Rollins : 1st Quarter 2026 Earnings Webcast

Published: 2026-04-23 08:14:10 ET ROL

Published on 04/23/2026 at 08:14 am EDT

Rollins, Inc.

April 23, 2026

Reconciliation of GAAP and Non-GAAP Financial Measures

A non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that either 1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, statement of financial position or statement of cash flows, or 2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

These measures should not be considered in isolation or as a substitute for revenues, net income, earnings per share or other performance measures prepared in accordance with GAAP. Management believes all of these non-GAAP financial measures are useful to provide investors with information about current trends in, and period-over-period comparisons of, the Company's results of operations. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

The Company has used the following non-GAAP financial measures in this earnings presentation:

Organic revenues

Organic revenues are calculated as revenues less the revenues from acquisitions completed within the prior 12 months and excluding the revenues from divested businesses. Acquisition revenues are based on the trailing 12-month revenue of our acquired entities. Management uses organic revenues, and organic revenues by type to compare revenues over various periods excluding the impact of acquisitions and divestitures.

Adjusted operating income and adjusted operating margin

Adjusted operating income and adjusted operating margin are calculated by adding back to operating income those expenses associated with the amortization of intangible assets and adjustments to the fair value of contingent consideration resulting from the acquisitions of Fox Pest Control and Saela Pest Control. Adjusted operating margin is calculated as adjusted operating income divided by revenues. Management uses adjusted operating income and adjusted operating margin as measures of operating performance because these measures allow the Company to compare performance consistently over various periods.

Adjusted net income and adjusted EPS

Adjusted net income and adjusted EPS are calculated by adding back to the GAAP measures amortization of intangible assets and adjustments to the fair value of contingent consideration resulting from the acquisitions of Fox Pest Control and Saela Pest Control, excluding gains and losses on the sale of non-operational assets and gains on the sale of businesses, and by further subtracting the tax impact of those expenses, gains, or losses. Management uses adjusted net income and adjusted EPS as measures of operating performance because these measures allow the Company to compare performance consistently over various periods.

EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, incremental EBITDA margin and adjusted incremental EBITDA margin

EBITDA is calculated by adding back to net income depreciation and amortization, interest expense, net, and provision for income taxes. EBITDA margin is calculated as EBITDA divided by revenues. Adjusted EBITDA and adjusted EBITDA margin are calculated by further adding back those expenses associated with the adjustments to the fair value of contingent consideration resulting from the acquisitions of Fox Pest Control and Saela Pest Control, and excluding gains and losses on the sale of non-operational assets and gains on the sale of businesses. Management uses EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin as measures of operating performance because these measures allow the Company to compare performance consistently over various periods. Incremental EBITDA margin is calculated as the change in EBITDA divided by the change in revenue. Management uses incremental EBITDA margin as a measure of operating performance because this measure allows the Company to compare performance consistently over various periods. Adjusted incremental EBITDA margin is calculated as the change in adjusted EBITDA divided by the change in revenue. Management uses adjusted incremental EBITDA margin as a measure of operating performance because this measure allows the Company to compare performance consistently over various periods.

Free cash flow and free cash flow conversion

Free cash flow is calculated by subtracting capital expenditures from cash provided by operating activities. Management uses free cash flow to demonstrate the Company's ability to maintain its asset base and generate future cash flows from operations. Free cash flow conversion is calculated as free cash flow divided by net income.

Management uses free cash flow conversion to demonstrate how much net income is converted into cash. Management believes that free cash flow is an important financial measure for use in evaluating the Company's liquidity. Free cash flow should be considered in addition to, rather than as a substitute for, net cash provided by operating activities as a measure of our liquidity. Additionally, the Company's definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, management believes it is important to view free cash flow as a measure that provides supplemental information to our condensed consolidated statements of cash flows.

Adjusted sales, general, and administrative ("SG&A")

Adjusted SG&A is calculated by removing the adjustments to the fair value of contingent consideration resulting from the acquisitions of Fox Pest Control and Saela Pest Control. Management uses adjusted SG&A to compare SG&A expenses consistently over various periods.

Leverage ratio

Leverage ratio, a financial valuation measure, is calculated by dividing adjusted net debt by adjusted EBITDAR. Adjusted net debt is calculated by adding short-term debt and operating lease liabilities to total long-term debt less a cash adjustment of 90% of total consolidated cash. Adjusted EBITDAR is calculated by adding back to net income depreciation and amortization, interest expense, net, provision for income taxes, operating lease cost, and stock-based compensation expense. Management uses leverage ratio as an assessment of overall liquidity, financial flexibility, and leverage.

First Quarter

Revenue

Adjusted EPS1

Free Cash Flow1

down

Other

Q1 Highlights

Organic growth1 was 6.6%, acquisitions drove remaining 3.6% growth

Sequential improvement in growth occurred as we moved through the quarter, with over 8% organic growth and ~12% total growth in March

Sequential Improvement Throughout Q1 and Positioned Well to Deliver in Peak Season

Free Cash Flow1 was negatively impacted by ~$40 million in net tax payments related to timing associated with our tax credit planning strategy and ~$9 million associated with our transition to semi-annual interest payments on our 2035 senior notes. Excluding these items, Free Cash Flow1 would have increased ~14% versus Q1 2025

Full quarter comparisons are against Q1 2025 unless otherwise noted. 1 These amounts are non-GAAP numbers (see Appendix).

$27.4

$33.2

$822.5

$17M organic1

$6M acquisition1

$15M organic1

$18M acquisition1

$22M organic1

$5M acquisition1

+4.2% organic1

+5.1% acquisition1

+9.3% total

+7.7% organic1

+1.9% acquisition1

+9.6% total

+9.8% organic1

+3.7% acquisition1

+13.5% total

+6.6% organic1

+3.6% acquisition1

+10.2% total

(in millions)

$23.3 $0.1 $906.4

Q1 2025 Residential Commercial Termite Other Q1 2026

Solid Growth in Q1 Across All Major Service Lines

20.9%

-0.6%

0.1% 19.8%

Key Drivers

-110 bps

Gross Profit

Insurance and claims drove half of the pressure, while the remainder came from deleverage associated with people costs driven by lower volume in the quarter, as well as timing of vehicle gains compared to last year

Adj. SG&A1

Deleverage driven by incremental selling investments, namely in sales headcount, as well as higher insurance and claims costs

Q1 2025 Adj.

EBITDA

Margin1

Gross Margin

Adjusted SG&A1

Other

Q1 2026 Adj.

EBITDA

Margin1

Margins Were Muted by Pressures from Insurance and Claims and Deleverage from People Costs and Selling Investments

Q1 2026 Free Cash Flow1

Q1 2026 Uses of Cash Flow

-21%

$140M

$111M

Q1 2025

133%

Q1 2026

103%

Capex

$7M

M&A

$18M

Dividends

$88M

Cash Flow & Balance Sheet

Cash flow was negatively impacted by ~$40 million in net tax payments, driven by the timing of our tax credit planning strategy, as well as ~$9 million related to our transition to semi-annual interest payments on our 2035 senior notes; excluding this cash flow conversion was

~140% and the increase versus last year was ~14%

Leverage1 of 0.9x

Acquisitions

Completed 3 acquisitions. Acquisition of Romex completed in early April

Dividends

Dividend +10% YoY

Solid Cash Flow Generation and Balanced Capital Allocation Strategy

1 These amounts are Non-GAAP numbers (See Appendix).

24 Years of Consecutive Growth

High Recurring Revenue

90+% Domestic Revenue

Consistency Through Cycles

Industrial Slowdown

($M) 6% Revenue

Growth

COVID Pandemic

12% Revenue Growth

14% Adj. EBITDA1

$3,761

$3,845

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$647

$650

$665

$677

Great Financial Crisis

6% Revenue Growth

11% Adj. EBITDA1

Growth

$147

$167

$181

$200

$215

$231

$262

$286

$384

$691

$1,137 $1,205 $1,271 $1,337 $1,412

8% Adj. EBITDA1

Growth

$311

$351

$1,485 $1,573 $1,674

$2,015

$411

$1,822

$2,161

Growth

$593

$2,696

$546

$2,424

$3,389

$772

$863

$855

$3,073

$500

$33

$751 $802

$47

$66

$78

$97

$859 $895 $1,021 $1,075

$120

$130

$106

$454

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 1Q26

LTM

Earnings Growth1: Adj. EBITDA

Margin2:

FCF Conversion2:

33%

5% NM

75%

124%

61%

10%

160%

33%

12%

139%

44%

13%

110%

13%

97%

11%

14%

115%

14%

15%

112%

14%

110%

22%

16%

113%

16%

123%

13%

17%

135%

10%

17%

110%

11%

17%

117%

12%

19%

120%

11%

19%

103%

10%

20%

116%

13%

21%

118%

24%

21%

118%

1.4%3

20%

144%

15%

21%

155%

26%

23%

105%

22%

118%

20%

23%

114%

11%

23%

124%

13%

23%

123%

13%

22%

117%

Recession-Resilient Business Model Yields Consistently Strong Financial Performance

Growth rates reflect Adjusted (non-GAAP) EPS beginning in 2017. Prior to 2017, growth is based on reported GAAP EPS.

These amounts are Non-GAAP numbers (See Appendix).

Driven by a one-time $50M pension plan discontinuation charge.

Solid Start to Peak Season

Sequential acceleration throughout the quarter as demand was a little slower to start given some unfavorable weather in January. Exited with

~12% total revenue growth and over 8% of organic growth1 in March.

We continued our investments in incremental sales staffing and marketing activities ahead of peak season to ensure that we are positioned top of mind for the consumer. We are well-staffed on the sales, technician, and customer support front, ready to provide an exceptional level of service for our customers.

Solid revenue growth of 10.2% for Q1 with growth across all service lines

Organic growth1 of 6.6%, acquisitions drove remaining 3.6% of growth. Both recurring and one-time business saw sequential improvement throughout the quarter.

Underlying markets remain healthy and customer retention rates are strong.

Sustainable Growth

Continue to focus on pricing and productivity

We saw headwinds to profitability from higher insurance and claims, as well as pressures from people costs and selling investments given lower volume earlier in the quarter. We anticipate improving profitability in our underlying operations as we enter our peak season.

Margins Remain a Focus

Welcomed Romex to Rollins Family

Earlier this month we announced our acquisition of Romex Pest Control, a top 40 pest management company according to PCT 100 rankings.

Romex provides us with entry points into new markets, while enabling them to further scale their operations and expand service offerings to their existing customer base. Most importantly, they have a strong people and customer-focused culture.

1 These amounts are non-GAAP numbers (See Appendix).

Last 3 Years 2026E Medium-Term Outlook

Revenue Growth

12%

~7% to 8% Organic

~2% to 3% M&A

Above-Market Organic Growth

+ M&A

Adj. Incremental EBITDA Margin1

23%

25-30%

~30-35%

FCF Conversion1

125%

>100%

Reconciliation of GAAP and Non-GAAP Financial Measures

Set below are reconciliations of non-GAAP financial measures used in this investor presentation, and our earnings release and conference call to their most directly comparable GAAP measures.

(unaudited, in thousands, except per share data)

Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS

Three Months Ended March 31,

Variance

2026 2025 $ %

Consists of expenses resulting from the amortization of intangible assets and adjustments to the fair value of contingent consideration associated with the acquisitions of Fox Pest Control and Saela Pest Control. While we exclude such expenses in this non-GAAP measure, the revenue from the acquired companies is reflected in this non-GAAP measure and

Net income

Acquisition-related expenses (1)

$ 107,838

7,307

$ 105,248

4,213

the acquired assets contribute to revenue generation.

Consists of the gain or loss on the sale of non-

Gain on sale of assets, net (2)

(61)

(692)

operational assets.

Tax impact of adjustments (3)

(1,855)

(901)

Adjusted net income

$ 113,229 $ 107,868

5,361

5.0

EPS - basic and diluted

$ 0.22 $ 0.22

Acquisition-related expenses (1)

Gain on sale of assets, net (2)

Tax impact of adjustments (3)

0.02 0.01

- -

Adjusted EPS - basic and diluted (4)

$ 0.24 $ 0.22

0.02

9.1

Weighted average shares outstanding - basic

481,385

484,414

Weighted average shares outstanding - diluted

481,398

484,434

The tax effect of the adjustments is calculated using the applicable statutory tax rates for the respective periods.

In some cases, the sum of the individual EPS amounts may not equal total adjusted EPS calculations due to rounding.

Reconciliation of GAAP and Non-GAAP Financial Measures

Set below are reconciliations of non-GAAP financial measures used in this investor presentation, and our earnings release and conference call to their most directly comparable GAAP measures.

Three Months Ended March 31,

Variance

(1) Consists of expenses resulting from the amortization of intangible assets and

(unaudited, in thousands, except margins)

2026

2025 $ %

adjustments to the fair value of contingent consideration associated with the acquisitions

Reconciliation of Net Income to EBITDA, Adjusted EBITDA, EBITDA Margin, Incremental EBITDA Margin, Adjusted EBITDA Margin, and Adjusted Incremental EBITDA Margin

of Fox Pest Control and Saela Pest Control. While we exclude such expenses in this non-GAAP measure, the revenue from the acquired

Net income

$ 107,838

$ 105,248

companies is reflected in this non-GAAP

Depreciation and amortization

32,498

29,209

measure and the acquired assets contribute to

Interest expense, net

8,851

5,796

revenue generation.

Provision for income taxes

29,260

32,296

EBITDA

$ 178,447

$ 172,549

5,898 3.4 (2) Consists of the gain or loss on the sale of

non-operational assets.

Acquisition-related expenses (1)

1,083

Gain on sale of assets, net (2)

(61)

(692)

Adjusted EBITDA $ 179,469 $ 171,857 7,612 4.4

Revenues

$ 906,424

$ 822,504

83,920

EBITDA margin

19.7%

21.0%

Incremental EBITDA margin

7.0%

Adjusted EBITDA margin

19.8%

20.9%

Adjusted incremental EBITDA margin

9.1%

Reconciliation of GAAP and Non-GAAP Financial Measures

Set below are reconciliations of non-GAAP financial measures used in this investor presentation, and our earnings release and conference call to their most directly comparable GAAP measures.

Three Months Ended March 31,

Variance

(unaudited, in thousands, except margins)

2026

2025 $ %

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Free Cash Flow Conversion

Net cash provided by operating activities

$ 118,367

$ 146,892

Capital expenditures

(7,139)

(6,781)

Free cash flow

$ 111,228

$ 140,111 (28,883) (20.6)

Free cash flow conversion

103.1%

133.1%

Reconciliation of GAAP and Non-GAAP Financial Measures

Set below are reconciliations of non-GAAP financial measures used in this investor presentation, and our earnings release and conference call to their most directly comparable GAAP measures.

Three Months Ended March 31,

(unaudited, in thousands)

2026

2025

Variance

$ %

Reconciliation of Revenues to Organic Revenues

Revenues

$ 906,424

$ 822,504

83,920

10.2

Revenues from acquisitions

(29,858)

3.6

Organic revenues

$ 876,566

$ 822,504

54,062

6.6

Reconciliation of Residential Revenues to Organic Residential Revenues

Residential revenues

$ 389,504

$ 356,313

33,191

9.3

Residential revenues from acquisitions

(18,145)

5.1

Residential organic revenues

$ 371,359

$ 356,313

15,046

4.2

Reconciliation of Commercial Revenues to Organic Commercial Revenues

Commercial revenues

$ 311,726

$ 284,357

27,369

9.6

Commercial revenues from acquisitions

(5,371)

1.9

Commercial organic revenues

$ 306,355

$ 284,357

21,998

7.7

Reconciliation of Termite and Ancillary Revenues to Organic Termite and Ancillary Revenues

Termite and ancillary revenues

$ 195,423

$ 172,130

23,293

13.5

Termite and ancillary revenues from acquisitions

(6,342)

(6,342) 3.7

Termite and ancillary organic revenues

$ 189,081

$ 172,130

16,951

9.8

Reconciliation of Franchise and Other Revenues to Organic Franchise and Other Revenues

Franchise and other revenues

$ 9,771

$ 9,704

0.7

Franchise and other revenues from acquisitions

- -

Franchise and other organic revenues

$ 9,771

$ 9,704

67 0.7

Reconciliation of GAAP and Non-GAAP Financial Measures

Set below are reconciliations of non-GAAP financial measures used in this investor presentation, and our earnings release and conference call to their most directly comparable GAAP measures.

(unaudited, in thousands)

Reconciliation of Debt and Net Income to Leverage Ratio

Short-term debt (1)

Long-term debt (2)

Operating lease liabilities (3)

Cash adjustment (4)

Adjusted net debt

Net income

Depreciation and amortization Interest expense, net Provision for income taxes Operating lease cost (5)

Period Ended March 31, 2026

$ 163,926

500,000

416,587

(104,889)

$ 975,624

$ 529,295

128,033

31,613

171,185

163,890

41,730

Period Ended December 31, 2025

$ 123,683

500,000

428,175

(90,004)

$ 961,854

$ 526,705

124,744

28,558

174,221

159,924

39,707

The Company's short-term borrowings are presented under the short-term debt caption of our condensed consolidated statement of financial position, net of unamortized discounts.

As of March 31, 2026 and December 31, 2025, the Company had outstanding borrowings of $500.0 million from the issuance of our 2035 Senior Notes. These borrowings are presented under the long-term debt caption of our condensed consolidated statement of financial position, net of unamortized discount and unamortized debt issuance costs. As of March 31, 2026 and December 31, 2025, the Company had no outstanding borrowings under the Revolving Credit Facility.

Operating lease liabilities are presented under the operating lease liabilities - current and operating lease liabilities, less current portion captions of our condensed consolidated statement of financial position.

Represents 90% of cash and cash equivalents per our condensed consolidated statement of financial position as of both

Stock-based compensation expense

periods presented.

Adjusted EBITDAR Leverage ratio

$ 1,065,746

0.9x

$ 1,053,859

0.9x

Operating lease cost excludes short-term lease cost associated with leases that have a duration of 12 months or less.

Reconciliation of GAAP and Non-GAAP Financial Measures

Set below are reconciliations of non-GAAP financial measures used in this investor presentation, and our earnings release and conference call to their most directly comparable GAAP measures.

Three Months Ended March 31,

(1) Consists of expenses resulting from the amortization of intangible assets and adjustments to the fair value of

(unaudited, in thousands)

Reconciliation of SG&A to Adjusted SG&A

SG&A

2026

$ 282,918

2025

$ 250,513

contingent consideration associated with the acquisitions of Fox Pest Control and Saela Pest Control. While we exclude such expenses in this non-GAAP measure, the revenue from the acquired companies is reflected in this non-GAAP measure and the acquired assets contribute to revenue generation.

Acquisition-related expenses (1)1,083 -

Adjusted SG&A

$ 281,835

$ 250,513

Revenues

$ 906,424

$ 822,504

Adjusted SG&A as a % of revenues

31.1%

30.5%

Disclaimer

Rollins Inc. published this content on April 23, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 23, 2026 at 12:13 UTC.