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Rollins Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 28, 2011 10:55AM
Rollins Inc. (ROL) filed Quarterly Report for the period ended 2011-09-30. Rollins Inc. has a market cap of $3.44 billion; its shares were traded at around $23.42 with a P/E ratio of 36.4 and P/S ratio of 2.9. The dividend yield of Rollins Inc. stocks is 1.2%. Rollins Inc. had an annual average earning growth of 15.2% over the past 10 years. GuruFocus rated Rollins Inc. the business predictability rank of 3.5-star.
Highlight of Business Operations:On October 26, 2011, Rollins, Inc. reported its 22nd consecutive quarter of improved operating earnings of $29.4 million for the quarter ended September 30, 2011, as compared to $25.5 million for the prior year quarter, a 15.3% improvement. Revenues increased 6.2% to $323.9 million for the quarter as compared to $305.1 million for the prior year quarter. Earnings for the quarter ended September 30, 2011 were $0.20 per diluted share, a 17.6% improvement over the $0.17 per diluted share reported the prior year quarter.
Cost of Services provided for the third quarter ended September 30, 2011 increased $9.0 million or 5.8%, compared to the quarter ended September 30, 2010. Gross margin for the quarter improved to 49.0% for the third quarter versus 48.9 % in the prior year. During the third quarter ended September 30, 2011, the Company was able to offset the nearly 50 basis point cost of higher fuel by favorable margin improvement related to administrative salaries, favorable medical claims and cost of risk, casualty and termite.
Sales, general and administrative expenses for the nine months ended September 30, 2011, increased $14.9 million, or 5.3% to 32.3% of revenues, decreasing from 32.8% for the nine months ended September 30, 2011. The decrease in margin percent is due to reductions in administrative and sales salaries as well as consulting costs.
Income Taxes for the nine months ended September 30, 2011 increased to $47.3 million, an 11.1% increase from $42.6 million reported for the same period in 2010, and reflect increased pre-tax income over the prior year period. The effective tax rate was 37.4% for the nine months ended September 30, 2011 versus 37.6% for the nine month ended September 30, 2010, primarily due to differences in state tax rates.
The Company invested approximately $13.4 million in capital expenditures during the first nine months ended September 30, 2011, compared to $6.8 million during the same period in 2010, and expects to invest approximately $5.0 million for the remainder of 2011. Capital expenditures for the first nine months consisted primarily of the purchase of replacement equipment and technology related projects. During the first nine months ended September 30, 2011, the Company made expenditures for acquisitions totaling $9.3 million, compared to $20.9 million during the same period in 2010. Cash on hand and borrowings under a senior unsecured revolving credit facility primarily funded expenditures for acquisitions. A total of $30.9 million was paid in cash dividends ($0.21 per share) during the first nine months of 2011, compared to $26.7 million or ($0.18 per share) during the same period in 2010. The Company repurchased 1.4 million shares during the first nine months of 2011 of its $1 par value common stock at a weighted average price of $18.63. The capital expenditures, share repurchases and cash dividends were funded through existing cash balances, operating activities and borrowings under a senior unsecured revolving credit facility. In total, approximately 1.1 million additional shares may be repurchased under the Companys share purchase program.
Stocks Discussed: ROL,