Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report on Form 10-Q.

GENERAL OPERATING COMMENTS

Below is a summary of the key operating results for the three months ended March 31, 2025:

• First quarter revenues were $822.5 million, an increase of 9.9% over the first quarter of 2024 with organic revenues* increasing 7.4%. The stronger dollar versus foreign currencies in countries where we operate reduced revenues by 40 basis points during the quarter.

• Quarterly operating income was $142.6 million, an increase of 7.7% over the first quarter of 2024. Quarterly operating margin was 17.3%, a decrease of 40 basis points versus the first quarter of 2024. Adjusted operating income* was $146.9 million, an increase of 6.7% over the prior year. Adjusted operating income margin* was 17.9%, a decrease of 50 basis points compared to the prior year.

• Adjusted EBITDA* was $171.9 million, an increase of 6.9% over the prior year. Adjusted EBITDA margin* was 20.9%, a decrease of 60 basis points versus the first quarter of 2024.

• Quarterly net income was $105.2 million, an increase of 11.5% over the prior year. Adjusted net income* was $107.9 million, an increase of 9.7% over the prior year.

• Quarterly EPS was $0.22 per diluted share, a 15.8% increase over the prior year EPS of $0.19. Adjusted EPS* was $0.22 per diluted share, an increase of 10.0% over the prior year.

• Operating cash flow was $146.9 million for the quarter, an increase of 15.3% compared to the prior year. The Company invested $27.2 million in acquisitions, $6.8 million in capital expenditures, and paid dividends totaling $79.9 million.

Demand remains favorable to start the second quarter and the pipeline of acquisition activity remains healthy. Although we continue to navigate a highly uncertain macroeconomic environment, we believe we are well positioned to continue to deliver strong results in 2025.

We remain focused on driving 7% to 8% organic revenue growth while adding 3% to 4% of inorganic revenue growth for 2025. We continue to focus on improving the efficiency of our business model while investing in programs aimed at growing our business across our service offerings.

*Amounts are non-GAAP financial measures. See the schedules below for a discussion of non-GAAP financial metrics including a reconciliation of the most directly comparable GAAP measure.

IMPACT OF ECONOMIC TRENDS

The continued disruption in economic markets due to inflation, changing interest rates, business interruptions due to natural disasters and changes in weather patterns, employee shortages, and supply chain issues, all pose challenges which may adversely affect our future performance. The Company continues to execute various strategies previously implemented to help mitigate the impact of these economic disruptors. However, the Company cannot reasonably estimate whether these strategies will help mitigate the impact of these economic disruptors in the future.

Additionally, the Company continues to monitor ongoing changes to global trade policies, including the imposition of tariffs. The broader economic impact of these policies is uncertain, and while we may experience changes in fleet-related expenses and materials and supplies, we do not expect to be materially affected.

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

ROLLINS, INC. AND SUBSIDIARIES

of a normal recurring nature but are complicated by the continued uncertainty surrounding these economic trends. 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.

The extent to which these economic trends will continue to impact the Company’s business, financial condition and results of operations is uncertain. Therefore, we cannot reasonably estimate the full future impacts of these matters at this time.

RESULTS OF OPERATIONS

Quarter ended March 31, 2025 compared to quarter ended March 31, 2024

			Three Months Ended March 31,
															Variance
(in thousands, except per share data)			2025						2024						$			%
GAAP Metrics
Revenues			$	822,504					$	748,349					$	74,155		9.9		%
Gross profit (1)			$	422,370					$	382,791					$	39,579		10.3		%
Gross profit margin (1)			51.4		%				51.2		%							20		bps
Operating income			$	142,648					$	132,424					$	10,224		7.7		%
Operating income margin			17.3		%				17.7		%							(40)		bps
Net income			$	105,248					$	94,394					$	10,854		11.5		%
EPS			$	0.22					$	0.19					$	0.03		15.8		%
Operating cash flow			$	146,892					$	127,433					$	19,459		15.3		%
Non-GAAP Metrics
Adjusted operating income (2)			$	146,861					$	137,689					$	9,172		6.7		%
Adjusted operating margin (2)			17.9		%				18.4		%							(50)		bps
Adjusted net income (2)			$	107,868					$	98,357					$	9,511		9.7		%
Adjusted EPS (2)			$	0.22					$	0.20					$	0.02		10.0		%
Adjusted EBITDA (2)			$	171,857					$	160,783					$	11,074		6.9		%
Adjusted EBITDA margin (2)			20.9		%				21.5		%							(60)		bps
Free cash flow (2)			$	140,111					$	120,262					$	19,849		16.5		%

(1) Exclusive of depreciation and amortization

(2) Amounts are non-GAAP financial measures. See "Non-GAAP Financial Measures" of this Form 10-Q for a discussion of non-GAAP financial metrics including a reconciliation of the most directly comparable GAAP measure.

ROLLINS, INC. AND SUBSIDIARIES

The following table presents financial information, including our significant expense categories, for the three months ended March 31, 2025 and 2024:

			Three Months Ended March 31,
(unaudited, in thousands)			2025						2024
			$			% of Revenue			$			% of Revenue
Revenue			$	822,504		100.0		%	$	748,349		100.0		%
Less:
Cost of services provided (exclusive of depreciation and amortization below):
Employee expenses			261,724			31.8		%	238,529			31.9		%
Materials and supplies			48,491			5.9		%	44,786			6.0		%
Insurance and claims			16,524			2.0		%	17,644			2.4		%
Fleet expenses			36,857			4.5		%	30,697			4.1		%
Other cost of services provided (1)			36,538			4.4		%	33,902			4.5		%
Total cost of services provided (exclusive of depreciation and amortization below)			$	400,134		48.6		%	$	365,558		48.8		%
Sales, general and administrative:
Selling and marketing expenses			98,250			11.9		%	82,911			11.1		%
Administrative employee expenses			81,481			9.9		%	75,778			10.1		%
Insurance and claims			10,004			1.2		%	10,526			1.4		%
Fleet expenses			9,403			1.1		%	7,765			1.0		%
Other sales, general and administrative (2)			51,375			6.2		%	46,077			6.2		%
Total sales, general and administrative			$	250,513		30.5		%	$	223,057		29.8		%
Depreciation and amortization			29,209			3.6		%	27,310			3.6		%
Interest expense, net			5,796			0.7		%	7,725			1.0		%
Other expense (income), net			(692)			(0.1)		%	61			—		%
Income tax expense			32,296			3.9		%	30,244			4.0		%
Net income			$	105,248		12.8		%	$	94,394		12.6		%

1. Other cost of services provided includes facilities costs, professional services, maintenance & repairs, software license costs, and other expenses directly related to providing services.

2. Other sales, general and administrative includes facilities costs, professional services, maintenance & repairs, software license costs, bad debt expense, and other administrative expenses.

ROLLINS, INC. AND SUBSIDIARIES

Revenues

The following presents a summary of revenues by service offering for the first quarter ended March 31, 2025 and March 31, 2024, respectively:

Revenues for the quarter ended March 31, 2025 were $822.5 million, an increase of $74.2 million, or 9.9%, from 2024 revenues of $748.3 million. The increase in revenues was driven by demand from our customers across all major service offerings, partially offset by foreign currency headwind of 40 basis points, primarily related to the Canadian Dollar. Organic revenue* growth was 7.4% with acquisitions adding 2.5% in the quarter. Residential pest control revenue increased 8.2%, commercial pest control revenue increased 10.2% and termite and ancillary services grew 13.2% including both organic and acquisition-related growth in each area. Organic revenue* growth was strong across our service offerings, growing 5.7% in residential, 7.4% in commercial, and 11.1% in termite and ancillary activity, despite having one less business day in the quarter ended March 31, 2025 compared to the same quarter in 2024.

*Amounts are non-GAAP financial measures. See the schedules below for a discussion of non-GAAP financial metrics including a reconciliation of the most directly comparable GAAP measure.

Revenues are impacted by the seasonal nature of the Company’s pest and termite control services. The increase in pest activity, as well as the metamorphosis of termites in the spring and summer (the occurrence of which is determined by the change in seasons), has historically resulted in an increase in the Company’s revenues as evidenced by the following table:

			Consolidated Net Revenues
(in thousands)			2025						2024						2023
First Quarter			$	822,504					$	748,349					$	658,015
Second Quarter			—						891,920						820,750
Third Quarter			—						916,270						840,427
Fourth Quarter			—						832,169						754,086
Year to date			$	822,504					$	3,388,708					$	3,073,278

Gross Profit (exclusive of Depreciation and Amortization)

Gross profit for the quarter ended March 31, 2025 was $422.4 million, an increase of $39.6 million, or 10.3%, compared to $382.8 million for the quarter ended March 31, 2024. Gross margin improved 20 basis points to 51.4% in 2025 compared to 51.2% in 2024, as pricing more than offset inflationary pressures. We saw leverage across a number of cost categories, including 10 basis points in each of employee expenses and materials and supplies, with the most significant leverage in insurance and claims of 40 basis points. This was partially offset by 40 basis points of higher fleet expenses associated with our leased vehicles due to higher lease costs.

ROLLINS, INC. AND SUBSIDIARIES

Sales, General and Administrative

For the quarter ended March 31, 2025, sales, general and administrative ("SG&A") expenses were $250.5 million, an increase of $27.5 million, or 12.3%, compared to the quarter ended March 31, 2024.

As a percentage of revenue, SG&A increased 70 basis points to 30.5% from 29.8% in the prior year. Selling and marketing costs have increased by 80 basis points as we continue to invest in growth initiatives, including advertising. This was partially offset by leverage associated with lower administrative costs and insurance and claims costs.

Depreciation and Amortization

For the quarter ended March 31, 2025, depreciation and amortization increased $1.9 million, or 7.0%, compared to the quarter ended March 31, 2024. The increase was due to higher amortization of intangible assets from acquisitions.

Operating Income

For the quarter ended March 31, 2025, operating income increased $10.2 million, or 7.7%, compared to the prior year.

As a percentage of revenue, operating income was 17.3%, a decrease of 40 basis points compared to the first quarter of 2024. Operating margin declined mostly due to investments in growth initiatives and higher fleet costs, partially offset by leverage in insurance and claims, administrative costs, employee expenses, and materials and supplies.

Interest Expense, Net

During the quarter ended March 31, 2025, interest expense, net decreased $1.9 million compared to the prior year due to both a lower average outstanding debt balance compared to the same quarter in the prior year and a lower average interest rate on our borrowings. For full year 2025, we expect to incur a higher level of interest expense compared to 2024 due to a higher level of acquisition activity. We expect to incur between $8.0 million to $10.0 million of interest expense in the second quarter of 2025.

Other Income, Net

During the quarter ended March 31, 2025, other income increased $0.8 million primarily due to higher gains on non-operational asset sales.

Income Taxes

The Company’s effective tax rate was 23.5% in the first quarter of 2025 and 24.3% in the first quarter of 2024. The lower rate for the quarter was primarily due to increased benefits from stock-based compensation. We expect the effective tax rate to approximate 26% for 2025.

ROLLINS, INC. AND SUBSIDIARIES

Non-GAAP Financial Measures

Reconciliation of GAAP and non-GAAP Financial Measures

A non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that either 1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows, or 2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

These measures should not be considered in isolation or as a substitute for revenues, net income, earnings per share or other performance measures prepared in accordance with GAAP. Management believes all of these non-GAAP financial measures are useful to provide investors with information about current trends in, and period-over-period comparisons of, the Company's results of operations. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

The Company has used the following non-GAAP financial measures in this Form 10-Q:

Organic revenues

Organic revenues are calculated as revenues less the revenues from acquisitions completed within the prior 12 months and excluding the revenues from divested businesses. Acquisition revenues are based on the trailing 12-month revenue of our acquired entities. Management uses organic revenues, and organic revenues by type to compare revenues over various periods excluding the impact of acquisitions and divestitures.

Adjusted operating income and adjusted operating margin

Adjusted operating income and adjusted operating margin are calculated by adding back to net income those expenses resulting from the amortization of certain intangible assets, adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control, and restructuring costs related to restructuring and workforce reduction plans. Adjusted operating margin is calculated as adjusted operating income divided by revenues. Management uses adjusted operating income and adjusted operating margin as measures of operating performance because these measures allow the Company to compare performance consistently over various periods.

Adjusted net income and adjusted EPS

Adjusted net income and adjusted EPS are calculated by adding back to the GAAP measures amortization of certain intangible assets, adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control, and restructuring costs related to restructuring and workforce reduction plans, and excluding gains and losses on the sale of non-operational assets and gains on the sale of businesses, and by further subtracting the tax impact of those expenses, gains, or losses. Management uses adjusted net income and adjusted EPS as measures of operating performance because these measures allow the Company to compare performance consistently over various periods.

EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, incremental EBITDA margin and adjusted incremental EBITDA margin

EBITDA is calculated by adding back to net income depreciation and amortization, interest expense, net, and provision for income taxes. EBITDA margin is calculated as EBITDA divided by revenues. Adjusted EBITDA and adjusted EBITDA margin are calculated by further adding back those expenses resulting from the adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control, restructuring costs related to restructuring and workforce reduction plans, and excluding gains and losses on the sale of non-operational assets and gains on the sale of businesses. Management uses EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin as measures of operating performance because these measures allow the Company to compare performance consistently over various periods. Incremental EBITDA margin is calculated as the change in EBITDA divided by the change in revenue. Management uses incremental EBITDA margin as a measure of operating performance because this measure allows the Company to compare performance consistently over various periods. Adjusted incremental EBITDA margin is calculated as the change in adjusted EBITDA divided by the change in revenue. Management uses adjusted incremental EBITDA margin as a measure

ROLLINS, INC. AND SUBSIDIARIES

of operating performance because this measure allows the Company to compare performance consistently over various periods.

Free cash flow and free cash flow conversion

Free cash flow is calculated by subtracting capital expenditures from cash provided by operating activities. Management uses free cash flow to demonstrate the Company’s ability to maintain its asset base and generate future cash flows from operations. Free cash flow conversion is calculated as free cash flow divided by net income. Management uses free cash flow conversion to demonstrate how much net income is converted into cash. Management believes that free cash flow is an important financial measure for use in evaluating the Company’s liquidity. Free cash flow should be considered in addition to, rather than as a substitute for, net cash provided by operating activities as a measure of our liquidity. Additionally, the Company’s definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, management believes it is important to view free cash flow as a measure that provides supplemental information to our consolidated statements of cash flows.

Adjusted sales, general, and administrative ("SG&A")

Adjusted SG&A is calculated by removing the adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control. Management uses adjusted SG&A to compare SG&A expenses consistently over various periods.

Leverage ratio

Leverage ratio, a financial valuation measure, is calculated by dividing adjusted net debt by adjusted EBITDAR. Adjusted net debt is calculated by adding operating lease liabilities to total long-term debt less a cash adjustment of 90% of total consolidated cash. Adjusted EBITDAR is calculated by adding back to net income depreciation and amortization, interest expense, net, provision for income taxes, operating lease cost, and stock-based compensation expense. Management uses leverage ratio as an assessment of overall liquidity, financial flexibility, and leverage.

ROLLINS, INC. AND SUBSIDIARIES

Set forth below is a reconciliation of the non-GAAP financial measures contained in this report with their most directly comparable GAAP measures (unaudited, in thousands, except per share data and margins).

			Three Months Ended March 31,
															Variance
			2025						2024						$						%
Reconciliation of Revenues to Organic Revenues
Revenues			$	822,504					$	748,349					74,155						9.9
Revenues from acquisitions			(18,550)						—						(18,550)						2.5
Organic revenues			$	803,954					$	748,349					55,605						7.4
Reconciliation of Residential Revenues to Organic Residential Revenues
Residential revenues			$	356,313					$	329,338					26,975						8.2
Residential revenues from acquisitions			(8,366)						—						(8,366)						2.5
Residential organic revenues			$	347,947					$	329,338					18,609						5.7
Reconciliation of Commercial Revenues to Organic Commercial Revenues
Commercial revenues			$	284,357					$	258,114					26,243						10.2
Commercial revenues from acquisitions			(7,032)						—						(7,032)						2.8
Commercial organic revenues			$	277,325					$	258,114					19,211						7.4
Reconciliation of Termite and Ancillary Revenues to Organic Termite and Ancillary Revenues
Termite and ancillary revenues			$	172,130					$	152,060					20,070						13.2
Termite and ancillary revenues from acquisitions			(3,152)						—						(3,152)						2.1
Termite and ancillary organic revenues			$	168,978					$	152,060					16,918						11.1

ROLLINS, INC. AND SUBSIDIARIES

			Three Months Ended March 31,												Variance
			2025						2024						$						%
Reconciliation of Operating Income to Adjusted Operating Income and Adjusted Operating Income Margin
Operating income			$	142,648					$	132,424
Fox acquisition-related expenses (1)			4,213						5,265
Adjusted operating income			$	146,861					$	137,689					9,172						6.7
Revenues			$	822,504					$	748,349
Operating income margin			17.3		%				17.7		%
Adjusted operating margin			17.9		%				18.4		%
Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS
Net income			$	105,248					$	94,394
Fox acquisition-related expenses (1)			4,213						5,265
Gain on sale of assets, net (2)			(692)						61
Tax impact of adjustments (3)			(901)						(1,363)
Adjusted net income			$	107,868					$	98,357					9,511						9.7
EPS - basic and diluted			$	0.22					$	0.19
Fox acquisition-related expenses (1)			0.01						0.01
Gain on sale of assets, net (2)			—						—
Tax impact of adjustments (3)			—						—
Adjusted EPS - basic and diluted (4)			$	0.22					$	0.20					0.02						10.0
Weighted average shares outstanding – basic			484,414						484,131
Weighted average shares outstanding – diluted			484,434						484,318
Reconciliation of Net Income to EBITDA, Adjusted EBITDA, EBITDA Margin, Incremental EBITDA Margin, Adjusted EBITDA Margin, and Adjusted Incremental EBITDA Margin
Net income			$	105,248					$	94,394
Depreciation and amortization			29,209						27,310
Interest expense, net			5,796						7,725
Provision for income taxes			32,296						30,244
EBITDA			$	172,549					$	159,673					12,876						8.1
Fox acquisition-related expenses (1)			—						1,049
Gain on sale of assets, net (2)			(692)						61
Adjusted EBITDA			$	171,857					$	160,783					11,074						6.9
Revenues			$	822,504					$	748,349					74,155
EBITDA margin			21.0		%				21.3		%
Incremental EBITDA margin															17.4		%
Adjusted EBITDA margin			20.9		%				21.5		%
Adjusted incremental EBITDA margin															14.9		%
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Free Cash Flow Conversion
Net cash provided by operating activities			$	146,892					$	127,433
Capital expenditures			(6,781)						(7,171)
Free cash flow			$	140,111					$	120,262					19,849						16.5
Free cash flow conversion			133.1		%				127.4		%

ROLLINS, INC. AND SUBSIDIARIES

			Three Months Ended March 31,
			2025						2024
Reconciliation of SG&A to Adjusted SG&A
SG&A			$	250,513					$	223,057
Fox acquisition-related expenses (1)			—						1,049
Adjusted SG&A			$	250,513					$	222,008
Revenues			$	822,504					$	748,349
Adjusted SG&A as a % of revenues			30.5		%				29.7		%

			Period Ended March 31, 2025						Period Ended December 31, 2024
Reconciliation of Long-term Debt and Net Income to Leverage Ratio
Long-term debt (5)			$	500,000					$	397,000
Operating lease liabilities (6)			425,582						417,218
Cash adjustment (7)			(181,059)						(80,667)
Adjusted net debt			$	744,523					$	733,551
Net income			477,233						466,379
Depreciation and amortization			115,119						113,220
Interest expense, net			25,748						27,677
Provision for income taxes			165,903						163,851
Operating lease cost (8)			141,057						133,420
Stock-based compensation expense			31,602						29,984
Adjusted EBITDAR			$	956,662					$	934,531
Leverage ratio			0.8x						0.8x

(1) Consists of expenses resulting from the amortization of certain intangible assets and adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control ("Fox"). While we exclude such expenses in this non-GAAP measure, the revenue from the acquired company is reflected in this non-GAAP measure and the acquired assets contribute to revenue generation.

(2) Consists of the gain or loss on the sale of non-operational assets.

(3) The tax effect of the adjustments is calculated using the applicable statutory tax rates for the respective periods.

(4) In some cases, the sum of the individual EPS amounts may not equal total non-GAAP EPS calculations due to rounding.

(5) As of March 31, 2025, the Company had outstanding borrowings of $500.0 million from the issuance of our 2035 Senior Notes and no outstanding borrowings under the Revolving Credit Facility. The Company’s borrowings are presented under the long-term debt caption of our condensed consolidated balance sheet, net of a $7.6 million unamortized discount and $6.9 million in unamortized debt issuance costs as of March 31, 2025.

(6) Operating lease liabilities are presented under the operating lease liabilities - current and operating lease liabilities, less current portion captions of our consolidated balance sheet.

(7) Represents 90% of cash and cash equivalents per our consolidated balance sheet as of both periods presented.

(8) Operating lease cost excludes short-term lease cost associated with leases that have a duration of 12 months or less.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

The Company’s $201.2 million of total cash at March 31, 2025 is held at various banking institutions. As of March 31, 2025, approximately $50.2 million is held in cash by foreign subsidiaries and the remaining $151.0 million is held at domestic banks.

We intend to continue to grow the business in the international markets where we have a presence. As it relates to our unremitted earnings in foreign jurisdictions, we assert that foreign cash earnings in excess of working capital and cash needed for strategic investments and acquisitions are not intended to be indefinitely reinvested offshore.

ROLLINS, INC. AND SUBSIDIARIES

We believe our current cash and cash equivalents balances, future cash flows expected to be generated from operating activities, access to debt financing based on our creditworthiness, our $1 billion commercial paper program, which is backstopped by our Revolving Credit Facility, and available borrowings under our Revolving Credit Facility, will be sufficient to finance our current operations and obligations, and fund expansion of the business for the foreseeable future.

2035 Senior Notes

In February 2025, we issued ten-year notes with an aggregate principal amount of $500 million due on February 24, 2035 (the “2035 Senior Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. We issued the 2035 Senior Notes at 98.443% of par, representing a discount of $7.8 million, and paid approximately $5.4 million for debt issuance costs. The interest is payable semi-annually in arrears on February 24 and August 24 of each year at 5.25% per annum, beginning on August 24, 2025, and the entire principal amount is due at the time of maturity. We used the net proceeds from this offering primarily to repay outstanding borrowings under the Revolving Credit Facility, as well as for general corporate purposes.

Commercial Paper Program

In March 2025, we established a commercial paper program under which we may issue unsecured commercial paper up to a total of $1 billion outstanding at any time, with maturities of up to 397 days from the date of issue. The net proceeds from the issuance of commercial paper are expected to be used for general corporate purposes. As of March 31, 2025, there were no outstanding borrowings under the commercial paper program.

Revolving Credit Facility

In February 2023, the Company entered into a credit agreement with, among others, JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as administrative agent (in such capacity, the “Administrative Agent”).

The Credit Agreement provides for a $1.0 billion revolving credit facility ("Revolving Credit Facility"), which may be denominated in U.S. Dollars and other currencies, subject to a $400 million foreign currency sublimit. Rollins has the ability to expand its borrowing availability under the Credit Agreement in the form of increased revolving 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.

As of March 31, 2025, the Company had no outstanding borrowings under the Revolving Credit Facility. As of December 31, 2024, the Company had outstanding borrowings of $397.0 million under the Revolving Credit Facility.

Letters of Credit

The Company maintained $82.4 million in letters of credit as of March 31, 2025 and $72.0 million as of December 31, 2024. 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 following table sets forth a summary of our cash flows from operating, investing and financing activities for the three month periods presented:

			Three Months Ended March 31,												Variance
(in thousands)			2025						2024						$						%
Net cash provided by operating activities			$	146,892					$	127,433					19,459						15.3
Net cash used in investing activities			(32,567)						(52,465)						(19,898)						(37.9)
Net cash used in financing activities			(4,612)						(64,254)						(59,642)						(92.8)
Effect of exchange rate on cash			1,834						(1,568)						3,402						N/M
Net increase in cash and cash equivalents			$	111,547					$	9,146					102,401						N/M

N/M - calculation not meaningful

ROLLINS, INC. AND SUBSIDIARIES

Cash Provided by Operating Activities

Cash from operating activities is the principal source of cash generation for our businesses. The most significant source of cash in our cash flow from operations is customer-related activities, the largest of which is collecting cash resulting from services sold. The most significant operating use of cash is to pay our suppliers, employees, and tax authorities. The Company’s operating activities generated net cash of $146.9 million and $127.4 million for the three months ended March 31, 2025 and 2024, respectively. The $19.5 million increase was driven primarily by strong operating results and the timing of cash receipts and cash payments to and from customers, vendors, employees, and tax and regulatory authorities.

The US Internal Revenue Service provided disaster relief to all State of Georgia taxpayers due to the impact of Hurricane Helene. Therefore, we did not make an estimated payment for US federal income tax purposes in the fourth quarter of 2024. That tax payment is due in the second quarter of 2025. We expect cash flows from operating activities to be negatively impacted associated with timing of this payment and normal recurring federal income tax payments in the second quarter of 2025.

Cash Used in Investing Activities

The Company’s investing activities used $32.6 million and $52.5 million for the three months ended March 31, 2025 and 2024, respectively. Cash paid for acquisitions totaled $27.2 million for the three months ended March 31, 2025, compared to $47.1 million for the three months ended March 31, 2024. The Company invested $6.8 million in capital expenditures during the year, offset by $1.4 million in cash proceeds from the sale of assets, compared with $7.2 million of capital expenditures and $0.7 million in cash proceeds from asset sales in 2024. The Company’s investing activities were funded through existing cash balances, operating cash flows, and borrowings.

Cash Used in or Provided by Financing Activities

Cash of $4.6 million was used in financing activities during the three months ended March 31, 2025, compared with $64.3 million during the three months ended March 31, 2024. A total of $79.9 million was paid in cash dividends ($0.165 per share) during the three months ended March 31, 2025, compared to $72.6 million in cash dividends paid ($0.150 per share) during the three months ended March 31, 2024.

During the three months ended March 31, 2025, the company received proceeds of $492.2 million and paid $5.4 million of debt issuance costs related to the issuance of the 2035 Senior Notes. Those proceeds were used primarily to repay borrowings under the credit agreement. Net repayments on the credit agreement during the three months ended March 31, 2025 were $397.0 million, resulting in net incremental borrowings in the quarter of $95.2 million compared to net borrowings of $20.0 million during 2024.

During the three months ended March 31, 2025, the Company paid $1.2 million of contingent consideration, compared to $1.5 million during the three months ended March 31, 2024. The Company withheld $14.7 million and $11.3 million of common stock for the three months ended March 31, 2025 and 2024, respectively, in connection with tax withholding obligations of its employees upon vesting of such employees’ equity awards.

Share Repurchase Program

In 2012, the Company’s Board of Directors authorized the purchase of up to 5 million shares of the Company’s common stock. After adjustments for stock splits, the total authorized shares under the share repurchase plan is 16.9 million shares. As of March 31, 2025, 11.4 million additional shares may be purchased under the share repurchase program.

Active Shelf Registration

The Form S-3 on file with the SEC registered $1.5 billion of the Company’s common stock, preferred stock, debt securities, depositary shares, warrants, rights, purchase contracts and units for future issuance. The Company may offer and sell some or all of such securities from time to time or through underwriters, brokers or dealers, directly to one or more other purchasers, through a block trade, through agents on a best-efforts basis, through a combination of any of the above methods of sale or through other types of transactions described in the Form S-3. The Company has not sold any securities as of the date of this Form 10-Q.

ROLLINS, INC. AND SUBSIDIARIES

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, litigation, and tax and other regulatory 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 investigations, cases, and claims from time to time, which may include claims on a representative or class action basis alleging wage and hour law violations, claims filed under California's Private Attorneys General Act, and claims related to our enforcement of post-employment restrictive covenants. 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 in accordance with ASC 450.

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 actuary 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 estimates, our operating results could be materially affected, and our ability to take timely corrective actions to limit future costs may be limited.

Item 103 of SEC Regulation S-K requires disclosure of certain environmental legal proceedings if the proceeding reasonably involves potential monetary sanctions of $300,000 or more. The Company has received a notice of alleged violations and information requests from local governmental authorities in California for our Orkin and Clark Pest Control operations and is currently working with several local governments regarding compliance with environmental regulations governing the management of hazardous waste and pesticide disposal. The investigation appears to be part of a broader effort to investigate waste handling and disposal processes of a number of industries. While we are unable to predict the outcome of this investigation, we do not believe the outcome will have a material effect on our results of operations, financial condition, or cash flows.

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.

CRITICAL ACCOUNTING ESTIMATES

There have been no significant changes in our identified critical accounting estimates as disclosed in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" of our 2024 Form 10-K.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q as well as other written or oral statements by the Company may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current opinions, expectations, intentions, beliefs, plans, objectives, assumptions and projections about future events and financial trends affecting the operating results and financial condition of our business. Although we believe that these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions, or expectations. Generally, statements that do not relate to historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. The words “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “should,” “will,” “would,” and similar expressions may identify forward-looking statements, but the

ROLLINS, INC. AND SUBSIDIARIES

absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:

• expectations with respect to our financial and business performance and strategy;

• expansion efforts and growth opportunities, including, but not limited, to organic growth and recent and future acquisitions in the United States and in foreign markets where we have a presence and integration efforts with respect to recent acquisitions;

• the impact of inflation, changing interest rates, business interruptions due to natural disasters and changes in the weather patterns, employee shortages, and supply chain issues;

• the economic impact of changes to global trade policies, including the imposition of tariffs, and changes in materials and supplies and fleet-related expenses;

• our belief that demand remains favorable and we are well positioned to continue to deliver strong results in 2025;

• expectations with respect to interest costs and the effective tax rate;

• our pipeline for acquisitions remains healthy;

• sufficiency of current cash and cash equivalents balances, future cash flows, access to debt financing based on our creditworthiness, our $1 billion commercial paper program, and available borrowings under our Revolving Credit Facility to finance our current and future operations;

• our belief that the Company has adequate liquid assets, funding sources and insurance accruals to accommodate potential future insurance claims;

• our approach to capital allocation inclusive of our intent to pay cash dividends to common shareholders;

• our belief that no pending or threatened claim, proceeding, litigation, regulatory action or investigation, either alone or in the aggregate, including but not limited to the investigation by certain California governmental authorities regarding compliance with environmental regulations, claims filed under California's Private Attorneys General Act, and claims related to our enforcement of post-employment restrictive covenants will have a material adverse effect on our financial position, results of operations or liquidity; and

• estimates, assumptions, and projections related to our application of critical accounting policies, described in more detail under “Critical Accounting Estimates.”

These forward-looking statements are based on information available as of the date of this report, and current expectations, forecasts, and assumptions, and involve a number of judgments, risks and uncertainties. Important factors could cause actual results to differ materially from those indicated or implied by forward-looking statements including, but not limited to, those set forth in the sections entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and may also be described from time to time in our future reports filed with the SEC.

Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required by law.