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Rollins' Q2 Earnings Miss Estimates, Increase Year Over Year
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Key Takeaways
Rollins missed Q2 earnings and revenue estimates despite year-over-year growth in both metrics.
ROL cited weaker residential demand, while commercial and termite operations posted solid growth.
Rollins is adjusting operations as demand softens and maintains a strong balance sheet.
Rollins, Inc. (ROL - Free Report) reported unimpressive second-quarter 2026 results, with both earnings and revenues missing the Zacks Consensus Estimate.
ROL’s adjusted earnings of 32 cents per share missed the Zacks Consensus Estimate by 5.9% but rose 6.7% year over year. Total revenues of $1.08 billion fell short of the consensus estimate by 1.7% but increased 7.9% from the year-ago quarter.
The quarter was affected by slower growth in parts of the residential pest control business, although commercial and termite operations continued to post healthy gains.
ROL’s shares have declined 25.1% over the past year compared with a 24.4% decline in the industry. The Zacks S&P 500 composite has risen 20.8% over the same time frame.
Residential revenues increased 6.6% year over year to $485.8 million. Commercial revenues climbed 8.6% to $347.9 million, while termite and ancillary revenues rose 10.5% to $234.2 million. Franchise and other revenues declined 7.4% to $10.7 million.
Management attributed the softer residential performance to weaker consumer-initiated demand across search, digital media and inbound calls, which reduced lead volumes during the quarter. However, relationship-based channels, including home builders and door-to-door sales, delivered solid organic growth.
Operating income increased 1.5% year over year to $201.4 million. However, the operating margin contracted 110 basis points to 18.7% as costs remained aligned for a stronger demand environment entering the peak season.
Adjusted operating income rose 2% to $209.9 million, while the adjusted operating margin declined 110 basis points to 19.5%. Adjusted EBITDA increased 2.2% to $236.3 million, with the adjusted EBITDA margin contracting 120 basis points to 21.9%.
ROL Management Takes Steps to Improve Execution
Management noted that demand trends softened during the quarter while the company's cost structure remained positioned for stronger growth, weighing on profitability.
To address these challenges, Rollins has implemented organizational and operational changes aimed at improving local execution, strengthening accountability and better aligning resources with current demand conditions. Management also indicated that lead volumes improved toward the end of June and continued into the first few weeks of July.
Rollins Maintains Healthy Cash Generation
The company generated operating cash flow of $172.5 million during the quarter, down 1.5% from the prior-year period. Free cash flow totaled $166.1 million, declining 1.2% year over year.
During the quarter, Rollins invested $117 million in acquisitions, spent $6.4 million on capital expenditures and paid dividends totaling $88.1 million, reflecting its continued focus on growth investments and shareholder returns.
ROL Balance Sheet Remains Strong
Rollins exited the quarter with cash and cash equivalents of $109.1 million compared with $100 million at year-end 2025. Long-term debt totaled $487.1 million, essentially unchanged from year-end 2025.
The company reiterated that its balance sheet remains strong and provides ample financial flexibility to pursue acquisitions, invest in long-term growth initiatives and maintain its balanced capital allocation strategy.
WEX Inc. (WEX - Free Report) reported better-than-expected second-quarter 2026 results. WEX’s adjusted earnings per share of $5.35 outpaced the Zacks Consensus Estimate by 5.3% and increased 35.4% from the year-ago quarter. WEX’s revenues of $753.5 million surpassed the consensus estimate by 1.8% and improved 14.2% year over year.
Waste Connections, Inc. (WCN - Free Report) posted impressive second-quarter 2026 results. WCN’s adjusted earnings of $1.50 per share outpaced the consensus mark by 11.1% and rose 16.3% from the year-ago quarter. WCN’s total revenues of $2.56 billion surpassed the consensus mark by 1.1% and increased 6.4% year over year.
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Rollins' Q2 Earnings Miss Estimates, Increase Year Over Year
Key Takeaways
Rollins, Inc. (ROL - Free Report) reported unimpressive second-quarter 2026 results, with both earnings and revenues missing the Zacks Consensus Estimate.
ROL’s adjusted earnings of 32 cents per share missed the Zacks Consensus Estimate by 5.9% but rose 6.7% year over year. Total revenues of $1.08 billion fell short of the consensus estimate by 1.7% but increased 7.9% from the year-ago quarter.
Rollins, Inc. Price, Consensus and EPS Surprise
Rollins, Inc. price-consensus-eps-surprise-chart | Rollins, Inc. Quote
The quarter was affected by slower growth in parts of the residential pest control business, although commercial and termite operations continued to post healthy gains.
ROL’s shares have declined 25.1% over the past year compared with a 24.4% decline in the industry. The Zacks S&P 500 composite has risen 20.8% over the same time frame.
ROL's Quarterly Performance Reflects Mixed Demand Trends
Residential revenues increased 6.6% year over year to $485.8 million. Commercial revenues climbed 8.6% to $347.9 million, while termite and ancillary revenues rose 10.5% to $234.2 million. Franchise and other revenues declined 7.4% to $10.7 million.
Management attributed the softer residential performance to weaker consumer-initiated demand across search, digital media and inbound calls, which reduced lead volumes during the quarter. However, relationship-based channels, including home builders and door-to-door sales, delivered solid organic growth.
Rollins Faces Margin Pressure Despite Revenue Growth
Operating income increased 1.5% year over year to $201.4 million. However, the operating margin contracted 110 basis points to 18.7% as costs remained aligned for a stronger demand environment entering the peak season.
Adjusted operating income rose 2% to $209.9 million, while the adjusted operating margin declined 110 basis points to 19.5%. Adjusted EBITDA increased 2.2% to $236.3 million, with the adjusted EBITDA margin contracting 120 basis points to 21.9%.
ROL Management Takes Steps to Improve Execution
Management noted that demand trends softened during the quarter while the company's cost structure remained positioned for stronger growth, weighing on profitability.
To address these challenges, Rollins has implemented organizational and operational changes aimed at improving local execution, strengthening accountability and better aligning resources with current demand conditions. Management also indicated that lead volumes improved toward the end of June and continued into the first few weeks of July.
Rollins Maintains Healthy Cash Generation
The company generated operating cash flow of $172.5 million during the quarter, down 1.5% from the prior-year period. Free cash flow totaled $166.1 million, declining 1.2% year over year.
During the quarter, Rollins invested $117 million in acquisitions, spent $6.4 million on capital expenditures and paid dividends totaling $88.1 million, reflecting its continued focus on growth investments and shareholder returns.
ROL Balance Sheet Remains Strong
Rollins exited the quarter with cash and cash equivalents of $109.1 million compared with $100 million at year-end 2025. Long-term debt totaled $487.1 million, essentially unchanged from year-end 2025.
The company reiterated that its balance sheet remains strong and provides ample financial flexibility to pursue acquisitions, invest in long-term growth initiatives and maintain its balanced capital allocation strategy.
Rollins currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Snapshots
WEX Inc. (WEX - Free Report) reported better-than-expected second-quarter 2026 results. WEX’s adjusted earnings per share of $5.35 outpaced the Zacks Consensus Estimate by 5.3% and increased 35.4% from the year-ago quarter. WEX’s revenues of $753.5 million surpassed the consensus estimate by 1.8% and improved 14.2% year over year.
Waste Connections, Inc. (WCN - Free Report) posted impressive second-quarter 2026 results. WCN’s adjusted earnings of $1.50 per share outpaced the consensus mark by 11.1% and rose 16.3% from the year-ago quarter. WCN’s total revenues of $2.56 billion surpassed the consensus mark by 1.1% and increased 6.4% year over year.