Rollins Inc (ROL) Posts Strong Revenue and Earnings Growth in Q4 and Full Year 2023
Revenue Growth: Q4 revenues rose by 14% to $754 million, with full-year revenues also up by 14% to $3.1 billion.
Net Income Surge: Q4 net income increased by 29% to $109 million, and full-year net income grew by 18% to $435 million.
Earnings Per Share (EPS): Q4 EPS climbed 29% to $0.22, while full-year EPS was up 19% to $0.89.
Operating Cash Flow: Q4 operating cash flow improved by 24% to $153 million, with a 13% increase to $528 million for the full year.
Capital Allocation: Rollins invested $367 million in acquisitions and returned $264 million to shareholders through dividends and repurchased $300 million of its stock in 2023.
On February 14, 2024, Rollins Inc (NYSE:ROL), a leading global consumer and commercial services company, announced its financial results for the fourth quarter and full year of 2023. The company reported a double-digit increase in earnings, driven by strong revenue growth. Rollins released its 8-K filing detailing these results.
Rollins, known for its comprehensive pest-control services, operates under a variety of brands including the well-known Orkin. The company's focus on residential pest and termite prevention, particularly in the U.S. and Canadian markets, has contributed to its robust financial performance.
In the fourth quarter, Rollins saw a 14% increase in revenues to $754 million, with organic revenues growing over 7% and acquisition-related revenue by approximately 7%. Operating income for the quarter rose by 16% to $139 million, with a 30 basis point increase in operating margin to 18.4% of revenue. Adjusted EBITDA for the quarter was up 14% to $167 million.
For the full year, revenues also increased by 14% to $3.1 billion, with organic revenues growing over 8% and acquisition-related revenue by nearly 6%. Operating income for the year increased by 18% to $583 million, and the operating margin improved by 70 basis points to 19.0%. The full-year adjusted EBITDA increased by 18% to $698 million.
Rollins' financial achievements are significant in the Personal Services industry, as they reflect the company's ability to grow both organically and through strategic acquisitions. The improvement in operating margins suggests efficient cost management and operational execution, which are critical in service-oriented industries.
Key financial metrics from the income statement include a 15% increase in gross profit to $383.8 million for the quarter and a 15.6% increase to $1.6 billion for the full year. Net income for the quarter was $108.8 million, a 29.1% increase, and $434.9 million for the full year, an 18% increase. Basic and diluted EPS for the quarter was $0.22, and for the full year, it was $0.89.
Rollins' balance sheet remains strong, with cash and cash equivalents of $103.8 million as of December 31, 2023. The company's total assets increased to $2.6 billion, up from $2.1 billion the previous year. Total liabilities also increased, but the company maintains a healthy equity position with total stockholders' equity of $1.2 billion.
Management remains optimistic about the future, citing strong organic growth and a robust pipeline for acquisitions. The company's focus on pricing, modernization efforts, and continuous improvement initiatives are expected to support healthy incremental margins and profitability.
Rollins' President and CEO, Jerry Gahlhoff, Jr., expressed confidence in the company's position for continued growth and profitability enhancement. CFO Kenneth Krause highlighted the double-digit revenue and cash flow growth, as well as the 70 basis point improvement in operating margins for 2023.
Overall, Rollins Inc (NYSE:ROL) has demonstrated a strong financial performance in the fourth quarter and full year of 2023, with significant growth in revenue, net income, and EPS. The company's strategic investments and commitment to operational excellence have positioned it well for sustained success in the competitive pest control market.
Explore the complete 8-K earnings release (here) from Rollins Inc for further details.
This article first appeared on GuruFocus.
