ROLLINS INCROL

ROLLINS INC Leases Disclosure

10-KFiled Feb 12, 20262 min read
LEASES
The Company leases certain buildings, vehicles, and equipment in order to reduce the risk associated with ownership. The Company elected the practical expedient approach permitted under ASC Topic 842, “Leases” not to include short-term leases with a duration of 12 months or less on the consolidated statements of financial position. As of December 31, 2025 and 2024, all leases were classified as operating leases. Building leases generally carry terms of 5 to 10 years with annual rent escalations at fixed amounts per the lease. Vehicle leases generally carry a fixed term of one year with renewal options to extend the lease on a monthly basis resulting in lease terms up to 7 years depending on the class of vehicle. The exercise of renewal options is at the Company’s sole discretion. It is reasonably certain that the Company will exercise the renewal options on its vehicle leases. The measurement of right-of-use assets and liabilities for vehicle leases includes the fixed payments associated with such renewal periods. We separate lease and non-lease components of contracts. Our lease agreements do not contain any material variable payments, residual value guarantees, early termination penalties or restrictive covenants.
The Company uses the rate implicit in the lease when available; however, most of our leases do not provide a readily determinable implicit rate. Accordingly, we estimate our incremental borrowing rate based on information available at lease commencement.
(in thousands, except Other Information)Years Ended
December 31,
Components of Lease ExpenseFinancial Statement Classification202520242023
Short-term lease costCost of services provided, Sales, general, and administrative expenses$7,281 $16,618 $14,753 
Operating lease costCost of services provided, Sales, general, and administrative expenses159,924 133,420 110,627 
Total lease expense$167,205 $150,038 $125,380 
Cash Flow Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$159,060 $132,588 $109,631 
Other Information
Weighted-average remaining lease term - operating leases
4.1 Yrs
4.4 Yrs
Weighted-average discount rate - operating leases4.50 %4.30 %
Lease Commitments
Future minimum lease payments, including assumed exercise of renewal options at December 31, 2025 were as follows:
(in thousands)
2026$154,557 
2027129,257 
202885,169 
202940,392 
203021,726 
Thereafter45,398 
Total future minimum lease payments476,499 
Less: amount representing interest(48,324)
Total future minimum lease payments, net of interest$428,175 
Future commitments presented in the table above include lease payments in renewal periods for which it is reasonably certain that the Company will exercise the renewal option. Total future minimum lease payments for operating leases, including the amount representing interest, are comprised of $189.8 million for building leases and $286.7 million for vehicle leases. As of December 31, 2025, the Company had additional future obligations of $11.1 million for leases that had not yet commenced.

Historical Timeline

Fiscal YearFiled
2025Feb 12, 2026Showing above
2024Feb 13, 2025
2023Feb 15, 2024
2022Feb 16, 2023
2021Feb 25, 2022
2020Feb 26, 2021
2019Feb 28, 2020

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

Other Available Disclosures

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