Rollins, Inc. Earnings Leap 29%
Price hikes, acquisitions, and tax savings all helped to drive the bug slayers profits higher in the third quarter.
Joe Tenebruso (TMFGuardian)
Oct 25, 2018 at 2:50PM
What happened with Rollins this quarter?
Rollins enjoyed broad-based growth across its business lines: Residential pest control, commercial pest control, and termite and ancillary services revenue increased 9.2%, 5.7%, and 11%, respectively.
These gains extended an impressive streak of steadily rising profits. "We are pleased to have completed our 50th consecutive quarter of improved revenue and earnings," CEO Gary Rollins said in a press release.
In all, total revenue rose 8.3% to $487.7 million. Price hikes and organic growth drove 5.1% of the increase, while acquisitions comprised 3.2%.
Rollins' mosquito business is performing particularly well. The company grew its mosquito revenue 30% in the third quarter and year to date. President and Chief Operating Officer John Wilson explained some of the reasons for Rollins' success in this high-potential area during a conference call with analysts.
This service line expansion has been largely driven by increased concern and raised public awareness around disease-borne issues related to mosquitoes including the Zika and West Nile. And other diseases are major contributors to this growth, as customers come to us seeking answers to this threat. We believe the growth rate of our mosquito business can and will continue strongly for many years to come.
Moreover, Mosquito control services are helping to boost Rollins' customer satisfaction ratings. In addition, cross-selling these and other services to its existing customer base is improving the efficiency of Rollins' operations.
In turn, Rollins is growing more profitable. Pre-tax income rose 8.9% to $89.9 million. And net income -- which was boosted by a lower effective tax rate brought about by tax reform -- jumped 29.6% to $66.6 million, or $0.31 per share.
Looking forward
Rollins ended the third quarter with $118.7 million in cash. Investors can expect management to continue to allocate a substantial portion of this capital toward the purchase of additional pest control businesses in the quarters ahead.
Rollins also announced an upcoming 3-for-2 stock split. The company will distribute the additional shares on Dec. 10, 2018, to shareholders of record at the close of business on Nov. 9, 2018.
Rollins, Inc. Earnings Leap 29% -- The Motley Fool
