ROL 10-K & 10-Q changes, risk factors and insider trading

•expansion efforts and growth opportunities, including, but not limitedlimited, to,to anticipated organic and acquisition 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;

•our policies and procedures that are designed to identify, assess, and manage material risks arising from cybersecurity incidents and AI technologies;

•new information technology systems and technology will lead to new or improving business capabilities and streamline business processes, financial reporting, and acquisition integration;

•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 investigationinquiry by certainthe California governmental authorities regarding compliance with environmental regulationsFTC and claims filed under California's Private Attorneys General Act, will have a material adverse effect on our financial position, results of operations or liquidity;

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 describedset forth in Item 1A “Risk Factors” of Part I, Item 7 “Management’s Discussion and Analysis of Financial condition and Results of Operations” of Part II, and elsewhere in this Annual Report on Form 10-K for our fiscal year ended December 31, 20242025 and may also be described from time to time in our future reports filed with the SEC.

We are focused on continuous improvement throughout the business. During 2024,2025, we madecontinued significantto make strides in all four pillars of our strategic objectives: 1) people first 2) customer loyalty 3) growth mindset and 4) operational efficiency.

We continue to focus on the development of our people. During 2024, weWe continued to make strategic improvements to both our support functions, as well as the customer-facing side of our business, by hiring and onboarding the right people into the right roles. Additionally,We weintroduced upgradedThe Co-Lab, where our trainingpeople andmanagers onboardingdevelop programsservant leadership skills to help improvethem develop themselves, their people and ultimately our overall teammate retention.business. We remain committed to developing exceptional talent and investing in our teams.

20242025 marked aanother record year in terms of revenues, totaling $3.4approximately $3.8 billion, an increase of 10.3%11.0% over 2023,2024, with acquisition revenues* growingcontributing by4.1% 3.1%growth comparedin tothe 2023.year. We completed 4426 acquisitionstransactions in 2024,2025, including 3222 acquisitions and 124 franchise buybacks, driving inorganic growth at our brands both domestically and internationally.

We saw healthy margins in 2024,2025, with gross margin improving 5010 basis points to 52.7%52.8% in 20242025 compared to 52.2%52.7% in 2023.2024. Operating margin was 19.4%19.3% of revenue, a decrease of 10 basis points as compared to 2024 and adjusted operating margin* was 20.0%, an increase of 40 basis points over 2023 and adjusted operating income margin* was 19.9%, an increase of 2010 basis points over the prior year. Our 2025 operating margin reflects weaker volumes in the fourth quarter, but our ongoing modernization efforts position us to deliver an improving margin profile as we look to 2026.

The continued disruption in economic markets due to inflation, changing interest rates, tariffs, trade disputes, 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.

The Company’s 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 consolidated financial statements. In the opinion of management, all material adjustments necessary for a fair presentation of the Company’s financial results for the year have been made. These adjustments are of a normal recurring nature but are complicated by the continued uncertainty surrounding these macro 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 following table presents financial information, including our significant expense categories, for the twelve months ended December 31, 20242025 and 2023:2024

Revenues for the year ended December 31, 20242025 were $3.4$3.8 billion, an increase of $315.4$372.3 million, or 10.3%,11.0%, from 20232024 revenues of $3.1$3.4 billion. The increase in revenues was largely driven by demand from our customers that remained strong throughout the year across all major service offerings. Comparing 20242025 to 2023,2024, organic revenue* growth was 7.9%6.9% with acquisitions adding 3.1%4.1% during the year, offset by divestitures of 0.7%.year. Residential pest control revenue increased approximately 9%,10%, commercial pest control revenue increased approximately 10%11% and termite and ancillary services grew approximately 14% including both organic and acquisition-related growth in each area. Organic revenue* growth was strong across our service offerings, growing overapproximately 5% in residential, overapproximately 8% in commercial, and overapproximately 12%10% in termite and ancillary activity. The Company’s foreign operations accounted for approximately 7% of total revenues for the years ended December 31, 20242025 and 2023.2024.

Gross profit for the twelve months ended December 31, 20242025 was $1.8$2.0 billion, an increase of $182.1$198.5 million, or 11.4%,11.1%, compared to $1.6$1.8 billion for the year ended December 31, 2023. Gross margin improved 50 basis points to 52.7% in 2024 compared to 52.2% in 2023, as pricing more than offset inflationary pressures. We saw 20 basis points of leverage in fleet and 10 basis points of leverage in materials and supplies, while employee expenses and insurance and claims were flat as a percentage of revenue.2024.

For the twelve months ended December 31, 2024,2025, sales, general and administrative ("SG&A") expenses increased $99.8$118.2 million, or 10.9%,11.6%, compared to the twelve months ended December 31, 2023. The increase is driven by expenses associated with growth initiatives aimed at capitalizing on the health of our underlying markets.2024.

For the twelve months ended December 31, 2024,2025, depreciation and amortization increased $13.5$11.5 million, or 13.5%,10.2%, compared to the twelve months ended December 31, 2023.2024. The increase was primarily due to higher amortization of intangible assets from acquisitions, most notably from athe full yearacquisition of acquisition costs of FPC Holdings, LLC ("Fox Pest Control", or "Fox").Saela.

Below is a summary of the key operating results for the three months ended MarchJune 31,30, 2026:

•FirstSecond quarter revenues were $906.4$1.1 million,billion, an increase of 10.2%7.9% over the firstsecond quarter of 2025 with organic revenues* increasing 6.6%.5.7%. This represents our 98th99th consecutive quarter of revenue growth.

•Quarterly operating income was $145.5$201.4 million, an increase of 2.0%1.5% over the firstsecond quarter of 2025. Quarterly operating margin was 16.1%,18.7%, a decrease of 120110 basis points versus the firstsecond quarter of 2025. Adjusted operating income* was $152.8$209.9 million, an increase of 4.0%2.0% over the prior year. Adjusted operating margin* was 16.9%,19.5%, a decrease of 100110 basis points compared to the prior year.

•Quarterly EPS was $0.22$0.30 per diluted shareshare, ina 3.4% increase over the firstprior quarteryear EPS of 2026 and 2025.$0.29. Adjusted EPS* was $0.24$0.32 per diluted share, an increase of 9.1%6.7% over the prior year.

•Operating cash flow was $118.4$172.5 million for the quarter, a decrease of 19.4%1.5% compared to the prior year. Free cash flow* was $111$166 million for the quarter, a decrease of 20.6%1.2% compared to the prior year. Cash flow was negatively impacted by $39.5 million due to the timing of tax payments associated with our tax credit planning strategy, as well as $8.8 million due to the transition to semi-annual interest payments on our 2035 Senior Notes.strategy. The Company invested $18.5$116.8 million in acquisitions, $7.1$6.4 million in capital expenditures, and paid dividends totaling $87.8$88.1 million.

Quarter ended MarchJune 31,30, 2026 compared to quarter ended MarchJune 31,30, 2025

The following table presents financial information, including our significant expense categories, for the three months ended MarchJune 31,30, 2026 and 2025:

The following presents a summary of revenues by service offering for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively:

Revenues for the quarter ended MarchJune 31,30, 2026 were $906.4$1.1 million,billion, an increase of $83.9$79.0 million, or 10.2%,7.9%, from 2025 revenues of $822.5$999.5 million. The increase in revenues was driven by demand from our customers across all major service offerings. Organic revenue* growth was 6.6%5.7% with acquisitions adding 3.6%2.2% in the quarter. Residential pest control revenue increased 9.3%,6.6%, commercial pest control revenue increased 9.6%8.6% and termite and ancillary services grew 13.5%10.5% including both organic and acquisition-related growth in each area. Organic revenue* growth was 4.2%3.6% in residential, 7.7%7.2% in commercial, and 9.8%8.9% in termite and ancillary activity. The Company’s foreign operations accounted for approximately 7% of total revenues for the quarters ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025.

*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 to the most closelydirectly correlatedcomparable GAAP measure.

Gross profit for the quarter ended MarchJune 31,30, 2026 was $460.9$569.9 million, an increase of $38.5$32.3 million, or 9.1%,6.0%, compared to $422.4$537.7 million for the quarter ended MarchJune 31,30, 2025.

Gross margin decreased 60100 basis points to 50.8%52.8% in 2026 compared to 51.4%53.8% in 2025. The decrease is primarily due to 3070 basis points of higher insuranceemployee expenses, including higher employee medical costs and claimsservice costssalaries, due20 tobasis apoints lessof favorablehigher claimsmaterials experience,and supplies, and 20 basis points of higher fleet expenses primarily associated with lowerhigher vehiclefuel gains,costs. whichThis wewas expectpartially tooffset moderateby in the second quarter, and 2010 basis points of higherleverage employeein expenses. Fuel costs represent approximately 1.5% of revenuesinsurance and weclaims expect these costs to remain below 2% for the year.costs.

For the quarter ended MarchJune 31,30, 2026, sales, general and administrative ("SG&A") expenses were $282.9$335.0 million, an increase of $32.4$27.4 million, or 12.9%,8.9%, compared to the quarter ended MarchJune 31,30, 2025.

As a percentage of revenue, SG&A increased 7030 basis points to 31.2%31.1% from 30.5%30.8% in the prior year, primarily due to 5010 basis points of higher selling and marketing costs and 2010 basis points of higher insurancefleet andexpenses claimsassociated with higher fuel costs. The remaining increase was driven by other SG&A costs.

For the quarter ended MarchJune 31,30, 2026, depreciation and amortization increased $3.3$1.9 million, or 11.3%,5.9%, compared to the quarter ended MarchJune 31,30, 2025. The increase was due to higher amortization of intangible assets from acquisitions, most notably from the acquisition of Saela.Romex.

For the quarter ended MarchJune 31,30, 2026, operating income increased $2.8$3.0 million, or 2.0%,1.5%, compared to the prior year.

As a percentage of revenue, operating income was 16.1%,18.7%, a decrease of 120110 basis points compared to the firstsecond quarter of 2025. Operating margin reduceddecreased mostly due to higher insuranceemployee expenses, higher materials and claims costs, higher selling and marketing costs,supplies, higher fleet costs,expenses, and higherother employeeSG&A expenses.

During the quarter ended MarchJune 31,30, 2026, interest expense, net increased $3.1$2.0 million compared to the prior year primarily due to a higher average debt balance associated primarily with the issuance of our 2035 Senior Notes, as well ashigher borrowings under our commercial paper program. We expect interest expense to be approximately $35 million in 2026 associated with borrowings under our 2035 Senior Notes and commercial paper program.

During the quarter ended MarchJune 31,30, 2026, other (income) expense, net decreased $0.2$2.5 million primarily due to lowerhigher gainslosses on non-operational asset sales.sales and disposals.

The Company’s effective tax rate was 21.3%24.2% in the firstsecond quarter of 2026 and 23.5%26.0% in the firstsecond quarter of 2025. The reduced rate is primarily due to increased benefits from stock-based compensation and the purchase of transferable federal income tax credits during the three months ended MarchJune 31,30, 2026. We expect our effective tax rate to be under 25% in 2026.

Adjusted operating income and adjusted operating margin are calculated by adding back to operating income those expenses associated with the amortization of intangible assets and adjustments to the fair value of contingent consideration resulting from the acquisitions of Fox Pest Control, Saela Pest Control and SaelaRomex Pest Control. 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 are calculated by adding back to the GAAP measures amortization of intangible assets and adjustments to the fair value of contingent consideration resulting from the acquisitions of Fox Pest Control, Saela Pest Control and SaelaRomex Pest Control, 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 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 associated with the adjustments to the fair value of contingent consideration resulting from the acquisitions of Fox Pest Control, Saela Pest Control and SaelaRomex Pest Control, 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 of operating performance because this measure allows the Company to compare performance consistently over various periods.

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