Rollins (ROL) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $916.3 million, up 9% year-over-year, with 7.7% organic growth and the remainder from acquisitions, despite operational disruptions from Hurricane Helene.

• Operating income increased 8.3% to $192 million; net income rose 7.1% to $137 million; EPS up 7.7% to $0.28 per share.

• Adjusted EPS was $0.29, up 4% year-over-year; adjusted EBITDA was $219 million, up 5.5%, with a margin of 24%.

• Free cash flow for Q3 was $139 million, up 16% year-over-year, with free cash flow conversion at ~102%.

• Leadership transition announced: Gary Rollins to Executive Chairman Emeritus, John Wilson to Executive Chairman effective January 1, 2025.

Financial highlights

• Gross margin was 54% for Q3 2024, up 20 basis points year-over-year.

• Operating margin was 20.9% (down 20 bps YoY); adjusted operating margin was 21.4% (down 90 bps YoY).

• Adjusted EBITDA margin was 24.0% (down 80 bps YoY); incremental EBITDA margin for the first nine months was ~28%.

• GAAP net income was $137 million ($0.28/share, +7.7% YoY); adjusted net income was $140 million ($0.29/share, +4% YoY).

• Free cash flow for the first nine months of 2024 was $396 million, up 12% year-over-year.

Outlook and guidance

• Management expects 2024 organic revenue growth of 7–8% and 2–3% from M&A, totaling 9–11% overall.

• Margin expansion opportunities remain, with a focus on pricing and modernization initiatives.

• Continued investments in growth initiatives and strong cash flow are expected to support balanced capital allocation.

• No significant impact to Q4 outlook from hurricane disruptions; healthy organic demand entering Q4.

• Full-year effective tax rate expected to approximate 26%.