Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 16, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 1-4422 | |
Entity Registrant Name | ROLLINS, INC. | |
Entity Central Index Key | 0000084839 | |
Entity Tax Identification Number | 51-0068479 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 2170 Piedmont Road | |
Entity Address, Address Line Two | N.E. | |
Entity Address, City or Town | Atlanta | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30324 | |
City Area Code | (404) | |
Local Phone Number | 888-2000 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | ROL | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 327,758,819 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 134,829 | $ 94,276 |
Trade receivables, net of allowance for doubtful accounts of $16,452 and $16,699, respectively | 129,297 | 122,766 |
Financed receivables, short-term, net of allowance for doubtful accounts of $1,810 and $1,675, respectively | 23,285 | 22,267 |
Materials and supplies | 34,064 | 19,476 |
Other current assets | 41,626 | 51,002 |
Total current assets | 363,101 | 309,787 |
Equipment and property, net | 191,141 | 195,533 |
Goodwill | 602,310 | 572,847 |
Customer contracts, net | 275,782 | 273,720 |
Trademarks & tradenames, net | 104,760 | 102,539 |
Other intangible assets, net | 10,176 | 10,525 |
Operating lease, right-of-use assets | 214,874 | 200,727 |
Financed receivables, long-term, net of allowance for doubtful accounts of $1,204 and $1,284 respectively | 38,281 | 30,792 |
Benefit plan assets | 9,312 | 21,565 |
Deferred income taxes | 2,105 | 2,180 |
Other assets | 24,540 | 24,161 |
Total assets | 1,836,382 | 1,744,376 |
LIABILITIES | ||
Accounts payable | 48,037 | 35,234 |
Accrued insurance | 31,230 | 30,441 |
Accrued compensation and related liabilities | 87,050 | 81,943 |
Unearned revenues | 139,541 | 122,825 |
Operating lease liabilities - current | 71,494 | 66,117 |
Current portion of long-term debt | 12,500 | 12,500 |
Other current liabilities | 88,321 | 60,975 |
Total current liabilities | 478,173 | 410,035 |
Accrued insurance, less current portion | 35,520 | 34,920 |
Operating lease liabilities, less current portion | 144,846 | 135,651 |
Long-term debt | 242,500 | 279,000 |
Deferred income tax liability | 14,482 | 9,927 |
Long-term accrued liabilities | 58,031 | 59,093 |
Total liabilities | 973,552 | 928,626 |
STOCKHOLDERS’ EQUITY | ||
Preferred stock, without par value; 500,000 shares authorized, zero shares issued | ||
Common stock, par value $1 per share; 550,000,000 shares authorized, 327,758,819 and 327,430,846 shares issued and outstanding, respectively | 327,759 | 327,431 |
Paid in capital | 88,640 | 89,413 |
Accumulated other comprehensive loss | (29,163) | (21,109) |
Retained earnings | 475,594 | 420,015 |
Total stockholders’ equity | 862,830 | 815,750 |
Total liabilities and stockholders’ equity | $ 1,836,382 | $ 1,744,376 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts Receivable, Allowance for Credit Loss, Current | $ 16,452 | $ 16,699 |
Financing Receivable, Allowance for Credit Loss, Current | 1,810 | 1,675 |
Accounts Receivable, Allowance for Credit Loss, Noncurrent | $ 1,204 | $ 1,284 |
Preferred Stock, Shares Authorized | 500,000 | 500,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par Value | $ 1 | $ 1 |
Common Stock, Shares Authorized | 550,000,000 | 550,000,000 |
Common Stock, Shares Issued | 327,758,819 | 327,430,846 |
Common Stock, Shares Outstanding | 327,758,819 | 327,430,846 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
REVENUES | ||||
Customer services | $ 553,329 | $ 523,957 | $ 1,041,230 | $ 953,026 |
COSTS AND EXPENSES | ||||
Cost of services provided | 255,622 | 253,333 | 506,774 | 470,591 |
Depreciation and amortization | 21,925 | 20,132 | 43,522 | 36,815 |
Sales, general and administrative | 171,253 | 161,886 | 329,115 | 301,416 |
Gain on sale of assets, net | (451) | (252) | (726) | (433) |
Interest expense, net | 1,460 | 1,899 | 3,625 | 1,625 |
INCOME BEFORE INCOME TAXES | 103,520 | 86,959 | 158,920 | 143,012 |
PROVISION FOR INCOME TAXES | 28,162 | 22,664 | 40,294 | 34,491 |
NET INCOME | $ 75,358 | $ 64,295 | $ 118,626 | $ 108,521 |
NET INCOME PER SHARE - BASIC AND DILUTED | $ 0.23 | $ 0.20 | $ 0.36 | $ 0.33 |
DIVIDENDS PAID PER SHARE | $ 0.08 | $ 0.11 | $ 0.20 | $ 0.21 |
Weighted average participating shares outstanding - basic and diluted | 327,763,000 | 327,506,000 | 327,723,000 | 327,506,000 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
NET INCOME | $ 75,358 | $ 64,295 | $ 118,626 | $ 108,521 |
Other comprehensive (loss) / earnings | ||||
Foreign currency translation adjustments | 9,378 | 485 | (7,490) | 2,827 |
Change in derivatives | 170 | (257) | (564) | (257) |
Other comprehensive (loss) / earnings | 9,548 | 228 | (8,054) | 2,570 |
Comprehensive earnings | $ 84,906 | $ 64,523 | $ 110,572 | $ 111,091 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Total |
Beginning Balance, Shares at Dec. 31, 2018 | 327,308,000 | ||||
Beginning Balance at Dec. 31, 2018 | $ 327,308 | $ 85,386 | $ (71,078) | $ 370,292 | $ 711,908 |
Net Income | 108,521 | 108,521 | |||
Other comprehensive income, net of tax | |||||
Foreign currency translation adjustments | 2,827 | 2,827 | |||
Change in derivatives | (257) | (257) | |||
Cash dividends | (68,699) | (68,699) | |||
Stock compensation | $ 437 | 7,149 | 7,586 | ||
Stock compensation, Shares | 437,000 | ||||
Employee stock buybacks | $ (259) | (9,575) | (9,834) | ||
Employee stock buybacks, Shares | (259,000) | ||||
Ending Balance, Shares at Jun. 30, 2019 | 327,486,000 | ||||
Ending Balance at Jun. 30, 2019 | $ 327,486 | 82,960 | (68,508) | 410,326 | 752,264 |
Other comprehensive income, net of tax | |||||
Impact of adoption of ASC 326 | 212 | 212 | |||
Beginning Balance, Shares at Mar. 31, 2019 | 327,530,000 | ||||
Beginning Balance at Mar. 31, 2019 | $ 327,530 | 79,932 | (68,736) | 380,398 | 719,124 |
Net Income | 64,295 | 64,295 | |||
Other comprehensive income, net of tax | |||||
Foreign currency translation adjustments | 485 | 485 | |||
Change in derivatives | (257) | (257) | |||
Cash dividends | (34,367) | (34,367) | |||
Stock compensation | $ (27) | 3,724 | 3,697 | ||
Stock compensation, Shares | (27,000) | ||||
Employee stock buybacks | $ (17) | (696) | (713) | ||
Employee stock buybacks, Shares | (17,000) | ||||
Ending Balance, Shares at Jun. 30, 2019 | 327,486,000 | ||||
Ending Balance at Jun. 30, 2019 | $ 327,486 | 82,960 | (68,508) | 410,326 | 752,264 |
Beginning Balance, Shares at Dec. 31, 2019 | 327,431,000 | ||||
Beginning Balance at Dec. 31, 2019 | $ 327,431 | 89,413 | (21,109) | 420,015 | 815,750 |
Net Income | 118,626 | 118,626 | |||
Other comprehensive income, net of tax | |||||
Foreign currency translation adjustments | (7,490) | (7,490) | |||
Change in derivatives | (564) | (564) | |||
Cash dividends | (65,531) | (65,531) | |||
Stock compensation | $ 549 | 7,091 | 7,640 | ||
Stock compensation, Shares | 549,000 | ||||
Employee stock buybacks | $ (221) | (7,864) | (8,085) | ||
Employee stock buybacks, Shares | (221,000) | ||||
Ending Balance, Shares at Jun. 30, 2020 | 327,759,000 | ||||
Ending Balance at Jun. 30, 2020 | $ 327,759 | 88,640 | (29,163) | 475,594 | 862,830 |
Other comprehensive income, net of tax | |||||
Impact of adoption of ASC 326 | 2,484 | 2,484 | |||
Beginning Balance, Shares at Mar. 31, 2020 | 327,767,000 | ||||
Beginning Balance at Mar. 31, 2020 | $ 327,767 | 84,865 | (38,711) | 426,450 | 800,371 |
Net Income | 75,358 | 75,358 | |||
Other comprehensive income, net of tax | |||||
Foreign currency translation adjustments | 9,378 | 9,378 | |||
Change in derivatives | 170 | 170 | |||
Cash dividends | (26,214) | (26,214) | |||
Stock compensation | $ (6) | 3,827 | 3,821 | ||
Stock compensation, Shares | (6,000) | ||||
Employee stock buybacks | $ (2) | (52) | (54) | ||
Employee stock buybacks, Shares | (2,000) | ||||
Ending Balance, Shares at Jun. 30, 2020 | 327,759,000 | ||||
Ending Balance at Jun. 30, 2020 | $ 327,759 | $ 88,640 | $ (29,163) | $ 475,594 | $ 862,830 |
CONSOLIDATED STATEMENTS OF STAT
CONSOLIDATED STATEMENTS OF STATEMENT OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
OPERATING ACTIVITIES | ||
Net income | $ 118,626 | $ 108,521 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 43,522 | 36,815 |
Provision for deferred income taxes | 3,055 | 4,763 |
Provision for bad debts | 9,769 | 4,925 |
Stock-based compensation expense | 7,640 | 7,586 |
Other, net | (1,078) | (900) |
Changes in operating assets and liabilities | 53,238 | (19,534) |
Net cash provided by operating activities | 234,772 | 142,176 |
INVESTING ACTIVITIES | ||
Cash used for acquisitions of companies, net of cash acquired | (56,030) | (410,067) |
Purchases of equipment and property | (12,441) | (13,436) |
Proceeds from sales of franchises | 285 | 486 |
Other | 1,820 | 1,097 |
Net cash used in investing activities | (66,366) | (421,920) |
FINANCING ACTIVITIES | ||
Payment of contingent consideration | (7,862) | (5,233) |
Repayment of term loan | (7,000) | (3,125) |
Repayment on revolving commitment | (97,500) | (17,000) |
Borrowings on term loan | 250,000 | |
Borrowings on revolving commitment | 68,000 | 118,000 |
Cash paid for common stock purchased | (8,085) | (9,834) |
Dividends paid | (65,531) | (68,699) |
Net cash provided by/(used in) financing activities | (117,978) | 264,109 |
Effect of exchange rate changes on cash | (9,875) | (1,384) |
Net increase/(decrease) in cash and cash equivalents | 40,553 | (17,019) |
Cash and cash equivalents at beginning of period | 94,276 | 115,485 |
Cash and cash equivalents at end of period | 134,829 | 98,466 |
Supplemental disclosure of cash flow information: | ||
Non-cash additions to operating lease right-of-use assets | $ 52,273 | $ 31,242 |
BASIS OF PREPARATION AND OTHER
BASIS OF PREPARATION AND OTHER | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
BASIS OF PREPARATION AND OTHER | NOTE 1. BASIS OF PREPARATION AND OTHER Basis of Preparation The preparation of interim financial statements requires management to make estimates and assumptions for the amounts reported in the condensed consolidated financial statements. Specifically, the Company makes estimates in its interim condensed consolidated financial statements for the termite accrual, which includes future costs including termiticide life expectancy and government regulations, the insurance accrual, which includes self-insurance and worker’s compensation, inventory adjustments, discounts and volume incentives earned, among others. In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic, which continues to spread throughout the U.S. and the world. This has resulted in authorities implementing numerous measures to contain the virus, including, but not limited to, travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. The pest control industry was designated as “essential” by the Department of Homeland Security and the Company has been able to remain operational in every part of the world in which it operates. The Company’s consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and related disclosures as of the date of the condensed consolidated financial statements. The Company considered the impact of COVID-19 on the assumptions and estimates used in preparing the condensed consolidated financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the Company’s financial results for the quarter have been made. These adjustments are of a normal recurring nature, but complicated by the uncertainty surrounding the global economic impact of the COVID-19 pandemic. The results of operations for the six months ended June 30, 2020 are not necessarily indicative of results for the entire year. The severity, magnitude and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing and difficult to predict. Therefore, our accounting estimates and assumptions may change over time in response to COVID-19 and may change materially in future periods. The Company has only one reportable segment, its pest and termite control business. The Company’s results of operations and its financial condition are not reliant upon any single customer, a few customers, or the Company’s foreign operations. The Company reclassified certain prior period amounts in the Statement of Cash Flows from Operating Activities to Financing Activities for payment of contingent consideration to conform to the current period presentation. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS Recently adopted accounting standards In June of 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments.” The updated accounting guidance requires changes to the recognition of credit losses on financial instruments not accounted for at fair value through net income. The Company adopted ASU 2016-13 effective January 1, 2020 and recognized the decrease in the allowance for doubtful accounts, net of tax, as a $2.5 million increase to beginning retained earnings. ROLLINS, INC. AND SUBSIDIARIES The Company is exposed to credit losses primarily related to accounts receivables and financed receivables derived from customer services revenue. To reduce credit risk for residential pest control accounts receivable, we promote enrollment in our auto-pay programs. In general, we may suspend future services for customers with past due balances. The Company’s credit risk is generally low with a large number of entities comprising Rollins’ customer base and dispersion across many different geographical regions. The Company manages its financing receivables on an aggregate basis when assessing and monitoring credit risks. The Company’s established credit evaluation and monitoring procedures seek to minimize the amount of business we conduct with higher risk customers. The credit quality of a potential obligor is evaluated at the loan origination based on an assessment of the individual’s Beacon/credit bureau score. Rollins requires a potential obligor to have good credit worthiness with low risk before entering into a contract. Depending upon the individual’s credit score, the Company may accept with 100% financing or require a significant down payment or turndown the contract. Delinquencies of accounts are monitored each month. Financing receivables include installment receivable amounts which are due subsequent to one year from the balance sheet dates. The Company’s allowances for credit losses for trade accounts receivable and financed receivables are developed using historical collection experience, current and economic and market conditions, reasonable and supportable forecasts, and a review of the current status of customers’ receivables. The Company’s receivable pools are classified between residential customers, commercial customers, large commercial customers, and financed receivables. Accounts are written-off against the allowance for doubtful accounts when the Company determines that amounts are uncollectible, and recoveries of amounts previously written off are recorded when collected. Below is a roll forward of the Company’s allowance for credit losses for the six months ended June 30, 2020. Trade Financed Total Balance at January 1, 2020 $ 16,699 $ 2,959 $ 19,658 Adoption of ASC 326 (3,330 ) — (3,330 ) Adjusted balance at January 1, 2020 13,369 2,959 16,328 Provision for expected credit losses 8,480 1,288 9,768 Write-offs charged against the allowance (8,233 ) (1,233 ) (9,466 ) Recoveries collected 2,729 — 2,729 Currency Conversion 107 — 107 Balance at June 30, 2020 $ 16,452 $ 3,014 $ 19,466 In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (ASC 350): Simplifying the Test for Goodwill Impairment, which eliminated the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of the current goodwill impairment test) to measure a goodwill impairment charge. Instead, entities would record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on the current Step 1). The Company adopted ASU 2017-04 effective January 1, 2020. The Company does not expect the adoption of this standard to have a material impact on its future consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (ASC 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The updated accounting guidance modified the disclosure requirements on fair value measurements by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements. The Company adopted ASU 2018-13 effective January 1, 2020 and the adoption did not materially impact its financial statement disclosures. ROLLINS, INC. AND SUBSIDIARIES Recently issued accounting standards to be adopted in 2021 or later In December, 2019, the FASB issued ASU No. 2019-12 Income Taxes (topic 740): Simplifying the Accounting for Income Taxes. The standard eliminates the need for an organization to analyze whether the following apply in a given period (1) exception to the incremental approach for intraperiod tax allocation (2) exceptions to accounting for basis differences when there are ownership changes in foreign investments and (3) exceptions in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The ASU also is designed to improve financial statement preparers’ application of income tax-related guidance and simplify GAAP for (1) franchise taxes that are partially based on income, (2) transactions with a government that result in a step-up in the tax basis of goodwill, (3) separate financial statements of legal entities that are not subject to tax, and (4) enacted changes in tax laws in interim periods. The standard in this update is effective for the Company’s financial statements issued for fiscal years beginning in 2021. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements. |
REVENUE
REVENUE | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | NOTE 3. REVENUE The following tables present our revenues disaggregated by revenue source (in thousands). Sales and usage-based taxes are excluded from revenues. No sales to an individual customer or in a country other than the United States accounted for more than 10% of the sales for the periods listed on the following table. Revenue, classified by the major geographic areas in which our customers are located, was as follows: (In thousands) Three Months Ended Six Months Ended 2020 2019 2020 2019 United States $ 517,576 $ 485,170 $ 969,922 $ 879,170 Other countries 35,753 38,787 71,308 73,856 Total Revenues $ 553,329 $ 523,957 $ 1,041,230 $ 953,026 Revenue from external customers, classified by significant product and service offerings, was as follows: (In thousands) Three Months Ended Six Months Ended 2020 2019 2020 2019 Residential revenue $ 257,921 $ 224,682 $ 462,578 $ 397,190 Commercial revenue 179,900 191,456 363,215 361,127 Termite completions, bait monitoring, & renewals 109,817 102,352 204,044 182,601 Franchise revenues 3,521 3,442 6,938 6,703 Other revenues 2,170 2,025 4,455 5,405 Total Revenues $ 553,329 $ 523,957 $ 1,041,230 $ 953,026 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 4. EARNINGS PER SHARE The Company follows ASC 260, Earnings Per Share Basic and diluted earnings per share attributable to common and restricted shares of common stock for the period Three Months Ended Six Months Ended 2020 2019 2020 2019 Basic and diluted earnings per share Common stock $ 0.23 $ 0.20 $ 0.36 $ 0.33 Restricted shares of common stock $ 0.22 $ 0.18 $ 0.35 $ 0.30 |
CONTINGENCIES
CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | NOTE 5. CONTINGENCIES In the normal course of business, certain of the Company’s subsidiaries are defendants in a number of lawsuits, claims or arbitrations which allege that the subsidiaries’ services caused damage. In addition, the Company defends employment-related cases and claims from time to time. We are involved in certain environmental matters primarily arising in the normal course of business. We are actively contesting each of these matters. Management does not believe that any pending claim, proceeding or litigation, either alone or in the aggregate will have a material adverse effect on the Company’s financial position, results of operations or liquidity; however, it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual quarter or year. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 6. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company’s financial instruments consist of cash and cash equivalents, trade receivables, notes receivable, accounts payable and other short-term liabilities. The carrying amounts of these financial instruments approximate their respective fair values. At June 30, 2020 and 2019, the Company had $47.1 million and $54.7 million of acquisition holdback and earnout liabilities with the former owners of acquired companies. The earnout liabilities were discounted to reflect the expected probability of payout, and both earnout and holdback liabilities were discounted to their net present value on the Company’s books and are considered level 3 liabilities. The table below presents a summary of the changes in fair value for these liabilities. Three Months Ended Six Months Ended (in thousands) 2020 2019 2020 2019 Beginning $ 51,328 $ 28,999 $ 49,131 $ 30,926 New acquisitions and revaluations 1,054 27,893 5,543 29,450 Payouts (5,822 ) (2,426 ) (7,862 ) (5,233 ) Interest on outstanding contingencies 565 510 1,148 722 Charge offset, forfeit and other (40 ) (291 ) (875 ) (1,180 ) Ending Balance $ 47,085 $ 54,685 $ 47,085 $ 54,685 |
UNEARNED REVENUE
UNEARNED REVENUE | 6 Months Ended |
Jun. 30, 2020 | |
Unearned Revenue | |
UNEARNED REVENUE | NOTE 7. UNEARNED REVENUE The Company records unearned revenue when we have either received payment or contractually have the right to bill for services in advance of the services or performance obligations being performed. Deferred revenue recognized in the three and six months ended June 30, 2020 and 2019 were $ 43.2 40.5 For the period ended June 30, December 31, June 30, (in thousands) 2020 2019 2019 Balance at beginning of year $ 136,507 $ 127,075 $ 127,075 Deferral of unearned revenue 105,928 174,404 100,188 Recognition of unearned revenue (85,936 ) (164,972 ) (80,496 ) Balance at end of period $ 156,499 $ 136,507 $ 146,767 The Company had no material contracted, but not recognized, revenue as of June 30, 2020 or December 31, 2019. At June 30, 2020 and December 31, 2019, the Company had long-term unearned revenue of $ 17.0 13.7 five years |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
LEASES | NOTE 8. LEASES The Company leases certain buildings, vehicles, and equipment in order to reduce the risk associated with ownership. The Company elected the practical expedient approach permitted under ASC 842 not to include short-term leases with a duration of 12 months or less on the balance sheet. As of June 30, 2020 and December 31, 2019, all leases were classified as operating leases. Building leases generally carry terms of 5 to 10 years with annual rent escalations at fixed amounts per the lease. Vehicle leases generally carry a fixed term of one year with renewal options to extend the lease on a monthly basis resulting in lease terms up to 5 years depending on the class of vehicle. The exercise of renewal options is at the Company’s sole discretion. It is reasonably certain that the Company will exercise the renewal options on its vehicle leases. The measurement of right-of-use assets and liabilities for vehicle leases includes the fixed payments associated with such renewal periods. We separate lease and non-lease components of contracts. Our lease agreements do not contain any material variable payments, residual value guarantees, early termination penalties or restrictive covenants. The Company uses the rate implicit in the lease when available; however, most of our leases do not provide a readily determinable implicit rate. Accordingly, we estimate our incremental borrowing rate based on information available at lease commencement. ROLLINS, INC. AND SUBSIDIARIES (in thousands) Lease Classification Financial Statement Classification Six Months Ended Short-term lease cost Cost of services provided, Sales, general, and administrative expenses $ 133 Operating lease cost Cost of services provided, Sales, general, and administrative expenses 42,024 Total lease expense $ 42,157 Other Information Weighted-average remaining lease term – operating leases 3.78 Weighted-average discount rate – operating leases 3.93 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 41,599 Lease Commitments Future minimum lease payments, including assumed exercise of renewal options (in thousands) Operating 2020 (excluding the six months ended June 30, 2020) $ 40,717 2021 71,763 2022 53,682 2023 33,800 2024 14,063 2025 7,913 Thereafter 11,987 Total Future Minimum Lease Payments $ 233,925 Less: Amount representing interest $ 17,585 Total future minimum lease payments, net of interest $ 216,340 Total future minimum lease payments for operating leases, including the amount representing interest, are comprised of $ 95.0 138.9 |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 9. DEBT The Company entered into a Credit Agreement with SunTrust Bank, now known as Truist Bank and Bank of America, N.A. for an unsecured Revolving Commitment of up to $ 175.0 75.0 25.0 250.0 72.0 183.0 101.5 190.0 The Credit Agreement includes a debt covenant that requires the Company’s leverage ratio to be no greater than 3.00:1.00. The Leverage Ratio is calculated as of the last day of the fiscal quarter most recently ended |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 10. STOCKHOLDERS’ EQUITY During the six months ended June 30, 2020, the Company paid $65.5 million, or $ 0.20 0.21 During the second quarter ended June 30, 2020 and during the same period in 2019 the Company did not repurchase shares on the open market. The Company repurchases shares from employees for the payment of their taxes on restricted shares that have vested. The Company repurchased $ 0.1 0.7 8.1 9.8 As more fully discussed in Note 17 of the Company’s notes to the consolidated financial statements in its 2019 Annual Report on Form 10-K, time-lapse restricted shares and restricted stock units have been issued to officers and other management employees under the Company’s Employee Stock Incentive Plans. The Company issues new shares from its authorized but unissued share pool. At June 30, 2020, approximately 4.9 million shares of the Company’s common stock were reserved for issuance. Time Lapse Restricted Shares and Restricted Stock Units The following table summarizes the components of the Company’s stock-based compensation programs recorded as expense Three Months Ended Six Months Ended (in thousands) 2020 2019 2020 2019 Time lapse restricted stock: Pre-tax compensation expense $ 3,821 $ 3,697 $ 7,640 $ 7,586 Tax benefit (1,100 ) (963 ) (1,937 ) (1,784 ) Restricted stock expense, net of tax $ 2,721 $ 2,734 $ 5,703 $ 5,802 ROLLINS, INC. AND SUBSIDIARIES The following table summarizes information on unvested restricted stock outstanding Number of Average Grant- Unvested Restricted Stock at December 31, 2019 2,310 $ 25.84 Forfeited (24 ) 24.22 Vested (627 ) 19.46 Granted 573 36.73 Unvested Restricted Stock at June 30, 2020 2,232 $ 30.44 At June 30, 2020 and December 31, 2019, the Company had $ 54.1 41.3 4.2 4.0 |
PENSION AND POST RETIREMENT BEN
PENSION AND POST RETIREMENT BENEFIT PLAN | 6 Months Ended |
Jun. 30, 2020 | |
Retirement Benefits [Abstract] | |
PENSION AND POST RETIREMENT BENEFIT PLAN | NOTE 11. PENSION AND POST RETIREMENT BENEFIT PLAN In September 2019, the Company settled its fully-funded pension plan. At December 31, 2019, $21.6 million of pension assets remained available to fund other employee benefits. The Company used $6.3 million and $12.3 million to fund its 401(k)-match obligation during the quarter and sixth months ended June 30, 2020, respectively. The Company plans to continue funding future benefit plan obligations, with a possible reversion of any remaining pension assets to the Company per ERISA regulations. As of June 30, 2020, the Company had approximately $ 9.3 Components of Net Pension Benefit Loss / (Gain) Three Months Ended June 30, Six Month Ended June 30, (in thousands) 2020 2019 2020 2019 Interest and service cost $ 28 $ 1,762 $ 53 $ 3,524 Expected return on plan assets (24 ) (2,640 ) (59 ) (5,280 ) Amortization of net loss 25 878 50 1,756 Net periodic loss $ 29 $ — $ 44 $ — During the six months ended June 30, 2020, and the same period in 2019, the Company made no contributions to its defined benefit retirement plans (the “Plans”). The Company made no contributions for the year ended December 31, 2019. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | NOTE 12. BUSINESS COMBINATIONS The Company made 13 30 June 30, 2020 Accounts receivable, net $ 1,835 Materials & supplies 192 Equipment and property 3,446 Goodwill 29,080 Customer contracts 27,968 Other intangible assets 3,094 Other assets and liabilities, net 4,003 Current liabilities (7,906 ) Total purchase price $ 61,712 Less: Contingent consideration liability (5,682 ) Total cash purchase price $ 56,030 Goodwill from acquisitions represents the excess of the purchase price over the fair value of net assets of businesses acquired. For the period ended June 30, 2020, $29.1 million of goodwill was added related to the 13 acquisitions noted above. The cumulative carrying amount of goodwill was $602.3 million and $572.8 million at June 30, 2020 and December 31, 2019, respectively. Goodwill generally changes due to the timing of acquisitions, finalization of allocation of purchase prices of previous acquisitions and foreign currency translations. The carrying amount of goodwill in foreign countries was $ 57.5 55.8 The Company completed its most recent annual impairment analysis as of September 30, 2019. Based upon the results of this analysis, the Company has concluded that no impairment of its goodwill or other intangible assets was indicated. The carrying amount of customer contracts was $ 275.8 273.7 104.8 102.5 10.2 10.5 33.5 3.1 3.4 1.0 1.2 Customer contracts and other amortizable intangible assets are amortized on a straight-line basis over their economic useful lives. The following table sets forth the components of intangible assets Intangible Asset Carrying Value Useful Life Customer contracts $ 275,782 3 12 Trademarks and tradenames 104,760 N/A - 20 Non-compete agreements 4,337 3 20 Patents 1,458 3 15 Other assets 2,154 10 Internet domains 2,227 N/A Total customer contracts and other intangible assets $ 390,718 |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 13. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Risk Management Objective of Using Derivatives The Company is exposed to certain interest rate risks on our outstanding debt and foreign currency risks arising from our international business operations and global economic conditions. The Company enters into certain derivative financial instruments to lock in certain interest rates, as well as to protect the value or fix the amount of certain obligations in terms of its functional currency, the U.S. dollar. Cash Flow Hedges of Interest Rate Risk The Company uses interest rate swap arrangements to manage or hedge its interest rate risk. Notwithstanding the terms of the swaps, the Company is ultimately obligated for all amounts due and payable under the Revolving Commitment and the Term Loan (“Credit Facility”). The Company does not use such instruments for speculative or trading purposes. On June 19, 2019, the Company entered into a floating-to-fixed interest rate swap for an aggregate notional amount of $100.0 million in order to hedge a portion of the Company’s floating rate indebtedness under the Credit Facility. The Company designated the swap as a cash flow hedge. The swap requires us to pay a fixed rate of 1.94% per annum on the notional amount. The cash flows from the swap began June 30, 2019 and ends on December 31, 2021. As of December 31, 2019, $0.3 million had been recorded as an Accumulated Loss in Other Comprehensive Income (“AOCI”). An additional loss of $0.6 million was recorded in AOCI in the six months ended June 30, 2020. Realized gains and losses in connection with each required interest payment are reclassified from AOCI to interest expense during the period of the cash flows. During the quarter and six months ended June 30, 2020, the Company reclassified into interest expense $0.2 million and $0.3 million, respectively. The fair value of the Company’s interest rate swaps was recorded as $0.7 million in Other Current Liabilities and $0.1 million in Long-Term Liabilities for a combined obligation of $0.8 million at June 30, 2020. The fair value of the Company’s interest rate swaps was recorded as $0.2 million in Other Current Liabilities and $0.1 million in Long-Term Liabilities for a combined obligation of $0.3 million at December 31, 2019. On a quarterly basis, management evaluates any swap agreement to determine its effectiveness or ineffectiveness and records the change in fair value as an adjustment to AOCI. Management intends that the swap remains effective. ROLLINS, INC. AND SUBSIDIARIES Hedges of Foreign Exchange Risk The Company is exposed to fluctuations in various foreign currencies against its functional currency, the US dollar. We use foreign currency derivatives, specifically vanilla foreign currency forward contracts (“FX Forwards”), to manage our exposure to fluctuations in the USD-CAD and AUD-USD exchange rates. FX Forwards involve fixing the foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date. The FX Forwards are typically settled in US dollars for their fair value at or close to their settlement date. We do not currently designate any of these FX Forwards under hedge accounting, but rather reflect the changes in fair value immediately in earnings. We do not use such instruments for speculative or trading purposes, but rather use them to manage our exposure to foreign exchange rates. Changes in the fair value of FX Forwards were recorded in other income/expense and were equal to a net loss of $0.3 million and $0.1 million for the quarter ended June 30, 2020 and 2019, respectively, and a net gain of $0.8 million and a net loss of $0.2 million for the six months ended June 30, 2020 and 2019, respectively. The fair value of the Company’s FX Forwards was recorded as $0.1 million in Other Current Assets at June 30, 2020 and was a net obligation of $0.2 million in Other Current Liabilities at December 31, 2019. As of June 30, 2020, the Company had the following outstanding FX Forwards Non-Designated Derivative Summary FX Forward Contracts Number of Sell Buy Sell AUD/Buy USD Fwd Contract 5 $ 1,000 $ 690 Sell CAD/Buy USD Fwd Contract 7 $ 8,500 6,343 Total 12 $ 7,033 The financial statement impact related to these derivative instruments was insignificant for the 6 months ended June 30, 2020 and year ended December 31, 2019. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14. SUBSEQUENT EVENTS On July 28, 2020, the Company announced that the Board of Directors declared a regular quarterly cash dividend on its common stock of $ 0.08 |
BASIS OF PREPARATION AND OTHER
BASIS OF PREPARATION AND OTHER (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Preparation | Basis of Preparation The preparation of interim financial statements requires management to make estimates and assumptions for the amounts reported in the condensed consolidated financial statements. Specifically, the Company makes estimates in its interim condensed consolidated financial statements for the termite accrual, which includes future costs including termiticide life expectancy and government regulations, the insurance accrual, which includes self-insurance and worker’s compensation, inventory adjustments, discounts and volume incentives earned, among others. In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic, which continues to spread throughout the U.S. and the world. This has resulted in authorities implementing numerous measures to contain the virus, including, but not limited to, travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. The pest control industry was designated as “essential” by the Department of Homeland Security and the Company has been able to remain operational in every part of the world in which it operates. The Company’s consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and related disclosures as of the date of the condensed consolidated financial statements. The Company considered the impact of COVID-19 on the assumptions and estimates used in preparing the condensed consolidated financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the Company’s financial results for the quarter have been made. These adjustments are of a normal recurring nature, but complicated by the uncertainty surrounding the global economic impact of the COVID-19 pandemic. The results of operations for the six months ended June 30, 2020 are not necessarily indicative of results for the entire year. The severity, magnitude and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing and difficult to predict. Therefore, our accounting estimates and assumptions may change over time in response to COVID-19 and may change materially in future periods. The Company has only one reportable segment, its pest and termite control business. The Company’s results of operations and its financial condition are not reliant upon any single customer, a few customers, or the Company’s foreign operations. The Company reclassified certain prior period amounts in the Statement of Cash Flows from Operating Activities to Financing Activities for payment of contingent consideration to conform to the current period presentation. |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Financing Receivable, Current, Allowance for Credit Loss [Table Text Block] | |
RECENT ACCOUNTING PRONOUNCEMENTS | Trade Financed Total Balance at January 1, 2020 $ 16,699 $ 2,959 $ 19,658 Adoption of ASC 326 (3,330 ) — (3,330 ) Adjusted balance at January 1, 2020 13,369 2,959 16,328 Provision for expected credit losses 8,480 1,288 9,768 Write-offs charged against the allowance (8,233 ) (1,233 ) (9,466 ) Recoveries collected 2,729 — 2,729 Currency Conversion 107 — 107 Balance at June 30, 2020 $ 16,452 $ 3,014 $ 19,466 |
REVENUE (Tables)
REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, classified by the major geographic areas in which our customers are located, was as follows: | Sales and usage-based taxes are excluded from revenues. No sales to an individual customer or in a country other than the United States accounted for more than 10% of the sales for the periods listed on the following table. Revenue, classified by the major geographic areas in which our customers are located, was as follows: |
REVENUE | (In thousands) Three Months Ended Six Months Ended 2020 2019 2020 2019 United States $ 517,576 $ 485,170 $ 969,922 $ 879,170 Other countries 35,753 38,787 71,308 73,856 Total Revenues $ 553,329 $ 523,957 $ 1,041,230 $ 953,026 |
REVENUE (Details 2) | (In thousands) Three Months Ended Six Months Ended 2020 2019 2020 2019 Residential revenue $ 257,921 $ 224,682 $ 462,578 $ 397,190 Commercial revenue 179,900 191,456 363,215 361,127 Termite completions, bait monitoring, & renewals 109,817 102,352 204,044 182,601 Franchise revenues 3,521 3,442 6,938 6,703 Other revenues 2,170 2,025 4,455 5,405 Total Revenues $ 553,329 $ 523,957 $ 1,041,230 $ 953,026 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Basic and diluted earnings per share attributable to common and restricted shares of common stock for the period | Basic and diluted earnings per share attributable to common and restricted shares of common stock for the period |
EARNINGS PER SHARE | Three Months Ended Six Months Ended 2020 2019 2020 2019 Basic and diluted earnings per share Common stock $ 0.23 $ 0.20 $ 0.36 $ 0.33 Restricted shares of common stock $ 0.22 $ 0.18 $ 0.35 $ 0.30 |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | Three Months Ended Six Months Ended (in thousands) 2020 2019 2020 2019 Beginning $ 51,328 $ 28,999 $ 49,131 $ 30,926 New acquisitions and revaluations 1,054 27,893 5,543 29,450 Payouts (5,822 ) (2,426 ) (7,862 ) (5,233 ) Interest on outstanding contingencies 565 510 1,148 722 Charge offset, forfeit and other (40 ) (291 ) (875 ) (1,180 ) Ending Balance $ 47,085 $ 54,685 $ 47,085 $ 54,685 |
UNEARNED REVENUE (Tables)
UNEARNED REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Unearned Revenue | |
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block] | |
UNEARNED REVENUE | For the period ended June 30, December 31, June 30, (in thousands) 2020 2019 2019 Balance at beginning of year $ 136,507 $ 127,075 $ 127,075 Deferral of unearned revenue 105,928 174,404 100,188 Recognition of unearned revenue (85,936 ) (164,972 ) (80,496 ) Balance at end of period $ 156,499 $ 136,507 $ 146,767 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Schedule of Leave Classification [Table Text Block] | |
LEASES | (in thousands) Lease Classification Financial Statement Classification Six Months Ended Short-term lease cost Cost of services provided, Sales, general, and administrative expenses $ 133 Operating lease cost Cost of services provided, Sales, general, and administrative expenses 42,024 Total lease expense $ 42,157 Other Information Weighted-average remaining lease term – operating leases 3.78 Weighted-average discount rate – operating leases 3.93 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 41,599 |
Future minimum lease payments, including assumed exercise of renewal options | Future minimum lease payments, including assumed exercise of renewal options |
LEASES (Details 2) | (in thousands) Operating 2020 (excluding the six months ended June 30, 2020) $ 40,717 2021 71,763 2022 53,682 2023 33,800 2024 14,063 2025 7,913 Thereafter 11,987 Total Future Minimum Lease Payments $ 233,925 Less: Amount representing interest $ 17,585 Total future minimum lease payments, net of interest $ 216,340 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
The following table summarizes the components of the Company’s stock-based compensation programs recorded as expense | The following table summarizes the components of the Company’s stock-based compensation programs recorded as expense |
STOCKHOLDERS' EQUITY | Three Months Ended Six Months Ended (in thousands) 2020 2019 2020 2019 Time lapse restricted stock: Pre-tax compensation expense $ 3,821 $ 3,697 $ 7,640 $ 7,586 Tax benefit (1,100 ) (963 ) (1,937 ) (1,784 ) Restricted stock expense, net of tax $ 2,721 $ 2,734 $ 5,703 $ 5,802 |
The following table summarizes information on unvested restricted stock outstanding | The following table summarizes information on unvested restricted stock outstanding |
STOCKHOLDERS' EQUITY (Details 2) | Number of Average Grant- Unvested Restricted Stock at December 31, 2019 2,310 $ 25.84 Forfeited (24 ) 24.22 Vested (627 ) 19.46 Granted 573 36.73 Unvested Restricted Stock at June 30, 2020 2,232 $ 30.44 |
PENSION AND POST RETIREMENT B_2
PENSION AND POST RETIREMENT BENEFIT PLAN (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Retirement Benefits [Abstract] | |
Components of Net Pension Benefit Loss / (Gain) | Components of Net Pension Benefit Loss / (Gain) |
PENSION AND POST RETIREMENT BENEFIT PLAN | Three Months Ended June 30, Six Month Ended June 30, (in thousands) 2020 2019 2020 2019 Interest and service cost $ 28 $ 1,762 $ 53 $ 3,524 Expected return on plan assets (24 ) (2,640 ) (59 ) (5,280 ) Amortization of net loss 25 878 50 1,756 Net periodic loss $ 29 $ — $ 44 $ — |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | |
BUSINESS COMBINATIONS | June 30, 2020 Accounts receivable, net $ 1,835 Materials & supplies 192 Equipment and property 3,446 Goodwill 29,080 Customer contracts 27,968 Other intangible assets 3,094 Other assets and liabilities, net 4,003 Current liabilities (7,906 ) Total purchase price $ 61,712 Less: Contingent consideration liability (5,682 ) Total cash purchase price $ 56,030 |
components of intangible assets | Customer contracts and other amortizable intangible assets are amortized on a straight-line basis over their economic useful lives. The following table sets forth the components of intangible assets |
BUSINESS COMBINATIONS (Details 2) | Intangible Asset Carrying Value Useful Life Customer contracts $ 275,782 3 12 Trademarks and tradenames 104,760 N/A - 20 Non-compete agreements 4,337 3 20 Patents 1,458 3 15 Other assets 2,154 10 Internet domains 2,227 N/A Total customer contracts and other intangible assets $ 390,718 |
DERIVATIVE INSTRUMENTS AND HE_2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Company had the following outstanding FX Forwards | As of June 30, 2020, the Company had the following outstanding FX Forwards |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | Non-Designated Derivative Summary FX Forward Contracts Number of Sell Buy Sell AUD/Buy USD Fwd Contract 5 $ 1,000 $ 690 Sell CAD/Buy USD Fwd Contract 7 $ 8,500 6,343 Total 12 $ 7,033 |
RECENT ACCOUNTING PRONOUNCEME_3
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Balance at January 1, 2020 | $ 19,658 | |
Adoption of ASC 326 | $ (3,330) | |
Adjusted balance | 16,328 | |
Provision for expected credit losses | 9,768 | |
Write-offs charged against the allowance | (9,466) | |
Recoveries collected | 2,729 | |
Currency Conversion | 107 | |
Balance at June 30, 2020 | 19,466 | |
Trade Accounts Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Balance at January 1, 2020 | 16,699 | |
Adoption of ASC 326 | (3,330) | |
Adjusted balance | 13,369 | |
Provision for expected credit losses | 8,480 | |
Write-offs charged against the allowance | (8,233) | |
Recoveries collected | 2,729 | |
Currency Conversion | 107 | |
Balance at June 30, 2020 | 16,452 | |
Financing Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Balance at January 1, 2020 | 2,959 | |
Adjusted balance | $ 2,959 | |
Provision for expected credit losses | 1,288 | |
Write-offs charged against the allowance | (1,233) | |
Recoveries collected | ||
Currency Conversion | ||
Balance at June 30, 2020 | $ 3,014 |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 553,329 | $ 523,957 | $ 1,041,230 | $ 953,026 |
UNITED STATES | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 517,576 | 485,170 | 969,922 | 879,170 |
Non-US [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 35,753 | $ 38,787 | $ 71,308 | $ 73,856 |
REVENUE (Details 2)
REVENUE (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 553,329 | $ 523,957 | $ 1,041,230 | $ 953,026 |
Residential Contract Revenue [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 257,921 | 224,682 | 462,578 | 397,190 |
Commercial Contract Revenue [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 179,900 | 191,456 | 363,215 | 361,127 |
Termite completions, bait monitoring, & renewals [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 109,817 | 102,352 | 204,044 | 182,601 |
Franchise Revenues [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 3,521 | 3,442 | 6,938 | 6,703 |
Other Revenues [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 2,170 | $ 2,025 | $ 4,455 | $ 5,405 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Earnings Per Share, Basic and Diluted | $ 0.23 | $ 0.20 | $ 0.36 | $ 0.33 |
Common Stock [Member] | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Earnings Per Share, Basic and Diluted | 0.23 | 0.20 | 0.36 | 0.33 |
Restricted Stock [Member] | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Earnings Per Share, Basic and Diluted | $ 0.22 | $ 0.18 | $ 0.35 | $ 0.30 |
FAIR VALUE OF FINANCIAL INSTR_3
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Payouts | $ (7,862) | $ (5,233) | ||
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Beginning | $ 51,328 | $ 28,999 | 49,131 | 30,926 |
New acquisitions and revaluations | 1,054 | 27,893 | 5,543 | 29,450 |
Payouts | (5,822) | (2,426) | (7,862) | (5,233) |
Interest on outstanding contingencies | 565 | 510 | 1,148 | 722 |
Charge offset, forfeit and other | (40) | (291) | (875) | (1,180) |
Ending Balance | $ 47,085 | $ 54,685 | $ 47,085 | $ 54,685 |
UNEARNED REVENUE (Details)
UNEARNED REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Unearned Revenue | |||||
Balance at beginning of year | $ 136,507 | $ 127,075 | $ 127,075 | ||
Deferral of unearned revenue | 105,928 | 100,188 | 174,404 | ||
Recognition of unearned revenue | $ 43,200 | $ 40,500 | (85,936) | (80,496) | (164,972) |
Balance at end of period | $ 156,499 | $ 146,767 | $ 156,499 | $ 146,767 | $ 136,507 |
UNEARNED REVENUE (Details Narra
UNEARNED REVENUE (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Unearned Revenue | |||||
Deferred Revenue Recognized | $ 43,200 | $ 40,500 | $ (85,936) | $ (80,496) | $ (164,972) |
Contract with Customer, Liability, Noncurrent | $ 17,000 | $ 17,000 | $ 13,700 | ||
Contract With Customer, Liability, Recognition Period | 5 years |
LEASES (Details)
LEASES (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Leases | |
Short-term lease cost | $ 133 |
Operating lease cost | 42,024 |
Total lease expense | $ 42,157 |
Weighted-average remaining lease term - operating leases | 3 years 9 months 10 days |
Weighted-average discount rate - operating leases | 3.93% |
Operating cash flows for operating leases | $ 41,599 |
LEASES (Details 2)
LEASES (Details 2) $ in Thousands | Jun. 30, 2020USD ($) |
Leases | |
2020 (excluding the six months ended June 30, 2020) | $ 40,717 |
2021 | 71,763 |
2022 | 53,682 |
2023 | 33,800 |
2024 | 14,063 |
2025 | 7,913 |
Thereafter | 11,987 |
Total Future Minimum Lease Payments | 233,925 |
Less: Amount representing interest | 17,585 |
Total future minimum lease payments, net of interest | $ 216,340 |
LEASES (Details Narrative)
LEASES (Details Narrative) $ in Thousands | Jun. 30, 2020USD ($) |
Lessor, Lease, Description [Line Items] | |
Capital Leases, Future Minimum Payments Due | $ 233,925 |
Building [Member] | |
Lessor, Lease, Description [Line Items] | |
Capital Leases, Future Minimum Payments Due | 95,000 |
Vehicles [Member] | |
Lessor, Lease, Description [Line Items] | |
Capital Leases, Future Minimum Payments Due | $ 138,900 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Line of Credit Facility [Line Items] | ||
Debt Instrument, Restrictive Covenants | The Credit Agreement includes a debt covenant that requires the Company’s leverage ratio to be no greater than 3.00:1.00. The Leverage Ratio is calculated as of the last day of the fiscal quarter most recently ended | |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Line of Credit | $ 72,000 | $ 101,500 |
Revolving Credit Facility [Member] | Line of Credit [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | 175,000 | |
Revolving Credit Facility [Member] | Letter of Credit [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | 75,000 | |
Revolving Credit Facility [Member] | Swingline Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | 25,000 | |
SunTrust Bank and Bank of America, [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Line of Credit | 250,000 | |
Term Loan [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Line of Credit | $ 183,000 | $ 190,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Time lapse restricted stock: | ||||
Pre-tax compensation expense | $ 3,821 | $ 3,697 | $ 7,640 | $ 7,586 |
Tax benefit | (1,100) | (963) | (1,937) | (1,784) |
Restricted stock expense, net of tax | $ 2,721 | $ 2,734 | $ 5,703 | $ 5,802 |
STOCKHOLDERS' EQUITY (Details 2
STOCKHOLDERS' EQUITY (Details 2) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Equity [Abstract] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Beginning Balance | shares | 2,310 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Beginning Balance | $ / shares | $ 25.84 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | shares | (24) |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ / shares | $ 24.22 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | shares | (627) |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ / shares | $ 19.46 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | shares | 573 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares | $ 36.73 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance | shares | 2,232 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Ending Balance | $ / shares | $ 30.44 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Equity [Abstract] | |||||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.08 | $ 0.11 | $ 0.20 | $ 0.21 | |
Shares Repurchased | $ 100 | $ 700 | $ 8,100 | $ 9,800 | |
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $ 54,100 | $ 54,100 | $ 41,300 | ||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 4 years 2 months 12 days | 4 years |
PENSION AND POST RETIREMENT B_3
PENSION AND POST RETIREMENT BENEFIT PLAN (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Retirement Benefits [Abstract] | ||||
Interest and service cost | $ 28 | $ 1,762 | $ 53 | $ 3,524 |
Expected return on plan assets | (24) | (2,640) | (59) | (5,280) |
Amortization of net loss | 25 | 878 | 50 | 1,756 |
Net periodic loss | $ 29 | $ 44 |
PENSION AND POST RETIREMENT B_4
PENSION AND POST RETIREMENT BENEFIT PLAN (Details Narrative) $ in Thousands | Jun. 30, 2020USD ($) |
Retirement Benefits [Abstract] | |
Remaining Benefit Pension Assets | $ 9,300 |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | ||
Materials & supplies | $ 34,064 | $ 19,476 |
Goodwill | 602,310 | $ 572,847 |
Acquisitions [Member] | ||
Business Acquisition [Line Items] | ||
Accounts receivable, net | 1,835 | |
Materials & supplies | 192 | |
Equipment and property | 3,446 | |
Goodwill | 29,080 | |
Customer contracts | 27,968 | |
Other intangible assets | 3,094 | |
Other assets and liabilities, net | 4,003 | |
Current liabilities | (7,906) | |
Total purchase price | 61,712 | |
Less: Contingent consideration liability | (5,682) | |
Total cash purchase price | $ 56,030 |
BUSINESS COMBINATIONS (Details
BUSINESS COMBINATIONS (Details 2) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 390,718 |
Customer Contracts [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 275,782 |
Customer Contracts [Member] | Minimum [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years |
Customer Contracts [Member] | Maximum [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 12 years |
Trademarks and Trade Names [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 104,760 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 20 years |
Noncompete Agreements [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 4,337 |
Noncompete Agreements [Member] | Minimum [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years |
Noncompete Agreements [Member] | Maximum [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 20 years |
Patents [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 1,458 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years |
Patents [Member] | Maximum [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years |
Other Intangible Assets [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 2,154 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years |
Internet Domain Names [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 2,227 |
BUSINESS COMBINATIONS (Detail_2
BUSINESS COMBINATIONS (Details Narrative) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020USD ($)Number | Dec. 31, 2019USD ($)Number | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Number of Businesses Acquired | Number | 13 | 30 |
Goodwill, Carrying Amount in Foreign Countries | $ 57,500 | $ 55,800 |
Customer Contracts [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Net (Excluding Goodwill) | 275,800 | 273,700 |
Customer Contracts [Member] | Non-US [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Net (Excluding Goodwill) | 33,500 | 33,500 |
Trademarks and Trade Names [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Net (Excluding Goodwill) | 104,800 | 102,500 |
Trademarks and Trade Names [Member] | Non-US [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Net (Excluding Goodwill) | 3,100 | 3,400 |
Other Intangible Assets [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Net (Excluding Goodwill) | 10,200 | 10,500 |
Other Intangible Assets [Member] | Non-US [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Net (Excluding Goodwill) | $ 1,000 | $ 1,200 |
DERIVATIVE INSTRUMENTS AND HE_3
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) $ in Thousands | Dec. 31, 2019USD ($)Franchise |
Not Designated as Hedging Instrument [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Derivative, Number of Instruments Held | Franchise | 12 |
Buy Notional | $ 7,033 |
Sell AUD/Buy USD Fwd Contract [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Derivative, Number of Instruments Held | Franchise | 5 |
Sell Notional | $ 1,000 |
Buy Notional | $ 690 |
Sell CAD/Buy USD Fwd Contract [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Derivative, Number of Instruments Held | Franchise | 7 |
Sell Notional | $ 8,500 |
Buy Notional | $ 6,343 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Jul. 28, 2020$ / shares |
Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Common Stock, Dividends, Per Share, Declared | $ 0.08 |