Item 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2024 AND DECEMBER 31, 2023

(in thousands except share data)

(unaudited)

			June 30, 2024						December 31, 2023
ASSETS
Cash and cash equivalents			$	106,697					$	103,825
Trade receivables, net of allowance for expected credit losses of $16,100 and $15,797, respectively			205,183						178,214
Financed receivables, short-term, net of allowance for expected credit losses of $1,971 and $1,874, respectively			39,959						37,025
Materials and supplies			37,925						33,383
Other current assets			84,528						54,192
Total current assets			474,292						406,639
Equipment and property, net of accumulated depreciation of $372,839 and $360,421, respectively			129,115						126,661
Goodwill			1,116,215						1,070,310
Customer contracts, net			386,211						386,152
Trademarks & tradenames, net			151,334						151,368
Other intangible assets, net			8,434						8,214
Operating lease right-of-use assets			371,018						323,390
Financed receivables, long-term, net of allowance for expected credit losses of $4,436 and $3,728, respectively			85,498						75,909
Other assets			44,385						46,817
Total assets			$	2,766,502					$	2,595,460
LIABILITIES
Accounts payable			$	54,075					$	49,200
Accrued insurance - current			49,246						46,807
Accrued compensation and related liabilities			107,606						114,355
Unearned revenues			196,690						172,380
Operating lease liabilities - current			105,905						92,203
Other current liabilities			96,428						101,744
Total current liabilities			609,950						576,689
Accrued insurance, less current portion			57,602						48,060
Operating lease liabilities, less current portion			267,639						233,369
Long-term debt			502,043						490,776
Other long-term accrued liabilities			93,210						90,999
Total liabilities			1,530,444						1,439,893
Commitments and contingencies (see Note 9)
STOCKHOLDERS’ EQUITY
Preferred stock, without par value; 500,000 shares authorized, zero shares issued			—						—
Common stock, par value $1 per share; 800,000,000 shares authorized, 484,313,840 and 484,080,014 shares issued and outstanding, respectively			484,314						484,080
Additional paid in capital			137,914						131,840
Accumulated other comprehensive loss			(31,196)						(26,755)
Retained earnings			645,026						566,402
Total stockholders’ equity			1,236,058						1,155,567
Total liabilities and stockholders’ equity			$	2,766,502					$	2,595,460

The accompanying notes are an integral part of these condensed consolidated financial statements.

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(in thousands except per share data)

(unaudited)

			Three Months Ended June 30,												Six Months Ended June 30,
			2024						2023						2024						2023
REVENUES
Customer services			$	891,920					$	820,750					$	1,640,269					$	1,478,765
COSTS AND EXPENSES
Cost of services provided (exclusive of depreciation and amortization below)			410,285						384,191						775,843						711,033
Sales, general and administrative			271,547						255,331						494,604						451,762
Depreciation and amortization			27,711						26,439						55,021						48,941
Total operating expenses			709,543						665,961						1,325,468						1,211,736
OPERATING INCOME			182,377						154,789						314,801						267,029
Interest expense, net			7,775						4,785						15,500						5,250
Other income, net			(412)						(1,019)						(351)						(5,733)
CONSOLIDATED INCOME BEFORE INCOME TAXES			175,014						151,023						299,652						267,512
PROVISION FOR INCOME TAXES			45,617						40,880						75,861						69,135
NET INCOME			$	129,397					$	110,143					$	223,791					$	198,377
NET INCOME PER SHARE - BASIC AND DILUTED			$	0.27					$	0.22					$	0.46					$	0.40
Weighted average shares outstanding – basic			484,244						492,700						484,187						492,593
Weighted average shares outstanding – diluted			484,419						492,891						484,356						492,764
DIVIDENDS PAID PER SHARE			$	0.15					$	0.13					$	0.30					$	0.26

The accompanying notes are an integral part of these condensed consolidated financial statements.

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(in thousands)

(unaudited)

			Three Months Ending June 30,												Six Months Ended June 30,
			2024						2023						2024						2023
NET INCOME			$	129,397					$	110,143					$	223,791					$	198,377
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments			1,306						2,362						(4,468)						2,459
Unrealized (loss) gain on available for sale securities			(30)						(110)						27						52
Other comprehensive (loss) income, net of tax			1,276						2,252						(4,441)						2,511
Comprehensive income			$	130,673					$	112,395					$	219,350					$	200,888

The accompanying notes are an integral part of these condensed consolidated financial statements.

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023

(in thousands)

(unaudited)

			Common Stock												Paid-in- Capital						Accumulated Other Comprehensive Income / (Loss)						Retained Earnings						Total
			Shares						Amount
Balance at March 31, 2024			484,230						$	484,230					$	127,531					$	(32,472)					$	588,207					$	1,167,496
Net Income			—						—						—						—						129,397						129,397
Other comprehensive income / (loss), net of tax:
Foreign currency translation adjustments			—						—						—						1,306						—						1,306
Unrealized (losses) on available for sale securities			—						—						—						(30)						—						(30)
Cash dividends			—						—						—						—						(72,578)						(72,578)
Stock compensation			97						97						10,589						—						—						10,686
Shares withheld for payment of employee taxes			(13)						(13)						(206)						—						—						(219)
Balance at June 30, 2024			484,314						$	484,314					$	137,914					$	(31,196)					$	645,026					$	1,236,058

			Common Stock												Paid-in- Capital						Accumulated Other Comprehensive Income / (Loss)						Retained Earnings						Total
			Shares						Amount
Balance at March 31, 2023			492,787						$	492,787					$	115,018					$	(31,303)					$	711,250					$	1,287,752
Net Income			—						—						—						—						110,143						110,143
Other comprehensive income / (loss), net of tax:
Foreign currency translation adjustments			—						—						—						2,362						—						2,362
Unrealized (losses) on available for sale securities			—						—						—						(110)						—						(110)
Cash dividends			—						—						—						—						(63,943)						(63,943)
Stock compensation			42						42						6,342						—						—						6,384
Shares withheld for payment of employee taxes			(8)						(8)						(355)						—						—						(363)
Balance at June 30, 2023			492,821						$	492,821					$	121,005					$	(29,051)					$	757,450					$	1,342,225

The accompanying notes are an integral part of these condensed consolidated financial statements.

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(in thousands)

(unaudited)

			Common Stock												Paid-in- Capital						Accumulated Other Comprehensive Income / (Loss)						Retained Earnings						Total
			Shares						Amount
Balance at December 31, 2023			484,080						$	484,080					$	131,840					$	(26,755)					$	566,402					$	1,155,567
Net income			—						—						—						—						223,791						223,791
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments			—						—						—						(4,468)						—						(4,468)
Unrealized gains on available for sale securities			—						—						—						27						—						27
Cash dividends			—						—						—						—						(145,167)						(145,167)
Stock compensation			511						511						17,356						—						—						17,867
Shares withheld for payment of employee taxes			(277)						(277)						(11,282)						—						—						(11,559)
Balance at June 30, 2024			484,314						$	484,314					$	137,914					$	(31,196)					$	645,026					$	1,236,058

			Common Stock												Paid-in- Capital						Accumulated Other Comprehensive Income / (Loss)						Retained Earnings						Total
			Shares						Amount
Balance at December 31, 2022			492,448						$	492,448					$	119,242					$	(31,562)					$	687,069					$	1,267,197
Net income			—						—						—						—						198,377						198,377
Other comprehensive income, net of tax:
Foreign currency translation adjustments			—						—						—						2,459						—						2,459
Unrealized gains on available for sale securities			—						—						—						52						—						52
Cash dividends			—						—						—						—						(127,996)						(127,996)
Stock compensation			643						643						11,688						—						—						12,331
Shares withheld for payment of employee taxes			(270)						(270)						(9,925)						—						—						(10,195)
Balance at June 30, 2023			492,821						$	492,821					$	121,005					$	(29,051)					$	757,450					$	1,342,225

The accompanying notes are an integral part of these condensed consolidated financial statements.

ROLLINS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(in thousands)

(unaudited)

			Six Months Ended June 30,
			2024						2023
OPERATING ACTIVITIES
Net income			$	223,791					$	198,377
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			55,021						48,941
Stock-based compensation expense			15,560						12,331
Provision for expected credit losses			15,137						9,946
Gain on sale of assets, net			(781)						(5,734)
Provision for deferred income taxes			—						144
Changes in operating assets and liabilities:
Trade accounts receivable			(39,904)						(28,425)
Financing receivables			(12,523)						(13,000)
Materials and supplies			(4,142)						(2,233)
Other current assets			(30,775)						(28,513)
Accounts payable and accrued expenses			15,289						34,055
Unearned revenue			24,304						18,047
Other long-term assets and liabilities			11,571						4,250
Net cash provided by operating activities			272,548						248,186
INVESTING ACTIVITIES
Acquisitions, net of cash acquired			(81,654)						(327,892)
Capital expenditures			(15,867)						(14,411)
Proceeds from sale of assets			2,313						10,186
Other investing activities, net			1,587						495
Net cash used in investing activities			(93,621)						(331,622)
FINANCING ACTIVITIES
Payment of contingent consideration			(30,289)						(4,350)
Borrowings under revolving commitment			271,000						585,000
Repayments of term loan			—						(55,000)
Repayments of revolving commitment			(260,000)						(245,000)
Payment of dividends			(145,167)						(127,996)
Cash paid for common stock purchased			(11,559)						(11,808)
Other financing activities, net			2,129						(651)
Net cash (used in) provided by financing activities			(173,886)						140,195
Effect of exchange rate changes on cash			(2,169)						2,642
Net increase in cash and cash equivalents			2,872						59,401
Cash and cash equivalents at beginning of period			103,825						95,346
Cash and cash equivalents at end of period			$	106,697					$	154,747
Supplemental disclosure of cash flow information:
Cash paid for interest			$	17,558					$	4,197
Cash paid for income taxes, net			$	93,272					$	84,583
Non-cash additions to operating lease right-of-use assets			$	103,235					$	55,353

The accompanying notes are an integral part of these condensed consolidated financial statements.

ROLLINS, INC. AND SUBSIDIARIES

NOTE 1. BASIS OF PREPARATION

Basis of Preparation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, the instructions to Form 10-Q and applicable sections of Securities and Exchange Commission ("SEC") regulation S-X, and therefore do not include all information and footnotes required by U.S. GAAP for complete financial statements. There have been no material changes in the Company’s significant accounting policies or the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of Rollins, Inc. (including its subsidiaries unless the context otherwise requires, “Rollins,” “we,” “us,” “our,” or the “Company”) for the year ended December 31, 2023. Accordingly, the quarterly condensed consolidated financial statements and related disclosures herein should be read in conjunction with the 2023 Annual Report on Form 10-K.

The Company’s condensed 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 economic trends on the assumptions and estimates used in preparing the condensed consolidated financial statements. In the opinion of management, all material 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 continued uncertainty surrounding economic trends. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of results for the entire year. The severity, magnitude and duration of certain economic trends continue to be uncertain and are difficult to predict. Therefore, our accounting estimates and assumptions may change over time in response to economic trends and may change materially in future periods.

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

Accounting standards and disclosure rules issued but not yet adopted

In October 2023, the FASB issued Accounting Standards Update ("ASU") 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” to amend certain disclosure and presentation requirements for a variety of topics within the Accounting Standards Codification ("ASC"). These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company does not expect that the application of this standard will have a material impact on its disclosures.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through additional and more detailed information about a reportable segment's expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the potential impact of adopting this new guidance on its disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. This amendment modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, (2) the amount of income taxes paid (net of refunds received) (disaggregated by federal, state, and foreign taxes) as well as individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid net of refunds, (3) the income or loss from continuing operations before income tax expense or benefit (disaggregated between domestic and foreign) and (4) income tax expense or benefit from continuing operations (disaggregated by federal, state

ROLLINS, INC. AND SUBSIDIARIES

and foreign). The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, while retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its disclosures.

In March 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule will require registrants to disclose certain climate-related information in registration statements and annual reports. On April 4, 2024, the SEC voluntarily stayed the effective date of the final rule pending judicial review of petitions challenging it, which have been consolidated for review by the U.S. District Court of Appeals for the 8th Circuit. Notwithstanding any changes as a result of these challenges, the disclosure requirements will apply to the Company's fiscal year beginning January 1, 2025. The Company is currently evaluating the impact this final rule will have on its financial statement disclosures.

NOTE 3. ACQUISITIONS

2024 Acquisitions

The Company made 26 acquisitions during the six months ended June 30, 2024. The aggregate preliminary values of major classes of assets acquired and liabilities assumed recorded at the dates of acquisition are included in the reconciliation of the total preliminary consideration as follows (in thousands):

			June 30, 2024
Accounts receivable			$	2,965
Materials and supplies			598
Other current assets			543
Equipment and property			4,450
Goodwill			47,654
Customer contracts			36,227
Trademarks & tradenames			1,108
Other intangible assets			1,307
Current liabilities			(783)
Unearned revenue			(103)
Other assets and liabilities, net			(1,771)
Assets acquired and liabilities assumed			$	92,195

Included in the total consideration of $92.2 million are acquisition holdback liabilities of $10.5 million.

Goodwill from acquisitions represents the excess of the purchase price over the fair value of net assets of businesses acquired. The factors contributing to the amount of goodwill are based on strategic and synergistic benefits that are expected to be realized. A majority of the recognized goodwill is expected to be deductible for tax purposes. Valuations of certain assets and liabilities, including intangible assets and goodwill, as of the acquisition date have not been finalized at this time and are provisional.

Fox Pest Control Acquisition

On April 1, 2023, the Company acquired 100% of FPC Holdings, LLC (“Fox Pest Control”, or "Fox"). As part of funding the Fox acquisition, on April 3, 2023, the Company borrowed incremental amounts under the Credit Agreement of $305.0 million. The proceeds were used to pay cash consideration at closing.

The Fox acquisition has been accounted for as a business combination. The valuation of the Fox acquisition was performed by a third-party valuation specialist under our management’s supervision. The values of identified assets acquired and liabilities assumed were finalized as of March 31, 2024 and are summarized in the table below (in thousands).

ROLLINS, INC. AND SUBSIDIARIES

			Final Fair Value
Cash			$	4,560
Accounts receivable			1,542
Materials and supplies			431
Operating lease right-of-use assets			8,689
Other current assets			487
Goodwill			188,176
Customer contracts			118,000
Trademarks & tradenames			38,000
Current liabilities			(5,538)
Unearned revenue			(6,144)
Operating lease liabilities			(8,689)
Assets acquired and liabilities assumed			$	339,514

The Company purchased Fox for $339.5 million. Included in the total consideration are cash payments of $302.8 million made upon closing, contingent consideration valued at $28.0 million that is based on Fox's financial performance in the twelve months following acquisition, and holdback liabilities valued at $8.7 million to be held by the Company to settle indemnity claims and working capital adjustments. The fair value of the contingent consideration was estimated using a Monte Carlo simulation. During the six months ended June 30, 2024, we recognized a charge of $1.0 million related to adjustments to the fair value of contingent consideration resulting from the acquisition of Fox. This charge is reported within sales, general and administrative expenses in our condensed consolidated statement of income.

Acquired customer contracts are estimated to have a remaining useful life of 7 years. The acquired trademarks and tradenames are expected to have an indefinite useful life.

Goodwill from this acquisition represents the excess of the purchase price over the fair value of net assets of the business acquired. The factors contributing to the amount of goodwill are based on strategic and synergistic benefits that are expected to be realized. The recognized goodwill is expected to be deductible for tax purposes.

Pro Forma Financial Information

The following table presents unaudited consolidated pro forma information as if the acquisition of Fox had occurred on January 1, 2022. The information presented below is for illustrative purposes only and is not necessarily indicative of results that would have been achieved if the acquisition had actually occurred as of the beginning of such years or results which may be achieved in the future.

(in thousands)			Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
Revenues			$	820,750					$	1,507,673
Net income			109,564						191,999

The pro forma financial information above adjusts for the effects of material business combination items, including the alignment of accounting policies, the effect of fair value adjustments including the amortization of acquired intangible assets, interest expense related to the incremental borrowings under the Credit Agreement, and income tax effects as if Fox had been part of Rollins since January 1, 2022.

ROLLINS, INC. AND SUBSIDIARIES

NOTE 4. REVENUE

Revenue, classified by the major geographic areas in which our customers are located, was as follows:

			Three Months Ended June 30,												Six Months Ended June 30,
(in thousands)			2024						2023						2024						2023
United States			$	827,839					$	763,646					$	1,521,699					$	1,372,654
Other countries			64,081						57,104						118,570						106,111
Total Revenues			$	891,920					$	820,750					$	1,640,269					$	1,478,765

Revenue from external customers, classified by significant product and service offerings, was as follows:

			Three Months Ended June 30,												Six Months Ended June 30,
(in thousands)			2024						2023						2024						2023
Residential revenue			$	408,414					$	384,087					$	737,752					$	666,844
Commercial revenue			287,770						261,900						545,884						493,607
Termite completions, bait monitoring, & renewals			186,024						166,398						338,084						302,529
Franchise revenues			4,445						4,304						8,406						8,093
Other revenues			5,267						4,061						10,143						7,692
Total Revenues			$	891,920					$	820,750					$	1,640,269					$	1,478,765

Revenues classified by significant product and service offerings for the three and six months ended June 30, 2023 were misstated by an immaterial amount and have been restated from the amounts previously reported to correct the classification of such revenues. There was no impact on our condensed consolidated statements of income, financial position, or cash flows.

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. Unearned revenue recognized in the three months ended June 30, 2024 and 2023 was $63.4 million and $57.8 million, and $125.3 million and $113.3 million in the six months ended June 30, 2024 and 2023, respectively. Changes in unearned revenue were as follows:

			Three Months Ended June 30,												Six Months Ended June 30,
(in thousands)			2024						2023						2024						2023
Beginning balance			$	222,967					$	198,154					$	210,059					$	187,994
Deferral of unearned revenue			74,369						77,911						149,165						143,537
Recognition of unearned revenue			(63,437)						(57,791)						(125,325)						(113,257)
Ending balance			$	233,899					$	218,274					$	233,899					$	218,274

As of June 30, 2024 and December 31, 2023, the Company had long-term unearned revenue of $37.2 million and $37.7 million, respectively, recorded in other long-term accrued liabilities. Unearned short-term revenue is recognized over the next 12-month period. The majority of unearned long-term revenue is recognized over a period of five years or less with immaterial amounts recognized through 2034.

Incremental Costs of Obtaining a Contract with a Customer

Incremental costs of obtaining a contract include only those costs that we incur to obtain a contract that we would not have incurred if the contract had not been obtained, primarily sales commissions. These costs are recorded as an asset and amortized to expense over the life of the contract to the extent such costs are expected to be recovered. As of June 30, 2024, we have $27.9 million of unamortized capitalized costs to obtain a contract, of which $22.7 million is recorded within other current assets and $5.2 million is recorded within other assets on our condensed consolidated statement of financial position. As of December 31, 2023, we had $22.0 million of unamortized capitalized costs to obtain a contract, of

ROLLINS, INC. AND SUBSIDIARIES

which $15.3 million was recorded within other current assets and $6.7 million was recorded within other assets on our condensed consolidated statement of financial position. During the three and six months ended June 30, 2024, we recorded approximately $4.2 million and $8.0 million of amortization of capitalized costs, which is recorded within sales, general and administrative expense on our condensed consolidated statement of income. During the three and six months ended June 30, 2023, we recorded $1.2 million of amortization of capitalized costs.

NOTE 5. ALLOWANCE FOR CREDIT LOSSES

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 individuals and entities comprising Rollins’ customer base and dispersion across many different geographical regions.

The Company manages its financed 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 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, require a significant down payment or turn down the contract. Delinquencies of accounts are monitored each month. Financed receivables include installment receivable amounts, some of 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 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 credit losses when the Company determines that amounts are uncollectible, and recoveries of amounts previously written off are recorded when collected. The Company stops accruing interest to these receivables when they are deemed uncollectible. Below is a roll forward of the Company’s allowance for credit losses for the three and six months ended June 30, 2024 and 2023.

			Allowance for Credit Losses
(in thousands)			Trade Receivables						Financed Receivables						Total Receivables
Balance at December 31, 2023			$	15,797					$	5,602					$	21,399
Provision for expected credit losses			4,823						2,870						7,693
Write-offs charged against the allowance			(7,184)						(2,362)						(9,546)
Recoveries collected			1,428						146						1,574
Balance at March 31, 2024			$	14,864					$	6,256					$	21,120
Provision for expected credit losses			4,503						2,941						7,444
Write-offs charged against the allowance			(4,690)						(2,985)						(7,675)
Recoveries collected			1,423						195						1,618
Balance at June 30, 2024			$	16,100					$	6,407					$	22,507

ROLLINS, INC. AND SUBSIDIARIES

			Allowance for Credit Losses
(in thousands)			Trade Receivables						Financed Receivables						Total Receivables
Balance at December 31, 2022			$	14,073					$	4,968					$	19,041
Provision for expected credit losses			1,461						2,435						3,896
Write-offs charged against the allowance			(4,687)						(1,927)						(6,614)
Recoveries collected			1,629						—						1,629
Balance at March 31, 2023			$	12,476					$	5,476					$	17,952
Provision for expected credit losses			3,185						2,865						6,050
Write-offs charged against the allowance			(4,271)						(2,332)						(6,603)
Recoveries collected			1,349						—						1,349
Balance at June 30, 2023			$	12,739					$	6,009					$	18,748

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

The following table summarizes changes in goodwill during the six months ended June 30, 2024 (in thousands):

Balance at December 31, 2023			$	1,070,310
Additions			47,654
Adjustments due to currency translation and other			(1,749)
Balance at June 30, 2024			$	1,116,215

The following table sets forth the components of indefinite-lived and amortizable intangible assets as of June 30, 2024 and December 31, 2023 (in thousands):

			June 30, 2024																		December 31, 2023
			Gross						Accumulated Amortization						Carrying Value						Gross						Accumulated Amortization						Carrying Value						Useful Life in Years
Amortizable intangible assets:
Customer contracts			$	660,242					$	(274,031)					$	386,211					$	625,920					$	(239,768)					$	386,152					3-20
Trademarks and tradenames			22,527						(10,924)						11,603						21,566						(9,933)						11,633						7-20
Other intangible assets			26,050						(19,843)						6,207						24,766						(18,779)						5,987						3-20
Total amortizable intangible assets			$	708,819					$	(304,798)					$	404,021					$	672,252					$	(268,480)					403,772
Indefinite-lived intangible assets															141,958																		141,962
Total customer contracts and other intangible assets															$	545,979																	$	545,734

Amortization expense related to intangible assets was $19.3 million and $18.0 million for the three months ended June 30, 2024 and 2023, respectively. Amortization expense related to intangible assets was $38.0 million and $32.0 million for the six months ended June 30, 2024 and 2023, respectively. Customer contracts and other amortizable intangible assets are amortized on a straight-line basis over their economic useful lives.

ROLLINS, INC. AND SUBSIDIARIES

Estimated amortization expense for the existing carrying amount of amortizable intangible assets for each of the five succeeding fiscal years as of June 30, 2024 are as follows:

(in thousands)
2024 (excluding the six months ended June 30, 2024)			$	42,771
2025			74,333
2026			70,233
2027			66,367
2028			64,356

NOTE 7. FAIR VALUE MEASUREMENT

The Company’s financial instruments consist of cash and cash equivalents, trade receivables, financed and notes receivable, accounts payable, other short-term liabilities, and debt. The carrying amounts of these financial instruments approximate their respective fair values.

The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant non-observable inputs.

As of June 30, 2024 and December 31, 2023, we had investments in international bonds of $9.1 million and $10.2 million, respectively. These bonds are accounted for as available for sale securities and are level 2 assets under the fair value hierarchy. The bonds are recorded at their fair market values and reported within other current assets and other assets in our condensed consolidated statement of financial position. The unrealized gain or loss activity during the three and six months ended June 30, 2024 and 2023 was not significant.

As of June 30, 2024 and December 31, 2023, the Company had $22.6 million and $46.1 million of acquisition holdback and earnout liabilities payable to former owners of acquired companies, respectively. The earnout liabilities were adjusted 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 June 30,												Six Months Ended June 30,
(in thousands)			2024						2023						2024						2023
Beginning balance			$	51,858					$	10,533					$	46,104					$	13,496
New acquisitions and measurement adjustments			3,785						38,731						10,449						40,031
Payouts			(33,012)						(252)						(34,486)						(4,350)
Interest and fair value adjustments			9						1,084						543						1,106
Charge offset, forfeit and other			(3)						(788)						27						(975)
Ending balance			$	22,637					$	49,308					$	22,637					$	49,308

NOTE 8. DEBT

On February 24, 2023, the Company entered into a revolving credit agreement (the "Credit Agreement") with, among others, JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as administrative agent (in such capacity, the “Administrative Agent”), which refinanced its previous credit facility.

The Credit Agreement provides for a $1.0 billion revolving credit facility (the “Credit Facility”), which may be denominated in U.S. Dollars and other currencies, including Euros, Australian Dollars, Canadian Dollars, New Zealand Dollars, Pounds Sterling and Japanese Yen, subject to a $400 million foreign currency sublimit. The Credit Facility also includes sub-facilities for the issuance of letters of credit of up to $150 million and swing line loans at the Administrative Agent’s discretion of up to $50 million. Certain subsidiaries of Rollins provide unsecured guarantees of the Credit Facility. Rollins has the ability to expand its borrowing availability under the Credit Agreement in the form of increased revolving

ROLLINS, INC. AND SUBSIDIARIES

commitments or one or more tranches of term loans by up to an additional $750 million, subject to the agreement of the participating lenders and certain other customary conditions. The maturity date of the loans under the Credit Agreement is February 24, 2028.

Loans under the Credit Agreement bear interest, at Rollins’ election, at (i) for loans denominated in U.S. Dollars, (A) an alternate base rate (subject to a floor of 0.00%), which is the greatest of (x) the prime rate publicly announced from time to time by JPMorgan Chase, (y) the greater of the federal funds effective rate and the Federal Reserve Bank of New York overnight bank funding rate, plus 50 basis points, and (z) Adjusted Term SOFR for a one month interest period, plus a margin ranging from 0.00% to 0.50% per annum based on Rollins’ consolidated total net leverage ratio; or (B) the greater of term SOFR for the applicable interest period plus 10 basis points (“Adjusted Term SOFR”) and zero, plus a margin ranging from 1.00% to 1.50% per annum based on Rollins’ consolidated total net leverage ratio; and (ii) for loans denominated in other currencies, including Euros, Australian Dollars, Canadian Dollars, New Zealand Dollars, Pounds Sterling and Japanese Yen, such interest rates as set forth in the Credit Agreement.

As of June 30, 2024, the Company had outstanding borrowings of $504.0 million under the Credit Facility. Borrowings under the Credit Facility are presented under the long-term debt caption of our condensed consolidated balance sheet, net of $2.0 million in unamortized debt issuance costs as of June 30, 2024. The aggregate effective interest rate on the debt outstanding as of June 30, 2024 was 6.4%. As of December 31, 2023, the Company had outstanding borrowings of $493.0 million under the Credit Facility. Borrowings under the Credit Facility are presented under the long-term debt caption of our condensed consolidated balance sheet, net of $2.2 million in unamortized debt issuance costs as of December 31, 2023. The aggregate effective interest rate on the debt outstanding as of December 31, 2023 was 6.5%.

The Company maintained $71.7 million in letters of credit as of June 30, 2024 and December 31, 2023. These letters of credit are required by the Company’s insurance companies, due to the Company’s high deductible insurance program, to secure various workers’ compensation and casualty insurance contracts coverage. The Company believes that it has adequate liquid assets, funding sources and insurance accruals to accommodate potential future insurance claims.

The Credit Agreement contains customary terms and conditions, including, without limitation, certain financial covenants including covenants restricting Rollins’ ability to incur certain indebtedness or liens, or to merge or consolidate with or sell substantially all of its assets to another entity. Further, the Credit Agreement contains a financial covenant restricting Rollins’ ability to permit the ratio of Rollins’ consolidated total net debt to EBITDA to exceed 3.50 to 1.00. Following certain acquisitions, Rollins may elect to increase the financial covenant level to 4.00 to 1.00 temporarily. The ratio is calculated as of the last day of the fiscal quarter most recently ended. The Credit Agreement also contains provisions permitting a future environmental, social and governance amendment, subject to certain terms and conditions contained therein, by which pricing may be adjusted pursuant to the Company's performance measured against certain sustainability-linked metrics. The Company is in compliance with applicable debt covenants as of June 30, 2024.

NOTE 9. CONTINGENCIES

In the normal course of business, the Company and its subsidiaries are involved in, and will continue to be involved in, various claims, arbitrations, contractual disputes, investigations, and regulatory and litigation matters relating to, and arising out of, our businesses and our operations. These matters may involve, but are not limited to, allegations that our services or vehicles caused damage or injury, claims that our services did not achieve the desired results, claims related to acquisitions and allegations by federal, state or local authorities, including taxing authorities, of violations of regulations or statutes. In addition, we are parties to employment-related cases and claims from time to time, which may include claims on a representative or class action basis alleging wage and hour law violations. We are also involved from time to time in certain environmental matters primarily arising in the normal course of business. We evaluate pending and threatened claims and establish loss contingency reserves based upon outcomes we currently believe to be probable and reasonably estimable.

The Company retains, up to specified limits, certain risks related to general liability, workers’ compensation and auto liability. The estimated costs of existing and future claims under the retained loss program are accrued based upon historical trends as incidents occur, whether reported or unreported (although actual settlement of the claims may not be made until future periods) and may be subsequently revised based on developments relating to such claims. The Company contracts with an independent third party to provide the Company an estimated liability based upon historical claims information. The actuarial study is a major consideration in establishing the reserve, along with management’s knowledge of changes in business practice and existing claims compared to current balances. Management’s judgment is inherently subjective as a number of factors are outside management’s knowledge and control. Additionally, historical information is

ROLLINS, INC. AND SUBSIDIARIES

not always an accurate indication of future events. The accruals and reserves we hold are based on estimates that involve a degree of judgment and are inherently variable and could be overestimated or insufficient. If actual claims exceed our estimates, our operating results could be materially affected, and our ability to take timely corrective actions to limit future costs may be limited.

Management does not believe that any pending claim, proceeding or litigation, regulatory action or investigation, 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 could result in a charge that might be material to the results of an individual quarter or year.

NOTE 10. STOCKHOLDERS' EQUITY

During the three months ended June 30, 2024, the Company paid $72.6 million, or $0.15 per share, in cash dividends compared to $63.9 million, or $0.13 per share, during the same period in 2023. During the six months ended June 30, 2024, the Company paid $145.2 million, or $0.30 per share, in cash dividends compared to $128.0 million, or $0.26 per share, during the same period in 2023.

The Company withholds shares from employees for the payment of their taxes on equity awards that have vested. The Company withheld $0.2 million and $0.4 million in connection with employee tax obligations during the three month periods ended June 30, 2024 and 2023, respectively. The Company withheld $11.6 million and $10.2 million in connection with employee tax obligations during the six month periods ended June 30, 2024 and 2023, respectively. The Company did not repurchase shares on the open market during the three and six months ended June 30, 2024 and June 30, 2023.

The following table summarizes the components of the Company’s stock-based compensation programs recorded as expense:

			Three Months Ended June 30,												Six Months Ended June 30,
(in thousands)			2024						2023						2024						2023
Restricted shares and PSUs:
Compensation expense			$	8,197					$	6,192					$	14,804					$	11,948

Employee Stock Purchase Plan

As more fully discussed in Note 13 of the Company’s notes to the consolidated financial statements in its 2023 Annual Report on Form 10-K, shareholders approved the Rollins, Inc. 2022 Employee Stock Purchase Plan ("ESPP") which provides eligible employees with the option to purchase shares of Company common stock, at a discount, through payroll deductions during six-month offering periods. The Company recorded compensation expense associated with its ESPP of $0.2 million and $0.8 million during the three and six months ended June 30, 2024, respectively, and $0.2 million and $0.4 million during the three and six months ended June 30, 2023. Compensation expense for the ESPP is included in cost of services provided and sales, general and administrative expenses in our condensed consolidated statements of income.

NOTE 11. EARNINGS PER SHARE

The Company reports both basic and diluted earnings per share. Basic earnings per share is computed by dividing net income available to participating common stockholders by the weighted average number of participating common shares outstanding for the period. Diluted earnings per share is calculated by dividing the net income available to participating common shareholders by the diluted weighted average number of shares outstanding for the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive equity.

ROLLINS, INC. AND SUBSIDIARIES

A reconciliation of weighted average shares outstanding is as follows (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2024						2023						2024						2023
Weighted-average outstanding common shares			482,147						490,168						482,012						490,058
Add participating securities:
Weighted-average time-lapse restricted awards			2,097						2,532						2,175						2,535
Total weighted-average shares outstanding – basic			484,244						492,700						484,187						492,593
Dilutive effect of restricted stock units and PSUs			175						191						169						171
Weighted-average shares outstanding – diluted			484,419						492,891						484,356						492,764

NOTE 12. INCOME TAXES

The Company’s provision for income taxes is recorded on an interim basis based upon the Company’s estimate of the annual effective income tax rate for the full year applied to “ordinary” income or loss, adjusted each quarter for discrete items. The Company recorded a provision for income taxes of $45.6 million and $40.9 million for the three months ended June 30, 2024 and 2023, and $75.9 million and $69.1 million for the six months ended June 30, 2024 and 2023, respectively.

The Company’s effective tax rate decreased to 26.1% in the second quarter of 2024 compared with 27.1% rate in the second quarter of 2023. During the six months ended June 30, 2024, the Company's effective tax rate decreased to 25.3% compared to 25.8% in 2023. The reduced rate was due to a decrease in foreign tax expense in 2024.

NOTE 13. SUBSEQUENT EVENTS

Quarterly Dividend

On July 23, 2024, the Company’s Board of Directors declared a regular quarterly cash dividend on its common stock of $0.15 per share payable on September 10, 2024 to stockholders of record at the close of business on August 12, 2024.

ROLLINS, INC. AND SUBSIDIARIES