Key Points
- Revenue of $892 million came in just below the $895 million expectation.
- Adjusted EPS of $0.27 beat analyst estimates of $0.26.
- Rollins reported significant margin improvements with operating income rising by 17.8% year over year.
Leading pest control services provider Rollins (ROL -0.36%)released a Q2 2024 earnings report on Wednesday that showcased solid performance metrics. Revenue jumped 8.7% year over year to $892 million, but it came in below analyst consensus estimates of $895 million. Adjusted per-share earnings were $0.27, topping the consensus estimate of $0.26.
Overall, the quarter demonstrated Rollins' consistent revenue streams and improved operational efficiencies.
| Metric | Q2 2024 | Analysts' Estimate | Q2 2023 | Change (YOY) |
|---|---|---|---|---|
| Revenue | $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 | $0.26 | $0.23 | 17.4% |
Source: Rollins. Note: Analysts' estimate provided by FactSet. YOY = Year over year.
Company overview
Rollins operates primarily in pest and wildlife control services, catering to both residential and commercial sectors. Its business model excels in offering contracted and recurring services, ensuring a steady and visible income stream. The company continues to focus on expanding its market presence through acquisitions and investing in proprietary technology for increased operational efficiency. Major brands under Rollins like Orkin and HomeTeam Pest Defense drive brand loyalty and market credibility.
Quarterly performance highlights
Rollins achieved notable financial milestones during the second quarter. Organic revenue, which accounts for internal operations but factors out acquisitions, totaled $877.8 million, a 7.7% rise year over year. Operating income showed substantial growth, registering $182 million (up 17.8% compared to Q2 2023). The operating margin increased from 18.9% to 20.4%, while adjusted operating margin improved by 140 basis points to 20.9%. This data underscores Rollins' successful cost management and enhanced operational efficiency.
The company's adjusted EBITDA of $210 million marked a 15.3% increase year over year. Adjusted EBITDA margin also improved by 140 basis points and sits at 23.6%. These figures highlight Rollins' ability to leverage its scalable operating platform effectively.
Acquisitions remain a significant part of Rollins' growth strategy, with investments of $35 million. Rollins' acquisition of Fox Pest Control contributed positively to its growth, but it also incurred $4.2 million in acquisition-related expenses.
Looking ahead
Management’s outlook remains optimistic with a strong demand forecast and a robust acquisition pipeline. Future revenue and margin growth will likely be fueled by continuous investments in technology and operational efficiency.
Investors should pay attention to the recurring revenue model and operational efficiencies, as well as the impact of upcoming acquisitions.