Image source: Rollins.
Rollins (ROL 0.64%) 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
| Metric | Q4 2016 | Q4 2015 | Year-Over-Year Change |
|---|---|---|---|
| Revenue | $385.614 million | $362.500 million | 6.4% |
| Net income | $38.007 million | $31.749 million | 19.7% |
| Earnings per share | $0.17 | $0.15 | 13.3% |
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.
We are also pleased with the growth experienced by our specialty brands and international and wildlife brands, all of which reported impressive growth for the year. ... I believe it bears repeating that we think the results underscore the value that we are experiencing in selectively acquiring market-leading specialty pest control and wildlife companies.
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:
We continue to make inroads in expanding Orkin's brand recognition through growing our international presence this past year; both through Orkin's expansion in Australia, and our entry into the United Kingdom. Also, as announced earlier this month, in the last quarter of the year, we created 17 new international franchises. 12 of these franchises were located in China, while the other five are located in Mexico, Ecuador, Bolivia, Malaysia, and in the Kingdom of Cambodia.
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' 43rd consecutive 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."
