ROLLINS INC

Previous wording

•Quarterly operating income was $191.8 million, an increase of 8.3% over the third quarter of 2023. Quarterly operating margin was 20.9%, a decrease of 20 basis points versus the third quarter of 2023. Adjusted operating income* was $196.0 million, an increase of 4.5% over the prior year. Adjusted operating income margin* was 21.4%, a decrease of 90 basis points compared to the prior year.

Current wording

•Quarterly operating income was $142.6 million, an increase of 7.7% over the first quarter of 2024. Quarterly operating margin was 17.3%, a decrease of 40 basis points versus the first quarter of 2024. Adjusted operating income* was $146.9 million, an increase of 6.7% over the prior year. Adjusted operating income margin* was 17.9%, a decrease of 50 basis points compared to the prior year.

Previous wording

•Adjusted EBITDA* was $219.5 million, an increase of 5.5% over the prior year. Adjusted EBITDA margin* was 24.0%, a decrease of 80 basis points versus the third quarter of 2023.

Current wording

•Adjusted EBITDA* was $171.9 million, an increase of 6.9% over the prior year. Adjusted EBITDA margin* was 20.9%, a decrease of 60 basis points versus the first quarter of 2024.

Previous wording

•Quarterly net income was $136.9 million, an increase of 7.1% over the prior year. Adjusted net income* was $139.6 million, an increase of 3.3% over the prior year.

Current wording

•Quarterly net income was $105.2 million, an increase of 11.5% over the prior year. Adjusted net income* was $107.9 million, an increase of 9.7% over the prior year.

Previous wording

•Quarterly EPS was $0.28 per diluted share, a 7.7% increase over the prior year EPS of $0.26. Adjusted EPS* was $0.29 per diluted share, an increase of 3.6% over the prior year.

Current wording

•Quarterly EPS was $0.22 per diluted share, a 15.8% increase over the prior year EPS of $0.19. Adjusted EPS* was $0.22 per diluted share, an increase of 10.0% over the prior year.

Previous wording

•Operating cash flow was $146.9 million for the quarter, an increase of 15.4% compared to the prior year. The Company invested $23.9 million in acquisitions, $7.5 million in capital expenditures, and paid dividends totaling $72.8 million.

Current wording

•Operating cash flow was $146.9 million for the quarter, an increase of 15.3% compared to the prior year. The Company invested $27.2 million in acquisitions, $6.8 million in capital expenditures, and paid dividends totaling $79.9 million.

Previous wording

Demand remains favorable to start the fourth quarter and the pipeline of acquisition activity remains healthy. Although we continue to navigate a highly uncertain macro-environment, we believe we are well positioned to continue to deliver strong results in the last quarter of 2024.

Current wording

Demand remains favorable to start the second quarter and the pipeline of acquisition activity remains healthy. Although we continue to navigate a highly uncertain macroeconomic environment, we believe we are well positioned to continue to deliver strong results in 2025.

Previous wording

We remain focused on driving 7% to 8% organic revenue growth while adding 2% to 3% of inorganic revenue growth for 2024. While we believe this goal is achievable, we acknowledge the potential impact weather as well as volatility in one-time business, and staffing levels, amongst other factors, might have on revenue performance. We continue to focus on improving the efficiency of our business model while investing in programs aimed at growing our business across our service offerings.

Current wording

We remain focused on driving 7% to 8% organic revenue growth while adding 3% to 4% of inorganic revenue growth for 2025. We continue to focus on improving the efficiency of our business model while investing in programs aimed at growing our business across our service offerings.

Previous wording

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

Current wording

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

Previous wording

The Company’s condensed 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 condensed consolidated financial statements. In the opinion of management, all material adjustments necessary for a fair presentation of the Company’s financial results for the quarter have been made. These adjustments are of a normal recurring nature but are complicated by the continued uncertainty surrounding these macro economic trends.

Current wording

The Company’s condensed 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 condensed consolidated financial statements. In the opinion of management, all material adjustments necessary for a fair presentation of the Company’s financial results for the quarter have been made. These adjustments are of a normal recurring nature but are complicated by the continued uncertainty surrounding these 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.

Previous wording

The extent to which changing interest rates, inflation and other economic trends will continue to impact the Company’s business, financial condition and results of operations is uncertain. Therefore, we cannot reasonably estimate the full future impacts of these matters at this time.

Current wording

The extent to which these economic trends will continue to impact the Company’s business, financial condition and results of operations is uncertain. Therefore, we cannot reasonably estimate the full future impacts of these matters at this time.

Previous wording

The following presents a summary of revenues by product and service offering:

Current wording

The following presents a summary of revenues by service offering for the first quarter ended March 31, 2025 and March 31, 2024, respectively:

Previous wording

Revenues for the quarter ended September 30, 2024 were $916.3 million, an increase of $75.8 million, or 9.0%, from 2023 revenues of $840.4 million. The increase in revenues was driven by demand from our customers across all major service offerings, partially offset by weakness late in the quarter associated with hurricane activity. Organic revenue* growth was 7.7% with acquisitions adding 2.1% in the quarter, offset by divestitures of 0.8%. Residential pest control revenue increased 6.4%, commercial pest control revenue increased 9.4% and termite and ancillary services grew 14.5% including both organic and acquisition-related growth in each area. Organic revenue* growth was strong across our service offerings, growing 4.9% in residential, 8.1% in commercial, and 13.7% in termite and ancillary activity. Residential organic revenue* growth was driven by stronger recurring revenue growth but was offset by slower one-time business.

Current wording

Revenues for the quarter ended March 31, 2025 were $822.5 million, an increase of $74.2 million, or 9.9%, from 2024 revenues of $748.3 million. The increase in revenues was driven by demand from our customers across all major service offerings, partially offset by foreign currency headwind of 40 basis points, primarily related to the Canadian Dollar. Organic revenue* growth was 7.4% with acquisitions adding 2.5% in the quarter. Residential pest control revenue increased 8.2%, commercial pest control revenue increased 10.2% and termite and ancillary services grew 13.2% including both organic and acquisition-related growth in each area. Organic revenue* growth was strong across our service offerings, growing 5.7% in residential, 7.4% in commercial, and 11.1% in termite and ancillary activity, despite having one less business day in the quarter ended March 31, 2025 compared to the same quarter in 2024.

Previous wording

Gross profit for the quarter ended September 30, 2024 was $494.4 million, an increase of $42.5 million, or 9.4%, compared to $451.9 million for the quarter ended September 30, 2023. Gross margin improved 20 basis points to 54.0% in 2024 compared to 53.8% in 2023, as pricing more than offset inflationary pressures. We saw good leverage across a number of cost categories with the most significant leverage in fleet costs and materials and supplies, partially offset by investments in people and less favorable insurance and claims.

Current wording

Gross profit for the quarter ended March 31, 2025 was $422.4 million, an increase of $39.6 million, or 10.3%, compared to $382.8 million for the quarter ended March 31, 2024. Gross margin improved 20 basis points to 51.4% in 2025 compared to 51.2% in 2024, as pricing more than offset inflationary pressures. We saw leverage across a number of cost categories, including 10 basis points in each of employee expenses and materials and supplies, with the most significant leverage in insurance and claims of 40 basis points. This was partially offset by 40 basis points of higher fleet expenses associated with our leased vehicles due to higher lease costs.

Previous wording

For the quarter ended September 30, 2024, sales, general and administrative ("SG&A") expenses were $274.9 million and increased $30.0 million, or 12.3%, compared to the quarter ended September 30, 2023.

Current wording

For the quarter ended March 31, 2025, sales, general and administrative ("SG&A") expenses were $250.5 million, an increase of $27.5 million, or 12.3%, compared to the quarter ended March 31, 2024.

Previous wording

As a percentage of revenue, SG&A increased to 30.0% from 29.1% in the prior year. Selling and marketing costs have increased as we continue to invest in growth initiatives, including advertising. Insurance and claims costs have also increased, offset by leverage associated with lower administrative costs and fleet costs.

Current wording

As a percentage of revenue, SG&A increased 70 basis points to 30.5% from 29.8% in the prior year. Selling and marketing costs have increased by 80 basis points as we continue to invest in growth initiatives, including advertising. This was partially offset by leverage associated with lower administrative costs and insurance and claims costs.

Previous wording

For the quarter ended September 30, 2024, depreciation and amortization increased $3.0 million, or 12.1%, compared to the quarter ended September 30, 2023. The increase was due to higher amortization of intangible assets from acquisitions.

Current wording

For the quarter ended March 31, 2025, depreciation and amortization increased $1.9 million, or 7.0%, compared to the quarter ended March 31, 2024. The increase was due to higher amortization of intangible assets from acquisitions.

Previous wording

For the quarter ended September 30, 2024, operating income increased $14.7 million, or 8.3%, compared to the prior year.

Current wording

For the quarter ended March 31, 2025, operating income increased $10.2 million, or 7.7%, compared to the prior year.

Previous wording

As a percentage of revenue, operating income was 20.9%, a decrease of 20 basis points compared to the third quarter of 2023. Operating margin declined mostly due to investments in people, growth initiatives, and less favorable insurance and claims.

Current wording

As a percentage of revenue, operating income was 17.3%, a decrease of 40 basis points compared to the first quarter of 2024. Operating margin declined mostly due to investments in growth initiatives and higher fleet costs, partially offset by leverage in insurance and claims, administrative costs, employee expenses, and materials and supplies.

Previous wording

During the quarter ended September 30, 2024, other income increased $0.1 million primarily due to higher gains on non-operational asset sales.

Current wording

During the quarter ended March 31, 2025, other income increased $0.8 million primarily due to higher gains on non-operational asset sales.

Previous wording

Management uses adjusted operating income, adjusted operating income margin, adjusted net income, adjusted EPS, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, incremental EBITDA margin, adjusted incremental EBITDA margin, and adjusted SG&A as measures of operating performance because these measures allow the Company to compare performance consistently over various periods. Management also uses organic revenues, and organic revenues by type to compare revenues over various periods excluding the impact of acquisitions and divestitures. Management uses free cash flow to demonstrate the Company’s ability to maintain its asset base and generate future cash flows from operations. Management uses free cash flow conversion to demonstrate how much net income is converted into cash. Management uses net debt as an assessment of overall liquidity, financial flexibility, and leverage. Net leverage ratio is useful to investors because it is an indicator of our ability to meet our future financial obligations. Management believes all of these non-GAAP financial measures are useful to provide investors with information about current trends in, and period-over-period comparisons of, the Company's results of operations. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

Current wording

These measures should not be considered in isolation or as a substitute for revenues, net income, earnings per share or other performance measures prepared in accordance with GAAP. Management believes all of these non-GAAP financial measures are useful to provide investors with information about current trends in, and period-over-period comparisons of, the Company's results of operations. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

Previous wording

The Company has used the non-GAAP financial measures of organic revenues, organic revenues by type, adjusted operating income, adjusted operating margin, adjusted net income, adjusted earnings per share (“EPS”), earnings before interest, taxes, depreciation and amortization (“EBITDA”), EBITDA margin, Adjusted EBITDA, adjusted EBITDA margin, incremental EBITDA margin, adjusted incremental EBITDA margin, free cash flow, free cash flow conversion, net debt, net leverage ratio, and adjusted sales, general and administrative expenses ("SG&A") in this Form 10-Q. Organic revenue is calculated as revenue less the revenue from acquisitions completed within the prior 12 months and excluding the revenue from divested businesses. Acquisition revenue is based on the trailing 12-month revenue of our acquired entities. Adjusted operating income and adjusted operating income margin are calculated by adding back to the GAAP measures those expenses resulting from the amortization of certain intangible assets, adjustments to the fair value of contingent consideration resulting from the acquisition of Fox, and restructuring costs related to restructuring and workforce reduction plans. Adjusted net income and adjusted EPS are calculated by adding back to the GAAP measure amortization of certain intangible assets, adjustments to the fair value of contingent consideration resulting from the acquisition of Fox, and restructuring costs related to restructuring and workforce reduction plans, and excluding gains and losses on the sale of non-operational assets and by further subtracting the tax impact of those expenses, gains, or losses. Adjusted EBITDA and adjusted EBITDA margin are calculated by adding back to the GAAP measures those expenses resulting from the adjustments to the fair value of contingent consideration resulting from the acquisition of Fox, restructuring costs related to restructuring and workforce reduction plans, and excluding gains and losses on the sale of non-operational assets. Incremental EBITDA margin is calculated as the change in EBITDA divided by the change in revenue. Adjusted incremental EBITDA margin is calculated as the change in adjusted EBITDA divided by the change in revenue. Free cash flow is calculated by subtracting capital expenditures from cash provided by operating activities. Free cash flow conversion is calculated as free cash flow divided by net income. Net debt is calculated as total long-term debt less cash and cash equivalents. Net leverage ratio is calculated by dividing net debt by trailing twelve-month EBITDA. Adjusted SG&A is calculated by removing the adjustments to the fair value of contingent consideration resulting from the acquisition of Fox. These measures should not be considered in isolation or as a substitute for revenues, net income, earnings per share or other performance measures prepared in accordance with GAAP.

Current wording

Organic revenues are calculated as revenues less the revenues from acquisitions completed within the prior 12 months and excluding the revenues from divested businesses. Acquisition revenues are based on the trailing 12-month revenue of our acquired entities. Management uses organic revenues, and organic revenues by type to compare revenues over various periods excluding the impact of acquisitions and divestitures.

Previous wording

(1) Consists of expenses resulting from the amortization of certain intangible assets and adjustments to the fair value of contingent consideration resulting from the acquisition of Fox. While we exclude such expenses in this non-GAAP measure, the revenue from the acquired company is reflected in this non-GAAP measure and the acquired assets contribute to revenue generation.

Current wording

(1) Consists of expenses resulting from the amortization of certain intangible assets and adjustments to the fair value of contingent consideration resulting from the acquisition of Fox Pest Control ("Fox"). While we exclude such expenses in this non-GAAP measure, the revenue from the acquired company is reflected in this non-GAAP measure and the acquired assets contribute to revenue generation.

Previous wording

(8) As of September 30, 2024, the Company had outstanding borrowings of $447.0 million under the Credit Facility. Borrowings under the Credit Facility are presented under the long-term debt caption of our condensed consolidated balance sheet, net of $1.8 million in unamortized debt issuance costs as of September 30, 2024.

Current wording

(5) As of March 31, 2025, the Company had outstanding borrowings of $500.0 million from the issuance of our 2035 Senior Notes and no outstanding borrowings under the Revolving Credit Facility. The Company’s borrowings are presented under the long-term debt caption of our condensed consolidated balance sheet, net of a $7.6 million unamortized discount and $6.9 million in unamortized debt issuance costs as of March 31, 2025.

Previous wording

The Company’s $95.3 million of total cash at September 30, 2024 is held at various banking institutions. As of September 30, 2024, approximately $53.5 million is held in cash accounts at international bank institutions and the remaining $41.8 million is primarily held in Federal Deposit Insurance Corporation (“FDIC”) insured non-interest-bearing accounts at various domestic banks which at times exceed federally insured amounts.

Current wording

The Company’s $201.2 million of total cash at March 31, 2025 is held at various banking institutions. As of March 31, 2025, approximately $50.2 million is held in cash by foreign subsidiaries and the remaining $151.0 million is held at domestic banks.

Previous wording

The Company believes its current cash and cash equivalents balances, future cash flows expected to be generated from operating activities, and available borrowings under its Credit Facility will be sufficient to finance its current operations and obligations, and fund expansion of the business for the foreseeable future.

Current wording

We believe our current cash and cash equivalents balances, future cash flows expected to be generated from operating activities, access to debt financing based on our creditworthiness, our $1 billion commercial paper program, which is backstopped by our Revolving Credit Facility, and available borrowings under our Revolving Credit Facility, will be sufficient to finance our current operations and obligations, and fund expansion of the business for the foreseeable future.

Previous wording

On February 24, 2023, the Company entered into a revolving credit agreement with, among others, JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as administrative agent (in such capacity, the “Administrative Agent”), which refinanced its previous credit facility.

Current wording

In February 2023, the Company entered into a credit agreement with, among others, JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as administrative agent (in such capacity, the “Administrative Agent”).

Previous wording

The Credit Agreement provides for a $1.0 billion revolving Credit Facility, which may be denominated in U.S. Dollars and other currencies, including Euros, Australian Dollars, Canadian Dollars, New Zealand Dollars, Pounds Sterling and Japanese Yen, subject to a $400 million foreign currency sublimit. Rollins has the ability to expand its borrowing availability under the Credit Agreement in the form of increased revolving commitments or one or more tranches of term loans by up to an additional $750 million, subject to the agreement of the participating lenders and certain other customary conditions. The maturity date of the loans under the Credit Agreement is February 24, 2028. Refer to Note 8. Debt, of the Notes to Condensed Consolidated Financial Statements for further details.

Current wording

The Credit Agreement provides for a $1.0 billion revolving credit facility ("Revolving Credit Facility"), which may be denominated in U.S. Dollars and other currencies, subject to a $400 million foreign currency sublimit. Rollins has the ability to expand its borrowing availability under the Credit Agreement in the form of increased revolving commitments or one or more tranches of term loans by up to an additional $750 million, subject to the agreement of the participating lenders and certain other customary conditions. The maturity date of the loans under the Credit Agreement is February 24, 2028.

Previous wording

The Company maintained $72.0 million in letters of credit as of September 30, 2024 and $71.7 million as of December 31, 2023. These letters of credit are required by the Company’s insurance companies, due to the Company’s high deductible insurance program, to secure various workers’ compensation and casualty insurance contracts coverage. The Company believes that it has adequate liquid assets, funding sources and insurance accruals to accommodate potential future insurance claims.

Current wording

The Company maintained $82.4 million in letters of credit as of March 31, 2025 and $72.0 million as of December 31, 2024. These letters of credit are required by the Company’s insurance companies, due to the Company’s high deductible insurance program, to secure various workers’ compensation and casualty insurance contracts coverage. The Company believes that it has adequate liquid assets, funding sources and insurance accruals to accommodate potential future insurance claims.

Previous wording

The following table sets forth a summary of our cash flows from operating, investing and financing activities for the nine month periods presented:

Current wording

The following table sets forth a summary of our cash flows from operating, investing and financing activities for the three month periods presented:

Previous wording

Cash from operating activities is the principal source of cash generation for our businesses. The most significant source of cash in our cash flow from operations is customer-related activities, the largest of which is collecting cash resulting from services sold. The most significant operating use of cash is to pay our suppliers, employees, and tax authorities. The Company’s operating activities generated net cash of $419.5 million and $375.5 million for the nine months ended September 30, 2024 and 2023, respectively. The $44.0 million increase was driven primarily by strong operating results and the timing of cash receipts and cash payments to and from customers, vendors, employees, and tax and regulatory authorities.

Current wording

Cash from operating activities is the principal source of cash generation for our businesses. The most significant source of cash in our cash flow from operations is customer-related activities, the largest of which is collecting cash resulting from services sold. The most significant operating use of cash is to pay our suppliers, employees, and tax authorities. The Company’s operating activities generated net cash of $146.9 million and $127.4 million for the three months ended March 31, 2025 and 2024, respectively. The $19.5 million increase was driven primarily by strong operating results and the timing of cash receipts and cash payments to and from customers, vendors, employees, and tax and regulatory authorities.

Previous wording

The Company’s investing activities used $123.6 million and $362.3 million for the nine months ended September 30, 2024 and 2023, respectively. Cash paid for acquisitions totaled $105.5 million for the nine months ended September 30, 2024, as compared to $349.3 million for the nine months ended September 30, 2023, primarily related to the Fox acquisition. The Company invested $23.4 million in capital expenditures during the year, offset by $3.0 million in cash proceeds from the sale of assets, compared with $21.3 million of capital expenditures and $10.2 million in cash proceeds from asset sales in 2023. The Company’s investing activities were funded through existing cash balances, operating cash flows, and borrowings under the Credit Facility.

Current wording

The Company’s investing activities used $32.6 million and $52.5 million for the three months ended March 31, 2025 and 2024, respectively. Cash paid for acquisitions totaled $27.2 million for the three months ended March 31, 2025, compared to $47.1 million for the three months ended March 31, 2024. The Company invested $6.8 million in capital expenditures during the year, offset by $1.4 million in cash proceeds from the sale of assets, compared with $7.2 million of capital expenditures and $0.7 million in cash proceeds from asset sales in 2024. The Company’s investing activities were funded through existing cash balances, operating cash flows, and borrowings.

Previous wording

Cash of $305.5 million was used in financing activities during the nine months ended September 30, 2024, compared with $33.7 million of cash provided by financing activities during the nine months ended September 30, 2023. A total of $218.0 million was paid in cash dividends ($0.45 per share) during the nine months ended September 30, 2024, compared to $191.8 million in cash dividends paid ($0.39 per share) during the nine months ended September 30, 2023. The Company made net repayments under its credit agreements of $46.0 million during the nine months ended September 30, 2024 compared to net borrowings of $544.0 million during 2023. During the nine months ended September 30, 2024, the Company paid $33.4 million of contingent consideration, primarily related to the Fox acquisition, compared to $9.3 million during the nine months ended September 30, 2023. The Company withheld $11.5 million and $10.7 million of common stock for the nine months ended September 30, 2024 and 2023, respectively, in connection with tax withholding obligations of its employees upon vesting of such employees’ equity awards. In addition, during the nine months ended September 30, 2023, the Company completed the repurchase of 8,724,100 of the shares of common stock from LOR, Inc ("LOR") for $300.0 million in conjunction with the Offering, as defined in our 2023 Annual Report on Form 10-K.

Current wording

Cash of $4.6 million was used in financing activities during the three months ended March 31, 2025, compared with $64.3 million during the three months ended March 31, 2024. A total of $79.9 million was paid in cash dividends ($0.165 per share) during the three months ended March 31, 2025, compared to $72.6 million in cash dividends paid ($0.150 per share) during the three months ended March 31, 2024.

Previous wording

In addition, the Form S-3 on file with the SEC registered $1.5 billion of the Company’s common stock, preferred stock, debt securities, depositary shares, warrants, rights, purchase contracts and units for future issuance. The Company may offer and sell some or all of such securities from to time or to or through underwriters, brokers or dealers, directly to one or more other purchasers, through a block trade, through agents on a best-efforts basis, through a combination of any of the above methods of sale or through other types of transactions described in the Form S-3. The Company has not sold any securities as of the date of this Form 10-Q.

Current wording

The Form S-3 on file with the SEC registered $1.5 billion of the Company’s common stock, preferred stock, debt securities, depositary shares, warrants, rights, purchase contracts and units for future issuance. The Company may offer and sell some or all of such securities from time to time or through underwriters, brokers or dealers, directly to one or more other purchasers, through a block trade, through agents on a best-efforts basis, through a combination of any of the above methods of sale or through other types of transactions described in the Form S-3. The Company has not sold any securities as of the date of this Form 10-Q.

Previous wording

In the normal course of business, the Company and its subsidiaries are involved in, and will continue to be involved in, various claims, arbitrations, contractual disputes, investigations, litigation, and tax and other regulatory matters relating to, and arising out of, our businesses and our operations. These matters may involve, but are not limited to, allegations that our services or vehicles caused damage or injury, claims that our services did not achieve the desired results, claims related to acquisitions and allegations by federal, state or local authorities, including taxing authorities, of violations of regulations or statutes. In addition, we are parties to employment-related cases and claims from time to time, which may include claims on a representative or class action basis alleging wage and hour law violations. We are also involved from time to time in certain environmental and tax matters primarily arising in the normal course of business or claims filed under California's Private Attorneys General Act. We evaluate pending and threatened claims and establish loss contingency reserves based upon outcomes we currently believe to be probable and reasonably estimable.

Current wording

In the normal course of business, the Company and its subsidiaries are involved in, and will continue to be involved in, various claims, arbitrations, contractual disputes, investigations, litigation, and tax and other regulatory matters relating to, and arising out of, our businesses and our operations. These matters may involve, but are not limited to, allegations that our services or vehicles caused damage or injury, claims that our services did not achieve the desired results, claims related to acquisitions and allegations by federal, state or local authorities, including taxing authorities, of violations of regulations or statutes. In addition, we are parties to employment-related investigations, cases, and claims from time to time, which may include claims on a representative or class action basis alleging wage and hour law violations, claims filed under California's Private Attorneys General Act, and claims related to our enforcement of post-employment restrictive covenants. We are also involved from time to time in certain environmental matters primarily arising in the normal course of business.We evaluate pending and threatened claims and establish loss contingency reserves based upon outcomes we currently believe to be probable and reasonably estimable in accordance with ASC 450.

Previous wording

The Company retains, up to specified limits, certain risks related to general liability, workers’ compensation and auto liability. The estimated costs of existing and future claims under the retained loss program are accrued based upon historical trends as incidents occur, whether reported or unreported (although actual settlement of the claims may not be made until future periods) and may be subsequently revised based on developments relating to such claims. The Company contracts with an independent third party to provide the Company an estimated liability based upon historical claims information. The actuarial study is a major consideration in establishing the reserve, along with management’s knowledge of changes in business practice and existing claims compared to current balances. Management’s judgment is inherently subjective as a number of factors are outside management’s knowledge and control. Additionally, historical information is not always an accurate indication of future events. The accruals and reserves we hold are based on estimates that involve a degree of judgment and are inherently variable and could be overestimated or insufficient. If actual claims exceed our estimates, our operating results could be materially affected, and our ability to take timely corrective actions to limit future costs may be limited.

Current wording

The Company retains, up to specified limits, certain risks related to general liability, workers’ compensation and auto liability. The estimated costs of existing and future claims under the retained loss program are accrued based upon historical trends as incidents occur, whether reported or unreported (although actual settlement of the claims may not be made until future periods) and may be subsequently revised based on developments relating to such claims. The Company contracts with an independent third-party actuary to provide the Company an estimated liability based upon historical claims information. The actuarial study is a major consideration in establishing the reserve, along with management’s knowledge of changes in business practice and existing claims compared to current balances. Management’s judgment is inherently subjective as a number of factors are outside management’s knowledge and control. Additionally, historical information is not always an accurate indication of future events. The accruals and reserves we hold are based on estimates that involve a degree of judgment and are inherently variable and could be overestimated or insufficient. If actual claims exceed our estimates, our operating results could be materially affected, and our ability to take timely corrective actions to limit future costs may be limited.

Previous wording

•expectations with respect to our financial and business performance;

Current wording

•expectations with respect to our financial and business performance and strategy;

Previous wording

•expansion efforts and growth opportunities, including but not limited to recent and future acquisitions in the United States and in foreign markets;

Current wording

•expansion efforts and growth opportunities, including, but not limited, to organic 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;

Previous wording

•the impact of high inflation, increasing interest rates, business interruptions due to natural disasters and changes in the weather patterns, employee shortages, and supply chain issues;

Current wording

•the impact of inflation, changing interest rates, business interruptions due to natural disasters and changes in the weather patterns, employee shortages, and supply chain issues;

Previous wording

•sufficiency of current cash and cash equivalents balances, future cash flows, and available borrowings under our Credit Facility to finance our current and future operations;

Current wording

•sufficiency of current cash and cash equivalents balances, future cash flows, access to debt financing based on our creditworthiness, our $1 billion commercial paper program, and available borrowings under our Revolving Credit Facility to finance our current and future operations;

Previous wording

•our approach to capital allocation inclusive of our intent to pay cash dividends to common shareholders and to invest in acquisitions;

Current wording

•our approach to capital allocation inclusive of our intent to pay cash dividends to common shareholders;