10q10k10q10k.net

What changed in Rollins, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Rollins, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+242 added−223 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-15)

Top changes in Rollins, Inc.'s 2024 10-K

242 paragraphs added · 223 removed · 178 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

108 edited+18 added−17 removed97 unchanged
Biggest changeFrom time to time, we and one or more franchisees have been, and may in the future become, involved in a dispute regarding the franchise relationship, including payment of royalties or fees, location of branches, advertising, purchase of products by franchisees, non-competition covenants, compliance with our standards or franchise renewal criteria. 9 Table of Contents Employment Laws We are subject to a myriad of complex laws and regulations in the various federal, state, provincial, regional, and local governments in the countries in which we operate related to employees, including, but not limited to wage and hour laws, anti-discrimination laws, immigration, pension benefit plans, ERISA laws, and retirement benefits.
Biggest changeFrom time to time, we and one or more franchisees have been, and may in the future become, involved in a dispute regarding the franchise relationship, including payment of royalties or fees, location of branches, advertising, purchase of products by franchisees, non-competition covenants, compliance with our standards or franchise renewal criteria.
The majority of our business runs our proprietary Branch Operating Support System (“BOSS”), which offers a back-end interface to facilitate service tracking and payment processing for technicians. BOSS also provides virtual route management tools to increase route efficiency across our network, reducing miles driven and associated costs while increasing customer retention through on-time and rapid response service.
The majority of our business runs on our proprietary Branch Operating Support System (“BOSS”), which offers a back-end interface to facilitate service tracking and payment processing for technicians. BOSS also provides virtual route management tools to increase route efficiency across our network, reducing miles driven and associated costs while increasing customer retention through on-time and rapid response service.
Our ability to successfully operate in international markets may be adversely affected by political, economic and social conditions beyond our control and geopolitical conflicts, such as the conflict between Russia and Ukraine and the conflict in Gaza.
Our ability to operate successfully in international markets may be adversely affected by political, economic and social conditions beyond our control and geopolitical conflicts, such as the conflict between Russia and Ukraine and the conflict in Gaza.
Although the majority of the products we use are generally available from multiple sources, and alternatives have been generally available in the event of disruption in the past, we could experience material disruptions in production, transportation, and other supply chain issues on specific products, which could result in out-of-stock conditions, and our results of operations and relationships with customers could be adversely affected (a) if new or existing distributors or suppliers are unable to meet any standards that we set or that are set by government or industry regulations or customers, (b) if we are unable to contract with distributors or suppliers at the quantity, quality and price levels needed for our business, or (c) if any of our key distributors or suppliers has shipping disruptions or becomes insolvent, ceases or significantly reduces its operations or experiences financial distress.
Although the majority of the products we use are generally available from multiple sources, and alternatives have been generally available in the event of disruption in the past, we could experience material disruptions in production, transportation, labor disputes, and other supply chain issues on specific products, which could result in out-of-stock conditions, and our results of operations and relationships with customers could be adversely affected (a) if new or existing distributors or suppliers are unable to meet any standards that we set or that are set by government or industry regulations or customers, (b) if we are unable to contract with distributors or suppliers at the quantity, quality and price levels needed for our business, or (c) if any of our key distributors or suppliers has shipping disruptions or becomes insolvent, ceases or significantly reduces its operations or experiences financial distress.
The Company has assigned Board responsibility for oversight of cybersecurity risk to the Audit Committee, which monitors the cybersecurity risk management and cyber control functions, including external security audits, and receives periodic updates from experienced senior management knowledgeable about assessing and managing cyber risks, including, as appropriate, updates on the prevention, detection, mitigation, and remediation of cyber incidents.
The Company has assigned responsibility for Board oversight of cybersecurity risk to the Audit Committee, which monitors the cybersecurity risk management and cyber control functions, including external security audits, and receives periodic updates from experienced senior management, including the CISO, knowledgeable about assessing and managing cyber risks, including, as appropriate, updates on the prevention, detection, mitigation, and remediation of cyber incidents.
Any failure to comply with such applicable laws or regulations could result in fines or legal proceedings. New or proposed regulation regarding climate change could have uncertain impacts on our business. Climate change has been the subject of increased focus by various governmental authorities and regulators around the world.
Any failure to comply with such applicable laws or regulations could result in fines or legal proceedings. New or proposed regulations regarding climate change could have uncertain impacts on our business. Climate change has been the subject of increased focus by various governmental authorities and regulators around the world.
Each of our brands that are franchised also provides training and support to franchisees. However, franchisees, subcontractors, and vendors are independent third parties that we do not control, and who own, operate and oversee the daily operations of their businesses, and the ultimate success of any business operation rests with the business owner.
Each of our brands that are franchised also provides training and support to franchisees. However, franchisees, subcontractors, and vendors are independent third parties that we do not control, and who own, operate and oversee the daily operations of their respective businesses, and the ultimate success of any business operation rests with the business owner.
We are subject to a myriad of complex laws and regulations in the various federal, state, provincial, regional, and local governments in the countries in which we operate related to employees, including, but not limited to wage and hour laws, anti-discrimination laws, immigration, pension benefit plans, ERISA laws, and retirement benefits.
Employment Laws We are subject to a myriad of complex laws and regulations in the various federal, state, provincial, regional, and local governments in the countries in which we operate related to employees, including, but not limited to wage and hour laws, anti-discrimination laws, immigration, pension benefit plans, ERISA laws, and retirement benefits.
Our major competitors include Rentokil, Ecolab, Anticimex, and numerous other regional companies. Research and Development Our expenditures on research activities relating to the development of new products or services are not significant.
Our major competitors include Rentokil, Ecolab, Anticimex, and numerous other regional and local companies. Research and Development Our expenditures on research activities relating to the development of new products or services are not significant.
Our business is subject to various federal, state, and local laws and regulations pertaining to environmental, public health and safety matters, including those related to the pest control industry.
Our business is subject to various federal, state, provincial, and local laws and regulations pertaining to environmental, public health and safety matters, including those related to the pest control industry.
In addition to in-person training, the Rollins Learning Center offers on-demand training sessions that employees can access from anywhere in the world that are produced at our on-site, state-of-the-art broadcast studio. Our unique programs contribute to our position as an employer of choice and have earned us recognition from Training magazine among the Top 125 U.S.
In addition to in-person training, the Rollins Learning Center offers on-demand training sessions that teammates can access from anywhere in the world that are produced at our on-site, state-of-the-art broadcast studio. Our unique programs contribute to our position as an employer of choice and have earned us recognition from Training magazine among the Top 125 U.S.
Although in the aggregate, our global portfolio of more than 450 trademarks is a valuable asset that is important to our operations, we believe that our competitive advantage is also largely attributable to the technical, marketing, and sales competence and capabilities of our employees, rather than on any individual trademark; however, the loss of the Orkin trademark could be material to our business as a whole.
Although in the aggregate, our global portfolio of more than 450 trademarks is a valuable asset that is important to our operations, we believe that our competitive advantage is also largely attributable to the technical, marketing, and sales competence and capabilities of our teammates, rather than on any individual trademark; however, the loss of the Orkin trademark could be material to our business as a whole.
This means not only investing in competitive wages and benefits, but also providing tools, training and development opportunities that drive a high level of employee engagement. Customer Loyalty We focus on creating the best customer experience that will enable a loyal customer base and in turn reduce the amount of churn across our customer base.
This means not only investing in competitive wages and benefits, but also providing tools, training and development opportunities that drive a high level of teammate engagement. Customer Loyalty We focus on creating the best customer experience that will enable a loyal customer base and in turn reduce the amount of churn across our customer base.
The possible effects of climate change could include changes in rainfall patterns, water shortages, changing storm patterns and intensities, changing temperature levels and changes in legislation, regulation, and international accords, all of which could adversely impact our costs and business operations. Our business is also affected by seasonality associated with our pest and termite control services.
The possible effects of climate change could include changes in rainfall patterns, water shortages, changing storm patterns and intensities, changing temperature levels, as well as changes in legislation, regulation, and international accords, all of which could adversely impact our costs and business operations. Our business is also affected by seasonality associated with our pest and termite control services.
We believe that our alignment around the key strategic areas will enable us to grow faster than our market, position our business for the future, and deliver value for all stakeholders, including our customers, our employees, our communities and our shareholders. Our Competitive Strengths Rollins is a leader in the global pest control market.
We believe that our alignment around the key strategic areas will enable us to grow faster than our market, position our business for the future, and deliver value for all stakeholders, including our customers, our teammates, our communities and our shareholders. Our Competitive Strengths Rollins is a leader in the global pest control market.
Although we believe that our customer experience and quality service are excellent, we cannot assure investors that we will be able to maintain our competitive position in the future. We may not be able to identify, complete or successfully integrate acquisitions or guarantee that any acquisitions will achieve the anticipated financial benefits.
Although we believe that our customer experience and quality service are excellent, we cannot assure investors that we will be able to maintain our competitive position in the future. We may not be able to identify, complete or successfully onboard acquisitions or guarantee that any acquisitions will achieve the anticipated financial benefits.
Our inability to achieve the anticipated financial benefits from any acquisition transactions may not be realized due to any number of factors, including, but not limited to, unsuccessful integration efforts, unexpected or underestimated liabilities or increased costs, fees, expenses and charges related to such transactions.
Our inability to achieve the anticipated financial benefits from any acquisition transactions may not be realized due to any number of factors, including, but not limited to, unsuccessful onboarding efforts, unexpected or underestimated liabilities or increased costs, fees, expenses and charges related to such transactions.
The increase in pest presence and activity, as well as the metamorphosis of termites in the spring and summer (the occurrence of which is determined by the timing of the change in seasons), has historically resulted in an increase in the revenue of our pest and termite control operations during such periods as evidenced by the following chart.
The increase in pest presence and activity, as well as the metamorphosis of termites in the spring and summer (the occurrence of which is determined by the timing of the change in seasons), has historically resulted in an increase in the revenue of our pest and termite control operations during such periods as evidenced by the following table.
Community Involvement We are a family of brands that has always upheld service – to our employees, customers, and communities – as a cornerstone. While each of our diverse brands has their own culture of service, we are firmly united in our commitment to engaging with our local communities.
Community Involvement We are a family of brands that has always upheld service – to our teammates, customers, and communities – as a cornerstone. While each of our diverse brands has their own culture of service, we are firmly united in our commitment to engaging with our local communities.
We are excited about the accomplishments on our journey to create a workplace of inclusion and will continue to execute on the strategic plan. Health and Safety We are committed to the health and safety of our employees, customers and communities where we work, live and play.
We are excited about the accomplishments on our journey to create a workplace of inclusion and will continue to execute on the strategic plan. Health and Safety We are committed to the health and safety of our teammates, customers and communities where we work, live and play.
Differentiated Employee Base and Service Delivery Our employees are critical to delivering an outstanding customer experience, and we are highly focused on providing our team with best-in-class training and development opportunities.
Differentiated Employee Base and Service Delivery Our teammates are critical to delivering an outstanding customer experience, and we are highly focused on providing our team with best-in-class training and development opportunities.
Rollins undertakes a variety of efforts to support the health and well-being of our team members, including their physical and mental health. This includes investing in competitive compensation and benefits while also providing the culture, tools, training and development opportunities to make working at Rollins an enjoyable and rewarding experience.
Rollins undertakes a variety of efforts to support the health and well-being of our teammates, including their physical and mental health. This includes investing in competitive compensation and benefits while also providing the culture, tools, training and development opportunities to make working at Rollins an enjoyable and rewarding experience.
This concentration of ownership could also have the effect of delaying or preventing a third party from acquiring control of the Company at a premium. The Significant Shareholder has a substantial ownership interest, and the availability of the Company’s common stock to the investing public may be limited.
This concentration of ownership could also have the effect of delaying or preventing a third party from acquiring control of the Company at a premium. 16 Table of Contents The Significant Shareholder has a substantial ownership interest, and the availability of the Company’s common stock to the investing public may be limited.
The 12-month program offers a blended learning approach that includes facilitator-led training, executive and peer mentoring, immersive field learning experiences, 360-degree assessments, a 6-month executive coaching engagement, and supported individualized development plans. Since the program was established in 2018, we have graduated a total of 85 senior leaders in five different RMDP classes with continued successes.
The 12-month program offers a blended learning approach that includes facilitator-led training, executive and peer mentoring, immersive field learning experiences, 360-degree assessments, a 6-month executive coaching engagement, and supported individualized development plans. Since the program was established in 2018, we have graduated a total of 112 senior leaders in six different RMDP classes with continued successes.
If these labor organizing activities are successful, it could further increase labor costs, decrease operating efficiency and productivity in the future, or otherwise disrupt or negatively impact our operations which could have a material adverse effect on our reputation and business. We may experience difficulties integrating, streamlining and optimizing our information technology (“IT”) systems and processes.
If these labor organizing activities are successful, it could further increase labor costs, decrease operating efficiency and productivity in the future, or otherwise disrupt or negatively impact our operations which could have a material adverse effect on our reputation and business. 11 Table of Contents We may experience difficulties integrating, streamlining and optimizing our information technology (“IT”) systems and processes.
The increase in pest 13 Table of Contents presence and activity, as well as the metamorphosis of termites in the spring and summer (the occurrence of which is determined by the timing of the change in seasons), has historically resulted in an increase in the revenue and income of our pest and termite control operations during such periods.
The increase in pest presence and activity, as well as the metamorphosis of termites in the spring and summer (the occurrence of which is determined by the timing of the change in seasons), has historically resulted in an increase in the revenue and income of our pest and termite control operations during such periods.
Maintaining and enhancing our brands will depend largely on our brands’ ability to remain service leaders and continue to provide high-quality pest control services that are truly beneficial and play a meaningful role in people’s lives. 12 Table of Contents Labor shortages, our ability to attract and retain skilled workers, and increased labor costs may impair growth potential and profitability.
Maintaining and enhancing our brands will depend largely on our brands’ ability to remain service leaders and continue to provide high-quality pest control services that are truly beneficial and play a meaningful role in people’s lives. Labor shortages, our ability to attract and retain skilled workers, and increased labor costs may impair growth potential and profitability.
The Company also has a cross-functional group of representatives from several departments that comprise the Cybersecurity and Privacy Committee, which meets and discusses information at least quarterly related to cybersecurity and privacy compliance at the Company, including training, policies, and trends.
The Company also has a cross-functional group of representatives 17 Table of Contents from several departments that comprise the Cybersecurity and Privacy Committee, which meets and discusses information at least quarterly related to cybersecurity and privacy compliance at the Company, including training, policies, and trends.
Workplace Inclusion We make it a priority to promote and create a diverse, equitable and inclusive workplace that results in higher levels of satisfaction and engagement, stronger staff retention, higher productivity, and a heightened sense of belonging. Our mission is to have a culture of inclusion, where all individuals feel respected, are treated fairly, with an equitable opportunity to excel.
Workplace Inclusion We make it a priority to promote and create an inclusive workplace that results in higher levels of satisfaction and engagement, stronger staff retention, higher productivity, and a heightened sense of belonging. Our mission is to foster a culture of inclusion, where all individuals feel respected, are treated fairly, with an opportunity to excel.
Cybersecurity incidents that significantly impact the confidentiality, integrity, or availability of Company data or the reliability of the Company system or network are reported to certain members of the Company’s Executive Leadership Team, including the Chief Executive Officer, Chief Financial Officer, Chief Information and Administration Officer, and General Counsel, for assessment of the materiality of the incident, which will be made using both quantitative and qualitative analyses to determine an incident’s immediate and reasonably likely future impacts.
Cybersecurity incidents that significantly impact the confidentiality, integrity, or availability of Company data or the reliability of the Company system or network are reported to certain members of the Company’s Executive Leadership Team, including the Chief Executive Officer, Chief Financial Officer, Chief Legal Officer, Chief Administrative Officer, and Chief Information Officer, for assessment of the materiality of the incident, which will be made using both quantitative and qualitative analyses to determine an incident’s immediate and reasonably likely future impacts.
We utilize the relationships with our manufacturers and materials suppliers to provide new and innovative products and services, coupled with in-depth reviews by our tenured Entomology Department to ensure they meet our strict requirements. We also conduct tests of new products with the specific manufacturers of such products and we rely on research performed by leading universities.
We utilize the relationships with our manufacturers and materials suppliers to provide new and innovative products and services, coupled with in-depth reviews by our tenured Entomology Department to confirm they meet our strict requirements. We also conduct evaluations of new products with the specific manufacturers of such products and we rely on research performed by leading universities.
You are cautioned that the risk factors discussed below are not exhaustive. Risks Related to our Business, Brand, Industry and Operations We face risks regarding our ability to compete in the pest control industry in the future. We operate in a highly competitive industry with fragmented markets and low barriers to entry.
You are cautioned that the risk factors discussed below are not exhaustive. 10 Table of Contents Risks Related to our Business, Brand, Industry and Operations We face risks regarding our ability to compete in the pest control industry in the future. We operate in a highly competitive industry with fragmented markets and low barriers to entry.
We have processes to address risks of a key service provider experiencing a significant cybersecurity incident that renders their services unavailable, but those processes may not cover all business losses.
We have processes to address risks of a key 13 Table of Contents service provider experiencing a significant cybersecurity incident that renders their services unavailable, but those processes may not cover all business losses.
Our Workplace Inclusion (WPI) mission to build an inclusive workplace has continued since 2020 under the guidance of our Executive Sponsor and Inclusion Advisory Council which is made up of employees from Rollins brands across the United States. In January 2022, we hired a Director of WPI.
Our Workplace Inclusion (WPI) mission to build an inclusive workplace has continued under the guidance of our Executive Sponsor and Inclusion Advisory Council which is made up of teammates from Rollins brands across the United States. In January 2022, we hired a Director of WPI.
Although we have sought to register or protect many of our marks either in the United States or in the countries in which they are or may be used, we have not sought to protect our marks in every country.
Although we have sought to register or protect many of our marks either in the United States or in the countries in which they are or may be used, we have not sought to protect our marks in every 15 Table of Contents country.
Risks Related to Market Conditions Adverse economic conditions, including inflation and restrictions in customer discretionary expenditures, increases in interest rates or other disruptions in credit or financial markets, increases in fuel prices, raw material costs, or other operating costs could materially adversely affect our business.
Risks Related to Market Conditions and External Factors Adverse economic conditions, including inflation and restrictions in customer discretionary expenditures, increases in interest rates or other disruptions in credit or financial markets, geopolitical developments, increases in fuel prices, raw material costs, or other operating costs could materially adversely affect our business.
Consumer Protection, Privacy and Solicitation Matters We are subject to international, federal, state, provincial and local laws and regulations designed to protect consumers generally, including laws governing lending, debt collection and consumer finance; consumer privacy and fraud; collection and use of consumer data; telemarketing; and other forms of solicitation.
Consumer Protection, Privacy and Solicitation Matters We are subject to international, federal, state, provincial and local laws and regulations designed to protect consumers generally, including laws governing lending, debt collection and consumer finance; consumer privacy and fraud; collection and use of consumer data; laws governing billing practices and contract renewals; telemarketing; and other forms of solicitation.
Our revenues and earnings are affected by changes in competitors’ services, markets, and prices and general economic issues. We compete with other large pest control companies, as well as numerous smaller pest control companies, for a finite number of customers.
Our revenues and earnings are affected by changes in competitors’ services, markets, and prices and general economic issues. We compete with other large pest control companies, as well as numerous smaller pest control companies and do-it-yourself options, for a finite number of customers.
Our business is also affected by extreme weather such as hurricanes which can impact our ability to operate as well as drought which can greatly reduce the pest population for extended periods. Climate change continues to receive increasing global attention.
Our business is also affected by extreme weather such as hurricanes, wildfires, and other storms which can impact our ability to operate as well as drought which can greatly reduce the pest population for extended periods. Climate change continues to receive increasing global attention.
Our inability to fully or substantially meet customer demand due to distributor or supply chain issues could result in, among other things, unmet consumer demand leading to reduced preference for our products or services in the future, customers purchasing services from competitors as a result of such shortage of products, strained customer relationships, termination of customer contracts, additional competition and new entrants into the market, and loss of potential sales and revenue.
Our inability to fully or substantially meet customer demand due to distributor or supply chain issues could result in, among other things, unmet consumer demand leading to reduced preference for our products or services in the future, customers' purchasing services from competitors, strained customer relationships, termination of customer contracts, additional competition and new entrants into the market, and loss of potential sales and revenue.
Our ability to implement our business strategy may be adversely affected by factors that we cannot foresee currently, such as unanticipated costs and expenses, global health crises, technological change, recession and economic slowdown, the level of interest rates, foreign exchange risks, failure to integrate acquisitions, or a decline in the effectiveness of our marketing (including digital marketing).
Our ability to implement our business strategy may be adversely affected by factors that we cannot foresee currently, such as unanticipated costs and expenses, global health crises, technological change, recession and economic slowdown, the level of interest rates, foreign exchange risks, our inability to effectively manage and implement change, failure to onboard acquisitions, or a decline in the effectiveness of our marketing (including digital marketing) efforts.
From time to time, we have integration with new IT systems due to organic growth and acquisitions. In addition, we grant third-party business partners and service providers access to confidential information in order to facilitate business operations and administer employee benefits.
From time to time, we integrate new IT systems due to organic growth and acquisitions. In addition, we grant third-party business partners and service providers access to confidential information in order to facilitate business operations and administer employee benefits.
This Annual Report on Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this Annual Report on Form 10-K.
Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this Annual Report on Form 10-K.
We operate under one reportable segment which contains our three service offerings: • Residential : Pest control services protecting residential properties from common pests, including rodents, insects and wildlife; • Commercial : Workplace pest control solutions for customers across diverse end markets such as healthcare, food service, logistics; and • Termite : Termite protection services and ancillary services for both residential and commercial customers.
We operate under one reportable segment which contains our three service offerings: • Residential : Pest control services protecting residential properties from common pests, including rodents, insects and wildlife; • Commercial : Workplace pest control solutions for customers across diverse end markets such as healthcare, food service, logistics; and • Termite and Ancillary : Termite protection services and ancillary services (wildlife exclusion, crawlspace encapsulation and moisture remediation, insulation) for both residential and commercial customers.
Unresolved Staff Comments None. Item 1.C Cybersecurity The Company has security incident response policies and procedures for identifying, assessing, and managing material risks arising from cybersecurity incidents, including those arising from third-party service providers.
Item 1.C Cybersecurity The Company has security incident response policies and procedures for identifying, assessing, and managing material risks arising from cybersecurity incidents, including those arising from third-party service providers.
The conclusions of the annual Enterprise Risk Assessment are shared with the Audit Committee. The CISO also reviews with the Audit Committee the strategy, priorities, and goals of the cybersecurity program. 19 Table of Contents
The conclusions of the annual Enterprise Risk Assessment are shared with the Audit Committee. The CISO also reviews with the Audit Committee the strategy, priorities, and goals of the cybersecurity program.
Rollins, Inc.’s certificate of incorporation, bylaws and other documents contain provisions including advance notice requirements for stockholder proposals and staggered terms for the Board of Directors. These provisions may make a tender offer, change in control or takeover attempt that is opposed by the Company’s Board of Directors more difficult or expensive. 18 Table of Contents Item 1.B.
Rollins, Inc.’s certificate of incorporation, bylaws and other documents contain provisions including advance notice requirements for stockholder proposals and staggered terms for the Board of Directors. These provisions may make a tender offer, change in control or takeover attempt that is opposed by the Company’s Board of Directors more difficult or expensive. Item 1.B. Unresolved Staff Comments None.
In addition, decisions and rules by the National Labor Relations Board, including “expedited elections” and restrictions on appeals, could lead to increased organizing activities at our subsidiaries.
In addition, decisions and rules by the National Labor Relations Board, including “expedited elections” and restrictions on appeals, has and could continue to lead to increased organizing activities at our brands.
The Company’s Chief Information Security Officer (“CISO”), who has 30 years of experience in information technology and information security and has several industry certifications such as CISSP, CCSP, CISM, CRISC, and CIPP, is primarily responsible for managing cybersecurity risks.
The Company’s Chief Information Security Officer (“CISO”), who has over 30 years of experience in information technology and information security and has several industry certifications, including CISSP, CCSP, CISM, CRISC, and CIPP, is the executive primarily responsible for managing cybersecurity risks.
Ongoing labor shortages could negatively affect our ability to efficiently operate at full capacity or lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees.
The demand for employees is high, and the supply is limited. Ongoing labor shortages could negatively affect our ability to efficiently operate at full capacity or lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees.
We have established an ongoing process that requires commitment, communication, and collaboration at all levels of the organization. Our structure is designed to ensure it remains effective and aligned with our organization’s goals and objectives. We review and refine our health and safety policies and procedures on an ongoing basis to ensure they remain efficient and relevant for our business.
We have established an ongoing process that requires commitment, communication, and collaboration at all levels of the organization. Our structure is designed to support effectiveness and alignment with our organization’s goals and objectives. We review and refine our health and safety policies and procedures on an ongoing basis so that they remain efficient and relevant for our business.
Our internal IT systems contain certain personal, financial, health, or other protected and confidential information that is entrusted to us by our customers and employees. Our IT systems also contain our and our wholly-owned subsidiaries’ 14 Table of Contents proprietary and other confidential information related to our business, such as business plans, customer lists, pricing, and service development initiatives.
Our internal IT systems contain certain personal, financial, health, or other protected and confidential information that is entrusted to us by our customers and employees. Our IT systems also contain our and our brands’ proprietary and other confidential information related to our business, such as business plans, customer lists, pricing, and service development initiatives.
The core mission of Rollins United is that everyone deserves a safe place to live, work, and play. Since 1985, we have partnered with the United Way of Greater Atlanta through employee and company-matching funds, helping make Rollins a community leader for many years.
We believe everyone deserves a safe place to live, work, and play. 8 Table of Contents Since 1985, we have partnered with the United Way of Greater Atlanta through employee and company-matching funds, helping make Rollins a community leader for many years.
In the normal course of business, we have been and may in the future be involved in various claims, contractual disputes, investigations, arbitration and litigation, including (1) claims that our acts, omissions, services or vehicles caused damage or injury, (2) claims that our services did not achieve the desired results, (3) claims related to acquisitions, (4) claims related to violations of antitrust laws or consumer protection laws, (4) claims related to allegations by federal, state or local authorities, including the Securities and Exchange Commission, the Federal Trade Commission and Department of Justice, of violations of regulations or statutes, (5) claims related to federal securities laws, (6) claims related to employment law 16 Table of Contents violations, (7) claims related to environmental matters, and (8) claims related to additional laws and regulations.
In the normal course of business, we have been and may in the future be involved in various claims, contractual disputes, investigations, arbitration and litigation, including (1) claims that our acts, omissions, services or vehicles caused damage or injury, (2) claims that our pest control, termite and/or ancillary services did not achieve the desired results, (3) claims related to acquisitions, (4) claims related to violations of antitrust laws or consumer protection laws, (4) claims related to allegations by federal, state or local authorities, including the Securities and Exchange Commission, the Federal Trade Commission and Department of Justice, of violations of regulations or statutes, (5) claims related to federal securities laws, (6) claims related to employment or wage and hour violations, including class actions under the California Private Attorney General Act ("PAGA"), (7) claims related to environmental matters, and (8) claims related to additional laws and regulations.
In some instances of these claims, the customer may initiate litigation or arbitration proceedings or these matters could be brought as a class action against us or one of our brands. Our safety and risk management programs may not have the intended effect of reducing our liability for employee-work related injuries, third party-liability claims or property loss.
In some instances of these claims, the customer may initiate litigation or arbitration proceedings against us or one of our brands. 14 Table of Contents Our safety and risk management programs may not have the intended effect of reducing our liability for employee-work related injuries, third party-liability claims or property loss.
As a result, these persons will have significant influence over the operations of the Company, including the election of directors and approval of substantial corporate transactions such as acquisitions and approval of matters requiring stockholder approval.
As a result, the Significant Shareholder has significant influence over our operations, including the election of directors, approval of substantial corporate transactions such as acquisitions, and approval of matters requiring stockholder approval.
The Audit Committee monitors the cybersecurity risk management and cyber control functions, including external security audits, and receives periodic updates from experienced senior management knowledgeable about assessing and managing cyber risks, including, as appropriate, updates on the prevention, detection, mitigation, and remediation of cyber incidents.
The Company has assigned responsibility for Board oversight of cybersecurity risk to the Audit Committee, which monitors the cybersecurity risk management and cyber control functions, including external security audits, and receives periodic updates from experienced senior management, outside legal counsel, and cybersecurity insurance carriers knowledgeable about assessing and managing cyber risks, including, as appropriate, updates on the prevention, detection, mitigation, and remediation of cyber incidents.
We have a partnership with the Grove Park Foundation (the “Foundation”) to help serve our Atlanta community. The partnership allows our employees to volunteer and support the Foundation, which is committed to neighborhood revitalization to improve the quality of life in the Grove Park neighborhood.
We have a partnership with the Grove Park Foundation (the “Foundation”) to help serve our Atlanta community. The partnership allows our teammates to volunteer and support the Foundation, which is committed to neighborhood revitalization, education programs, and job training that improves the quality of life in the Grove Park neighborhood, a predominantly African American community.
Led by 2 full-time teammates, the GDT works with local organizations across 6 states and is supported by our team across Northwest. 8 Table of Contents Regulatory Considerations Our business is subject to various local and national legislative and regulatory enactments including, but not limited to, environmental laws, antitrust laws, employment and benefit laws (including wage and hour laws, payroll taxes, anti-discrimination laws, pension laws and regulations, and ERISA), immigration laws, motor vehicle laws and regulations, human health and safety laws, securities laws including, but not limited to, SEC regulations, and federal, state and local laws and regulations governing worker safety and the pest and termite control industry.
Regulatory Considerations Our business is subject to various local and national legislative and regulatory enactments including, but not limited to, environmental laws, antitrust laws, employment and benefit laws (including wage and hour laws, payroll taxes, anti-discrimination laws, pension laws and regulations, and ERISA), immigration laws, motor vehicle laws and regulations, human health and safety laws, securities laws including, but not limited to, SEC regulations, and federal, state and local laws and regulations governing worker safety and the pest and termite control industry.
Competition We operate in a highly competitive environment with fragmented markets and low barriers to entry. The principal factors of competition in our pest and termite control markets are quality and speed of service, customer proximity, customer satisfaction, brand awareness and reputation, terms of guarantees, safety, technical proficiency and price.
The principal factors of competition in our pest and termite control markets are quality and speed of service, customer proximity, customer satisfaction, brand awareness and reputation, terms of guarantees, safety, technical proficiency and price.
We expect that any such decreases could also have the effect of stabilizing or reducing our insurance costs. However, incidents involving injury or property loss may be caused by multiple potential factors, a significant number of which are beyond our control.
Such incidents could also have the effect of destabilizing or increasing our insurance costs and financial reserves. Incidents involving injury or property loss may be caused by multiple potential factors, a significant number of which are beyond our control.
Our scale enables delivery of great service and provides a significant and reinforcing competitive advantage through (i) comprehensive capabilities to win new residential and commercial accounts, (ii) technology investments for operations optimization and enhanced customer experience, (iii) route density to manage variable costs, and (iv) financial flexibility to generate organic growth and pursue M&A.
Our scale enables delivery of great service and provides a significant and reinforcing competitive advantage through (i) comprehensive capabilities to win new residential and commercial accounts, (ii) technology investments for operations optimization and enhanced customer experience, (iii) a diverse portfolio of brands of varying sizes of which to innovate, test, learn, and grow or expand, particularly when it comes to emerging technology, (iv) route density to manage variable costs, and (v) financial flexibility to generate organic growth and pursue acquisitions.
Our ERGs are led by Rollins employees, are inclusive to all and represent our employee population. Each ERG provides a platform for employees to connect, collaborate, and advocate for their shared interests and experiences. These groups promote inclusivity, provide networking opportunities, and contribute to a sense of belonging among employees.
Each ERG provides a platform for teammates to connect, collaborate, and advocate for their shared interests and experiences. These groups promote inclusivity, provide networking opportunities, and contribute to a sense of belonging among teammates.
Our ability to remain productive and profitable will depend substantially on our ability to compete with other pest control and service companies to attract, adequately train, and retain skilled workers and key employees (including executive officers), create leadership opportunities, and successfully implement diversity, equity and inclusion initiatives.
Our ability to remain productive and profitable will depend substantially on our ability to compete with other pest control and service companies to attract, adequately train, and retain skilled workers and key employees (including executive officers), and create leadership opportunities. Our ability to expand our operations is in part impacted by our ability to increase our labor force.
In addition, the use of certain pesticide products is also regulated by various federal, state, provincial and local environmental and public health agencies. These laws also impose liability for the costs of investigating and remediating, and damages resulting from, present and past releases of hazardous substances, including releases by prior owners or operators of sites we currently own or operate.
These laws also impose liability for the costs of investigating and remediating, and damages resulting from, present and past releases of hazardous substances, including releases by prior owners or operators of sites we currently own or operate.
As these initiatives are implemented, we may not fully achieve the desired results, including but not limited to, expected cost savings or growth rates, and these initiatives may adversely impact customer retention or our operations. Also, our business strategies may change in light of our ability to implement new business initiatives, competitive pressures, economic uncertainties or developments or other factors.
As these initiatives are implemented, we may not fully achieve the desired results, including but not limited to, expected cost savings or growth rates, and these initiatives may adversely impact customer retention or our operations.
Thus far, we have established the following ERGs: • R-Collective: Strives to improve company culture and employee engagement and retention through multigenerational networking. • Women+ Resource Community: Provides a resource for women+ at any career level to achieve their goals and celebrate their accomplishments resulting in an enhanced work experience at Rollins. • Women of Orkin Pest (WOOP): Increases communication between the women of Orkin by providing opportunities for professional development, mentoring, and networking. • PRIDE: Provides a network that supports the professional development of LGBTQ+ employees and allies, promotes recruitment and retention, and builds community. • P.E.A.C.E.: To build community for People who Embrace and Advocate for Cultural Equity through networking, team building, and allyship to foster a racially inclusive workplace so that all people can have thriving careers at Rollins.
We have established five ERGs: • R-Collective: Strives to improve company culture and teammate engagement and retention through multigenerational networking. • Women+ Resource Community: Provides a resource for women+ at any career level to achieve their goals and celebrate their accomplishments resulting in an enhanced work experience at Rollins. 7 Table of Contents • Women's Impact Network (WIN): Increases communication between the women of Orkin by providing opportunities for professional development, mentoring, and networking. • PRIDE: Provides a network that supports the professional development of LGBTQ+ teammates and allies, promotes recruitment and retention, and builds community. • P.E.A.C.E.: Promoting Equality, Acceptance and Cultural Empowerment through networking, team building, and allyship to foster an inclusive and respectful environment that celebrates the diverse cultures represented within the workforce.
Gahlhoff has extensive knowledge of the 4 Table of Contents Company’s business and industry, having served in various roles of increasing responsibility at HomeTeam and the Company, collectively, for over 22 years. He is also a trained Entomologist. Kenneth Krause has served as the Executive Vice President, Chief Financial Officer and Treasurer of the Company since September 2022. Mr.
Gahlhoff has extensive knowledge of the Company’s business and industry, having served in various roles of increasing responsibility at HomeTeam and the Company, collectively, for over 23 years. He is also a trained Entomologist.
While each of our brands is focused on developing operational leadership capabilities that are brand-specific, Rollins is focused on developing overall leadership capabilities through our Region Manager Development Program (RMDP). The RMDP is a comprehensive leadership development program for mid-level leaders across the organization who lead multiple business units or departments and those preparing to lead at that level.
The RMDP is a comprehensive leadership development program for mid-level leaders across the organization who lead multiple business units or departments and those preparing to lead at that level.
We maintain commercial liability insurance that extends to products liability. In addition, we also maintain other insurance and other traditional risk transfer tools to respond to certain types of liabilities and risks. However, such tools are subject to terms such as deductibles, retentions, limits and policy exclusions, as well as risk of denial of coverage, default or insolvency.
We maintain commercial liability insurance that extends to products liability. In addition, we also maintain other insurance and other traditional risk transfer tools to respond to certain types of liabilities and risks.
We offer employees the opportunity to participate in various community outreach programs. We created Rollins United in 2019 to unify our brands’ philanthropic visions and consolidate our community outreach efforts. Our overarching goal is to create a significant impact in local communities over an extended period of time.
We offer teammates the opportunity to participate in various community outreach programs. Our brands work closely with their local communities to create an impact through outreach, volunteerism, and donations. Our overarching goal is to create a significant impact in local communities over an extended period of time.
Over the last three years, we have completed approximately 90 acquisitions, including 24 acquisitions in 2023. Our acquisition strategy targets high quality, profitable businesses with strong leadership, a healthy level of brand awareness, and customer loyalty in the markets they serve that would benefit from incremental growth capital and have the potential to achieve organic growth and margin expansion.
Our acquisition strategy targets high quality, profitable businesses with strong leadership, a healthy level of brand awareness, and customer loyalty in the markets they serve that would benefit from incremental growth capital and have the potential to achieve organic growth and margin expansion. 5 Table of Contents Seasonality Our business is affected by weather conditions, including climate change and the seasonal nature of our pest and termite control services.
We believe geographic diversity allows us to increase brand recognition, meet demands of global customers, and draw on business and technical expertise from teams in several countries, and offers us an opportunity to access new markets. Franchising Programs We have franchise programs through Orkin, Critter Control, Missquito, and our Australian subsidiaries.
In 2024, we saw revenue growth in our company-owned operations in Canada, Australia, the United Kingdom, and Singapore. We believe geographic diversity allows us to increase brand recognition, meet demands of global customers, and draw on business and technical expertise from teams in several countries, and offers us an opportunity to access new markets.
We maintain a sufficient level of products, materials, and other supplies to fulfill our immediate servicing needs and to mitigate any potential short-term shortage in availability from our national network of suppliers. We also have qualified comparable products and materials for key categories to have alternatives ready as needed.
Materials and Supplies Our Company has relationships with a vast network of national pest control product distributors, manufacturers and other suppliers for pest and termite treatment products. We maintain a sufficient level of products, materials, and other supplies to fulfill our immediate servicing needs and to mitigate any potential short-term shortage in availability from our national network of suppliers.
Everside provides these services either virtually or through the existing nationwide network of Everside Health clinics for all our team members participating in one of our insurance plans in the U.S. This is an enhanced medical benefit, provided at no cost to team members.
That clinic provides no-cost primary care to Rollins teammates who participate in one of our medical plans in the state of Georgia. Marathon Health provides these services either virtually or through the existing nationwide network of Marathon Health clinics for all our teammates participating in one of our insurance plans in the U.S.
You should not rely on our forward-looking statements. The Company does not undertake to update its forward-looking statements. Item 1.A. Risk Factors An investment in our common stock involves certain risks. Before making an investment decision, you should carefully consider the following risks and all of the other information included in this Annual Report on Form 10-K.
Item 1.A. Risk Factors An investment in our common stock involves certain risks. Before making an investment decision, you should carefully consider the following risks and all of the other information included in this Annual Report on Form 10-K. Our business, reputation, financial condition, results of operations, or cash flows could be materially adversely affected by any of these risks.
Krause brings over eight years of public company Chief Financial Officer experience and over 20 years of global finance and strategy experience. Elizabeth Chandler has served as the Vice President, General Counsel since she joined the Company in 2013 and as Corporate Secretary since 2018. Ms. Chandler brings over 35 years of legal experience.
Krause brings over nine years of public company Chief Financial Officer experience and over 21 years of global finance and strategy experience. • Elizabeth Chandler joined the Company in 2013 and currently serves as our Chief Legal Officer. Ms.
Risks Related to Cybersecurity, Privacy Compliance and Business Disruptions The Company, our wholly-owned subsidiaries, third-party business partners and service providers have been subject to cybersecurity incidents in the past and could be the targets of future attacks that could result in disruption to our business operations, economic and reputational damage, and possible fines, penalties and private litigation, if there is unauthorized access to or unintentional distribution of personal, financial, proprietary, confidential, or other protected data or information the Company is entrusted to keep about its customers, employees, business practices, or third parties, or there are significant operational disruptions that result from a cybersecurity incident.
Risks Related to Cybersecurity, Privacy Compliance and Business Disruptions The Company, our brands, third-party business partners and service providers have been subject to cybersecurity incidents in the past and could be the targets of future attacks that could result in disruption to our business operations, economic and reputational damage, and possible fines, penalties and private litigation.
These regulations may also apply to our third-party suppliers. Penalties for noncompliance with these laws may include criminal sanctions or civil remedies, including, but not limited to, cancellation of licenses, fines, and other corrective actions.
Penalties for noncompliance with these laws may include criminal sanctions or civil remedies, including, but not limited to, cancellation of licenses, fines, and other corrective actions. Noncompliance with, changes in, expanded enforcement of, or adoption of new laws and regulations governing hazardous waste disposal and other environmental matters, could result in operational changes and increased costs.
Experienced Management Team Our management team combines extensive business and consumer services experience with robust local pest control leadership. Consistent with our culture of attracting, developing and progressing talented individuals, our senior leadership team consists of a combination of long-term internal leaders and strategic hires from well-respected external platforms.
Consistent with our culture of attracting, developing and progressing talented individuals, our senior leadership team consists of a combination of long-term internal leaders and strategic hires from well-respected external platforms. Our Executive Chairman Emeritus, Gary Rollins, is the son of Rollins, Inc. co-founder O.

… 63 more changes not shown on this page.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+0 added−0 removed10 unchanged
Biggest changeThese matters may involve, but are not limited to, allegations that our services or vehicles caused damage or injury, claims that our services did not achieve the desired results, claims related to acquisitions and allegations by federal, state or local authorities, including taxing authorities, of violations of regulations or statutes.
Biggest changeThese matters may involve, but are not limited to, allegations that our services or vehicles caused damage or injury, claims that our services did not achieve the desired results (including claims that we are responsible for termite damage to a structure), claims related to acquisitions and allegations by federal, state or local authorities, including taxing authorities, of violations of regulations or statutes.
The Company has received a notice of alleged violations and information requests from local governmental authorities in California for our Orkin and Clark Pest Control operations and is currently working with several local governments regarding compliance with environmental regulations governing the management of hazardous waste and pesticide disposal.
The Company has received a notice of alleged violations and information requests from local governmental authorities in California for our Orkin and Clark Pest Control operations and is currently working with several local governments regarding compliance with environmental regulations 18 Table of Contents governing the management of hazardous waste and pesticide disposal.
Item 4. Mine Safety Disclosures. Not applicable. 20 Table of Contents PART II
Item 4. Mine Safety Disclosures. Not applicable. 19 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. Mine Safety Disclosures. 20 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 21 Item 6 [Reserved] 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 22 Item 7.A. Quantitative and Qualitative Disclosures about Market Risk. 33 Item 8.
Biggest changeItem 4. Mine Safety Disclosures. 19 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 20 Item 6 [Reserved] 21 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 21 Item 7.A. Quantitative and Qualitative Disclosures about Market Risk. 36 Item 8.
Financial Statements and Supplementary Data. 34 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. 71 Item 9.A. Controls and Procedures. 71 Item 9.B. Other Information. 72
Financial Statements and Supplementary Data. 37 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. 74 Item 9.A. Controls and Procedures. 74 Item 9.B. Other Information. 74

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−1 removed2 unchanged
Biggest changePeriod Total number of shares purchased (1) Weighted- average price paid per share Total number of shares purchased as part of publicly announced repurchases (2) Maximum number of shares that may yet be purchased under the repurchase plan (2) October 1 to 31, 2023 1,213 $ 36.01 — 11,415,625 November 1 to 30, 2023 1,293 43.02 — 11,415,625 December 1 to 31, 2023 — — — 11,415,625 Total 2,506 $ 39.63 — 11,415,625 (1) Includes shares withheld by the Company in connection with tax withholding obligations of its employees upon vesting of such employees’ equity awards.
Biggest changePeriod Total number of shares purchased (1) Weighted- average price paid per share Total number of shares purchased as part of publicly announced repurchases (2) Maximum number of shares that may yet be purchased under the repurchase plan (2) October 1 to 31, 2024 — $ — — 11,415,625 November 1 to 30, 2024 — — — 11,415,625 December 1 to 31, 2024 817 49.86 — 11,415,625 Total 817 $ — — 11,415,625 (1) Represents shares withheld by the Company in connection with tax withholding obligations of its employees upon vesting of such employees' restricted stock awards.
The repurchase plan has no expiration date. 21 Table of Contents Performance Graph The following graph sets forth a five-year comparison of the cumulative total stockholder return based on the performance of the stock of the Company as compared with both a broad equity market index and an industry index.
The repurchase plan has no expiration date. 20 Table of Contents Performance Graph The following graph sets forth a five-year comparison of the cumulative total stockholder return based on the performance of the stock of the Company as compared with both a broad equity market index and an industry index.
The Company expects to continue to pay cash dividends to the common stockholders, subject to the earnings and financial condition of the Company and other relevant factors. Issuer Purchases of Equity Securities The Company did not repurchase shares on the open market during the quarter ended December 31, 2023.
The Company expects to continue to pay cash dividends to the common stockholders, subject to the earnings and financial condition of the Company and other relevant factors. Issuer Purchases of Equity Securities The Company did not repurchase shares on the open market during the quarter ended December 31, 2024.
(2) The Company has a share repurchase plan, adopted in 2012, to repurchase up to 16.9 million shares of the Company’s common stock. As of December 31, 2023, the Company has a remaining authorization to repurchase 11.4 million shares of the Company's common stock under this program.
(2) The Company has a share repurchase plan, adopted in 2012, to repurchase up to 16.9 million shares of the Company’s common stock. As of December 31, 2024, the Company has a remaining authorization to repurchase 11.4 million shares of the Company's common stock under this program.
As of January 31, 2024, there were 8,118 holders of record of the Company’s common stock. However, a large number of our shareholders hold their shares in “street name” in brokerage accounts and, therefore, do not appear on the shareholder list maintained by our transfer agent.
As of January 31, 2025, there were 8,135 holders of record of the Company’s common stock. However, a large number of our shareholders hold their shares in “street name” in brokerage accounts and, therefore, do not appear on the shareholder list maintained by our transfer agent.
The indices included in the following graph are the S&P 500 Index and the S&P 500 Commercial Services & Supplies Index. *$100 invested on 12/31/18 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. Copyright© 2023 Standard & Poor's, a division of S&P Global.
The indices included in the following graph are the S&P 500 Index and the S&P 500 Commercial Services & Supplies Index. *$100 invested on 12/31/19 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. Copyright© 2024 Standard & Poor's, a division of S&P Global.
The following table presents the Company's share repurchase activity for the period from October 1, 2023 to December 31, 2023.
The following table presents the Company's share repurchase activity for the period from October 1, 2024 to December 31, 2024.
Removed
All rights reserved. 2018 2019 2020 2021 2022 2023 Rollins Inc. $ 100.00 $ 93.03 $ 166.06 $ 147.06 $ 158.95 $ 192.61 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 S&P 500 Commercial Services & Supplies 100.00 140.15 169.56 223.20 211.29 271.25
Added
All rights reserved. 2019 2020 2021 2022 2023 2024 Rollins Inc. $ 100.00 $ 178.51 $ 158.09 $ 170.87 $ 207.05 $ 222.65 S&P 500 100.00 118.40 152.39 124.79 157.59 197.02 S&P 500 Commercial Services & Supplies 100.00 120.98 159.25 150.76 193.54 229.12

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

56 edited+45 added−27 removed15 unchanged
Biggest changeThere was no impact on our consolidated statements of income, financial position, or cash flows. 28 Table of Contents Twelve Months Ended December 31, Variance 2023 2022 $ % Reconciliation of Operating Income to Adjusted Operating Income and Adjusted Operating Income Margin Operating income $ 583,226 $ 493,388 Fox acquisition-related expenses (1) 15,795 — Restructuring costs (2) 5,196 — Adjusted operating income $ 604,217 $ 493,388 110,829 22.5 Revenues $ 3,073,278 $ 2,695,823 Operating income margin 19.0 % 18.3 % Adjusted operating margin 19.7 % 18.3 % Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS Net income $ 434,957 $ 368,599 Fox acquisition-related expenses (1) 15,795 — Restructuring costs (2) 5,196 — Gain on sale of businesses (3) (15,450) — Tax impact of adjustments (4) (1,418) — Adjusted net income $ 439,080 $ 368,599 70,481 19.1 EPS - basic and diluted $ 0.89 $ 0.75 Fox acquisition-related expenses (1) 0.03 — Restructuring costs (2) 0.01 — Gain on sale of businesses (3) (0.03) — Tax impact of adjustments (4) — — Adjusted EPS - basic and diluted (5) $ 0.90 $ 0.75 0.15 20.0 Weighted average shares outstanding - basic 489,949 492,300 Weighted average shares outstanding - diluted 490,130 492,413 Reconciliation of Net Income to EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin Net income $ 434,957 $ 368,599 Depreciation and amortization 99,752 91,326 Interest expense, net 19,055 2,638 Provision for income taxes 151,300 130,318 EBITDA 705,064 592,881 112,183 18.9 Fox acquisition-related expenses (1) $ 3,148 $ — Restructuring costs (2) 5,196 — Gain on sale of businesses (3) (15,450) — Adjusted EBITDA $ 697,958 $ 592,881 105,077 17.7 Revenues $ 3,073,278 $ 2,695,823 EBITDA margin 22.9 % 22.0 % Adjusted EBITDA margin 22.7 % 22.0 % Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow Net cash provided by operating activities $ 528,366 465,930 Capital expenditures $ (32,465) $ (30,628) Free cash flow 495,901 435,302 60,599 13.9 (1) Consists of expenses resulting from the amortization of certain intangible assets and adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control.
Biggest changeManagement uses leverage ratio as an assessment of overall liquidity, financial flexibility, and leverage. 30 Table of Contents Twelve Months Ended December 31, Variance 2024 2023 $ % Reconciliation of Revenues to Organic Revenues Revenues $ 3,388,708 $ 3,073,278 315,430 10.3 Revenues from acquisitions (95,517) — (95,517) 3.1 Revenues of divestitures — (20,559) 20,559 (0.7) Organic revenues $ 3,293,191 $ 3,052,719 240,472 7.9 Reconciliation of Residential Revenues to Organic Residential Revenues Residential revenues $ 1,535,104 $ 1,409,872 125,232 8.9 Residential revenues from acquisitions (62,799) — (62,799) 4.5 Residential revenues of divestitures — (11,913) 11,913 (0.8) Residential organic revenues $ 1,472,305 $ 1,397,959 74,346 5.2 Reconciliation of Commercial Revenues to Organic Commercial Revenues Commercial revenues $ 1,125,964 $ 1,024,176 101,788 9.9 Commercial revenues from acquisitions (24,460) — (24,460) 2.4 Commercial revenues of divestitures — (8,646) 8,646 (0.8) Commercial organic revenues $ 1,101,504 $ 1,015,530 85,974 8.3 Reconciliation of Termite and Ancillary Revenues to Organic Termite and Ancillary Revenues Termite and ancillary revenues $ 688,186 $ 605,533 82,653 13.6 Termite and ancillary revenues from acquisitions (8,258) — (8,258) 1.4 Termite and ancillary organic revenues $ 679,928 $ 605,533 74,395 12.2 31 Table of Contents Twelve Months Ended December 31, Variance 2024 2023 $ % Reconciliation of Operating Income and Operating Income Margin to Adjusted Operating Income and Adjusted Operating Margin Operating income $ 657,224 $ 583,226 Fox acquisition-related expenses (1) 17,902 15,795 Restructuring costs (2) — 5,196 Adjusted operating income $ 675,126 $ 604,217 70,909 11.7 Revenues $ 3,388,708 $ 3,073,278 Operating income margin 19.4 % 19.0 % Adjusted operating margin 19.9 % 19.7 % Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS (7) Net income $ 466,379 $ 434,957 Fox acquisition-related expenses (1) 17,902 15,795 Restructuring costs (2) — 5,196 Loss (gain) on sale of assets, net (3) (683) (6,636) Gain on sale of businesses (4) — (15,450) Tax impact of adjustments (5) (4,408) 280 Adjusted net income $ 479,190 $ 434,142 45,048 10.4 EPS - basic and diluted $ 0.96 $ 0.89 Fox acquisition-related expenses (1) 0.04 0.03 Restructuring costs (2) — 0.01 Loss (gain) on sale of assets, net (3) — (0.01) Gain on sale of businesses (4) — (0.03) Tax impact of adjustments (5) (0.01) — Adjusted EPS - basic and diluted (6) $ 0.99 $ 0.89 0.10 11.2 Weighted average shares outstanding - basic 484,249 489,949 Weighted average shares outstanding - diluted 484,295 490,130 Reconciliation of Net Income to EBITDA, Adjusted EBITDA, EBITDA Margin, Incremental EBITDA Margin, Adjusted EBITDA Margin, and Adjusted Incremental EBITDA Margin (7) Net income $ 466,379 $ 434,957 Depreciation and amortization 113,220 99,752 Interest expense, net 27,677 19,055 Provision for income taxes 163,851 151,300 EBITDA 771,127 705,064 66,063 9.4 Fox acquisition-related expenses (1) $ 1,049 $ 3,148 Restructuring costs (2) — 5,196 Loss (gain) on sale of assets, net (3) (683) (6,636) Gain on sale of businesses (4) — (15,450) Adjusted EBITDA $ 771,493 $ 691,322 80,171 11.6 Revenues $ 3,388,708 $ 3,073,278 EBITDA margin 22.8 % 22.9 % Incremental EBITDA margin 20.9 % Adjusted EBITDA margin 22.8 % 22.5 % Adjusted incremental EBITDA margin 25.4 % Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Free Cash Flow Conversion Net cash provided by operating activities $ 607,653 528,366 Capital expenditures $ (27,572) $ (32,465) Free cash flow $ 580,081 $ 495,901 84,180 17.0 Free cash flow conversion 124.4 % 114.0 % 32 Table of Contents Twelve Months Ended December 31, 2024 2023 Reconciliation of SG&A to Adjusted SG&A SG&A $ 1,015,067 $ 915,233 Fox acquisition-related expenses (1) 1,049 3,148 Adjusted SG&A $ 1,014,018 $ 912,085 Revenues $ 3,388,708 $ 3,073,278 Adjusted SG&A as a % of revenues 29.9 % 29.7 % Twelve Months Ended December 31, 2024 2023 Reconciliation of Long-term Debt and Net Income to Leverage Ratio Long-term debt (8) $ 397,000 $ 493,000 Operating lease liabilities (9) 417,218 325,572 Cash adjustment (10) (80,667) (93,443) Adjusted net debt $ 733,551 $ 725,129 Net income $ 466,379 $ 434,957 Depreciation and amortization 113,220 99,752 Interest expense, net 27,677 19,055 Provision for income taxes 163,851 151,300 Operating lease cost (11) 133,420 110,627 Stock-based compensation expense 29,984 24,605 Adjusted EBITDAR $ 934,531 $ 840,296 Leverage ratio 0.8x 0.9x (1) Consists of expenses resulting from the amortization of certain intangible assets and adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control.
The circumstances that make these judgments difficult or complex relate to the need for management to make estimates about the effect of matters that are inherently uncertain. We believe our critical accounting estimates to be as follows: Accrued Insurance— The Company retains, up to specified limits, certain risks related to U.S. general liability, workers’ compensation and auto liability.
The circumstances that make these judgments difficult or complex relate to the need for management to make estimates about the effect of matters that are inherently uncertain. We believe our critical accounting estimate to be as follows: Accrued Insurance— The Company retains, up to specified limits, certain risks related to U.S. general liability, workers’ compensation and auto liability.
Discussions of 2021 items and year-to-year comparisons of 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons of 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.
The extent to which increasing interest rates, inflation and other economic trends will continue to impact the Company’s business, financial condition and results of operations is uncertain. Therefore, we cannot reasonably estimate the full future impacts of these matters at this time.
The extent to which changing interest rates, inflation and other economic trends will continue to impact the Company’s business, financial condition and results of operations is uncertain. Therefore, we cannot reasonably estimate the full future impacts of these matters at this time.
The Company may offer and sell some or all of such securities from to time or to or through underwriters, brokers or dealers, directly to one or more other purchasers, through a block trade, through agents on a best-efforts basis, 31 Table of Contents through a combination of any of the above methods of sale or through other types of transactions described in the Form S-3.
The Company may offer and sell some or all of such securities from time to time or through underwriters, brokers or dealers, directly to one or more other purchasers, through a block trade, through agents on a best-efforts basis, through a combination of any of the above methods of sale or through other types of transactions described in the Form S-3.
While we exclude such expenses in this non-GAAP measure, the revenue from the acquired company is reflected in this non-GAAP measure and the acquired assets contribute to revenue generation. (2) Restructuring costs consist of costs primarily related to severance and benefits paid to employees pursuant to restructuring and workforce reduction plans.
While we exclude such expenses in this non-GAAP measure, such expenses are expected to recur, the revenue from the acquired company is reflected in this non-GAAP measure and the acquired assets contribute to revenue generation. (2) Restructuring costs consist of costs primarily related to severance and benefits paid to employees pursuant to restructuring and workforce reduction plans.
The following discussion (as well as other discussions in this document) contains forward-looking statements. Please see “Cautionary Statement Regarding Forward-Looking Statements” and "Risk Factors" for a discussion of uncertainties, risks and assumptions associated with these statements. 22 Table of Contents The Company Rollins, Inc.
The following discussion (as well as other discussions in this document) contains forward-looking statements. Please see “Cautionary Statement Regarding Forward-Looking Statements” and "Risk Factors" for a discussion of uncertainties, risks and assumptions associated with these statements. The Company Rollins, Inc.
The maturity date of the loans under the Credit Agreement is February 24, 2028. Refer to Note 10, Debt to the accompanying financial statements for further details. As of December 31, 2023, the Company had outstanding borrowings of $493.0 million under the Credit Facility. The aggregate effective interest rate on the debt outstanding as of December 31, 2023 was 6.5%.
The maturity date of the loans under the Credit Agreement is February 24, 2028. Refer to Note 10, Debt to the accompanying financial statements for further details. As of December 31, 2024, the Company had outstanding borrowings of $397.0 million under the Credit Facility. The aggregate effective interest rate on the debt outstanding as of December 31, 2024 was 5.5%.
Adjusted operating income and adjusted operating margin are calculated by adding back to the GAAP measures those expenses resulting from the amortization of certain intangible assets and adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control and restructuring costs related to restructuring and workforce reduction plans.
Adjusted operating income and adjusted operating margin Adjusted operating income and adjusted operating margin are calculated by adding back to net income those expenses resulting from the amortization of certain intangible assets, adjustments to the fair value of contingent consideration resulting from the acquisition of Fox, and restructuring costs related to restructuring and workforce reduction plans.
Impact of Economic Trends The continued disruption in economic markets due to high inflation, increases in interest rates, business interruptions due to natural disasters and changes in weather patterns, employee shortages, and supply chain issues, all pose challenges which may adversely affect our future performance.
Impact of Economic Trends The continued disruption in economic markets due to inflation, changing interest rates, tariffs, trade disputes, business interruptions due to natural disasters and changes in weather patterns, employee shortages, and supply chain issues, all pose challenges which may adversely affect our future performance.
The Company’s investing activities were funded through existing cash balances, operating cash flows, and borrowings under the Credit Facility. Cash Used in Financing Activities Cash used in financing activities was $149.4 million and $336.0 million during the twelve months ended December 31, 2023 and 2022, respectively.
The Company’s investing activities were funded through existing cash balances, operating cash flows, and borrowings under the Credit Facility. Cash Used in Financing Activities Cash used in financing activities was $440.7 million and $149.4 million during the twelve months ended December 31, 2024 and 2023, respectively.
Interest Expense, Net During the twelve months ended December 31, 2023, interest expense, net increased $16.4 million compared to the prior year, due to the increase in the average debt balance associated primarily with the acquisition of Fox and the share repurchase completed during 2023.
Interest Expense, Net During the twelve months ended December 31, 2024, interest expense, net increased $8.6 million compared to the prior year, due to the increase in the average debt balance associated primarily with the share repurchase completed in the third quarter of 2023 and the acquisition of Fox in the second quarter of 2023.
(3) Represents the gain on the sale of certain non-core businesses. (4) The tax effect of the adjustments is calculated using the applicable statutory tax rates for the respective periods.
(3) Consists of the gain or loss on the sale of non-operational assets. (4) Represents the gain on the sale of certain non-core businesses. (5) The tax effect of the adjustments is calculated using the applicable statutory tax rates for the respective periods.
The Company’s operating activities generated net cash of $528.4 million and $465.9 million for the twelve months ended December 31, 2023 and 2022, respectively. The $62.4 million increase was driven primarily by strong operating results and the timing of cash receipts and cash payments to vendors, employees, and tax and regulatory authorities.
The Company’s operating activities generated net cash of $607.7 million and $528.4 million for the twelve months ended December 31, 2024 and 2023, respectively. The $79.3 million increase was driven primarily by strong operating results and the timing of cash receipts and cash payments to vendors, employees, and tax and regulatory authorities.
The Company made net borrowings under its credit agreements of $438.0 million during the twelve months ended December 31, 2023, compared to net repayments of $100.0 million during 2022.
The Company made net repayments under its credit facility of $96.0 million during the twelve months ended December 31, 2024, compared to net borrowings of $438.0 million during 2023.
A total of $264.3 million was paid in cash dividends ($0.54 per share) during the twelve months ended December 31, 2023, compared to $211.6 million in cash dividends paid ($0.43 per share) during the twelve months ended December 31, 2022.
A total of $298.0 million was paid in cash dividends ($0.62 per share) during the twelve months ended December 31, 2024, compared to $264.3 million in cash dividends paid ($0.54 per share) during the twelve months ended December 31, 2023.
Cash Used in Investing Activities The Company’s investing activities used $372.9 million and $134.1 million for the twelve months ended December 31, 2023 and 2022, respectively.
Cash Used in Investing Activities The Company’s investing activities used $176.2 million and $372.9 million for the twelve months ended December 31, 2024 and 2023, respectively.
The Company invested $32.5 million in capital expenditures during the year, offset by $12.5 million in cash proceeds from the sale of assets, and $15.9 million in cash proceeds from the sale of businesses, compared with $30.6 million of capital expenditures and $14.6 million in cash proceeds from asset sales in 2022.
During 2024, the Company invested $27.6 million in capital expenditures, offset by $4.1 million in cash proceeds from the sale of assets, compared with $32.5 million of capital expenditures, $12.5 million in cash proceeds from asset sales, and $15.9 million in cash proceeds from the sale of businesses during 2023.
A non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that either 1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows, or 2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. 27 Table of Contents Set forth below is a reconciliation of the non-GAAP financial measures contained in this report with their most directly comparable GAAP measures (in thousands, except per share data and margins).
Non-GAAP Financial Measures Reconciliation of GAAP and non-GAAP Financial Measures A non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that either 1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows, or 2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.
Customer Loyalty We remain committed to providing our customers with the best customer experience. Effective sales and service staffing levels helped us to capitalize on continued demand and deliver solid results for the year, with organic revenues* growing by 8.2% compared to 2022.
We remain committed to developing exceptional talent and investing in our teams. Customer Loyalty We remain committed to providing our customers with the best customer experience. Effective sales and service staffing levels helped us to capitalize on continued demand and deliver solid results for the year, with organic revenues* growing by 7.9% compared to 2023.
Contractual Commitments We have material cash requirements for known contractual obligations and commitments in the form of operating leases and debt obligations. We expect to fund these obligations primarily through cash generated from our operations. Refer to Note 6, Leases and Note 10, Debt to the accompanying financial statements for further details.
We expect to fund these obligations primarily through cash generated from our operations. Refer to Note 6, Leases and Note 10, Debt to the accompanying financial statements for further details.
Cash paid for acquisitions totaled $366.9 million for the twelve months ended December 31, 2023, as compared to $119.2 million for the twelve months ended December 31, 2022, driven primarily by the acquisition of Fox Pest Control.
Cash paid for acquisitions totaled $157.5 million for the twelve months ended December 31, 2024, as compared to $366.9 million for the twelve months ended December 31, 2023, driven primarily by the acquisition of Fox in 2023.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Presentation This discussion should be read in conjunction with our audited financial statements and related notes included elsewhere in this document.
Presentation This discussion should be read in conjunction with our audited financial statements and related notes included elsewhere in this document.
These adjustments are of a normal recurring nature but are complicated by the continued uncertainty surrounding these macro economic trends. The severity, magnitude and duration of certain economic trends continue to be uncertain and are difficult to predict. Therefore, our accounting estimates and assumptions may change over time in response to economic trends and may change materially in future periods.
The severity, magnitude and duration of certain economic trends continue to be uncertain and are difficult to predict. Therefore, our accounting estimates and assumptions may change over time in response to economic trends and may change materially in future periods.
Adjusted EBITDA and adjusted EBITDA margin are calculated by adding back to net income interest, taxes, depreciation and amortization expense those expenses resulting from the adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control, restructuring costs related to restructuring and workforce reduction plans, and gains on the sale of businesses.
Adjusted EBITDA and adjusted EBITDA margin are calculated by further adding back those expenses resulting from the adjustments to the fair value of contingent consideration resulting from the acquisition of Fox, restructuring costs related to restructuring and workforce reduction plans, and excluding gains and losses on the sale of non-operational assets and gains on the sale of businesses.
The Company continues to execute various strategies previously implemented to help mitigate the impact of these economic disruptors.
The Company continues to execute various strategies previously implemented to help mitigate the impact of these economic disruptors. However, the Company cannot reasonably estimate whether these strategies will help mitigate the impact of these economic disruptors in the future.
During 2023, we made significant strides in all four pillars of our strategic objectives: 1) people first 2) customer loyalty 3) growth mindset and 4) operational efficiency. People First During 2023, we focused on the safety of our people. We are continuously improving our safety culture and monitoring our measurable safety goals.
During 2024, we made significant strides in all four pillars of our strategic objectives: 1) people first 2) customer loyalty 3) growth mindset and 4) operational efficiency. People First We continue to focus on the development of our people.
These significant assumptions are forward-looking and could be affected by future economic and market conditions. 32 Table of Contents Recent Accounting Guidance and Other Policies and Estimates See Note 1, Summary of Significant Accounting Policies to the accompanying financial statements (Part II, Item 8 of this Form 10-K) for further discussion.
Recent Accounting Guidance and Other Policies and Estimates See Note 1, Summary of Significant Accounting Policies to the accompanying financial statements (Part II, Item 8 of this Form 10-K) for further discussion.
The Company believes its current cash and cash equivalents balances, future cash flows expected to be generated from operating activities, and available borrowings under its Credit Facility will be sufficient to finance its current operations and obligations, and fund expansion of the business for the foreseeable future.
The Company believes its current cash and cash equivalents balances, future cash flows expected to be generated from operating activities, available borrowings under its Credit Facility, access to debt financing based on our creditworthiness, and our newly announced $1 billion commercial paper program authorization, which is backstopped by our Credit Facility, will be sufficient to finance its current operations and obligations, and fund expansion of the business for the foreseeable future.
The increase in revenues was driven by demand from our customers that remained strong throughout the year across all major service offerings. Comparing 2023 to 2022, organic revenue* growth was 8.2% while acquisitions drove 5.9% of total growth.
The increase in revenues was driven by demand from our customers that remained strong throughout the year across all major service offerings. Comparing 2024 to 2023, organic revenue* growth was 7.9% with acquisitions adding 3.1% during the year, offset by divestitures of 0.7%.
Income Taxes The Company’s effective tax rate was 25.8% in 2023 compared to 26.1% in 2022. The 2023 rate was favorably impacted by lower state income taxes and federal tax credits compared to 2022.
Income Taxes The Company’s effective tax rate was 26.0% in 2024 compared to 25.8% in 2023. The 2024 rate was negatively impacted by higher state income taxes and foreign income taxes compared to 2023.
Management uses adjusted operating income, adjusted operating margin, adjusted net income, adjusted EPS, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, and free cash flow as measures of operating performance because this measure allows the Company to compare performance consistently over various periods.
Management uses adjusted incremental EBITDA margin as a measure of operating performance because this measure allows the Company to compare performance consistently over various periods. Free cash flow and free cash flow conversion Free cash flow is calculated by subtracting capital expenditures from cash provided by operating activities.
Operating Income For the twelve months ended December 31, 2023, operating income increased $89.8 million or 18.2% compared to the prior year. As a percentage of revenue, operating income increased to 19.0% from 18.3% in the prior year. The improvement in operating income as a percentage of sales is primarily driven by the improvement in gross profit discussed previously.
As a percentage of revenue, operating income increased to 19.4% from 19.0% in the prior year. The improvement in operating income as a percentage of revenue is primarily driven by the improvement in gross profit discussed previously.
These letters of credit are required by the Company’s insurance companies, due to the Company’s high deductible insurance program, to secure various workers’ compensation and casualty insurance contracts coverage and were increased from $71.3 million as of December 31, 2022. The Company believes that it has adequate liquid assets, funding sources and insurance accruals to accommodate potential future insurance claims.
The Company maintains $72.0 million in letters of credit as of December 31, 2024. These letters of credit are required by the Company’s insurance companies, due to the Company’s high deductible insurance program, to secure various workers’ compensation and casualty insurance contracts coverage and were increased from $71.7 million as of December 31, 2023.
However, the Company cannot reasonably estimate whether these strategies will help mitigate the impact of these economic disruptors in the future. 23 Table of Contents The Company’s consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and related disclosures as of the date of the condensed consolidated financial statements.
The Company’s consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and related disclosures as of the date of the condensed consolidated financial statements. The Company considered the impact of economic trends on the assumptions and estimates used in preparing the consolidated financial statements.
The following table sets forth a summary of our cash flows from operating, investing and financing activities for the year ended December 31, 2023 and 2022: Year Ended December 31, Variance (in thousands) 2023 2022 $ % Net cash provided by operating activities 528,366 465,930 62,436 13.4 Net cash used in investing activities (372,895) (134,141) (238,754) (178.0) Net cash used in financing activities (149,420) (336,017) 186,597 55.5 Effect of exchange rate on cash 2,428 (5,727) 8,155 N/M Net increase (decrease) in cash and cash equivalents $ 8,479 $ (9,955) 18,434 N/M N/M - calculation not meaningful 30 Table of Contents Cash Provided by Operating Activities Cash from operating activities is the principal source of cash generation for our businesses.
The following table sets forth a summary of our cash flows from operating, investing and financing activities for the year ended December 31, 2024 and 2023: Year Ended December 31, Variance (in thousands) 2024 2023 $ % Net cash provided by operating activities 607,653 528,366 79,287 15.0 Net cash used in investing activities (176,232) (372,895) (196,663) (52.7) Net cash used in financing activities (440,708) (149,420) 291,288 194.9 Effect of exchange rate on cash (4,908) 2,428 (7,336) N/M Net (decrease) increase in cash and cash equivalents $ (14,195) $ 8,479 (22,674) N/M N/M - calculation not meaningful 34 Table of Contents Cash Provided by Operating Activities Cash from operating activities is the principal source of cash generation for our businesses.
These cash receipts are included in other financing activities. In 2012, the Company’s Board of Directors authorized the purchase of up to 5 million shares of the Company’s common stock. After adjustments for stock splits, the total authorized shares under the share repurchase program were 16.9 million shares.
In 2012, the Company’s Board of Directors authorized the purchase of up to 5 million shares of the Company’s common stock. After adjustments for stock splits, the total authorized shares under the share repurchase program is 16.9 million shares. As of December 31, 2024, we have a remaining authorization of 11.4 million shares under the share repurchase program.
Approximately $52.1 million is held in cash by foreign subsidiaries and the remaining $51.7 million is held in Federal Deposit Insurance Corporation (“FDIC”) insured non-interest-bearing accounts at various domestic banks which at times exceed federally insured amounts. We intend to continue to grow the business in the international markets where we have a presence.
Approximately $48.5 million is held in cash by foreign subsidiaries and the remaining $41.1 million is held at domestic banks. We intend to continue to grow the business in the international markets where we have a presence.
Looking at the service offerings, residential pest control revenue increased approximately 17%, commercial pest control revenue increased approximately 11% and termite and ancillary services grew approximately 13% including both organic and acquisition-related growth in each area.
Residential pest control revenue increased approximately 9%, commercial pest control revenue increased approximately 10% and termite and ancillary services grew approximately 14% including both organic and acquisition-related growth in each area. Organic revenue* growth was strong across our service offerings, growing over 5% in residential, over 8% in commercial, and over 12% in termite and ancillary activity.
Sales, General and Administrative For the twelve months ended December 31, 2023, sales, general and administrative (SG&A) expenses increased $112.5 million, or 14.0%, compared to the twelve months ended December 31, 2022. The increase is driven by people-related costs, advertising and selling expenses associated with growth initiatives.
Sales, General and Administrative For the twelve months ended December 31, 2024, sales, general and administrative (SG&A) expenses increased $99.8 million, or 10.9%, compared to the twelve months ended December 31, 2023. The increase is driven by expenses associated with growth initiatives aimed at capitalizing on the health of our underlying markets.
In addition, during the twelve months ended December 31, 2023, the Company completed the repurchase of 8,724,100 of the shares of common stock from LOR, Inc ("LOR") (a company controlled by Mr. Gary W. Rollins and certain members of his family) for $300.0 million in conjunction with the transaction described below.
In addition, during the twelve months ended December 31, 2023, the Company completed the repurchase of 8,724,100 of the shares of common stock from LOR, Inc ("LOR") for $300.0 million in conjunction with the Offering, as defined in our 2023 Annual Report on Form 10-K.
These measures should not be considered in isolation or as a substitute for revenues, net income, earnings per share or other performance measures prepared in accordance with GAAP.
These measures should not be considered in isolation or as a substitute for revenues, net income, earnings per share or other performance measures prepared in accordance with GAAP. Management believes all of these non-GAAP financial measures are useful to provide investors with information about current trends in, and period-over-period comparisons of, the Company's results of operations.
Adjusted net income and adjusted EPS are calculated by adding back those acquisition-related expenses, restructuring costs, and gains on the sale of businesses to the GAAP measures and by further subtracting the tax impact of those expenses and/or gains. Free cash flow is calculated by subtracting capital expenditures from cash provided by operating activities.
Adjusted net income and adjusted EPS Adjusted net income and adjusted EPS are calculated by adding back to the GAAP measures amortization of certain intangible assets, adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control, and restructuring costs related to restructuring and workforce reduction plans, and excluding gains and losses on the sale of non-operational assets and gains on the sale of businesses, and by further subtracting the tax impact of those expenses, gains, or losses.
See the schedules below for definitions and a discussion of non-GAAP financial metrics, including a reconciliation to the most directly comparable GAAP measure. Gross Profit Gross profit for the year ended December 31, 2023 was $1.6 billion, an increase of $216.0 million, or 15.6%, compared to $1.4 billion for the year ended December 31, 2022.
See the schedules below for definitions and a discussion of non-GAAP financial metrics, including a reconciliation to the most directly comparable GAAP measure.
The Company considered the impact of economic trends on the assumptions and estimates used in preparing the consolidated financial statements. In the opinion of management, all material adjustments necessary for a fair presentation of the Company’s financial results for the year have been made.
In the opinion of management, all material adjustments necessary for a fair presentation of the Company’s financial results for the year have been made. These adjustments are of a normal recurring nature but are complicated by the continued uncertainty surrounding these macro economic trends.
Operating margin was 19.0% of revenue, an increase of 70 basis points over 2022 and adjusted operating income margin* at 19.7%, an increase of 140 basis points over the prior year. *Amounts are non-GAAP financial measures. See the schedules below for definitions and a discussion of non-GAAP financial metrics, including a reconciliation to the most directly comparable GAAP measure.
See the schedules below for definitions and a discussion of non-GAAP financial metrics, including a reconciliation to the most directly comparable GAAP measure.
The Company has not sold any such securities as of the date of this Form 10-K. Litigation For discussion on the Company’s legal contingencies, see Note 12, Commitments and Contingencies to the accompanying financial statements, and Part I, Item 3, Legal Proceedings.
Litigation For discussion on the Company’s legal contingencies, see Note 12, Commitments and Contingencies to the accompanying financial statements, and Part I, Item 3, Legal Proceedings. 35 Table of Contents Contractual Commitments We have material cash requirements for known contractual obligations and commitments in the form of operating leases and debt obligations.
Debt levels and corresponding interest expense are expected to remain elevated in the first half of 2024 due primarily to the higher level of debt associated with the acquisition of Fox and the share repurchases during 2023. 26 Table of Contents Other Income, Net During the twelve months ended December 31, 2023, other income, net increased $13.9 million primarily due to the Company recognizing a $15.5 million gain on the sale of certain businesses during 2023, offset by lower gains from asset sales.
Other Income, Net During the twelve months ended December 31, 2024, other income, net decreased $21.4 million primarily due to the Company recognizing a $15.5 million gain on the sale of certain businesses during 2023, with no such gain on sale during 2024, and lower gains on sales of non-operational assets.
Growth Mindset 2023 marked a record year in terms of revenues, totaling $3.1 billion, an increase of 14.0% over 2022, with acquisition revenues* growing by 5.9% compared to 2022. We completed the acquisition of Fox Pest Control ("Fox"), one of the largest acquisitions in the Company's history, for $339.5 million.
Growth Mindset 2024 marked a record year in terms of revenues, totaling $3.4 billion, an increase of 10.3% over 2023, with acquisition revenues* growing by 3.1% compared to 2023. We completed 44 acquisitions in 2024, including 32 acquisitions and 12 franchise buybacks, driving inorganic growth at our brands both domestically and internationally.
Depreciation and Amortization For the twelve months ended December 31, 2023, depreciation and amortization increased $8.4 million, or 9.2%, compared to the twelve months ended December 31, 2022. The increase was due to higher amortization of intangible assets from acquisitions, most notably Fox, offset by lower depreciation of operating equipment and internal-use software.
The increase was primarily due to higher amortization of intangible assets from acquisitions, most notably from a full year of acquisition costs of FPC Holdings, LLC ("Fox Pest Control", or "Fox"). Operating Income For the twelve months ended December 31, 2024, operating income increased $74.0 million or 12.7% compared to the prior year.
As of December 31, 2022, the Company had outstanding borrowings of $54.9 million under the previous Term Loan and there were no outstanding borrowings under the previous Revolving Commitment. The aggregate effective interest rate on the debt outstanding as of December 31, 2022 was 5.1%. The Company maintains $71.7 million in letters of credit as of December 31, 2023.
As of December 31, 2023, the Company had outstanding borrowings of $493.0 million under the Credit Facility. The aggregate effective interest rate on the debt outstanding as of December 31, 2023 was 6.5%. The Company is in compliance with applicable financial debt covenants as of December 31, 2024.
The Company also repurchased $10.8 million and $7.1 million of common stock for the twelve months ended December 31, 2023 and 2022, respectively, from employees for the payment of taxes on vesting restricted shares.
The Company did not repurchase shares of its common stock on the open market during 2024 or 2023. The Company also withheld $11.6 million and $10.8 million of common stock for the twelve months ended December 31, 2024 and 2023, respectively, in connection with tax withholding obligations of its employees upon vesting of such employees’ equity awards.
See "Non-GAAP Financial Measures" below for a discussion of non-GAAP financial metrics including a reconciliation to the most directly comparable GAAP measure. 24 Table of Contents Revenues The following presents a summary of revenues by product and service offering and revenues by geography: Revenues for the year ended December 31, 2023 were $3.1 billion, an increase of $377.5 million, or 14.0%, from 2022 revenues of $2.7 billion.
The Company’s foreign operations accounted for approximately 7% of total revenues for the years ended December 31, 2024 and 2023. *Amounts are non-GAAP financial measures. See the schedules below for definitions and a discussion of non-GAAP financial metrics, including a reconciliation to the most directly comparable GAAP measure.
Results of Operations—2023 Compared to 2022 Twelve Months Ended December 31, Variance (in thousands, except per share data and margins) 2023 2022 $ % GAAP Metrics Revenues $ 3,073,278 $ 2,695,823 $ 377,455 14.0 % Gross profit (1) $ 1,603,407 $ 1,387,424 $ 215,983 15.6 % Gross profit margin (1) 52.2 % 51.5 % 70 bps Operating income $ 583,226 $ 493,388 $ 89,838 18.2 % Operating income margin 19.0 % 18.3 % 70 bps Net income $ 434,957 $ 368,599 $ 66,358 18.0 % EPS $ 0.89 $ 0.75 $ 0.14 18.7 % Operating cash flow $ 528,366 $ 465,930 $ 62,436 13.4 % Non-GAAP Metrics Adjusted operating income (2) $ 604,217 $ 493,388 $ 110,829 22.5 % Adjusted operating margin (2) 19.7 % 18.3 % 140 bps Adjusted net income (2) $ 439,080 $ 368,599 $ 70,481 19.1 % Adjusted EPS (2) $ 0.90 $ 0.75 $ 0.15 20.0 % Adjusted EBITDA (2) $ 697,958 $ 592,881 $ 105,077 17.7 % Adjusted EBITDA margin (2) 22.7 % 22.0 % 70 bps Free cash flow (2) $ 495,901 $ 435,302 $ 60,599 13.9 % (1) Exclusive of depreciation and amortization (2) Amounts are non-GAAP financial measures.
The Company will continue to monitor the potential impact of Pillar Two proposals and developments on our consolidated financial statements and related disclosures as various tax jurisdictions begin enacting such legislation. 24 Table of Contents Results of Operations—2024 Compared to 2023 Twelve Months Ended December 31, Variance (in thousands, except per share data and margins) 2024 2023 $ % GAAP Metrics Revenues $ 3,388,708 $ 3,073,278 315,430 10.3 Gross profit (1) $ 1,785,511 $ 1,603,407 182,104 11.4 Gross profit margin (1) 52.7 % 52.2 % 50 bps Operating income $ 657,224 $ 583,226 73,998 12.7 Operating income margin 19.4 % 19.0 % 40 bps Net income $ 466,379 $ 434,957 31,422 7.2 EPS $ 0.96 $ 0.89 0.07 7.9 Net cash provided by operating activities $ 607,653 $ 528,366 79,287 15.0 Non-GAAP Metrics Adjusted operating income (2) $ 675,126 $ 604,217 70,909 11.7 Adjusted operating margin (2) 19.9 % 19.7 % 20 bps Adjusted net income (2) $ 479,190 $ 434,142 45,048 10.4 Adjusted EPS (2) $ 0.99 $ 0.89 0.10 11.2 Adjusted EBITDA (2) $ 771,493 $ 691,322 80,171 11.6 Adjusted EBITDA margin (2) 22.8 % 22.5 % 30 bps Free cash flow (2) $ 580,081 $ 495,901 84,180 17.0 (1) Exclusive of depreciation and amortization (2) Amounts are non-GAAP financial measures.
As a percentage of revenue, SG&A was consistent at 29.8% in 2023 and 2022, as we continue to manage our cost structure while investing in growth initiatives. Restructuring Costs During the twelve months ended December 31, 2023, we executed a restructuring program to modernize our workforce. This effort resulted in expense of approximately $5.2 million in the year.
This was partially offset by 20 basis points of leverage associated with lower administrative costs. 27 Table of Contents Restructuring Costs For the twelve months ended December 31, 2024, restructuring costs decreased by $5.2 million. During the twelve months ended December 31, 2023, we executed a restructuring program to modernize our workforce.
Management also uses organic revenues to compare revenues over various periods excluding the impact of acquisitions and divestitures. Management uses free cash flow to demonstrate the Company’s ability to maintain its asset base and generate future cash flows from operations. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.
An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. The Company has used the following non-GAAP financial measures in this Form 10-K: Organic revenues Organic revenues are calculated as revenues less the revenues from acquisitions completed within the prior 12 months and excluding the revenues from divested businesses.
Removed
For example, throughout the year we made considerable progress with respect to the implementation and adoption of our driver safety application, which monitors driver behaviors once a vehicle is in motion. Our average driver safety score for drivers that we monitor showed improvement in 2023.
Added
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Caution Regarding Forward-Looking Statements This Annual Report on Form 10-K as well as other written or oral statements by the Company may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995.
Removed
We also executed a restructuring program during the year to modernize our workforce and enable us to make more strategic improvements in our support functions. We remain committed to developing exceptional talent and investing in our teams, including a focus on strategic hiring in both support functions, as well as the customer-facing side of our business.
Added
We have based these forward-looking statements on our current opinions, expectations, intentions, beliefs, plans, objectives, assumptions and projections about future events and financial trends affecting the operating results and financial condition of our business. Although we believe that these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions, or expectations.
Removed
We also completed 23 additional acquisitions in 2023, driving inorganic growth at several of our brands. Operational Efficiency We saw healthy margins in 2023, with gross margin improving 70 basis points to 52.2% in 2023 compared to 51.5% in 2022.
Added
Generally, statements that do not relate to historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements.
Removed
Organic revenue* growth was strong across our service offerings, growing over 6% in residential, approximately 10% in commercial, and over 10% in termite and ancillary activity. The Company’s foreign operations accounted for approximately 7% of total revenues for the years ended December 31, 2023 and 2022.
Added
The words “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “should,” “will,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. 21 Table of Contents Forward-looking statements in this Annual Report on Form 10-K include, but are not limited to, statements regarding: • expectations with respect to our financial and business performance and strategy; • expansion efforts and growth opportunities, including, but not limited to, organic growth and recent and future acquisitions in the United States and in foreign markets where we have a presence and integration efforts with respect to recent acquisitions; • our belief that we are starting 2025 with favorable demand and demand will continue to be solid; • our belief that we compete effectively and favorably with our competitors; • our alignment around the key strategic areas that will enable us to grow faster than our market, position our business for the future, and deliver value for all stakeholders and our ability to execute on our strategic plan; • the impact of inflation, changing interest rates, tariffs, trade disputes, foreign exchange rate risk, business interruptions due to natural disasters and changes in the weather patterns, seasonality, employee shortages, and supply chain issues; • our belief that we maintain a sufficient level of products, materials, and other supplies and have qualified comparable products and materials and our ability to foresee potential supply disruptions; • expectations with respect to new and innovative products and services; • our approach to human capital management, including training, development, retention, inclusion, and engaging with our local communities; • continuously improving our safety culture and monitoring safety goals, including, but not limited to, our proactive approach with respect to safety and risk management; • our policies and procedures that are designed to identify, assess, and manage material risks arising from cybersecurity incidents; • new information technology systems and technology will lead to new or improving business capabilities and streamline business processes, financial reporting, and acquisition integration; • expectations with respect to interest costs and effective tax rates; • our robust pipeline for acquisitions; • our focus on continuous improvement initiatives to enhance profitability across our business; • the underlying health of core pest control markets; • our focus on pricing, ongoing modernization efforts, and a culture of continuous improvement should support healthy incremental margins; • sufficiency of current cash and cash equivalents balances, future cash flows, and available borrowings under our Credit Facility to finance our current and future operations; • our belief that the Company has adequate liquid assets, funding sources and insurance accruals to accommodate potential future insurance claims; • our approach to capital allocation inclusive of our intent to pay cash dividends to common shareholders and to invest in acquisitions; • our belief that no pending or threatened claim, proceeding, litigation, regulatory action or investigation, either alone or in the aggregate, including, but not limited to, the investigation by certain California governmental authorities regarding compliance with environmental regulations and claims filed under California's Private Attorneys General Act, will have a material adverse effect on our financial position, results of operations or liquidity; • the suitability and adequacy of our facilities to meet our current and reasonably anticipated future needs; and 22 Table of Contents • estimates, assumptions, and projections related to our application of critical accounting policies, described in more detail under “Critical Accounting Estimates.” These forward-looking statements are based on information available as of the date of this report, and current expectations, forecasts, and assumptions, and involve a number of judgments, risks and uncertainties.
Removed
We continue to maintain a very healthy balance sheet that positions us well to continue to invest in growth initiatives across our business as we enter 2024, From an organic perspective, we are proactively managing pricing across our portfolio.
Added
Important factors could cause actual results to differ materially from those indicated or implied by forward-looking statements including, but not limited to, those described in Item 1A “Risk Factors” of Part I, Item 7 “Management’s Discussion and Analysis of Financial condition and Results of Operations” of Part II, and elsewhere in this Annual Report on Form 10-K for our fiscal year ended December 31, 2024 and may also be described from time to time in our future reports filed with the SEC.
Removed
Additionally, while lead generation and the overall demand environment are healthy to start the new year, we continue to navigate the negative impact of a colder January in certain parts of our business. 25 Table of Contents *Amounts are non-GAAP financial measures.
Added
Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required by law.
Removed
Gross margin improved 70 basis points to 52.2% in 2023 compared to 51.5% in 2022. The acquisition of Fox drove 20 basis points of leverage in 2023. Excluding this, gross margin improved 50 basis points as pricing more than offset increases in our cost structure.
Added
During 2024, we continued to make strategic improvements to both our support functions, as well as the customer-facing side of our business, by hiring and onboarding the right people 23 Table of Contents into the right roles. Additionally, we upgraded our training and onboarding programs to help improve our overall teammate retention.
Removed
Looking specifically at people related costs, materials and supplies, and fleet, which comprise 87% of total cost of services, we saw an improvement of 90 basis points associated with leverage in these categories, as pricing more than offset inflationary pressures. Insurance and claims experience decreased gross margins in 2023 by 10 basis points.
Added
Operational Efficiency We saw healthy margins in 2024, with gross margin improving 50 basis points to 52.7% in 2024 compared to 52.2% in 2023. Operating margin was 19.4% of revenue, an increase of 40 basis points over 2023 and adjusted operating income margin* was 19.9%, an increase of 20 basis points over the prior year. *Amounts are non-GAAP financial measures.
Removed
We expect the normal seasonality to drive lower gross profit margins in the first and fourth quarters of 2024 relative to the second and third quarters on the lower level of business activity.
Added
Tax Legislation Developments The Organization for Economic Co-operation and Development ("OECD") has proposed a global minimum tax of 15% of reported profits ("Pillar Two") for multinational enterprises with annual global revenues exceeding €750 million. Pillar Two has been agreed upon in principle by over 140 countries and is intended to apply for tax years beginning in 2024.
Removed
The large majority of the costs incurred are related to severance-related costs for employees who were terminated as part of this effort. The changes were primarily across corporate-related functions and will enable us to make more strategic improvements in our support functions.
Added
The OECD has issued administrative guidance (including transitional safe harbor rules) in conjunction with the implementation of the Pillar Two global minimum tax. These rules did not have a material impact on financial results in 2024 due to certain transitional safe harbors.
Removed
We expect the first and fourth quarters to represent our lowest level for margins and profitability due primarily to the lower level of volume generated in those quarters due to the impact of seasonality.
Added
See "Non-GAAP Financial Measures" below for a discussion of non-GAAP financial metrics including a reconciliation to the most directly comparable GAAP measure. 25 Table of Contents The following table presents financial information, including our significant expense categories, for the twelve months ended December 31, 2024 and 2023: Twelve Months Ended December 31, (in thousands) 2024 2023 $ % of Revenue $ % of Revenue Revenue $ 3,388,708 100.0 % $ 3,073,278 100.0 % Less: Cost of services provided (exclusive of depreciation and amortization below): Employee expenses 1,048,992 31.0 % 953,600 31.0 % Materials and supplies 212,296 6.3 % 197,825 6.4 % Insurance and claims 68,326 2.0 % 60,390 2.0 % Fleet expenses 131,898 3.9 % 127,390 4.1 % Other cost of services provided (1) 141,685 4.2 % 130,666 4.3 % Total cost of services provided (exclusive of depreciation and amortization below) 1,603,197 47.3 % 1,469,871 47.8 % Sales, general and administrative: Selling and marketing expenses 427,916 12.6 % 375,805 12.2 % Administrative employee expenses 313,814 9.3 % 291,772 9.5 % Insurance and claims 41,434 1.2 % 37,946 1.2 % Fleet expenses 33,580 1.0 % 31,415 1.0 % Other sales, general and administrative (2) 198,323 5.9 % 178,295 5.8 % Total sales, general and administrative 1,015,067 30.0 % 915,233 29.8 % Restructuring costs — — % 5,196 0.2 % Depreciation and amortization 113,220 3.3 % 99,752 3.2 % Interest expense, net 27,677 0.8 % 19,055 0.6 % Other income, net (683) — % (22,086) (0.7) % Income tax expense 163,851 4.8 % 151,300 4.9 % Net income $ 466,379 13.8 % $ 434,957 14.2 % 1) Other cost of services provided includes facilities costs, professional services, maintenance and repairs, software license costs, and other expenses directly related to providing services. 2) Other sales, general and administrative includes facilities costs, professional services, maintenance and repairs, software license costs, bad debt expense, and other administrative expenses. 26 Table of Contents Revenues The following presents a summary of revenues by service offering: Revenues for the year ended December 31, 2024 were $3.4 billion, an increase of $315.4 million, or 10.3%, from 2023 revenues of $3.1 billion.
Removed
Non-GAAP Financial Measures Reconciliation of GAAP and non-GAAP Financial Measures The Company has used the non-GAAP financial measures of organic revenues, adjusted operating income, adjusted operating margin, adjusted net income, and adjusted earnings per share (“EPS”), earnings before interest, taxes, depreciation and amortization (“EBITDA”), EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, and free cash flow in this Form 10-K.
Added
Gross Profit (exclusive of Depreciation and Amortization) Gross profit for the twelve months ended December 31, 2024 was $1.8 billion, an increase of $182.1 million, or 11.4%, compared to $1.6 billion for the year ended December 31, 2023. Gross margin improved 50 basis points to 52.7% in 2024 compared to 52.2% in 2023, as pricing more than offset inflationary pressures.

… 48 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed1 unchanged
Biggest changeThe Company believes that this foreign exchange rate risk will not have a material impact upon the Company’s results of operations going forward. For a discussion of the Company’s activities to manage risks relative to fluctuations in foreign currency exchange rates, see Note 1, Summary of Significant Accounting Policies to the accompanying financial statements. 33 Table of Contents
Biggest changeThe Company believes that this foreign exchange rate risk will not have a material impact upon the Company’s results of operations going forward. 36 Table of Contents
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Market Risk The Company is subject to interest rate risk exposure through borrowings on its $1.0 billion revolving credit facility (the "Credit Facility"). As of December 31, 2023, the Company had outstanding borrowings of $493.0 million under the Credit Facility.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Market Risk The Company is subject to interest rate risk exposure through borrowings on its $1.0 billion revolving credit facility (the "Credit Facility"). As of December 31, 2024, the Company had outstanding borrowings of $397.0 million under the Credit Facility.

Other ROL 10-K year-over-year comparisons