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Roper Technologies Announces First Quarter Results

Company Release - 4/28/2017 6:55 AM ET

GAAP Revenue Increased 20%; Adjusted Revenue Increased 22%

Operating Cash Flow Increased to $378 Million

SARASOTA, Fla., April 28, 2017 (GLOBE NEWSWIRE) -- Roper Technologies, Inc. (NYSE:ROP), a diversified technology company, reported financial results for the first quarter ended March 31, 2017.

Roper reports results – including revenue, operating margin, net income and diluted earnings per share – on a GAAP basis and an adjusted basis. 

First quarter GAAP revenue increased 20% to $1.09 billion and adjusted revenue grew 22% to $1.11 billion.  GAAP diluted earnings per share (DEPS) were $1.53 (+3%), while adjusted diluted earnings per share increased 17% to $2.11.

GAAP gross margin was 61.5% while adjusted gross margin was 62.2%. Operating cash flow increased to $378 million and adjusted EBITDA increased 18% to $362 million. 

“Our businesses performed exceptionally well in the first quarter,” said Brian Jellison, Roper’s Chairman, President and CEO.  “Our significant revenue increase included 5% organic growth, as our software and medical businesses continued their strong performance and we benefited from improvement in industrial and energy markets. Growth was broad-based as revenue in each of our four segments increased organically in the quarter.”

“Our cash flow performance was outstanding in the quarter with significant contributions from our recent application software acquisitions, Deltek and ConstructConnect, as well as strong execution across the enterprise. We are very pleased by our great start to 2017,” concluded Mr. Jellison.

2017 Guidance

Roper is raising its full year 2017 guidance. The Company now expects full year Adjusted DEPS of $8.98 - $9.28, compared to previous guidance of $8.82 - $9.22.

For the second quarter of 2017, the Company expects Adjusted DEPS to be between $2.16 and $2.24.

The Company’s guidance excludes the impact of future acquisitions or divestitures.

Conference Call to be Held at 8:30 AM (ET) Today

A conference call to discuss these results has been scheduled for 8:30 AM ET on Friday, April 28, 2017.  The call can be accessed via webcast or by dialing +1 877-857-6149 (US/Canada) or +1 719-325-4845, using confirmation code 4090618.  Webcast information and conference call materials will be made available in the Investors section of Roper’s website (www.ropertech.com) prior to the start of the call. The webcast can also be accessed directly by using the following URL http://edge.media-server.com/m/p/skmkjsqe.  Telephonic replays will be available for up to two weeks and can be accessed by using the following registration URL https://event.replay with access code 4090618.

Use of Non-GAAP Financial Information

The Company supplements its consolidated financial statements presented on a GAAP basis with certain non-GAAP financial information to provide investors with greater insight, increase transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making.  Reconciliation of non-GAAP measures to their most directly comparable GAAP measures are included in the accompanying financial schedules or tables.  The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP, and the financial results prepared in accordance with GAAP and reconciliations from these results should be carefully evaluated.

Table 1:  Revenue Growth Detail ($M)

  Q1 2017  Q1 2016  V % 
GAAP Revenue $1,086  $902   20%  
Purchase accounting adjustment to
acquired deferred revenueA,B
  22 A 3 B   
Rounding     1     
Adjusted Revenue $1,108  $906  22%  
           
Components of Adjusted Revenue Growth          
Organic       5%  
Acquisitions       +18%  
Foreign Exchange       (1%)  
Total Adjusted Revenue Growth       22%  


Table 2:  Reconciliation of Q1 2017 GAAP DEPS to Adjusted DEPS

  Q1 2017  Q1 2016  
GAAP Diluted Earnings Per Share (DEPS) $1.53   $1.48  
Purchase accounting adjustment to acquired deferred
revenueA,B
  0.14  A 0.02 B
Purchase accounting adjustment for commission
expenseC
  (0.01) C -  
Acquisition-related inventory step-up chargeD  -    0.00 D
Amortization of Acquisition-related intangible assets,
after tax F
  0.45  F 0.31 F
        
Adjusted DEPS $2.11   $1.81  


Table 3:  Q1 Free Cash Flow Reconciliation ($M)

  Q1 2017 Q1 2016 V % 
GAAP Operating Cash Flow $378  $207   + 83%  
Cash taxes related to 2015 sale of Abel
Pump
    37     
Rounding    1     
Adjusted Operating Cash Flow $378  $245  + 55%  
Capital expenditures  (15)  (9)    
Capitalized software expenditures  (3)  (1)    
Rounding  -   (1)    
Adjusted Free Cash Flow $360  $234  + 54%  


Table 4:  Adjusted Gross Margin Reconciliation ($M)

  Q1 2017  Q1 2016  V Bps 
GAAP Revenue $1,086   $902      
Purchase accounting adjustment to
acquired deferred revenueA,B
  22  A 3  B   
Rounding     1      
Adjusted Revenue $1,108   $906      
           
GAAP Gross Profit $668   $560      
Purchase accounting adjustment to
acquired deferred revenueA,B
  22  A 3  B   
Rounding  (1)        
Adjusted Gross Profit $689   $563      
           
GAAP Gross Margin  61.5%   62.0%  (50) bps  
Adjusted Gross Margin  62.2%   62.1%  + 10 bps  


Table 5:  Q1 EBITDA Reconciliation ($M)

  Q1 2017 Q1 2016 V%
GAAP Revenue $1,086  $902   
Purchase accounting adjustment to acquired deferred
revenueA,B
  22 A 3 B 
Rounding    1   
Adjusted Revenue $1,108  $906   
       
GAAP Net Earnings $158  $151   
Taxes  53   66   
Interest expense  46   27   
Depreciation  12   10   
Amortization  73   50   
Purchase accounting adjustment to acquired deferred
revenue, pretaxA,B
  22 A 3 B 
Purchase accounting adjustment for commission
expense, pretaxC
  (2)    
Acquisition-related inventory step-up charge, pretaxD  -   0 D 
Rounding  -   -   
Adjusted EBITDA $362  $307  +18%
% of Adjusted Revenue  32.7%  34.0%  


Table 6:  Forecasted Diluted Earnings Per Share (DEPS)

  Q2 2017  Full Year 2017  
  Low End  High End  Low End  High End  
GAAP DEPS $1.62  $1.70  $6.86  $7.16  
Purchase accounting adjustments to
acquired deferred revenue and
commissionsE
  0.09 E 0.09 E 0.32 E 0.32 E
Amortization of acquisition-related
intangible assets, after-taxF
  0.45 F 0.45 F 1.80 F 1.80 F
Adjusted DEPS $2.16  $2.24  $8.98  $9.28  
              

A  Acquisition-related fair value adjustments to deferred revenue related to the acquisitions of CliniSys ($0.0M pretax, $0.0M after-tax), ConstructConnect ($5.3M pretax, $3.4M after-tax) and Deltek ($16.3M pretax, $10.6M after-tax).

B  Acquisition-related fair value adjustments to deferred revenue related to the acquisitions of Strata ($0.2M pretax, $0.1M after-tax), Softwriters ($0.0M pretax, $0.0M after-tax), Data Innovations ($0.7M pre-tax, $0.4M after-tax), On Center Software ($0.4M pretax, $0.3M after-tax), Aderant ($1.8M pretax, $1.2M after-tax), Atlas Medical ($0.1M pretax, $0.0M after-tax) and CliniSys ($0.1M pretax, $0.1M after-tax)

C  Purchase Accounting Adjustment for Commission Expense related to the acquisition of Deltek ($1.8M pretax, $1.2M after-tax),  

D  Acquisition-related inventory step-up charge related to the acquisition of PCI Medical ($0.1M pretax, $0.1M after-tax)

E  Forecasted acquisition-related fair value adjustments to acquired deferred revenue and commissions of ConstructConnect and Deltek, as shown below ($M, except per share data)

  Q2 2017 FY 2017
Pretax $15 $51
After-tax $10 $33
Per Share $0.09 $0.32

F Actual results and forecast of estimated amortization of acquisition-related intangible assets ($M); For comparison purposes, prior period amounts are also shown below. Tax Rate of 35% applied to amortization in all periods.

  Q1 2016A 
Q2 2016A
 FY 2016A  

Q1 2017A
 
Q2 2017E
 FY 2017E
Pretax $49 $50 $201 $72 $72 $286
After-tax $32 $32 $131 $47 $47 $186
Per share $0.31 $0.31 $1.27 $0.45 $0.45 $1.80

About Roper Technologies

Roper Technologies is a constituent of the S&P 500, Fortune 1000, and the Russell 1000 indices. Roper designs and develops software (both software-as-a-service and licensed), and engineered products and solutions for healthcare, transportation, food, energy, water, education and other niche markets worldwide. Additional information about Roper is available on the Company’s website at www.ropertech.com.

The information provided in this press release contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements may include, among others, statements regarding operating results, the success of our internal operating plans, and the prospects for newly acquired businesses to be integrated and contribute to future growth, profit and cash flow expectations.  Forward-looking statements may be indicated by words or phrases such as "anticipate," "estimate," "plans," "expects," "projects," "should," "will," "believes," "intends" and similar words and phrases.  These statements reflect management's current beliefs and are not guarantees of future performance.  They involve risks and uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement. Such risks and uncertainties include our ability to integrate acquisitions and realize expected synergies.  We also face other general risks, including our ability to realize cost savings from our operating initiatives, general economic conditions, changes in foreign exchange rates, difficulties associated with exports, risks associated with our international operations, difficulties in making and integrating acquisitions, risks associated with newly acquired businesses, increased product liability and insurance costs, increased warranty exposure, future competition, changes in the supply of, or price for, parts and components, environmental compliance costs and liabilities, risks and cost associated with asbestos related litigation, potential write-offs of our substantial intangible assets, and risks associated with obtaining governmental approvals and maintaining regulatory compliance for new and existing products.  Important risks may be discussed in current and subsequent filings with the SEC.  You should not place undue reliance on any forward-looking statements.  These statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

    
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(Amounts in thousands)
    
    
 March 31, December 31,
ASSETS2017 2016
    
CURRENT ASSETS:   
Cash and cash equivalents$730,666  $757,200 
Accounts receivable 549,838   619,854 
Inventories 191,426   181,952 
Unbilled receivable 143,589   129,965 
Other current assets 97,104   87,530 
Total current assets 1,712,623   1,776,501 
    
PROPERTY, PLANT AND EQUIPMENT, NET 144,113   141,318 
    
OTHER ASSETS:   
Goodwill and other intangible assets, net 12,268,952   12,302,985 
Deferred taxes 30,300   30,620 
Other assets 74,066   73,503 
Total other assets 12,373,318   12,407,108 
    
TOTAL ASSETS$14,230,054  $14,324,927 
    
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
    
CURRENT LIABILITIES:   
Accounts payable$152,638  $152,067 
Accrued compensation 131,584   161,730 
Deferred revenue 513,820   488,399 
Other accrued liabilities 251,298   219,339 
Income taxes payable 88,126   22,762 
Current portion of long-term debt 401,072   400,975 
Total current liabilities 1,538,538   1,445,272 
    
NONCURRENT LIABILITIES:   
Long-term debt 5,439,700   5,808,561 
Deferred taxes 1,169,151   1,178,205 
Other liabilities 111,875   104,024 
Total liabilities 8,259,264   8,536,062 
    
STOCKHOLDERS' EQUITY:   
Common stock 1,039   1,036 
Additional paid-in capital 1,518,213   1,489,067 
Retained earnings 4,764,711   4,642,402 
Accumulated other comprehensive earnings (294,327)  (324,739)
Treasury stock (18,846)  (18,901)
Total stockholders' equity 5,970,790   5,788,865 
    
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$14,230,054  $14,324,927 
    



Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(Amounts in thousands, except per share data)
     
     
  Three months ended
  March 31,
  2017 2016
     
Net sales $1,086,305  $902,423 
Cost of sales  418,691   342,904 
     
Gross profit  667,614   559,519 
     
Selling, general and administrative expenses  409,358   314,528 
     
Income from operations  258,256   244,991 
     
Interest expense  45,865   27,413 
Other expense  (1,047)  (129)
     
Earnings from continuing operations before income taxes  211,344   217,449 
     
Income taxes  53,273   66,033 
     
Net Earnings $158,071  $151,416 
     
     
     
Earnings per share:    
Basic $1.55  $1.50 
Diluted $1.53  $1.48 
     
Weighted average common and common equivalent shares outstanding:    
Basic  101,885   101,071 
Diluted  103,078   102,318 
     


 

Roper Technologies, Inc. and Subsidiaries
Selected Segment Financial Data (unaudited)
(Amounts in thousands and percents of net sales)
         
         
  Three months ended March 31,
  2017 2016
  Amount % Amount %
Net sales:        
Medical & Scientific Imaging $348,235   $332,214  
RF Technology  429,619    280,210  
Industrial Technology  183,404    171,235  
Energy Systems & Controls  125,047    118,764  
Total $1,086,305   $902,423  
         
         
Gross profit:        
Medical & Scientific Imaging $251,930 72.3% $246,897 74.3%
RF Technology  251,478 58.5%  160,365 57.2%
Industrial Technology  93,151 50.8%  86,020 50.2%
Energy Systems & Controls  71,055 56.8%  66,237 55.8%
Total $667,614 61.5% $559,519 62.0%
         
         
Operating profit*:        
Medical & Scientific Imaging $119,793 34.4% $114,456 34.5%
RF Technology  88,984 20.7%  88,766 31.7%
Industrial Technology  53,613 29.2%  46,759 27.3%
Energy Systems & Controls  30,236 24.2%  24,182 20.4%
Total $292,626 26.9% $274,163 30.4%
         
         
Net Orders:        
Medical & Scientific Imaging $350,777   $343,850  
RF Technology  441,289    281,125  
Industrial Technology  195,316    178,905  
Energy Systems & Controls  126,727    122,770  
Total $1,114,109   $926,650  
         
         
*  Operating profit is before unallocated corporate general and administrative expenses.  These expenses were $34,370 and $29,172 for the three months ended March 31, 2017 and 2016, respectively.
         

 

Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)
     
     
  Three months ended
  March 31,
  2017 2016
     
Net earnings $158,071  $151,416 
Non-cash items:    
Depreciation  12,377   9,702 
Amortization  72,998   49,549 
Stock-based compensation expense  21,049   18,979 
Income taxes  39,013   20,127 
Changes in assets and liabilities:    
Receivables  59,536   (14,059)
Inventory  (7,905)  (3,907)
Accounts payable  (2,009)  (1,273)
Accrued liabilities  34,094   (18,458)
Other, net  (9,007)  (5,004)
Cash provided by operating activities  378,217   207,072 
     
Business acquisitions, net of cash acquired  (2,829)  (265,248)
Capital expenditures  (14,930)  (9,489)
Capitalized software expenditures  (3,169)  (665)
Other, net  (391)  1,446 
Cash used in investing activities  (21,319)  (273,956)
     
Principal debt payments  -   (289)
Revolver payments, net  (370,000)  (160,000)
Dividends  (35,443)  (30,173)
Proceeds from stock-based compensation, net  7,576   690 
Premium on convertible debt conversions  -   (915)
Other, net  782   505 
Cash used in financing activities  (397,085)  (190,182)
     
Effect of exchange rate changes on cash  13,653   1,588 
     
Net decrease in cash and equivalents  (26,534)  (255,478)
Cash and equivalents, beginning of period  757,200   778,511 
     
Cash and equivalents, end of period  730,666   523,033 
     


Contact Information:
Investor Relations
941-556-2601
investor-relations@ropertech.com

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Source: Roper Technologies, Inc.