Rollins Financial Model
Business Services Company Financials Example (Free Excel Download)
Rollins, Inc. is a premier global consumer and commercial services company that provides essential pest control services and protection against termite damage, rodents, and insects.
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About this model
This model provides a comprehensive equity valuation and cash flow forecasting tool to determine the intrinsic value of Rollins, Inc., enabling an equity research analyst to assess the sustainability of its premium valuation multiple based on its highly recurring, asset-light, and acquisition-driven growth model.
Rollins, Inc. is a premier global consumer and commercial services company that provides essential pest control services and protection against termite damage, rodents, and insects. The company operates primarily through its flagship Orkin brand, alongside dozens of other regional and international brands acquired through its serial bolt-on M&A strategy.
Business segments include:
- Residential Pest Control (approximately 45% of revenue)
- Commercial Pest Control (approximately 35% of revenue)
- Termite and Ancillary Services (approximately 20% of revenue)
The company operates predominantly in North America, with foreign operations accounting for approximately 7% of total revenues. Rollins employs a highly recurring, route-based, asset-light business model where approximately 75% of revenues are recurring, 10% are ancillary, and 15% are one-time services. Its competitive position is exceptionally strong, operating as part of a global duopoly alongside Rentokil Initial. Recent major events include the establishment of a $1 billion commercial paper programme, the issuance of $500 million in 2035 Senior Notes, and the completion of 26 bolt-on acquisitions in 2025 alone.
The downloadable Rollins financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsRollins financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $2.42B | $2.70B | $3.07B | $3.39B | $3.76B |
| Cost of services provided (exclusive of depreciation and amortization below | $1.16B | $1.31B | $1.47B | $1.60B | $1.78B |
| Operating income | $447.6M | $493.4M | $583.2M | $657.2M | $726.1M |
| Net income | $356.6M | $368.6M | $435.0M | $466.4M | $526.7M |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
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How to build a detailed financial model for Rollins
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
Residential Pest Control
- Segment name: Residential
- Revenue driver formula: Number of Residential Customers x Average Revenue Per User (ARPU)
- Historical growth rate: 5% to 10% (5% organic growth in 2025)
- Key growth levers and headwinds: Driven by housing turnover, weather patterns, and pricing power. Headwinds include severe weather disruptions and consumer discretionary spending pressure.
- Pricing dynamics: Contractual recurring billing with annual price escalators to offset inflation.
- Revenue recognition notes: Recognised over time as services are performed.
- Seasonality: Highly seasonal. Q2 and Q3 are the strongest quarters due to warmer weather driving pest activity, while Q1 and Q4 are historically weaker.
Commercial Pest Control
- Segment name: Commercial
- Revenue driver formula: Number of Commercial Contracts x Average Contract Value
- Historical growth rate: 8% to 11% (8% organic growth in 2025)
- Key growth levers and headwinds: Driven by return-to-office trends, food safety regulations, and healthcare sanitation requirements. Headwinds include commercial real estate vacancies.
- Pricing dynamics: Multi-year contracts with strict service level agreements and inflation-linked pricing adjustments.
- Revenue recognition notes: Recognised ratably over the contract term as route services are completed.
- Seasonality: Less seasonal than residential, but still experiences a slight uptick in the summer months.
Termite and Ancillary Services
- Segment name: Termite and Ancillary
- Revenue driver formula: Number of Termite Jobs x Average Job Size + Renewal Fees
- Historical growth rate: 10% to 14% (10% organic growth in 2025)
- Key growth levers and headwinds: Driven by housing market activity, new construction termite pre-treatments, and mosquito control demand.
- Pricing dynamics: High upfront treatment cost followed by high-margin, low-cost annual renewal warranties.
- Revenue recognition notes: Upfront treatments recognised upon completion; annual renewal warranties deferred and recognised over the warranty period.
- Seasonality: Spring swarm season makes Q2 the most critical quarter for termite revenue.
Cost Structure
Variable Costs / COGS
- Line-by-line breakdown: Direct labour (technician wages and benefits), materials and supplies (chemicals, traps), fleet costs (fuel, vehicle depreciation, maintenance), and insurance claims.
- Gross margin range: 51.5% to 53.0% (52.8% in 2025, 52.7% in 2024).
- Key input costs and commodity exposures: Fuel prices for the vehicle fleet and chemical costs.
- How COGS scales with revenue: Highly linear with route density. As route density increases, fuel and labour costs per stop decrease, creating operating leverage.
Operating Expenses
- R&D: Negligible. The company relies on chemical manufacturers for product innovation.
- SG&A: Includes branch administration, sales and marketing, corporate overhead, and IT systems. Typically runs at 28% to 30% of revenue.
- Depreciation & Amortisation: D&A is approximately 4% to 5% of revenue. Amortisation is heavily skewed by customer lists and trademarks acquired through continuous M&A.
- Stock-Based Compensation: Relatively low, typically 0.5% to 1.0% of revenue.
- Restructuring / one-time charges: Rare, though acquisition-related expenses occur annually due to the bolt-on strategy.
Margin Profile
- Gross margin: 52.0% to 53.0%
- EBITDA margin: 21.0% to 23.0% (22.7% adjusted EBITDA margin in 2025)
- Operating margin: 18.5% to 20.0% (19.3% in 2025)
- Net margin: 13.0% to 14.5% (14.0% in 2025)
- Margin trend: Slowly expanding due to pricing power and route density improvements, partially offset by higher fleet and insurance costs.
Balance Sheet Structure
- Total assets: Approximately $3.5 billion to $4.0 billion.
- Key asset categories: Goodwill, customer contracts, trademarks, and operating lease right-of-use assets.
- Goodwill & intangibles as % of total assets: Very high (typically 60% to 70%) due to decades of serial acquisitions.
- Working capital profile:
- Days Sales Outstanding (DSO): 30 to 40 days.
- Days Inventory Outstanding (DIO): 15 to 25 days (minimal chemical inventory required).
- Days Payable Outstanding (DPO): 35 to 45 days.
- Net working capital as % of revenue: Near zero or slightly negative.
- Is working capital positive or negative? The company frequently operates with negative working capital, collecting cash from residential customers upfront or at the time of service, which funds organic growth.
- PP&E: Very light. Consists primarily of branch office equipment and fleet vehicles. Useful life for vehicles is typically 3 to 5 years.
- Right-of-use assets / operating leases: Material. The company leases the vast majority of its branch locations and a significant portion of its vehicle fleet.
Capital Expenditure & Investment
- Capex as % of revenue: 1.5% to 2.0% (highly asset-light).
- Maintenance capex vs. growth capex: 80% maintenance (vehicle replacements, branch IT) and 20% growth.
- Major capex programmes underway or planned: Routing and scheduling software modernisation.
- Capitalised software / development costs: Minimal but present for proprietary routing systems.
- M&A pattern: Serial bolt-on acquirer. The company completed 26 acquisitions in 2025 and 94 over the last three years.
- Typical acquisition multiple paid: 2.0x to 3.0x revenue for high-quality regional players.
Debt & Capital Structure
- Total debt: Approximately $500 million in long-term debt, plus commercial paper.
- Debt/EBITDA ratio: Very low, typically under 1.0x.
- Credit rating: Investment grade profile, though historically unrated due to lack of debt.
- Key debt instruments: $1 billion revolving credit facility (undrawn at end of 2025), $1 billion commercial paper programme, and $500 million of 5.25% 2035 Senior Notes.
- Maturity profile: Long-dated with the recent 2035 notes issuance.
- Interest rate profile: Fixed on the senior notes, floating on the commercial paper.
- Covenants: Standard leverage and interest coverage ratios on the revolver.
- Share repurchase programme: Active. The company repurchased approximately $200 million in shares in 2025.
- Dividend policy: Regular quarterly dividend. Paid $327.9 million in 2025, representing a payout ratio of approximately 48% of operating cash flow.
Cash Flow Characteristics
- Operating cash flow conversion: Exceptionally strong. OCF / Net Income typically ranges from 115% to 125% (128% in 2025).
- Free cash flow margin: 15% to 18% of revenue.
- Major non-cash items that bridge net income to OCF: High amortisation of acquired intangibles and depreciation of fleet vehicles.
- Working capital cash flow impact: Favourable. Growth generates cash due to the negative working capital dynamic.
- Capex intensity: Extremely low, driving the high free cash flow conversion.
- Cash tax rate vs. GAAP effective tax rate: Cash taxes are generally in line with the GAAP rate of 24% to 26%.
Sheet Structure
- Assumptions: All hardcoded drivers, macroeconomic inputs, tax rates, and M&A placeholders.
- Scenarios: Base, Bull, and Bear case toggles for organic growth and margin expansion.
- Income Statement: Historical and projected P&L mirroring the 10-K, with revenue split by Residential, Commercial, and Termite.
- Balance Sheet: Assets, liabilities, and equity. Must explicitly break out Goodwill, Customer Contracts, and Right-of-Use Assets.
- Cash Flow Statement: Direct link from Net Income, adding back D&A, stock-based compensation, and working capital changes.
- Working Capital Schedule: DSO, DIO, DPO calculations and deferred revenue roll-forward.
- Debt & Interest Schedule: Tranches for the Revolver, Commercial Paper, and 2035 Senior Notes.
- PP&E & Intangibles Roll-forward: Crucial for this company. Must track base D&A plus new amortisation from projected bolt-on M&A.
- M&A Schedule: Placeholder for annual bolt-on spend, acquired revenue, and acquired EBITDA.
- DCF Valuation: Unlevered free cash flow build, WACC calculation, and terminal value.
- Outputs & Charts: Summary dashboard for the equity analyst.
Key Financial Relationships
- `Residential Revenue = Prior Year Residential Revenue x (1 + Residential Organic Growth Rate + Residential M&A Growth Rate)`
- `Commercial Revenue = Prior Year Commercial Revenue x (1 + Commercial Organic Growth Rate + Commercial M&A Growth Rate)`
- `Termite Revenue = Prior Year Termite Revenue x (1 + Termite Organic Growth Rate + Termite M&A Growth Rate)`
- `Total Revenue = Residential Revenue + Commercial Revenue + Termite Revenue`
- `Cost of Services Provided = Total Revenue x (1 - Gross Margin %)`
- `Gross Profit = Total Revenue - Cost of Services Provided`
- `SG&A Expense = Total Revenue x SG&A % of Revenue`
- `Amortisation of Intangibles = Base Amortisation + (Cumulative M&A Spend x % Allocated to Customer Lists / Useful Life)`
- `Operating Income = Gross Profit - SG&A Expense - Depreciation & Amortisation`
- `Operating Cash Flow = Net Income + D&A + SBC + Change in Net Working Capital`
- `Free Cash Flow = Operating Cash Flow - Capital Expenditures`
- `Dividends Paid = Operating Cash Flow x Target Dividend Payout Ratio`
Cross-Sheet Dependencies
- The Assumptions sheet feeds the revenue growth rates and margin profiles on the Income Statement.
- The M&A Schedule is the critical chain. It feeds acquired revenue to the Income Statement, adds Goodwill and Intangibles to the Balance Sheet, and increases Amortisation on the PP&E & Intangibles Roll-forward.
- The Working Capital Schedule calculates the change in NWC, which feeds the Cash Flow Statement.
- The Debt & Interest Schedule calculates interest expense, which feeds the Income Statement. This creates a circularity if the revolver is used to plug cash shortfalls, as interest expense lowers net income, which lowers cash flow, which increases the revolver draw.
Sign Convention
- Income Statement: Revenues are positive. All expenses (COGS, SG&A, Interest, Taxes) are negative.
- Balance Sheet: All assets, liabilities, and equity balances are positive.
- Cash Flow Statement: Cash inflows are positive. Cash outflows (Capex, Dividends, Debt Repayment, Share Repurchases) are negative.
- Formulas: When calculating Gross Profit, use `Revenue + COGS` (since COGS is negative).
Things Most Likely to Go Wrong
- Failing to model the heavy amortisation burden. Rollins acquires dozens of companies a year, creating a massive customer list intangible asset that must be amortised, depressing GAAP operating margins relative to cash margins.
- Ignoring weather seasonality. Q1 and Q4 are structurally lower margin and lower revenue than Q2 and Q3. A quarterly model must reflect this or cash flow timing will be wrong.
- Misunderstanding the working capital dynamic. Rollins generates cash from working capital as it grows. Modelling standard positive working capital will understate free cash flow.
- Omitting fleet lease costs. The company leases many vehicles. Changes to lease accounting or fleet strategy can shift costs between COGS and D&A.
- Double-counting organic and M&A growth. The company explicitly guides to 7-8% organic and 2-4% M&A growth. The model must separate these drivers.
- Underestimating the dividend burden. The company pays out nearly 50% of OCF in dividends, which limits the cash available for mega-acquisitions without tapping debt.
- Forgetting the new 2035 Senior Notes. Historical models will show zero long-term debt, but the 2025 issuance of $500M at 5.25% introduces permanent interest expense.
- Miscalculating the tax rate. The company does not benefit from significant tax credits; the effective rate sits stubbornly around 25%.
Validation Checks
- Gross margin should remain tightly bound between 51.5% and 53.5%. Flag if it breaches this range.
- Operating cash flow conversion (OCF / Net Income) must be > 1.15x. If it drops below 1.0x, the working capital or amortisation schedules are broken.
- Capex as a % of revenue should not exceed 2.5%.
- Total Revenue growth should equal the sum of the organic growth assumption (typically 6-8%) plus the M&A growth assumption (typically 2-4%).
- Balance sheet must balance: Total Assets = Total Liabilities + Shareholders' Equity in every forecast period.
- Debt/EBITDA should remain below 2.0x unless a transformational acquisition is modelled.
- Dividend payout ratio should remain near 45-50% of Operating Cash Flow.
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| Residential Organic Growth | 6.0 | % | Blended average of recent historical performance and management guidance. |
| Commercial Organic Growth | 8.0 | % | Reflects strong pricing power and steady volume growth. |
| Termite Organic Growth | 10.0 | % | Matches 2025 actual organic growth rate. |
| Annual M&A Revenue Contribution | 3.5 | % | Management targets 2% to 4% annual growth from bolt-on acquisitions. |
| Gross Margin | 52.8 | % | Actual reported gross margin for FY2025. |
| SG&A as % of Revenue | 29.0 | % | Historical average required to support branch network. |
| D&A as % of Revenue | 4.5 | % | Reflects heavy amortisation of acquired customer lists. |
| Effective Tax Rate | 25.0 | % | Standard US corporate rate plus state taxes. |
| Capex as % of Revenue | 1.5 | % | Asset-light business model requires minimal capital expenditure. |
| DSO (Days Sales Outstanding) | 35 | Days | Based on historical receivables turnover. |
| DPO (Days Payable Outstanding) | 40 | Days | Based on historical payables turnover. |
| Dividend Payout Ratio (% of OCF) | 48.0 | % | Matches the $327.9M paid on $678M OCF in 2025. |
| 2035 Senior Notes Interest Rate | 5.25 | % | Actual coupon rate on the 2025 debt issuance. |
| Share Repurchases | 200 | $M | Matches the 2025 actual share repurchase volume. |
| WACC | 7.5 | % | Low beta, highly defensive business model warrants a lower discount rate. |
| Terminal Growth Rate | 3.0 | % | Pricing power consistently exceeds long-term inflation. |
Data Sources & Benchmarks
- SEC Filings: Rollins Investor Relations page and SEC EDGAR (10-K, 10-Q, 8-K).
- Key Peers for Benchmarking: Rentokil Initial plc (RTO), Ecolab Inc. (ECL), and ServiceMaster (historical data prior to acquisition).
- Industry Data Sources: Pest Control Technology (PCT) Magazine for industry growth rates and top 100 operator lists.
- Consensus Estimates: Bloomberg or FactSet for forward revenue and EBITDA estimates.
- Macro Indicators: US Existing Home Sales and housing starts (leading indicators for termite and residential pest control).
Sources
Do more with the Rollins model
Frequently asked
What services does Rollins, Inc. (ROL) provide?+
Rollins, Inc. is a premier global consumer and commercial services company specializing in essential pest control services. It offers protection against termite damage, rodents, and various insects, primarily through its flagship Orkin brand and numerous acquired regional brands.
How does Rollins generate its revenue?+
Rollins generates revenue primarily through highly recurring pest control services, with approximately 75% of its revenues being recurring. Its business is segmented into residential, commercial, and termite and ancillary services, supported by an acquisition-driven growth strategy.
What is Rollins' capital expenditure strategy given its asset-light model?+
Rollins operates with a highly asset-light model, reflected in its low capital expenditure, typically 1.5% to 2.0% of revenue. The majority of this capex, about 80%, is for maintenance, such as vehicle replacements and branch IT.
How does Rollins' net working capital profile impact its financial model?+
Rollins frequently operates with negative net working capital, as it collects cash from residential customers upfront or at the time of service. This unique profile means the company often generates cash from its working capital, which can fund organic growth.
What is a key assumption for revenue growth in the Rollins financial model?+
A key assumption for revenue growth in the Rollins financial model is approximately 11.12%. This growth is significantly bolstered by the company's serial bolt-on M&A strategy, having completed 26 acquisitions in 2025 alone.
Can I download an Excel financial model for Rollins, Inc. (ROL)?+
Yes, a comprehensive Excel financial model for Rollins, Inc. is available for download. This model provides an equity valuation and cash flow forecasting tool to help assess the intrinsic value of the company.
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