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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 June 30, 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 August 1, 2022: 121,544,698 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

Six Months Ended

June 30,

June 30,

2022

2021

2022

2021

Revenue

$

585

$

560

$

1,081

1,032

Cost of services rendered and products sold

340

318

636

588

Selling and administrative expenses

148

143

287

280

Amortization expense

10

10

20

19

Acquisition-related costs

1

(1)

(1)

Mobile Bay Formosan termite settlement

4

4

Restructuring and other charges

15

2

33

9

Loss on sale of international subsidiaries

41

41

Interest expense

11

11

23

23

Interest and net investment income

1

(1)

2

(1)

Income before Income Taxes

19

73

39

110

Provision for income taxes

18

20

21

31

Equity in earnings of joint ventures

2

1

3

2

Net Income

$

2

$

54

$

21

81

Other Comprehensive Income (Loss), Net of Income Taxes:

Net unrealized gains (losses) on derivative instruments

6

(3)

30

11

Foreign currency translation gain (loss)

(5)

(3)

5

Other Comprehensive Income (Loss), Net of Income Taxes

1

(5)

29

17

Total Comprehensive Income

$

3

$

48

$

50

97

Weighted-average common shares outstanding - Basic

121.5

127.4

121.5

129.3

Weighted-average common shares outstanding - Diluted

121.7

127.8

121.7

129.8

Basic Earnings Per Share:

Net Income

0.02

0.42

0.17

0.62

Diluted Earnings Per Share:

Net Income

0.02

0.42

0.17

0.62

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

June 30,

December 31,

2022

2021

Assets:

Current Assets:

Cash and cash equivalents

$

277

$

116

Receivables, less allowances of $29 and $32, respectively

213

206

Inventories

45

41

Prepaid expenses and other assets

163

151

Total Current Assets

698

514

Other Assets:

Property and equipment, net

183

196

Operating lease right-of-use assets

72

79

Goodwill

2,107

2,211

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

1,051

1,097

Restricted cash

89

89

Notes receivable

38

36

Long-term marketable securities

12

15

Deferred customer acquisition costs

102

98

Other assets

134

77

Total Assets

$

4,486

$

4,410

Liabilities and Stockholders' Equity:

Current Liabilities:

Accounts payable

$

122

$

85

Accrued liabilities:

Payroll and related expenses

73

81

Self-insured claims and related expenses

73

72

Accrued interest payable

7

7

Other

107

95

Deferred revenue

99

103

Current portion of lease liability

17

18

Current portion of long-term debt

47

50

Total Current Liabilities

544

511

Long-Term Debt

846

849

Other Long-Term Liabilities:

Deferred taxes

396

387

Other long-term obligations, primarily self-insured claims

173

197

Long-term lease liability

91

92

Total Other Long-Term Liabilities

660

677

Stockholders' Equity:

Common stock $0.01 par value (authorized 2,000,000,000 shares with 149,359,858 shares issued and 121,523,419 outstanding at June 30, 2022 and 149,095,168 shares issued and 121,258,729 outstanding shares outstanding at December 31, 2021)

2

2

Additional paid-in capital

2,403

2,391

Retained Earnings

988

967

Accumulated other comprehensive income (loss)

8

(22)

Less common stock held in treasury, at cost (27,836,439 shares at June 30, 2022 and December 31, 2021)

(964)

(964)

Total Stockholders' Equity

2,436

2,375

Total Liabilities and Stockholders' Equity

$

4,486

$

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

Net income

54

54

Other comprehensive loss, net of tax

(5)

(5)

Total comprehensive income

54

(5)

48

Issuance of common stock

1