Rollins (ROL 0.39%) provides pest control services to both residential and commercial customers. The company has improved earnings for 21 consecutive years, and grown its dividend at 12% per year over the last 17 years. Shareholders have also seen significant share price appreciation, as Rollins stock has skyrocketed 1,420% over the same time period.

However, there may be trouble on the horizon. In this Backstage Pass video, which was recorded Oct. 29, 2021, Motley Fool contributor Jason Hawthorne discusses the company's third-quarter earnings, highlighting where investors should focus their attention. Fool contributor Brian Withers is also in the clip.

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Jason Hawthorne: Rollins is a pest control business. You talk about boring businesses, this is a company that has grown consistently even through the last few recessions. It's basically, bugs don't take any holidays when the economy is down. It's an aside, but it's one of my favorite founding story.

This company actually started around the turn of the century with a guy with a nickname of Rat Man [laughs] going around and selling rat poisons. I always get a kick out of that. They really launched what we know now in the '60s, when they bought Orkin. That's one of the primary brand that you think of when you come across Rollins.

The quarter itself was a little hit and miss. The company tends to be pretty consistent. The quarter they actually beat revenue, $650 million in revenue, that was up 11% year over year. Beat the annual estimate by $9 million, but they missed on earnings by a penny. I'll get to what drove that. But there was definitely some questions I was left with after this call.

The feel of the conference call was a little wonky because their CEO had knee replacement surgery. I don't know how much time the other executives had to prepare, but it definitely felt a little sit on your front porch, shoot the breeze, how are things going? Which makes me a little nervous. I like things to be tied up and very clear message.

Anyway, they didn't give any guidance. There's only four analysts that cover the company and they are estimating about $2.4 billion in revenue this year. Again, that'd be up 11%; that's relatively strong for this company on the top line. You're getting rid of mosquitoes and termites and stuff like that. It's not a fast growing technology business. That's a pretty good top line. But when we get down to the highlights, one of the things down there I will touch on is fuel expense. That's really why they missed the earnings.

One big thing and one reason I love this company, dividend hikes. They hiked their dividend 25%. This company has tripled their dividend since 2012, so over the last nine years. That's in addition to giving special dividends at the end of some years. So they tend to through in an extra quarter's worth the dividend. The dividend doesn't sound like much. It's like $0.27 a year on a $35 stock. But it's a perfect example of compounding, in continuing to grow that dividend. Even though people that bought the stock in 2012, that were getting 1.5% dividend, right now that's almost a 6% yield. It's just a good example of how you buy these dividend growers and over a long period of time, your yield on what you paid for it is actually pretty high.

The next bullet there, immaterial reserves. They made a reserve for an SEC probe. The long story short on this as a former senior person in their Accounting Department, alleged that they think between 2015 and 2017 that they kind of fudged how they apply to accounting rules depending on some internal targets. Think about it as in changing how they're accruing some things to maybe make that extra penny. They said the reserve they put forward is immaterial, won't affect the financials, they've done an internal review and they said they don't see anything out of line. But again, there's something sitting out there that, anytime you hear accounting questions in the SEC, that gives you some red flags or at least yellow flags.

Brian Withers: Hey, Jason I wanted to make sure you hit that SEC probe bullet. We've got about one minute left. You want to hit us with your takeaways and how we should feel going forward.

Jason Hawthorne: Sure. Two big takeaways for me were: One, they're not experiencing much labor inflation right now, but they have a lot of fuel inflation and they've hit that over and over. They bought technology to try to limit the impact. They want fewer miles per stop. It sounded like they're a little frustrated about the pace of adoption in the field of that technology.

Then, the final thing is they change some of how they're reporting and you used to get insight into how fast termites were growing, or consumer business, the commercial business, mosquito control. Now they are rolling it up and just separating it into organic growth and acquired growth.

My big takeaway here, walking away from this quarter, although I love the company, is I'm a little on edge about some of the things going on and I'm not really sure how I feel about it yet. I'm going to hold onto this stock, but it's back on my radar from being one of those that you can set and forget.

Brian Withers: Yeah, great update. It's a solid company when you have a long, long history of dividend. I imagine they're going to figure these things out. But I think it's appropriate to keep them on the short leash for now.