Item 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 2024 AND DECEMBER 31, 2023

(in thousands except share data)

(unaudited)

			September 30, 2024						December 31, 2023
ASSETS
Cash and cash equivalents			$	95,282					$	103,825
Trade receivables, net of allowance for expected credit losses of $18,548 and $15,797, respectively			226,452						178,214
Financed receivables, short-term, net of allowance for expected credit losses of $2,271 and $1,874, respectively			39,289						37,025
Materials and supplies			39,283						33,383
Other current assets			86,196						54,192
Total current assets			486,502						406,639
Equipment and property, net of accumulated depreciation of $378,768 and $360,421, respectively			129,168						126,661
Goodwill			1,135,122						1,070,310
Customer contracts, net			381,197						386,152
Trademarks & tradenames, net			151,294						151,368
Other intangible assets, net			8,230						8,214
Operating lease right-of-use assets			391,626						323,390
Financed receivables, long-term, net of allowance for expected credit losses of $5,354 and $3,728, respectively			87,880						75,909
Other assets			45,179						46,817
Total assets			$	2,816,198					$	2,595,460
LIABILITIES
Accounts payable			$	58,217					$	49,200
Accrued insurance - current			50,106						46,807
Accrued compensation and related liabilities			108,227						114,355
Unearned revenues			201,909						172,380
Operating lease liabilities - current			113,727						92,203
Other current liabilities			89,882						101,744
Total current liabilities			622,068						576,689
Accrued insurance, less current portion			57,510						48,060
Operating lease liabilities, less current portion			280,555						233,369
Long-term debt			445,176						490,776
Other long-term accrued liabilities			93,112						90,999
Total liabilities			1,498,421						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, 484,305,525 and 484,080,014 shares issued and outstanding, respectively			484,306						484,080
Additional paid in capital			145,489						131,840
Accumulated other comprehensive loss			(21,137)						(26,755)
Retained earnings			709,119						566,402
Total stockholders’ equity			1,317,777						1,155,567
Total liabilities and stockholders’ equity			$	2,816,198					$	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 NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(in thousands except per share data)

(unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
REVENUES
Customer services			$	916,270					$	840,427					$	2,556,539					$	2,319,192
COSTS AND EXPENSES
Cost of services provided (exclusive of depreciation and amortization below)			421,892						388,533						1,197,735						1,099,566
Sales, general and administrative			274,918						244,906						769,522						696,668
Restructuring costs			—						5,196						—						5,196
Depreciation and amortization			27,664						24,668						82,685						73,609
Total operating expenses			724,474						663,303						2,049,942						1,875,039
OPERATING INCOME			191,796						177,124						506,597						444,153
Interest expense, net			7,150						5,547						22,650						10,797
Other income, net			(582)						(493)						(933)						(6,226)
CONSOLIDATED INCOME BEFORE INCOME TAXES			185,228						172,070						484,880						439,582
PROVISION FOR INCOME TAXES			48,315						44,293						124,176						113,428
NET INCOME			$	136,913					$	127,777					$	360,704					$	326,154
NET INCOME PER SHARE - BASIC AND DILUTED			$	0.28					$	0.26					$	0.74					$	0.66
Weighted average shares outstanding – basic			484,317						490,775						484,231						491,980
Weighted average shares outstanding – diluted			484,359						490,965						484,270						492,158
DIVIDENDS PAID PER SHARE			$	0.15					$	0.13					$	0.45					$	0.39

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 NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(in thousands)

(unaudited)

			Three Months Ending September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
NET INCOME			$	136,913					$	127,777					$	360,704					$	326,154
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			9,921						(6,199)						5,453						(3,740)
Unrealized gains on available for sale securities			138						64						165						116
Other comprehensive income (loss), net of tax			10,059						(6,135)						5,618						(3,624)
Comprehensive income			$	146,972					$	121,642					$	366,322					$	322,530

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 SEPTEMBER 30, 2024 AND 2023

(in thousands)

(unaudited)

			Common Stock												Paid-in- Capital						Accumulated Other Comprehensive Income / (Loss)						Retained Earnings						Total
			Shares						Amount
Balance at June 30, 2024			484,314						$	484,314					$	137,914					$	(31,196)					$	645,026					$	1,236,058
Net Income			—						—						—						—						136,913						136,913
Other comprehensive income, net of tax:
Foreign currency translation adjustments			—						—						—						9,921						—						9,921
Unrealized gains on available for sale securities			—						—						—						138						—						138
Cash dividends			—						—						—						—						(72,820)						(72,820)
Stock compensation			(16)						(16)						7,558						—						—						7,542
Shares withheld for payment of employee taxes			8						8						17						—						—						25
Balance at September 30, 2024			484,306						$	484,306					$	145,489					$	(21,137)					$	709,119					$	1,317,777

			Common Stock												Paid-in- Capital						Accumulated Other Comprehensive Income / (Loss)						Retained Earnings						Total
			Shares						Amount
Balance at June 30, 2023			492,821						$	492,821					$	121,005					$	(29,051)					$	757,450					$	1,342,225
Net Income			—						—						—						—						127,777						127,777
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments			—						—						—						(6,199)						—						(6,199)
Unrealized gains on available for sale securities			—						—						—						64						—						64
Cash dividends			—						—						—						—						(63,809)						(63,809)
Stock compensation			(57)						(57)						6,153						—						—						6,096
Shares withheld for payment of employee taxes			(2)						(2)						(510)						—						—						(512)
Repurchase and retirement of common stock, including excise tax			(8,724)						(8,724)						(2,799)						—						(291,276)						(302,799)
Balance at September 30, 2023			484,038						$	484,038					$	123,849					$	(35,186)					$	530,142					$	1,102,843

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 NINE MONTHS ENDED SEPTEMBER 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			—						—						—						—						360,704						360,704
Other comprehensive income, net of tax:
Foreign currency translation adjustments			—						—						—						5,453						—						5,453
Unrealized gains on available for sale securities			—						—						—						165						—						165
Cash dividends			—						—						—						—						(217,987)						(217,987)
Stock compensation			495						495						24,914						—						—						25,409
Shares withheld for payment of employee taxes			(269)						(269)						(11,265)						—						—						(11,534)
Balance at September 30, 2024			484,306						$	484,306					$	145,489					$	(21,137)					$	709,119					$	1,317,777

			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			—						—						—						—						326,154						326,154
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments			—						—						—						(3,740)						—						(3,740)
Unrealized gains on available for sale securities			—						—						—						116						—						116
Cash dividends			—						—						—						—						(191,805)						(191,805)
Stock compensation			586						586						17,841						—						—						18,427
Shares withheld for payment of employee taxes			(272)						(272)						(10,435)						—						—						(10,707)
Repurchase and retirement of common stock, including excise tax			(8,724)						(8,724)						(2,799)						—						(291,276)						(302,799)
Balance at September 30, 2023			484,038						$	484,038					$	123,849					$	(35,186)					$	530,142					$	1,102,843

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 NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(in thousands)

(unaudited)

			Nine Months Ended September 30,
			2024						2023
OPERATING ACTIVITIES
Net income			$	360,704					$	326,154
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			82,685						73,609
Stock-based compensation expense			22,762						18,427
Provision for expected credit losses			24,915						17,484
Gain on sale of assets, net			(1,367)						(6,226)
Provision for deferred income taxes			—						144
Changes in operating assets and liabilities:
Trade accounts receivable			(69,885)						(58,114)
Financing receivables			(14,234)						(14,887)
Materials and supplies			(5,208)						(2,729)
Other current assets			(32,553)						(30,496)
Accounts payable and accrued expenses			12,630						37,428
Unearned revenue			29,090						18,033
Other long-term assets and liabilities			9,956						(3,286)
Net cash provided by operating activities			419,495						375,541
INVESTING ACTIVITIES
Acquisitions, net of cash acquired			(105,529)						(349,312)
Capital expenditures			(23,389)						(21,279)
Proceeds from sale of assets			2,973						10,214
Other investing activities, net			2,385						(1,957)
Net cash used in investing activities			(123,560)						(362,334)
FINANCING ACTIVITIES
Payment of contingent consideration			(33,417)						(9,288)
Borrowings under revolving commitment			391,000						980,000
Repayments of term loan			—						(55,000)
Repayments of revolving commitment			(437,000)						(381,000)
Payment of dividends			(217,964)						(191,805)
Cash paid for common stock purchased			(11,534)						(314,914)
Other financing activities, net			3,409						5,750
Net cash (used in) provided by financing activities			(305,506)						33,743
Effect of exchange rate changes on cash			1,028						(49)
Net (decrease) increase in cash and cash equivalents			(8,543)						46,901
Cash and cash equivalents at beginning of period			103,825						95,346
Cash and cash equivalents at end of period			$	95,282					$	142,247
Supplemental disclosure of cash flow information:
Cash paid for interest			$	25,687					$	9,746
Cash paid for income taxes, net			$	133,807					$	125,878
Non-cash additions to operating lease right-of-use assets			$	153,848					$	99,061

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 nine months ended September 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 Financial Accounting Standards Board ("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, even for companies with only one reportable segment. The Company is required to adopt the guidance for its 2024 annual report filed on Form 10-K. The Company is currently evaluating the impact of these amendments on its disclosures, but this standard update will not impact the Company's results of operations or financial position.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. 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

ROLLINS, INC. AND SUBSIDIARIES

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 32 acquisitions during the nine months ended September 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):

			September 30, 2024
Cash			$	1,061
Accounts receivable			2,819
Materials and supplies			721
Other current assets			246
Equipment and property			5,961
Goodwill			61,689
Customer contracts			46,923
Trademarks & tradenames			1,612
Other intangible assets			1,685
Current liabilities			(715)
Unearned revenue			(353)
Other assets and liabilities, net			(1,771)
Assets acquired and liabilities assumed			$	119,878

Included in the total consideration of $119.9 million are acquisition holdback liabilities of $13.7 million.

The Company also made payments of $0.4 million for prior year acquisitions during the nine months ended September 30, 2024.

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 was 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 were cash payments of $302.8 million made upon closing, contingent consideration valued at $28.0 million that were based on Fox's financial performance in the twelve months following acquisition, and holdback liabilities valued at $8.7 million 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 nine months ended September 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 were based on strategic and synergistic benefits that are expected to be realized. The recognized goodwill is 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 September 30, 2023						Nine Months Ended September 30, 2023
Revenues			$	840,427					$	2,348,100
Net income			126,294						314,279

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 September 30,												Nine Months Ended September 30,
(in thousands)			2024						2023						2024						2023
United States			$	850,253					$	782,073					$	2,371,952					$	2,155,237
Other countries			66,017						58,354						184,587						163,955
Total Revenues			$	916,270					$	840,427					$	2,556,539					$	2,319,192

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

			Three Months Ended September 30,												Nine Months Ended September 30,
(in thousands)			2024						2023						2024						2023
Residential revenue			$	428,290					$	402,559					$	1,166,042					$	1,069,403
Commercial revenue			299,633						273,865						845,517						767,472
Termite completions, bait monitoring, & renewals			177,674						155,135						515,758						457,664
Franchise revenues			4,282						4,292						12,688						12,386
Other revenues			6,391						4,576						16,534						12,267
Total Revenues			$	916,270					$	840,427					$	2,556,539					$	2,319,192

Revenues classified by significant product and service offerings for the three and nine months ended September 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 and nine months ended September 30, 2024 and 2023 was $63.8 million and $59.4 million, and $189.1 million and $172.6 million. Changes in unearned revenue were as follows:

			Three Months Ended September 30,												Nine Months Ended September 30,
(in thousands)			2024						2023						2024						2023
Beginning balance			$	233,899					$	218,274					$	210,059					$	187,994
Deferral of unearned revenue			69,980						61,354						219,145						204,891
Recognition of unearned revenue			(63,819)						(59,375)						(189,144)						(172,632)
Ending balance			$	240,060					$	220,253					$	240,060					$	220,253

As of September 30, 2024 and December 31, 2023, the Company had long-term unearned revenue of $38.2 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 September 30, 2024, we have $29.9 million of unamortized capitalized costs to obtain a contract, of which $23.6 million is recorded within other current assets and $6.3 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 nine months ended September 30, 2024, we recorded approximately $6.7 million and $14.7 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 nine months ended September 30, 2023, we recorded $3.6 million and $4.8 million of amortization of capitalized costs, respectively.

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 nine months ended September 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
Provision for expected credit losses			7,268						2,510						$	9,778
Write-offs charged against the allowance			(6,244)						(1,361)						$	(7,605)
Recoveries collected			1,424						69						$	1,493
Balance at September 30, 2024			$	18,548					$	7,625					$	26,173

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
Provision for expected credit losses			4,739						2,799						7,538
Write-offs charged against the allowance			(5,582)						(2,731)						(8,313)
Recoveries collected			1,428						—						1,428
Balance at September 30, 2023			$	13,324					$	6,077					$	19,401

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

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

Balance at December 31, 2023			$	1,070,310
Additions			61,689
Adjustments due to currency translation and other			3,123
Balance at September 30, 2024			$	1,135,122

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

			September 30, 2024																		December 31, 2023
			Gross						Accumulated Amortization						Carrying Value						Gross						Accumulated Amortization						Carrying Value						Useful Life in Years
Amortizable intangible assets:
Customer contracts			$	674,690					$	(293,493)					$	381,197					$	625,920					$	(239,768)					$	386,152					3-20
Trademarks and tradenames			23,367						(11,806)						11,561						21,566						(9,933)						11,633						7-20
Other intangible assets			26,577						(20,574)						6,003						24,766						(18,779)						5,987						3-20
Total amortizable intangible assets			$	724,634					$	(325,873)					$	398,761					$	672,252					$	(268,480)					403,772
Indefinite-lived intangible assets															141,960																		141,962
Total customer contracts and other intangible assets															$	540,721																	$	545,734

Amortization expense related to intangible assets was $19.2 million and $16.5 million for the three months ended September 30, 2024 and 2023, respectively. Amortization expense related to intangible assets was $57.2 million and $48.5 million for the nine months ended September 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 September 30, 2024 are as follows:

(in thousands)
2024 (excluding the nine months ended September 30, 2024)			$	18,952
2025			76,087
2026			71,931
2027			68,065
2028			66,054

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 September 30, 2024 and December 31, 2023, we had investments in international bonds of $8.7 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 nine months ended September 30, 2024 and 2023 was not significant.

As of September 30, 2024 and December 31, 2023, the Company had $22.1 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 September 30,												Nine Months Ended September 30,
(in thousands)			2024						2023						2024						2023
Beginning balance			$	22,637					$	49,308					$	46,104					$	13,496
New acquisitions and measurement adjustments			3,123						2,872						13,572						42,903
Payouts			(3,128)						(4,938)						(37,614)						(9,288)
Interest and fair value adjustments			13						910						556						2,016
Charge offset, forfeit and other			(507)						(607)						(480)						(1,582)
Ending balance			$	22,138					$	47,545					$	22,138					$	47,545

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 September 30, 2024, the Company had outstanding borrowings of $447.0 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 $1.8 million in unamortized debt issuance costs as of September 30, 2024. The aggregate effective interest rate on the debt outstanding as of September 30, 2024 was 6.2%. As of December 31, 2023, the Company had outstanding borrowings of $493.0 million under the Credit Facility and $2.2 million in unamortized debt issuance costs. The aggregate effective interest rate on the debt outstanding as of December 31, 2023 was 6.5%.

The Company maintained $72.0 million in letters of credit as of September 30, 2024 and $71.7 million as of 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 Company is in compliance with applicable debt covenants as of September 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 or claims filed under California's Private Attorneys General Act. 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 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

ROLLINS, INC. AND SUBSIDIARIES

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 September 30, 2024, the Company paid $72.8 million, or $0.15 per share, in cash dividends compared to $63.8 million, or $0.13 per share, during the same period in 2023. During the nine months ended September 30, 2024, the Company paid $218.0 million, or $0.45 per share, in cash dividends compared to $191.8 million, or $0.39 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 $11.5 million and $10.7 million in connection with employee tax obligations during the nine month periods ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2023, the Company completed the repurchase of 8,724,100 of the shares of common stock from LOR, Inc ("LOR") for $300.0 million in conjunction with the Offering, as defined in our 2023 Annual Report on Form 10-K. As we repurchase our common stock, we reduce common stock for par value of the shares repurchased, with the excess of the purchase price over par value recorded as a reduction to additional paid-in capital and retained earnings.

The Company did not repurchase shares on the open market during the three and nine months ended September 30, 2024 and September 30, 2023.

The following table summarizes the components of the Company’s stock-based compensation programs, including time-lapsed restricted share awards, performance share unit awards, and employee stock purchase plan, recorded as expense:

			Three Months Ended September 30,												Nine Months Ended September 30,
(in thousands)			2024						2023						2024						2023
Stock-based compensation expense			$	7,202					$	6,096					$	22,762					$	18,427

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.

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

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Weighted-average outstanding common shares			482,219						488,304						482,082						489,467
Add participating securities:
Weighted-average time-lapse restricted awards			2,098						2,471						2,149						2,513
Total weighted-average shares outstanding – basic			484,317						490,775						484,231						491,980
Dilutive effect of restricted stock units and PSUs			42						190						39						178
Weighted-average shares outstanding – diluted			484,359						490,965						484,270						492,158

ROLLINS, INC. AND SUBSIDIARIES

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 $48.3 million and $44.3 million for the three months ended September 30, 2024 and 2023, and $124.2 million and $113.4 million for the nine months ended September 30, 2024 and 2023, respectively.

The Company’s effective tax rate increased to 26.1% in the third quarter of 2024 compared with 25.7% in the third quarter of 2023. The higher rate for the quarter was primarily due to an increase in non-deductible expenses and foreign tax expense in 2024. During the nine months ended September 30, 2024, the Company's effective tax rate decreased to 25.6% compared to 25.8% in 2023. The reduced rate was primarily due to a reduction in foreign tax expense in 2024.

NOTE 13. RESTRUCTURING COSTS

During the third quarter of 2023, the Company executed a restructuring program to modernize its workforce. These changes were primarily across corporate-related functions and enabled us to make more strategic improvements in our support functions. As a result of this program, the Company incurred $5.2 million in restructuring costs, consisting mainly of one-time termination benefits, including severance and outplacement services, stock-based compensation, and other benefits-related costs. These costs are recorded within restructuring costs in our condensed consolidated statement of income. As of December 31, 2023, the Company had accrued restructuring costs of $2.1 million, which are included in other current liabilities in our condensed consolidated balance sheet. No such costs were incurred during 2024 and as of September 30, 2024 we have no remaining obligation associated with this program.

NOTE 14. SUBSEQUENT EVENTS

Quarterly Dividend

On October 22, 2024, the Company’s Board of Directors declared a regular quarterly cash dividend on its common stock of $0.165 per share payable on December 10, 2024 to stockholders of record at the close of business on November 12, 2024.

ROLLINS, INC. AND SUBSIDIARIES