisition [Line Items] | ||
Accounts receivable | 1,982 | |
Current assets | 413 | |
Equipment and property | 4,690 | |
Goodwill | 12,886 | |
Customer contracts and other intangible assets | 53,564 | |
Current liabilities | (13,920) | |
Other assets and liabilities, net | (438) | |
Total consideration paid | 59,177 | |
Less: Contingent consideration liability | (4,558) | |
Total cash purchase price | $ 54,619 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Outstanding Derivative Instruments (Details) $ in Thousands |
Jun. 30, 2018
USD ($)
derivative_instrument
|
---|---|
Derivative [Line Items] | |
Number of Instruments | derivative_instrument | 16 |
Sell Notional | $ 0 |
Buy Notional | $ 6,201 |
Sell AUD/Buy USD Fwd Contract | |
Derivative [Line Items] | |
Number of Instruments | derivative_instrument | 6 |
Sell Notional | $ 750 |
Buy Notional | $ 564 |
Sell CAD/Buy USD Fwd Contract | |
Derivative [Line Items] | |
Number of Instruments | derivative_instrument | 10 |
Sell Notional | $ 7,250 |
Buy Notional | $ 5,637 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Fair Value of Derivative Instruments and Classification on the Balance Sheet (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivative [Line Items] | ||
Derivatives Asset | $ 122 | $ 0 |
Derivative Liabilities | (10) | (70) |
Sell AUD/Buy USD Fwd Contract | ||
Derivative [Line Items] | ||
Derivatives Asset | 10 | 0 |
Derivative Liabilities | (2) | (9) |
Sell CAD/Buy USD Fwd Contract | ||
Derivative [Line Items] | ||
Derivatives Asset | 112 | 0 |
Derivative Liabilities | $ (8) | $ (61) |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Derivative Instruments Classification Within Fair Value Hierarchy (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
---|---|---|---|
Assets | |||
Derivative Financial Instruments | $ 122 | $ 0 | |
Liabilities | |||
Derivative Financial Instruments | (10) | $ (70) | |
Fair Value, Measurements, Recurring | |||
Assets | |||
Derivative Financial Instruments | 122 | $ 0 | |
Liabilities | |||
Derivative Financial Instruments | (10) | (77) | |
Fair Value, Measurements, Recurring | Level 1 | |||
Assets | |||
Derivative Financial Instruments | 0 | 0 | |
Liabilities | |||
Derivative Financial Instruments | 0 | 0 | |
Fair Value, Measurements, Recurring | Level 2 | |||
Assets | |||
Derivative Financial Instruments | 122 | 0 | |
Liabilities | |||
Derivative Financial Instruments | (10) | (77) | |
Fair value of derivatives, net | 122 | ||
Obligation to return cash | 122 | ||
Fair Value, Measurements, Recurring | Level 3 | |||
Assets | |||
Derivative Financial Instruments | 0 | 0 | |
Liabilities | |||
Derivative Financial Instruments | $ 0 | $ 0 |
SUBSEQUENT EVENTS (Details) |
Jul. 24, 2018
$ / shares
|
---|---|
Subsequent Event | |
Subsequent Event [Line Items] | |
Quarterly dividend declared (in dollars per share) | $ 0.14 |
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