TERMINIX GLOBAL HOLDINGS INC [TMX] Filings

10-Q 1 tmx-20220630x10q.htm 10-Q tmx-20220630x10q

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


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.

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	23

Item 3. Quantitative and Qualitative Disclosures About Market Risk	38

Item 4. Controls and Procedures	38

Part II. Other Information	38

Item 1. Legal Proceedings	38

Item 1A. Risk Factors	38

Item 2. Unregistered Sales of Registered Securities and Use of Proceeds	39

Item 6. Exhibits	40

Signature	41

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				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

Table of Contents

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

‎

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
Net income		—		—		—		54		—		—		—		54
Other comprehensive loss, net of tax		—		—		—		—		(5)		—		—		(5)
Total comprehensive income		—		—		—		54		(5)		—		—		48
Issuance of common stock		—		—		1		—

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