Rollins (ROL) Q4 2023 earnings summary

Executive summary

• FY 2023 revenue rose 14% to $3.073B; adjusted EPS increased 20% to $0.90 and free cash flow rose 14% to $496M.

• Q4 revenue increased 14% to $754M; adjusted EPS rose 24% to $0.21 and free cash flow increased 22% to $142M.

• Double-digit growth across residential, commercial and termite; organic growth was 8.2% for FY and exceeded 7% in Q4, with acquisitions contributing additional growth.

Financial highlights

• FY GAAP net income was $435.0M versus $368.6M; adjusted net income was $439.1M, up 19.1%.

• Q4 GAAP net income was $108.8M versus $84.3M; adjusted net income was $101.2M, up 20.1%.

• FY operating income increased 18% to $583M; adjusted operating income rose 22% to $604M. Q4 operating income increased 16% to $139M; adjusted operating income rose 20% to $144M.

• FY EPS increased 19% to $0.89; adjusted EPS rose 20% to $0.90. Q4 EPS increased 29% to $0.22; adjusted EPS rose 24% to $0.21.

• FY operating cash flow was $528.4M, with $32.5M in capital expenditures and $495.9M in free cash flow; Q4 operating cash flow was $153M.

Outlook and guidance

• 2024 outlook calls for continued strong organic growth, supported by healthy core markets, operational execution and disciplined strategic M&A.

• Pricing, modernization and continuous improvement are expected to support healthy incremental margins; solid staffing is intended to meet demand and accelerate modernization.

• Cash flow and a strong balance sheet are expected to support balanced capital allocation; management cited a robust acquisition pipeline with attractive multiples.