Rollins (NYSE:ROL) reported fourth-quarter financial results on Jan. 23. The pest control specialist delivered sharply higher profits, fueled by broad-based sales growth and recent tax cuts.

Rollins results: The raw numbers

Metric

Q4 2018

Q4 2017

Year-Over-Year Change

Revenue

$444.6 million

$414.7 million

7%

Net income

$51.0 million

$33.7 million

51%

Earnings per share

$0.16

$0.10

60%

Data source: Rollins Q4 2018 earnings release.

What happened with Rollins this quarter?

Rollins generated solid growth in all of its major business segments. Residential pest control, which accounts for 42% of the company's revenue, increased by 7.8%. Commercial pest control, representing 39% of sales, grew 5.9%, while termite and ancillary services, which make up approximately 18% of its revenue, improved by 8.2%. 

All told, Rollins' revenue rose 7.2% year over year to $444.6 million. Organic growth and higher prices were responsible for 5.6 percentage points of this increase, with acquisitions contributing the remainder. 

The benefits of tax reform were also on full display during the quarter. A significantly lower effective tax rate helped Rollins' net income surge 51% to $51 million, or $0.16 per share.

In turn, the company boosted its quarterly cash dividend by 12.5%, to $0.105 per share. The puts the stock's yield at about 1.1% at Wednesday's closing price. This marked the 17th straight year that Rollins has raised its cash payout to investors by at least 12%.  

A person handing another person cash

Investors can expect larger cash dividends from Rollins. Image source: Getty Images.

"Once again, our group of leading pest control companies has achieved Rollins' major financial objectives for 2018," CEO Gary Rollins said in a press release. "These results reflect the execution of our strategic programs that were designed to improve our sales, while improving productivity and profit margins."

Looking forward 

Rollins acquired 38 companies in 2018. The pest control leader has earned a strong reputation within the industry as an acquirer of choice, particularly for family-owned operations. This growth-through-acquisition strategy has served Rollins well -- the company has delivered 51 straight quarters of improved revenue and earnings -- and it should remain a key driver of its global expansion in the coming years.

Rollins recently agreed to purchase Clark Pest Control, the eighth-largest pest control provider in the U.S., with revenue in 2017 of $130 million. The company said the acquisition will be the largest in Rollins' history, though the purchase price was not disclosed. Rollins expects the deal to close in the first quarter of 2019 and for Clark to be accretive to cash flow within one year post-closing. 

"As we enter 2019, strategic acquisitions will remain a focus of our growth strategy," Rollins said during a conference call with analysts.

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