Rollins, Inc.

Q2 total revenue increased 7.9% and organic growth was 5.7%. Residential revenue rose 6.6%, commercial pest control increased 8.6%, and termite and ancillary revenue increased 10.5%; organic growth was 3.6% in residential, 7.2% in commercial, and 8.9% in termite and ancillary. Gross margin was 52.8%, down 100 basis points, and SG&A as a percentage of revenue rose 30 basis points. GAAP operating income was $201 million, up 1.5%; adjusted operating income was $210 million, up 2%; adjusted EBITDA was $236 million, up 2.2%; GAAP net income was $144 million or $0.30 per share; adjusted net income was $152 million or $0.32 per share, up 6.7%. Operating cash flow was $173 million and free cash flow was $166 million. For 2026, management now expects at least 6% organic growth, at least 10% incremental margins, 2% to 3% of growth from acquisitions, free cash flow conversion above 100%, and an effective tax rate under 25% for the year.

Jerry Gahlhoff said the quarter was hurt primarily by slower growth in parts of the residential pest control business, especially brands that rely on consumer-initiated demand through search, digital media, and inbound calls. He emphasized that retention stayed strong, customer health remained solid, and the weakness was not broad-based across the portfolio. His tone was candid and operationally focused: the company is changing organization, accountability, and resource allocation while staying confident in the long-term opportunity.

Will Harkins laid out the quarter’s financials and said total revenue grew 7.9% with organic growth of 5.7%, while adjusted EPS was $0.32 and adjusted EBITDA was $236 million. He highlighted gross margin of 52.8%, down 100 basis points, with pressure from people-related costs, medical expenses, and fuel; fuel was about 1.8% of sales and is expected to remain below 2% for 2026. He also noted free cash flow of $166 million, operating cash flow of $173 million, acquisitions of $117 million in the quarter, dividends of $88 million, leverage of 1x, and an updated full-year outlook calling for at least 6% organic growth and at least 10% incremental margins, with margin improvement weighted to Q4.

Analysts pressed on whether the slowdown was driven by retention, pricing, AI/LLM search changes, weather, pest pressure, or competition. Management repeatedly said retention and pricing were not the issue, it did not see meaningful competitive share loss, and it believes the problem was a confluence of factors including softer consumer demand, weaker pest pressure in certain categories, and a late start to the season; it also said testing different marketing moves did not materially change volume. On margins and guidance, management said Q3 will be the tougher comparison and that the 10% incremental margin guide is intended as a floor, with better flow-through expected in Q4.