TERMINIX GLOBAL HOLDINGS INC [TMX] Filings

10-Q 1 tmx-20210930x10q.htm 10-Q tmx-20210930x10q

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 September 30, 2021


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 October 28, 2021: 121,148,869 shares of common stock, par value $0.01 per share.

Table of Contents

TABLE OF CONTENTS


	Page ‎No.
Part I. Financial Information

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Statements of Operations and Comprehensive Income	3

Condensed Consolidated Statements of Financial Position	4

Condensed Consolidated Statements of Stockholders’ Equity	5

Condensed Consolidated Statements of Cash Flows	6

Notes to Condensed Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3. Quantitative and Qualitative Disclosures About Market Risk	36

Item 4. Controls and Procedures	36

Part II. Other Information	37

Item 1. Legal Proceedings	37

Item 1A. Risk Factors	37

Item 2. Unregistered Sales of Registered Securities and Use of Proceeds	37

Item 6. Exhibits	38

Signature	39

Table of Contents

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				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenue	$	530	$	512	$	1,562	$	1,502
Cost of services rendered and products sold		309		299		897		876
Selling and administrative expenses		142		140		422		423
Amortization expense		10		9		29		26
Acquisition-related costs		1		(1)		—		—
Mobile Bay Formosan termite settlement		—		49		4		49
Fumigation related matters		—		—		1		—
Restructuring and other charges		2		2		10		14
Goodwill impairment		3		—		3		—
Interest expense		11		22		34		67
Interest and net investment income		—		(1)		(2)		(2)
Loss on extinguishment of debt		—		1		—		1
Income (Loss) from Continuing Operations before Income Taxes		52		(7)		162		50
Provision for income taxes		14		15		45		31
Equity in earnings of joint ventures		1		1		2		2
Income (Loss) from Continuing Operations		38		(21)		119		20
Net earnings from discontinued operations		—		14		—		40
Net Income (Loss)	$	38	$	(7)	$	119	$	61
Total Comprehensive Income (Loss)	$	35	$	(16)	$	133	$	3
Weighted-average common shares outstanding - Basic		124.3		132.0		127.6		132.9
Weighted-average common shares outstanding - Diluted		124.7		132.0		128.1		133.1
Basic Earnings (Loss) Per Share:
Income (Loss) from Continuing Operations	$	0.31	$	(0.17)	$	0.93	$	0.14
Net earnings from discontinued operations		—		0.11		—		0.30
Net Income (Loss)		0.31		(0.06)		0.93		0.44
Diluted Earnings (Loss) Per Share:
Income (Loss) from Continuing Operations	$	0.31	$	(0.17)	$	0.93	$	0.14
Net earnings from discontinued operations		—		0.11		—		0.30
Net Income (Loss)		0.30		(0.06)		0.93		0.44

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

Table of Contents

Condensed Consolidated Statements of Financial Position (Unaudited)

(In millions, except share data)



	As of		As of
	September 30,		December 31,
	2021		2020
Assets:
Current Assets:
Cash and cash equivalents	$	156	$	615
Receivables, less allowances of $31 and $25, respectively		219		206
Inventories		41		44
Prepaid expenses and other assets		149		145
Total Current Assets		564		1,010
Other Assets:
Property and equipment, net		193		182
Operating lease right-of-use assets		79		80
Goodwill		2,192		2,146
Intangible assets, primarily trade names, service marks and trademarks, net		1,101		1,111
Restricted cash		89		89
Notes receivable		32		31
Long-term marketable securities		15		14
Deferred customer acquisition costs		101		98
Other assets		78		75
Total Assets	$	4,445	$	4,837
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts payable	$	108	$	91
Accrued liabilities:
Payroll and related expenses		96		102
Self-insured claims and related expenses		72		76
Accrued interest payable		3		7
Other		94		99
Deferred revenue		105		102
Current portion of lease liability		17		17
Current portion of long-term debt		52		94
Total Current Liabilities		547		588
Long-Term Debt		845		826
Other Long-Term Liabilities:
Deferred taxes		370		346
Other long-term obligations, primarily self-insured claims		211		239
Long-term lease liability		93		96
Total Other Long-Term Liabilities		674		681
Commitments and Contingencies (Note 6)
Stockholders' Equity:
Common stock $0.01 par value (authorized 2,000,000,000 shares with 148,948,815 shares issued and 121,568,176 outstanding at September 30, 2021 and 148,400,384 shares issued and 132,080,845 shares outstanding at December 31, 2020)		2		2
Additional paid-in capital		2,386		2,359
Retained Earnings		960		841
Accumulated other comprehensive loss		(25)		(39)
Less common stock held in treasury, at cost (27,380,639 shares at September 30, 2021 and 16,319,539 shares at December 31, 2020)		(945)		(423)
Total Stockholders' Equity		2,378		2,741
Total Liabilities and Stockholders' Equity	$	4,445	$	4,837

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

‎

Table of Contents

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, 2019		148	$	2	$	2,334	$	291	$	9		(12)	$	(313)	$	2,322
Net income		—		—		—		14		—		—		—		14
Other comprehensive loss, net of tax		—		—		—		—		(50)		—		—		(50)
Total comprehensive income (loss)		—		—		—		14		(50)		—		—		(36)
Exercise of stock options		—		—		2		—		—		—		—		2
Stock-based employee compensation		—		—		5		—		—		—		—		5
Repurchase of common stock		—		—		—		—		—		(4)		(103)		(103)
Balance March 31, 2020		148	$	2	$	2,341	$	305	$	(41)		(16)	$	(417)	$	2,190
Net income		—		—		—		53		—		—		—		53
Other comprehensive income, net of tax		—		—		—		—		1		—		—		1
Total comprehensive income (loss)		—		—		—

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