Exhibit 99.1
For Further Information Contact
Harry J. Cynkus (404) 888-2922
FOR IMMEDIATE RELEASE
ROLLINS, INC. REPORTS THIRD QUARTER FINANCIAL RESULTS
Revenues Rise 8.8% over Previous Years Third Quarter; Net income up 12.8%
ATLANTA, GEORGIA, October 25, 2006: Rollins, Inc. (NYSE:ROL), a premier North American consumer and commercial services company, today reported that revenues rose 8.8% for the third quarter ended September 30, 2006 to $227.8 million, compared to revenues of $209.3 million for the third quarter ended September 30, 2005. Excluding revenues resulting from the Companys October 1, 2005 acquisition of the Industrial Fumigant Company, revenues grew 4.6%. See attached detailed reconciliation.
Rollins recorded net income of $17.0 million, or $0.25 per diluted share for the third quarter ended September 30, 2006, compared to $15.1 million, or $0.22 per diluted share for the third quarter ended September 30, 2005.
Rollins recorded net income of $47.3 million, or $0.69 per diluted share for the nine months ended September 30, 2006, compared to $45.4 million, or $0.65 per diluted share for the nine months ended September 30, 2005. Included in the first nine months of last years results was a $2.5 million gain, net of taxes, or $0.04 per diluted share, as the Company curtailed Rollins, Inc.s pension plan effective June 30, 2005. Excluding the impact of the pension curtailment gain in 2005, the Companys earnings increased 10.1% or $.08 per diluted share compared to the same period last year. See attached detailed reconciliation.
Rollins balance sheet remains strong with total assets of $454.2 million and stockholders equity increasing to $198.9 million. In the third quarter, the Company announced that it repurchased 127,306 shares of common stock with a total of 1,006,680 shares repurchased year to date. In total, approximately 2.3 million additional shares may be purchased under programs previously approved by the Board of Directors.
Gary W. Rollins, President and Chief Executive Officer of Rollins, Inc. stated, We are pleased with the progress we are making increasing our revenue and growing our customer base. Additionally, we are focused on providing our customers a positive experience from the first service rendered through the entire customer relationship. Our commitment to extraordinary service has been recognized through recent industry acknowledgement. Orkin received the Best in Class Customer Service award from PCT Magazine and Syngenta, a leading pesticide manufacturer. We were recognized in the class of pest control companies with over $6.0 million in revenue, which includes a large number of exceptional competitors.
Rollins, Inc. is a premier North American consumer and commercial services company. Through its wholly owned subsidiaries, Orkin, Inc., Western Pest Services, and The Industrial Fumigant Company, the Company provides essential pest control services and protection against termite damage, rodents and insects to approximately 1.7 million customers in the United States, Canada, Mexico, Panama and Costa Rica from over 400 locations. You can learn more about our subsidiaries by visiting our Web sites at www.orkin.com, www.westernpest.com, www.indfumco.com and www.rollins.com. You can also find this and other news releases at www.rollins.com by accessing the news releases button.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding effect of various operational initiatives and the dedication of the Companys employees to further increase the Companys business put the Company on track year-to-date to meet the Companys financial goals for 2006 and the Companys expectation that 2006 will be another notable year for the Company and its shareholders. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties, including without limitation, general economic conditions; market risk; changes in industry practices or technologies; the degree of success of the Companys pest and termite process reforms and pest control selling and treatment methods; the Companys ability to identify and integrate potential acquisitions; climate and weather trends; competitive factors and pricing practices; expected benefits of the commercial re-engineering project may not be realized, potential increases in labor costs; uncertainties of litigation; and changes in various government laws and regulations, including environmental regulations. All of the foregoing risks and uncertainties are beyond the ability of the Company to control, and in many cases the Company cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. A more detailed discussion of potential risks facing the Company can be found in the Companys Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2005.
ROLLINS, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||||||
(in thousands) | |||||||
|
2006 |
|
2005 | ||||
At September 30, |
(unaudited) |
|
(unaudited) | ||||
ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
53,787 |
|
|
$ |
79,489 |
|
Trade receivables, short-term |
|
57,817 |
|
|
|
48,954 |
|
Materials and supplies |
|
8,398 |
|
|
|
7,358 |
|
Deferred income taxes |
|
21,053 |
|
|
|
30,389 |
|
Other current assets |
|
8,975 |
|
|
|
8,097 |
|
Total Current Assets |
|
150,030 |
|
|
|
174,287 |
|
|
|
|
|
|
|
|
|
Equipment and property, net |
|
72,090 |
|
|
|
57,928 |
|
Goodwill and other intangible assets |
|
201,556 |
|
|
|
189,893 |
|
Deferred income taxes |
|
16,867 |
|
|
|
17,441 |
|
Trade receivables, long-term |
|
9,111 |
|
|
|
9,866 |
|
Other assets |
|
4,531 |
|
|
|
4,221 |
|
Total Assets |
$ |
454,185 |
|
|
$ |
453,636 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Capital leases |
$ |
623 |
|
|
$ |
- |
|
Accounts payable |
|
14,092 |
|
|
|
14,901 |
|
Accrued insurance |
|
16,633 |
|
|
|
16,516 |
|
Accrued compensation and related liabilities |
|
42,813 |
|
|
|
38,816 |
|
Unearned revenue |
|
88,945 |
|
|
|
90,080 |
|
Other current liabilities |
|
31,759 |
|
|
|
39,827 |
|
Total Current Liabilities |
|
194,865 |
|
|
|
200,140 |
|
|
|
|
|
|
|
|
|
Capital leases, less current portion |
|
197 |
|
|
|
- |
|
Accrued pension |
|
15,651 |
|
|
|
27,291 |
|
Long-term accrued liabilities |
|
44,593 |
|
|
|
47,522 |
|
Total Liabilities |
|
255,306 |
|
|
|
274,953 |
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
Common stock |
|
67,783 |
|
|
|
68,383 |
|
Retained earnings and other equity |
|
131,096 |
|
|
|
110,300 |
|
Total Stockholders Equity |
|
198,879 |
|
|
|
178,683 |
|
Total Liabilities and Stockholders Equity |
$ |
454,185 |
|
|
$ |
453,636 |
|
ROLLINS, INC. AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
FOR THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, | |||||||||||||||
(in thousands except per share data) | |||||||||||||||
(unaudited) | |||||||||||||||
|
Third Quarter |
|
Nine months ended | ||||||||||||
|
September 30 |
|
September 30 | ||||||||||||
|
2006 |
|
2005 |
|
2006 |
|
2005 | ||||||||
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer services |
$ |
227,816 |
|
|
$ |
209,346 |
|
|
$ |
654,225 |
|
|
$ |
607,587 |
|
COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services provided |
|
119,206 |
|
|
|
110,083 |
|
|
|
345,255 |
|
|
|
324,626 |
|
Depreciation and amortization |
|
6,662 |
|
|
|
5,800 |
|
|
|
20,400 |
|
|
|
17,808 |
|
Sales, general and administrative |
|
74,472 |
|
|
|
68,574 |
|
|
|
211,340 |
|
|
|
194,839 |
|
Pension curtailment gain |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,176 |
) |
Gain sales of assets |
|
(17 |
) |
|
|
(1 |
) |
|
|
(15 |
) |
|
|
(544 |
) |
Interest income |
|
(332 |
) |
|
|
(489 |
) |
|
|
(968 |
) |
|
|
(1,305 |
) |
|
|
199,991 |
|
|
|
183,967 |
|
|
|
576,012 |
|
|
|
531,248 |
|
INCOME BEFORE TAXES |
|
27,825 |
|
|
|
25,379 |
|
|
|
78,213 |
|
|
|
76,339 |
|
PROVISION FOR INCOME TAXES |
|
10,788 |
|
|
|
10,279 |
|
|
|
30,943 |
|
|
|
30,918 |
|
NET INCOME |
$ |
17,037 |
|
|
$ |
15,100 |
|
|
$ |
47,270 |
|
|
$ |
45,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME PER SHARE - BASIC |
$ |
0.25 |
|
|
$ |
0.22 |
|
|
$ |
0.70 |
|
|
$ |
0.67 |
|
NET INCOME PER SHARE - DILUTED |
$ |
0.25 |
|
|
$ |
0.22 |
|
|
$ |
0.69 |
|
|
$ |
0.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic |
|
67,068 |
|
|
|
68,117 |
|
|
|
67,184 |
|
|
|
67,999 |
|
Weighted average shares outstanding diluted |
|
68,700 |
|
|
|
70,042 |
|
|
|
68,926 |
|
|
|
70,046 |
|
ROLLINS, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
FOR THE NINE MONTHS ENDED SEPTEMBER 30, | |||||||
(in thousands) | |||||||
|
2006 |
|
2005 | ||||
|
|
Unaudited |
|
|
|
Unaudited |
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
Net Income |
$ |
47,270 |
|
|
$ |
45,421 |
|
Adjustments to reconcile net income to net cash |
|
|
|
|
|
|
|
Provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
20,400 |
|
|
|
17,808 |
|
Pension curtailment gain |
|
- |
|
|
|
(4,176 |
) |
Provision for deferred income taxes |
|
5,144 |
|
|
|
2,085 |
|
Gain on sales of assets |
|
(15 |
) |
|
|
(544 |
) |
Other, net |
|
(1,822 |
) |
|
|
(2,590 |
) |
(Increase)/decrease in assets |
|
|
|
|
|
|
|
Trade receivables |
|
(9,747 |
) |
|
|
(3,187 |
) |
Materials and supplies |
|
685 |
|
|
|
1,536 |
|
Other current assets |
|
138 |
|
|
|
(2,059 |
) |
Other non-current assets |
|
735 |
|
|
|
233 |
|
Increase/(decrease) in liabilities: |
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
2,893 |
|
|
|
8,298 |
|
Unearned revenue |
|
8,955 |
|
|
|
10,147 |
|
Accrued insurance |
|
1,398 |
|
|
|
(2,484 |
) |
Accrual for termite contracts |
|
(3,900 |
) |
|
|
(1,263 |
) |
Accrued Pension |
|
(5,000 |
) |
|
|
- |
|
Long-term accrued liabilities |
|
(6,666 |
) |
|
|
(881 |
) |
Net cash provided by operating activities |
|
60,468 |
|
|
|
68,344 |
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
Purchase of equipment and property |
|
(15,657 |
) |
|
|
(16,999 |
) |
Acquisitions of companies |
|
(5,050 |
) |
|
|
(3,022 |
) |
Cash from sales of franchises |
|
550 |
|
|
|
340 |
|
Proceeds from sales of assets |
|
20 |
|
|
|
749 |
|
Net cash used in investing activities |
|
(20,137 |
) |
|
|
(18,932 |
) |
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
Dividends paid |
|
(12,790 |
) |
|
|
(10,304 |
) |
Common stock purchased |
|
(19,452 |
) |
|
|
(21,313 |
) |
Common stock options exercised |
|
435 |
|
|
|
3,229 |
|
Principal payments on capital leases |
|
(566 |
) |
|
|
- |
|
Other |
|
2,157 |
|
|
|
983 |
|
Net cash used in financing activities |
|
(30,216 |
) |
|
|
(27,405 |
) |
Effect of exchange rate changes on cash |
|
607 |
|
|
|
745 |
|
Net increase/(decrease) in cash and cash equivalents |
|
10,722 |
|
|
|
22,752 |
|
Cash and cash equivalents at beginning of period |
|
43,065 |
|
|
|
56,737 |
|
Cash and cash equivalents at end of period |
$ |
53,787 |
|
|
$ |
79,489 |
|
|
|
|
|
|
|
|
|
ROLLINS, INC. AND SUBSIDIARIES | ||||||||||||
REVENUE RECONCILIATION | ||||||||||||
REVENUES EXCLUDING THE INDUSTRIAL FUMIGANT COMPANY | ||||||||||||
|
Third Quarter Ended |
|
|
|
|
|
| |||||
|
September 30, |
|
|
|
|
|
| |||||
|
2006 |
|
2005 |
|
$ Better/ |
|
% Better/ |
| ||||
|
(Unaudited) |
|
(Unaudited) |
|
(Worse) |
|
(Worse) |
| ||||
Reported net revenues |
$ |
227,816 |
|
$ |
209,346 |
|
$ |
18,470 |
|
|
8.8 |
% |
Less: The Industrial Fumigant Company (IFC) |
|
8,773 |
|
|
- |
|
|
8,773 |
|
|
100.0 |
|
Net revenue excluding IFC |
$ |
219,043 |
|
$ |
209,346 |
|
$ |
9,697 |
|
|
4.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
ROLLINS, INC. AND SUBSIDIARIES | ||||||||||||
NET INCOME AND EARNINGS PER SHARE RECONCILIATION | ||||||||||||
EARNINGS AND EARNINGS PER SHARE EXCLUDING PENSION CURTAILMENT GAIN | ||||||||||||
|
Third Quarter Ended |
|
|
|
|
|
| |||||
|
September 30, |
|
|
|
|
|
| |||||
|
2006 |
|
2005 |
|
$ Better/ |
|
% Better/ |
| ||||
|
(Unaudited) |
|
(Unaudited) |
|
(Worse) |
|
(Worse) |
| ||||
Reported net income |
$ |
47,270 |
|
$ |
45,421 |
|
$ |
1,849 |
|
|
4.1 |
% |
Less: Pension Curtailment Gain (net of tax) |
|
- |
|
|
2,485 |
|
|
2,485 |
|
|
100.0 |
|
Income excluding Pension Curtailment Gain |
$ |
47,270 |
|
$ |
42,936 |
|
$ |
4,334 |
|
|
10.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Earnings Per Share Basic |
$ |
0.70 |
|
$ |
0.67 |
|
$ |
0.03 |
|
|
4.5 |
% |
Less: Pension Curtailment Gain (net of tax) |
|
- |
|
|
0.04 |
|
|
0.04 |
|
|
100.0 |
|
Earnings Per Share Basic excluding Pension Curtailment Gain |
$ |
0.70 |
|
$ |
0.63 |
|
$ |
0.07 |
|
|
11.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Earnings Per Share Diluted |
$ |
0.69 |
|
$ |
0.65 |
|
$ |
0.04 |
|
|
6.2 |
% |
Less: Pension Curtailment Gain (net of tax) |
|
- |
|
|
0.04 |
|
|
0.04 |
|
|
100.0 |
|
Earnings Per Share Diluted excluding Pension Curtailment Gain |
$ |
0.69 |
|
$ |
0.61 |
|
$ |
0.08 |
|
|
13.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
CONFERENCE CALL ANNOUNCEMENT
Rollins, Inc.
(NYSE: ROL)
Management will hold a conference call to discuss
third quarter results on:
Wednesday, October 25, 2006 at:
9:30 a.m. Eastern
8:30 a.m. Central
7:30 a.m. Mountain
6:30 a.m. Pacific
TO PARTICIPATE:
Please dial 800-867-0448 domestic;
303-262-2140 international
at least 5 minutes before start time.
REPLAY: available through November 1, 2006
Please dial 800-405-2236/303-590-3000, Passcode: 11073223
THIS CALL CAN ALSO BE ACCESSED THROUGH THE INTERNET AT
www.viavid.net
Questions?
Contact Samantha Alphonso at Financial Relations Board at 212-827-3746
Or email to salphonso@financialrelationsboard.com