Rollins, Inc. Enjoys Broad-Based Growth

MarketsMotley Fool

Rollins (NYSE: ROL) reported second-quarter financial results on July 26. The parent company of Orkin and other pest-management businesses posted its 45th consecutive quarter of improved revenue and earnings.

Rollins results: The raw numbers

Continue Reading Below

What happened with Rollins this quarter?

Revenue grew 5.5% year over year to $433.6 million, including 0.6% from acquisitions and 4.9% in organic growth -- Rollins' highest Q2 organic growth in five years.

Rollins saw growth in all of its business lines, including residential pest control (up 5.9%), commercial pest control (up 5.1%), and the termite segment (up 6.1%).

The company continues to expand both domestically and internationally. On July 25, Rollins announced an agreement to acquire Northwest Exterminating Co., Inc. -- the 17th-largest pest control operator in the United States with reported revenue of more than $50 million in 2016. Rollins also made moves to grow its non-U.S. business, as explained by CEO Gary Rollins during a conference call with analysts:

Moreover, Rollins is becoming more profitable as it expands. The company's investments in routing and scheduling technology helped gross margin improve to 52.8%, up from 52.3% in the prior-year quarter. Additionally, sales, general, and administrative expenses as a percent of revenue decreased to 29.9% from 30.8%, mainly due to lower payroll expenses. Together, these improvements helped net income before taxes rise 11.9% to $86.1 million.

All told, net income rose 12.4% to $53.7 million, and earnings per share increased 13.6% to $0.25.

Looking forward

As is typically the case, Rollins declined to offer financial guidance. CFO Eddie Northen did, however, note that the company remains on the hunt for value-creating acquisitions:

Northen went on to note that privately owned businesses in the U.S. and -- increasingly -- international markets would remain an attractive hunting ground for further deals:

10 stocks we like better than RollinsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Rollins wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of July 6, 2017

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.