Rollins misses Q3 estimates on both earnings and revenue, flags acquisition challenges

Revenue of $1.09 billion compares with $1.03 billion a year earlier, according to MarketBeat

Rollins reported third-quarter earnings of $0.34 per share, a cent below expectations, on revenue of $1.09 billion, short of the $1.12 billion analysts had forecast.

President and CEO Jerry Gahlhoff, Jr. said Rollins is acting with urgency to address customer acquisition challenges after the quarter fell short, while saying he remains confident in long-term growth given the company's diversified, recurring-revenue business.

The result compares with $0.35 per share on revenue of $1.03 billion in the same quarter last year, according to MarketBeat. It is also the second straight quarterly miss: Rollins fell short of a $0.3357 consensus estimate with $0.32 per share in the second quarter, reported in July, MarketBeat said. Zacks has noted Rollins has missed estimates in two of the past four quarters, with an average miss of 1%, and had flagged ahead of this report that higher buyout and integration costs were expected to offset revenue growth.

The miss on both lines, paired with Gahlhoff's admission of customer acquisition problems, marks a shift from the diversified, recurring-revenue narrative that had underpinned confidence in steady growth at Rollins. Rollins recently raised its quarterly dividend to $0.20 per share even as that debate continues, Yahoo Finance reported. Earlier this month, unrelated commentary on China's soybean purchases had no bearing on the operational issues now surfacing at the company.