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Rollins, inc (ROL) Q3 2021 Earnings Call Transcript

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Rollins, inc (NYSE:ROL)
Q3 2021 Earnings Call
Oct 27, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to Rollins Incorporated Third Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host, Joe Calabrese. Thank you. You may begin.

Joe CalabreseNational Head of Investment, Fiduciary and Banking Services

Thank you. By now, you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive one, please contact our office at 212-827-3746 and we will send you release and make sure you’re on the company’s distribution list. There will be a replay of the call which will begin one hour after the call and run for one week. The replay can be accessed by dialing 844-512-2921 with the passcode 13723477. Additionally, call is being webcast at www.viavid.com, and a replay will be available for 90 days. On the line with me today and speaking are John Wilson, Vice Chairman; Jerry Gahlhoff Junior, President and Chief Operating Officer; and Julie Bimmerman, Interim Chief Financial Officer, Vice President and Treasurer. Management will make some opening remarks and then we’ll open the line for your questions. John, would you like to begin?

John WilsonVice-Chairman

Thank you, Joe, and good morning. We appreciate all of you joining us for our third quarter 2021 Conference Call. Julie will read our forward-looking statement and disclaimer and then we will begin.

Julie BimmermanVice President, Interim Chief Financial Officer and Treasurer

Our earnings release discussions — or sorry, discusses our business outlook and contains certain forward-looking statements. These particular forward-looking statements and all other statements that will be made on this call excluding historical facts are subject to a number of risks and uncertainties, and actual risks may differ materially from any statement we make today. Please refer to today’s press release and our SEC filings, including the Risk Factors section of our Form 10-K for the year ended December 31st, 2020 for more information, and the risk factors that could cause actual results to differ.

John WilsonVice-Chairman

Thank you, Julie. Before we begin, I am sure you have noticed that Gary is not on today’s conference call. He is actively rehabbing from a knee replacement operation, and while he is recovering quickly he is doing very well. He’s just not a position to physically join us today. We wish Gary well with this physical therapy and look forward to having him rejoin us on future calls.

During the third quarter we achieved some very strong business results, and Jerry will go over those with you shortly. In the interim, I wanted to share news of the latest addition to our Rollins’ Board of Directors. As you already know over the previous year we have enhanced and diversified that group with several new members. I am very pleased to announce our latest addition is Rollins’ President and Chief Operating Officer, Jerry Gahlhoff. This is in recognition of his strong leadership and his deep commitment to the company’s long-term success. We are proud to have Jerry serving on our Board moving forward. Jerry hit — is an important part of the Rollins leadership team and his in-depth knowledge of our business and experience gained from working in our industry since 1991 adds perspective. We’re fortunate to have him assume a greater role in the direction and future of our company.

Before turning the call over to Jerry I have two items to first update you on. The first, we’ll represent a recent development in Rollins Environmental, Social and Governance commitment. We take very seriously the responsibility that we have to the communities in which we work and live. As a recent example, we’re pleased to share that Rollins made an in-kind donation originally costing $4.6 million dollars worth of personal protective equipment or PPE items during the third quarter. Working with the Federal Emergency Management Agency and several philanthropic organizations including the Friends of Disabled Adults and Children, the Foundation of HOPE Food Bank, as well as COPE Preparedness in Los Angeles, we donated 27 pallets or 6.8 million pieces of masks, gloves and other items. In addition to achieving a successful execution of our strategies as well as solid business results, we also have a responsibility to the communities in which we work and live. ESG is a — facet of our business is becoming more important to us. We are proud to support these initiatives.

Last, as we have previously disclosed, the company has been responding to an investigation by the US Securities and Exchange Commission. In accordance with accounting standard ASC 450, we have established a reserve related to this matter which we consider immaterial. Given that the investigation is ongoing, we cannot answer any questions during our Q&A, but we remain focused on resolving this inquiry. With that, I will turn our call over to Jerry.

Jerry Gahlhoff Jr.President and Chief Operating Officer

Thank you, John. Good morning, everybody. We’re very pleased with our third quarter results. Revenue increased 11.4% to $650.2 million compared to $583.7 million for the third quarter of last year. Our net income totaled $93.9 million or $0.19 per diluted share compared to $79.6 million or $0.16 per diluted share for the same period in 2020. Julie will review the GAAP and non-GAAP results shortly.

Revenues for the first nine months of 2021 were $1.824 billion, an increase of 12.2% compared to $1.625 billion for the same period last year. Net income for the first nine months increased 44% to $285.3 million or $0.58 per diluted share compared to $198.2 million or $0.40 per diluted share for the comparable period last year. For the quarter, we experienced solid growth in all our business lines with residential increasing 11.7% and termite presenting percent growth over the third quarter 2020. Additionally, commercial excluding fumigation delivered an impressive 10.1% growth over the third quarter last year. This is also an improvement of 7.9% growth over two years ago when we were not experiencing COVID related shutdowns. Overall, we are pleased with our performance. Rollins remains well positioned for the remainder of the year and into 2022.

Looking deeper at our operating results, we’re attracting customers to all our services and brands. And one area I’d like to focus on today is our continued strong growth in our wildlife service offerings. Trutech wildlife joined the Rollins family in 2010 followed by Critter Control in 2015. Since 2010, the business has grown 800%. Day-to-day operations of operating a wildlife control business is quite different than running a typical pest and termite business, and we are proud to have a…

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