TERMINIX GLOBAL HOLDINGS INC MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q) – Marketscreener.com

The following information should be read in conjunction with the unauditedcondensed consolidated financial statements and related notes included in Item 1of this Quarterly Report on Form 10-Q. The following discussion may containforward-looking statements that reflect our plans, estimates and beliefs. Ouractual results could differ materially from those discussed in theseforward-looking statements. Factors that could cause or contribute to thesedifferences include those factors discussed below and elsewhere in this report,particularly in "-Information Regarding Forward-Looking Statements."

Overview

COVID-19

Refer to Results of Operations below for further discussion of the impact ofCOVID-19 on our business.

Proposed Acquisition by Rentokil

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Key Business Metrics

To the extent applicable, these measures are evaluated with and withoutimpairment, restructuring and other charges that management believes are notindicative of the earnings capabilities of our business. We also focus onmeasures designed to monitor cash flow, including net cash provided fromoperating activities from continuing operations and free cash flow.

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A reconciliation of Net income to Adjusted EBITDA for the three months endedMarch 31, 2022 and 2021 was as follows:

Effect of Weather Conditions

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Results of Operations

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Revenue

Three months ended March 31, 2022 Compared to Three months ended March 31, 2021

Revenue growth was $25 million year over year, or five percent, including onepercent from acquisitions.

Sales of products and other revenue growth was 18 percent due to increasedchemical demand as we lap the impacts of COVID-19 on three months ended March31, 2021 revenue.

Cost of Services Rendered and Products Sold

We reported cost of services rendered and products sold of $296 million and $270million for the three months ended March 31, 2022 and 2021, respectively.

Selling and Administrative Expenses

The following table provides a summary of selling and administrative expensesfor the three months ended March 31, 2022 and 2021:

Selling and marketing expenses were relatively flat in the three months endedMarch 31, 2022 compared to the three months ended March 31, 2021.

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Amortization Expense

Amortization expense was $10 million for both the three months ended March 31,2022 and 2021.

Acquisition-related costs were $1 million for the three months ended March 31,2021.

Restructuring and Other Charges

Interest expense was $11 million and $12 million in the three months ended March31, 2022 and 2021, respectively.

Interest and Net Investment Income

Interest and net investment income is comprised primarily of net investmentgains from equity investments and interest income on other cash balances.Interest and net investment income was $1 million for the three months endedMarch 31, 2021.

Provision for Income Taxes

Net Income

Adjusted EBITDA

Three Months Ended March 31, 2022 $ 86

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Termite Damage Claims

A summary of Litigated Claims and Non-Litigated Claims for the three monthsended March 31, 2022 and 2021 was as follows:

A summary of Litigated Claims and Non-Litigated Claims reserve activity for thethree months ended March 31, 2022 and 2021 is as follows:

Free Cash Flow

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The following table reconciles net cash provided from operating activities,which we consider to be the most directly comparable GAAP measure, to Free CashFlow using data derived from our unaudited condensed consolidated financialstatements for the periods indicated:

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Liquidity and Capital Resources

Liquidity

Capital Resources

Fleet and Equipment Financing Arrangements

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Limitations on Distributions and Dividends by Subsidiaries

Cash Flows

Cash increase (decrease) during the period $ 54 $ (131)

Operating Activities

Investing Activities

Net cash used for investing activities was $40 million for the three monthsended March 31, 2022, compared to $26 million for the three months ended March31, 2021.

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Financing Activities

Mobile Bay Formosan Termite Settlement

Information Regarding Forward-Looking Statements

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?risks and uncertainties related to the proposed acquisition of the Company byRentokil, including stockholder approvals, challenges to the proposedacquisition, business operational uncertainties and potential loss of keyteammates;

?implementation of Mobile Bay termite Settlement remediation measures to currentand former customers, including refunds of certain price increases and theestablishment of the consumer fund intended to settle future Non-LitigatedClaims for termite damage;

?weakening general economic conditions, especially as they may affectunemployment and consumer confidence or discretionary spending levels, all ofwhich could impact the demand for our services;

?the impact of reserves attributable to pending Litigated Claims andNon-Litigated Claims for termite damages;

?compliance with, or violation of, environmental, health and safety laws andregulations;

?our ability to attract and retain key teammates, including our ability toattract, retain and maintain positive relations with trained workers andthird-party contractors;

?adverse weather conditions;

?our ability to generate the significant amount of cash needed to fund ouroperations and service our debt obligations;

?our ability to successfully implement our business strategies;

?increase in prices for fuel and raw materials, and in minimum wage levels;

?changes in the source and intensity of competition in our segments;

?our franchisees, subcontractors, third-party distributors and vendors takingactions that harm our business;

?changes in our services or products;

?our ability to protect our intellectual property and other material proprietaryrights;

?negative reputational and financial impacts resulting from future acquisitionsor strategic transactions;

?laws and governmental regulations increasing our legal and regulatory expenses;

?increases in interest rates increasing the cost of servicing our substantialindebtedness;

?increased borrowing costs due to lowering or withdrawal of the ratings, outlookor watch assigned to our debt securities;

?restrictions contained in our debt agreements;

?the effects of our indebtedness and the limitations contained in the agreementsgoverning such indebtedness; and

?other factors described in this report and from time to time in documents thatwe file with the SEC.

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Comparisons of results for current and any prior periods are not intended toexpress any future trends, or indications of future performance, unlessexpressed as such, and should only be viewed as historical data.

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Edgar Online, source Glimpses

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TERMINIX GLOBAL HOLDINGS INC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q) - Marketscreener.com