Rollins (ROL) investor relations material

Executive summary

• Q1 2026 revenues reached $906.4 million, up 10.2% year-over-year, with organic growth of 6.6% and acquisitions contributing 3.6%; all major service lines saw growth and March showed over 8% organic and ~12% total growth.

• Adjusted EPS rose 9.1% to $0.24 per share, and adjusted EBITDA increased 4.4% to $179 million.

• Net income was $107.8 million, up 2.5% year-over-year; adjusted net income reached $113.2 million, a 5% increase.

• Free cash flow was $111.2 million, down 20.6% year-over-year, impacted by tax and interest payment timing; excluding one-time items, free cash flow would have increased ~14%.

• Strategic investments in sales, marketing, and staffing, along with the acquisition of Romex Pest Control, positioned the company for continued growth.

Financial highlights

• Gross profit was $460.9 million, up 9.1% year-over-year; gross margin declined 60 bps to 50.8%.

• Operating income was $145.5 million (+2.0% YoY); adjusted operating income $153 million (+4.0% YoY); adjusted operating margin was 16.9%.

• Adjusted EBITDA margin was 19.8%, down 110 bps year-over-year, pressured by higher insurance, claims, and people costs.

• Free cash flow conversion was 103.1%, compared to 133.1% in Q1 2025.

• Leverage ratio remained low at 0.9x, reflecting strong balance sheet flexibility.

Outlook and guidance

• Management expects 7–8% organic and 2–3% M&A-driven revenue growth for full-year 2026.

• Margin improvement anticipated in Q2 and Q3 as volume ramps and headwinds from insurance/claims and fleet gains moderate.

• Price increases expected to contribute 3–4% to growth, ahead of CPI.

• Effective tax rate projected under 25% for the year; interest expense projected at approximately $35 million.

• Cash flow conversion expected to remain above 100% for 2026, with improvement as timing differences moderate.