Rollins, Inc. Earnings Jump 20%

By Joe

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Rollins (NYSE: ROL) reported fourth-quarter results on Jan. 26. The parent company of Orkin and other pest control brands is enjoying solid increases in sales and profits as it expands internationally and improves its technology.

Rollins results: The raw numbers

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Data source: Rollins Q4 2016 earnings press release.

What happened with Rollins this quarter?

Revenue rose 6.4% year over year to $385.6 million, with 1.2% growth coming from acquisitions and the remaining 5.2% coming from price increases and organic growth.

Rollins saw growth in all of its business lines, including residential pest control (up 7.9%), commercial pest control (up 5.5%), and its termite segment (up 5.7%).

CEO Gary Rollins highlighted the strong performance of the company's mosquito business -- which grew 20% in 2016 -- as well as its international and wildlife growth initiatives, during a conference call with analysts.

These growing revenue streams should help to offset an expected slowdown in Rollins' bed bug business, which saw sales rise 10% in the past year."Bedbugs have certainly not gone away, although we believe we will experience a slower growth rate in this business going forward," said Rollins.

Rollins is also ramping up its international expansion initiatives, as noted by its CEO during the call:

In all, Orkin now has a presence in 45 countries through 70 international franchises.

Moreover, Rollins is becoming more profitable as it expands. The company is enjoying the benefits of its technology investments in customer relationship and virtual route management software, which are helping to improve the efficiency of its operations. Together, they contributed to an 11.9% improvement in adjusted pre-tax margin, which increased to 16%, in the fourth quarter.

All told, fourth-quarter net income jumped 19.7% to $38 million, or $0.17 per share. That marked Q4 2016 as Rollins' 43rdconsecutive quarter of improved revenue and earnings.

Looking forward

Rollins Inc. declined to offer revenue or earnings guidance, but management appears optimistic about the company's future."We are excited about our company's opportunities for 2017," said Gary Rollins. "The Rollins culture of continuous improvement enables us to generate aggressive plans and new programs that should provide another successful year."

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Joe Tenebruso has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Rollins. The Motley Fool has a disclosure policy.