Rollins, Inc. (ROL, Financial) reported financial results for the first quarter, surpassing market expectations with revenue reaching $823 million, compared to the consensus estimate of $815.98 million. This performance underscores the company's robust business model and its strategic focus on operational efficiency.
President and CEO Jerry Gahlhoff, Jr. emphasized the importance of organic growth and strategic acquisitions in driving the company's success. A notable transaction during this period was the acquisition of pest control services provider, Saela, in April. This addition is anticipated to enhance Rollins' portfolio offerings and broaden its market reach, reflecting the company's commitment to expansion through carefully considered mergers and acquisitions.
The integration of Saela is expected to provide beneficial contributions to Rollins' operations, marking a significant step in the company's growth strategy. Rollins remains focused on generating organic demand and leveraging its expanded offerings to sustain its competitive edge in the pest control industry.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 10 analysts, the average target price for Rollins Inc (ROL, Financial) is $51.93 with a high estimate of $62.00 and a low estimate of $39.32. The average target implies an downside of 5.46% from the current price of $54.93. More detailed estimate data can be found on the Rollins Inc (ROL) Forecast page.
Based on the consensus recommendation from 12 brokerage firms, Rollins Inc's (ROL, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Rollins Inc (ROL, Financial) in one year is $55.86, suggesting a upside of 1.69% from the current price of $54.93. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Rollins Inc (ROL) Summary page.
Key Business Developments
Release Date: February 13, 2025
- Revenue: $3.4 billion for fiscal 2024, a 10.3% increase year-over-year.
- Organic Growth: 7.9% for the year.
- Adjusted Earnings Per Share: Increased by 11.2% for the year.
- Operating Cash Flow: $608 million, up 15% year-over-year.
- Free Cash Flow: $580 million, up 17% year-over-year.
- Fourth Quarter Revenue Growth: 10.4% with organic growth at 8.5%.
- Residential Revenue Growth: 8.4% in the fourth quarter.
- Commercial Pest Control Revenue Growth: 9.2% in the fourth quarter.
- Termite and Ancillary Services Revenue Growth: 16.6% in the fourth quarter.
- Gross Margin: Improved by 40 basis points to 51.3% in the fourth quarter.
- Quarterly Adjusted EBITDA: $181 million with a margin of 21.8%.
- Quarterly GAAP Net Income: $106 million or $0.22 per share.
- Adjusted Net Income: $109 million or $0.23 per share for the fourth quarter.
- Investment-Grade Credit Ratings: Fitch BBB+ and S&P BBB.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rollins Inc (ROL, Financial) achieved a milestone of $3.4 billion in revenue for fiscal 2024, with a 10.3% increase in full-year revenue compared to the previous year.
- The company reported strong organic growth of 7.9% for the year, supported by effective execution of operating strategies and investments in staffing.
- Rollins Inc (ROL) strategically expanded its commercial division within Orkin, growing its sales force by over 15% and investing in training and support.
- The company closed 44 tuck-in deals in 2024, maintaining a robust M&A pipeline to drive additional growth.
- Rollins Inc (ROL) received investment-grade corporate credit ratings from Fitch and S&P, enhancing its access to capital markets for executing growth strategies.
Negative Points
- Investments in long-term growth objectives tempered incremental margins in the second half of the year.
- The company faced headwinds from legacy auto claims, impacting incremental margins by 40 basis points in the fourth quarter.
- SG&A costs as a percentage of revenue increased by 50 basis points in the fourth quarter due to growth initiatives.
- The commercial business experienced a slight deceleration in growth during the fourth quarter despite easier comps.
- Rollins Inc (ROL) continues to work through a long tail of safety claims, which remains a challenge for the company.
