Strong Top-Line Growth
Total revenue grew 10.2% year-over-year with organic growth of 6.6%. The company exited March with approximately 12% total growth and over 8% organic growth, and organic growth improved ~90 basis points versus Q4 2025.
Rollins
· ROL
April 22nd, 2026
Summary
- Earnings Call Date:
- 2026-04-22
- Change Since:
- -19.21%
- Next Earnings Date:
- 2026-07-29
Earnings Call Sentiment
PositiveThe call presented a predominantly positive operational and financial picture: strong revenue and organic growth across segments, improving March exit trends, healthy cash generation, a low leverage ratio, and a confident 2026 outlook with pricing support. Offsetting items were largely seasonal or explainable short-term headwinds — notably margin pressure from insurance/claims, lower vehicle gains, and the deliberate decision to carry incremental staffing into peak season — which management expects to moderate as volumes ramp. Management reiterated targets for organic growth, M&A contribution, margin improvement, and cash conversion, and will provide further detail at an upcoming Investor Day.
Company Guidance
Management reiterated 2026 guidance for organic growth of 7–8% with M&A adding 2–3% (implying roughly 9–11% total), expects pricing to contribute 3–4% (ahead of CPI) and to be positive on price/cost, sees fuel tracking below 2% of sales (Q1 ~1.5%), and expects an effective tax rate under 25% for the year (Q1 21.3%); they expect free cash flow conversion above 100% in 2026 (Q1 OCF $118M, FCF $111M; excluding timing items FCF would have risen 14% and conversion ~140%), improving gross margins from Q1’s 50.8% (down 60 bps) and adjusted EBITDA of $179M (19.8% margin) as peak-season volumes ramp and headwinds from lower vehicle gains (~50 bps), insurance/claims (~30 bps; Q1 insurance 3.7% of sales) and extra service payroll (~20 bps) abate; balance sheet metrics include Q1 acquisitions of $18M, dividends paid $88M and leverage of 0.9x.
Broad-Based Segment Strength
Residential revenue increased 9.3% (organic ~4.2%), commercial pest control rose 9.6% (organic 7.7%), and termite & ancillary grew 13.5% (organic ~10%).
Profitability and Margin Metrics
GAAP operating income was $145M (up 2% YoY). Adjusted operating income was $153M (up 4% YoY). Adjusted EBITDA was $179M (up 4.4% YoY) representing a 19.8% margin.
Earnings Per Share and Adjusted Net Income
GAAP net income was $108M or $0.22 per share. Adjusted net income (after ~$7M pretax adjustments) was $113M or $0.24 per share, up 9.1% year-over-year.
Strong Cash Generation and Balance Sheet
Operating cash flow was $118M and free cash flow was $111M. Free cash flow conversion exceeded 100% for the quarter (would have been ~140% excluding timing/one-time items). Leverage ratio stood at 0.9x and the balance sheet described as very healthy.
Disciplined Capital Allocation
Q1 acquisitions totaled $18M; dividends paid were $88M. Management expects M&A to contribute 2%–3% to revenue growth in 2026 and reiterated a balanced capital allocation strategy.
Pricing and Tax Improvements
Recent price increases are expected to contribute 3%–4% of growth for the year (ahead of CPI). Effective tax rate improved to 21.3% (versus 23.5%) and management expects a rate under 25% for the year, roughly 100 basis points below historical levels.
Confident 2026 Outlook
Management reiterated guidance of 7%–8% organic growth for 2026 plus 2%–3% from M&A, confidence in improving incremental margin profile through peak season, and expectation of cash flow conversion above 100% for the year.
Operator
Greetings, and welcome to the Rollins, Inc. First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Lyndsey Burton, Vice President of Investor Relations. Please go ahead.
Lyndsey Burton
Thank you, and good morning, everyone. In addition to the earnings release that we issued yesterday, the company has also prepared a supporting slide presentation. The earnings release and presentation are available on our website at www.rollins.com. We have included certain non-GAAP financial measures as part of our discussion this morning. The non-GAAP reconciliations are available in the appendix of today's presentation as well as in our earnings release. The company's earnings release discusses the business outlook and contains certain forward-looking statements. These particular forward-looking statements and all other statements that have been made on this call, excluding historical facts, are subject to a number of risks and uncertainties, and actual results may differ materially from any statement we make today. Please refer to yesterday's press release and the company's SEC filings, including the Risk Factors section of our Form 10-K for the year ended December 31, 2025.
On the line with me today and speaking are Jerry Geoff, President and Chief Executive Officer; and Ken Krause, Executive Vice President and Chief Financial Officer. Management will make some opening remarks, and then we'll open the line for your questions. Jerry, ...
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