AI Takeaway
Rollins (ROL) delivered 7.9% revenue growth to $1.1B in Q2 FY2026, but operating-margin compression and softer consumer-initiated residential demand limited operating-income growth to 1.5%. Source: 10-Q Item 2 MD&A, pp.25-29.
Revenue
$1.08B
++7.91% YoY
EPS (Basic)
$0.30
++3.45% YoY
Operating Income
$201.36M
++1.53% YoY
Filed · Source: SEC EDGAR 10-Q filing
Rollins (ROL) reported Q2 FY2026 revenue of $1.08B, up 7.9% year over year. The company posted net income of $143.91M, up 1.7% from a year earlier, with diluted EPS of $0.30.
Q2 FY2026 revenue increased $79.0M, or 7.9%, to $1.1B; organic revenue grew 5.7% and acquisitions contributed 2.2%. Residential revenue grew 6.6%, commercial revenue grew 8.6%, and termite and ancillary revenue grew 10.5%; foreign operations represented approximately 7% of quarterly revenue.
Source: 10-Q Item 2 MD&A, pp.26-28
Gross margin declined 100 basis points year over year to 52.8%, primarily reflecting higher employee expenses, materials and supplies, and fleet costs. Operating margin fell 110 basis points to 18.7%, while SG&A rose 8.9% to $335.0M and increased to 31.1% of revenue from 30.8%.
Source: 10-Q Item 2 MD&A, pp.26-29
Management said results fell short of expectations because parts of the residential service offering experienced slower growth from lower lead volume, particularly brands dependent on search, digital media, and inbound calls. Relationship-based channels, including home builders and door-to-door sales, delivered solid organic growth; management said lead volume improved toward the end of June and into early July.
Source: 10-Q Item 2 MD&A, p.25
The company expects at least 6% organic revenue growth, 2% to 3% inorganic revenue growth, adjusted incremental EBITDA margin of at least 10%, and free-cash-flow conversion above 100% for 2026. These targets are management outlook measures and include non-GAAP metrics.
Source: 10-Q Item 2 MD&A, p.25
Quarterly operating cash flow was $172.5M, down 1.5% year over year, and quarterly free cash flow was $166.1M, down 1.2%; management attributed the pressure to the timing of tax payments associated with its tax-credit planning strategy. During the quarter, Rollins invested $116.8M in acquisitions, spent $6.4M on capital expenditures, and paid $88.1M in dividends.
Source: 10-Q Item 2 MD&A, pp.25-26
The current ratio was 0.63x at Q2 FY2026, based on $590.4M of current assets and $938.1M of current liabilities. This does not establish a liquidity shortfall, but it means the company depends on continuing operating cash generation and financing access to meet near-term obligations.
Source: 10-Q Balance Sheet (XBRL)
Current liabilities rose 19.0% year over year to $938.1M, while total liabilities increased 10.9% to $1.9B, compared with a 5.5% increase in total assets to $3.4B. Higher obligations can reduce financial flexibility if earnings or cash generation weaken.
Source: 10-Q Balance Sheet (XBRL)
Six-month operating cash flow declined 9.7% year over year to $290.9M, while six-month net income increased 2.0% to $251.7M. The divergence may increase reliance on working-capital management and external liquidity if it persists.
Source: 10-Q Cash Flow Statement (XBRL)
Debt-to-equity was 1.35x at Q2 FY2026, with long-term debt of $487.1M and stockholders' equity down 1.0% year over year to $1.4B. This capital structure could make profitability and cash flow more sensitive to borrowing costs or weaker operating performance.
Source: 10-Q Balance Sheet (XBRL)
Reported EPS of $0.32 versus the $0.34 analyst consensus — a -7.0% miss for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $1.08B | $999.53M | +7.91% |
Operating Income | $201.36M | $198.33M | +1.53% |
Net Income | $143.91M | $141.49M | +1.71% |
EPS (Basic) | $0.30 | $0.29 | +3.45% |
EPS (Diluted) | $0.30 | $0.29 | +3.45% |
SG&A Expense | $334.98M | $307.6M | +8.90% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $3.35B | $3.18B | +5.50% |
Current Assets | $590.4M | $537.91M | +9.76% |
Total Liabilities | $1.93B | $1.74B | +10.90% |
Current Liabilities | $938.1M | $788.08M | +19.04% |
Stockholders' Equity | $1.43B | $1.44B | -0.99% |
Cash & Equivalents | $109.08M | $123.03M | -11.34% |
Long-Term Debt | $487.11M | $485.28M | +0.38% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $290.87M | $322.01M | -9.67% |
Investing Cash FlowYTD | $-146.21M | $-263.09M | +44.43% |
Financing Cash FlowYTD | $-134.72M | $-28.57M | -371.55% |
Share Buybacks | $20M | $0 | — |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 18.7% | 19.8% | -1.17% |
Net Margin | 13.3% | — | — |
ROE | 10.1% | — | — |
ROA | 4.3% | — | — |
Current Ratio | $0.629 | — | — |
Debt to Equity | $1.347 | — | — |
Expected release date, analyst estimates & what to watch
Rollins (ROL) delivered solid Q1 FY2026 revenue growth of 10.2% to $906.4M, but operating margin compressed 130 bps to 16.1% as SG&A expenses surged 12.9%, while cash and operating cash flow declined meaningfully year-over-year.
Rollins (ROL) delivered strong FY2025 results with revenue growing 11.0% to $3.76B and net income rising 12.9% to $527M, driven by continued organic growth and acquisitions, while maintaining a healthy operating margin near 19.3%.
Other companies in Environmental & Facilities Services
Revenue rose 7.9% to $1.1B, supported by 5.7% organic growth and 2.2% growth from acquisitions. However, operating income increased only 1.5% to $201.4M because operating margin fell 110 basis points to 18.7%. Source: 10-Q Item 2 MD&A, pp.26-29.
Rollins reported $1.1B of revenue in Q2 FY2026, up $79.0M, or 7.9%, year over year. Residential, commercial, and termite and ancillary revenue rose 6.6%, 8.6%, and 10.5%, respectively, including organic and acquisition-related growth. Source: 10-Q Item 2 MD&A, p.28.
Gross margin decreased 100 basis points to 52.8% because of higher employee expenses, materials and supplies, and fleet costs. Operating margin declined 110 basis points to 18.7%, also reflecting higher SG&A expenses, which increased to 31.1% of revenue from 30.8%. Source: 10-Q Item 2 MD&A, pp.27-29.
Management expects at least 6% organic revenue growth, 2% to 3% inorganic revenue growth, adjusted incremental EBITDA margin of at least 10%, and free-cash-flow conversion above 100% in 2026. The outlook followed management's statement that first-half results and near-term operating visibility led it to update its full-year expectations. Source: 10-Q Item 2 MD&A, p.25.
Rollins ended Q2 FY2026 with $109.1M of cash, $590.4M of current assets, and $938.1M of current liabilities, producing a 0.63x current ratio. The company also reported $290.9M of six-month operating cash flow, while total liabilities were $1.9B and stockholders' equity was $1.4B. Source: 10-Q Balance Sheet and Cash Flow Statement (XBRL).