TERMINIX GLOBAL HOLDINGS INC [TMX] Filings

10-Q 1 tmx-20220331x10q.htm 10-Q tmx-20220331x10q

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


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.

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	21

Item 3. Quantitative and Qualitative Disclosures About Market Risk	34

Item 4. Controls and Procedures	34

Part II. Other Information	35

Item 1. Legal Proceedings	35

Item 1A. Risk Factors	35

Item 2. Unregistered Sales of Registered Securities and Use of Proceeds	35

Item 6. Exhibits	36

Signature	37

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
	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

Table of Contents

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

‎

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, 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

Table of Contents

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

TERMINIX GLOBAL HOLDINGS INC [TMX] Filings
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10-K	[2021-02-26]
10-Q	[2020-11-09]
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10-Q	[2018-05-02]
10-K	[2018-02-28]
10-Q	[2017-08-01]
10-Q	[2017-04-28]
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