Refile: Rollins' Q4 disappoints as frigid weather dampens demand for pest control
15/02/2024 24:01
(Corrects to remove extraneous word in paragraph 9)
Feb 14 (Reuters) - Rollins' ROL.N fourth-quarter
organic residential revenue and margins disappointed investors
on Wednesday as cold weather dampened demand for its pest
control services while higher operating costs also weighed.
The company's shares were down about 7% in extended trade.
Winters can be a lean time for companies such as Rollins, as
frigid weather conditions keep bugs under control. Rollins'
fourth-quarter organic residential revenues advanced 4.7% to
$302.1 million, but fell short of Street's expectations.
"Expectations were high heading into the fourth quarter,"
said Tim Mulrooney, analyst at William Blair Equity Research,
adding that margin expansion was also muted in the quarter.
In a tough labor market, the Atlanta, Georgia-based company
has also undertaken restructuring measures in order to mitigate
labor costs, which form a major portion of its expenses.
Rollins has bumped up advertising spend as higher mortgage
rates have tempered demand for new homes in the United States,
further impacting the company's top line.
Adjusted operating income margin rose 100 basis points to
19.1% in the reported period, down from a 240-basis-point jump
in the prior quarter.
The company's quarterly revenue rose 14% to $754.1 million,
topping analysts' average estimate of $753.4 million, according
to LSEG data.
Adjusted profit per share was at 21 cents, in line with
market expectations.
"If you get into the weeds, they had a very good quarter,"
said Michael Hoffman, analyst at Stifel, adding that the company
was up against tough comparisons from a year earlier in the
residential business.
For 2024, the company said it expects the "underlying health
of core pest control markets" to support strong organic growth
in the year.
(Reporting by Juveria Tabassum; Editing by Shinjini Ganguli and
Sherry Jacob-Phillips)
((Juveria.Tabassum@thomsonreuters.com;))