Rentokil approves $200 million share buyback as revenue rises
Key Facts
Rentokil Initial's board approved a $200 million share buyback programme, according to its third-quarter 2026 trading update, returning cash to shareholders as revenue grew. The group said the programme would begin soon. Quarterly revenue totalled $1,890 million, compared with $1,810 million in the third quarter of 2025. That represented reported growth of 4.4%, compared with growth of 4.0% at constant exchange rates. Group organic revenue growth was 3.4% during the quarter. Rentokil maintained its annual profit outlook, saying earnings would be in line with "current market expectations".
In North America, revenue rose to $1,176 million from $1,137 million in the corresponding period, with reported and constant-currency growth of 3.4%, while organic growth reached 3.2%. The region's pest control services business posted organic growth of 2.4%, supported by residential business, improvements in national commercial accounts and service quality, and the rollout of PestConnect, according to the company. Meanwhile, business services grew organically by 9.6%, supported by seasonal demand in product distribution and new brand standards services contracts. On customer acquisition, the group said residential lead flow improved in September after weakness in July and August. Lead flow remained down about 1% in September, despite an improving trend at the end of the quarter. North American customer retention rose to 81.1%, compared with 80.9% in the third quarter of 2025.
Outside North America, the international pest control business recorded organic growth of 5.7% in the third quarter, outpacing group growth, according to the quarterly update. Operations in Asia, the Middle East, North Africa and Turkey outperformed the business's average growth rate. Business volumes in India and Indonesia drove performance in those markets, according to Rentokil. In international hygiene and wellbeing, organic growth was limited to 0.7% over the same period. The company said the business was affected by difficult conditions in its DCUK unit's asbestos removal operations.
The buyback decision follows improvements in cash flow and leverage in the first half of 2026, according to the group's interim results. Free cash flow totalled $318 million, compared with $282 million in the first half of 2025, an increase of 12.8%. The ratio of net debt to adjusted earnings before interest, taxes, depreciation and amortisation fell to 2.4 times as of 30 June 2026, entering the target range for the first time since the Terminix acquisition. Rentokil also lowered its estimate for acquisition spending during 2026 to about $100 million in its third-quarter update. It had forecast acquisition spending of about $120 million for the year when announcing its first-half results.
In September 2026, Rentokil announced an agreement to sell SOLitude and its Vertex Aquatic Solutions unit to Bain Capital for proposed total consideration of $230 million on a cash-free, debt-free basis. The group expects net cash proceeds after tax of about $180 million, according to the sale announcement. SOLitude generated revenue of $112 million during the 2025 financial year. Its adjusted operating profit totalled $16 million in the same year. The sale agreement is subject to antitrust clearance under the Hart-Scott-Rodino Act, and the announcement anticipated completion in early fourth-quarter 2026.
Operationally, Rentokil adopted a structure comprising two divisions, North America and International, according to its organisational update. It said the structure aims to strengthen accountability for performance across operations. It also aims to accelerate the adoption of best practices and simplify operations. Phil Wood was appointed chief executive of the new International division, while Matt Yocum became group chief transformation officer. When announcing its first-half results, Rentokil had abandoned its North American margin target of 20% in 2027, prioritising investment in volume growth.
In a change in financial leadership, the group announced that Chief Financial Officer Paul Edgecliffe-Johnson would leave his executive role and the board on 31 January 2027 for family health reasons. He will remain a senior adviser and a member of the executive leadership team to ensure an orderly transition and continuity of financial leadership, according to the management change announcement. The board has begun searching for a permanent successor. Group Financial Controller Sarah Sargeant will take over on an interim basis if a successor has not started by the time Edgecliffe-Johnson retires. The investor calendar scheduled the preliminary annual results announcement for 25 February 2027. The share buyback programme is due to be completed by the announcement of those results.