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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 September 30, 2021

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 October 28, 2021: 121,148,869 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

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

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


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)