Mixed Q2 Results: Rollins Tops EPS, Below Revenue Expectations

Rollins reports solid earnings and revenue that fell slightly short of expectations, as well as results that demonstrate organic growth and improved operating efficiency.

Key points

Revenue of $892 million was slightly below the $895 million expected.
Adjusted earnings per share of $0.27 topped analysts’ estimates of $0.26.
Rollins saw significant margin improvement, with operating income up 17.8% year-over-year.

Leading Pest Control Provider Rollins (ROL -4.91%)released its second-quarter 2024 earnings report on Wednesday, which showed solid performance metrics. Revenue rose 8.7% year over year to $892 million, but fell short of analysts’ consensus estimates of $895 million. Adjusted earnings per share came in at $0.27, beating the consensus estimate of $0.26.

Overall, the quarter demonstrated stability in Rollins’ revenue streams and improved operating efficiencies.

Metric	Q2 2024	Analysts’ estimates	Q2 2023	Change (year over year)
Income	$892 million	$895 million	$820.8 million	8.7%
Organic revenue	$877.8 million	—	$814.8 million	7.7%
Operating income	$182.4 million	—	$154.8 million	17.8%
Operating margin	20.4%	—	18.9%	150 bps
Adjusted EPS	0.27 PLN	0.26 PLN	0.23 PLN	17.4%

Source: Rollins. Note: Analyst consensus estimates provided by FactSet. YOY = year-over-year.

Informations about company

Rollins operates primarily in the pest and wildlife control services space, serving both the residential and commercial sectors. Its business model is distinguished by offering contract and recurring services, providing a steady and visible revenue stream. The company continues to focus on expanding its market presence through acquisitions and investing in proprietary technology to increase operational efficiencies. Major brands under Rollins, such as Orkin and HomeTeam Pest Defense, enhance brand loyalty and market credibility.

Quarterly results highlights

Rollins achieved significant financial milestones in the second quarter. Organic revenues, which include internal operations but exclude acquisitions, totaled $877.8 million, up 7.7% year over year. Operating income showed significant growth, recording $182 million (up 17.8% compared to the second quarter of 2023). Operating margin increased from 18.9% to 20.4%, while adjusted operating margin improved 140 basis points to 20.9%. These figures underscore Rollins’ effective cost management and improved operating efficiency.

The company’s adjusted EBITDA of $210 million was up 15.3% year over year. Adjusted EBITDA margin also improved by 140 basis points to 23.6%. These numbers underscore Rollins’ ability to effectively leverage its scalable operating platform.

Acquisitions remain a significant part of Rollins’ growth strategy, with investments of $35 million. Rollins’ acquisition of Fox Pest Control contributed positively to growth, but also incurred $4.2 million in acquisition-related expenses.

Looking to the future

Management’s outlook remains positive, with a strong demand outlook and a solid acquisition pipeline. Future revenue and margin growth is likely to be driven by continued investment in technology and operational efficiencies.

Investors should pay attention to the company’s recurring revenue model and operating efficiency, as well as the impact of upcoming acquisitions.

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