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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________

FORM 10-Q

________________________________________________

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-36507

________________________________________________

Terminix Global Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

20-8738320

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

150 Peabody Place, Memphis, Tennessee 38103

(Address of principal executive offices) (Zip Code)

901-597-1400

(Registrant’s telephone number, including area code)

________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common, par value $0.01

TMX

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer x

Accelerated Filer o

Non-Accelerated Filer o

Smaller Reporting Company o

Emerging Growth Company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

The number of shares of the registrant’s common stock outstanding as of May 3, 2022: 121,503,352 shares of common stock, par value $0.01 per share.

 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

(In millions, except per share data)

 

Three Months Ended

March 31,

2022

2021

Revenue

$

496

$

471

Cost of services rendered and products sold

296

270

Selling and administrative expenses

138

137

Amortization expense

10

10

Acquisition-related costs

1

Restructuring and other charges

19

6

Interest expense

11

12

Interest and net investment income

1

(1)

Income before Income Taxes

21

37

Provision for income taxes

3

11

Equity in earnings of joint ventures

1

Net Income

$

19

$

27

Other Comprehensive Income, Net of Income Taxes:

Net unrealized gains on derivative instruments

23

14

Foreign currency translation gain

5

8

Other Comprehensive Income, Net of Income Taxes

28

22

Total Comprehensive Income

$

47

$

49

Weighted-average common shares outstanding - Basic

121.4

131.4

Weighted-average common shares outstanding - Diluted

121.6

131.9

Basic Earnings Per Share:

Net Income

0.15

0.20

Diluted Earnings Per Share:

Net Income

0.15

0.20

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Financial Position

(In millions, except share data)

 

(Unaudited)

As of

As of

March 31,

December 31,

2022

2021

Assets:

Current Assets:

Cash and cash equivalents

$

170

$

116

Receivables, less allowances of $30 and $32, respectively

195

206

Inventories

44

41

Prepaid expenses and other assets

164

151

Total Current Assets

573

514

Other Assets:

Property and equipment, net

192

196

Operating lease right-of-use assets

74

79

Goodwill

2,210

2,211

Intangible assets, primarily trade names, service marks and trademarks, net

1,085

1,097

Restricted cash

89

89

Notes receivable

38

36

Long-term marketable securities

14

15

Deferred customer acquisition costs

94

98

Other assets

126

77

Total Assets

$

4,495

$

4,410

Liabilities and Stockholders' Equity:

Current Liabilities:

Accounts payable

$

105

$

85

Accrued liabilities:

Payroll and related expenses

69

81

Self-insured claims and related expenses

67

72

Accrued interest payable

3

7

Other

101

95

Deferred revenue

108

103

Current portion of lease liability

18

18

Current portion of long-term debt

77

50

Total Current Liabilities

547

511

Long-Term Debt

848

849

Other Long-Term Liabilities:

Deferred taxes

398

387

Other long-term obligations, primarily self-insured claims

182

197

Long-term lease liability

92

92

Total Other Long-Term Liabilities

672

677

Stockholders' Equity:

Common stock $0.01 par value (authorized 2,000,000,000 shares with 149,330,124 shares issued and 121,493,685 outstanding at March 31, 2022 and 149,095,168 shares issued and 121,258,729 outstanding shares outstanding at December 31, 2021)

2

2

Additional paid-in capital

2,398

2,391

Retained Earnings

986

967

Accumulated other comprehensive income (loss)

6

(22)

Less common stock held in treasury, at cost (27,836,439 shares at March 31, 2022 and 27,836,439 shares at December 31, 2021)

(964)

(964)

Total Stockholders' Equity

2,428

2,375

Total Liabilities and Stockholders' Equity

$

4,495

$

4,410

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements


Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(In millions)

Retained

Accumulated

Additional

Earnings

Other

Common

Paid-in

(Accumulated

Comprehensive

Treasury

Total

Shares

Stock

Capital

Deficit)

(Loss) Income

Shares

Amount

Equity

Balance December 31, 2020

148

$

2

$

2,359

$

841

$

(39)

(16)

$

(423)

$

2,741

Net income

27

27

Other comprehensive income, net of tax

22

22

Total comprehensive income

27

22

49

Issuance of common stock

1

1

Exercise of stock options

4

4

Stock-based employee compensation

6

6

Repurchase of common stock

(4)

(169)

(169)

Balance March 31, 2021

149

$

2

$

2,370

$

868

$

(17)

(20)

$

(592)

$

2,631

Balance December 31, 2021

149

$

2

$

2,391

$

967

$

(22)

(28)

$

(964)

$

2,375

Net income

19

19

Other comprehensive income, net of tax

28

28

Total comprehensive income

19

28

47

Exercise of stock options

1

1

Stock-based employee compensation

6

6

Balance March 31, 2022

149

$

2

$

2,398

$

986

$

6

(28)

$

(964)

$

2,428

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

Three Months Ended

March 31,

2022

2021

Cash and Cash Equivalents and Restricted Cash at Beginning of Period

$

205

$

704

Cash Flows from Operating Activities

Net Income

19

27

Equity in earnings of joint venture

(1)

Depreciation expense

17

18

Amortization expense

10

10

Amortization of debt issuance costs

1

1

Amortization of lease right-of-use assets

4

4

Payments on fumigation related matters

(3)

Deferred income tax provision

2

5

Stock-based compensation expense

6

6

Restructuring and other charges

19

6

Payments for restructuring and other charges

(10)

(2)

Acquisition-related costs