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Roper Technologies Announces Second Quarter Results

Company Release - 7/31/2017 6:55 AM ET

GAAP Revenue Increased 22%; Adjusted Revenue Increased 23%

Raising Full Year Adjusted DEPS Guidance

SARASOTA, Fla., July 31, 2017 (GLOBE NEWSWIRE) -- Roper Technologies, Inc. (NYSE:ROP), a diversified technology company, reported financial results for the second quarter ended June 30, 2017.

Roper reports results – including revenue, gross margin, operating margin, net income, and diluted earnings per share (“DEPS”) – on a GAAP basis and an adjusted basis.

Second quarter GAAP revenue increased 22% to $1.13 billion and adjusted revenue grew 23% to $1.15 billion. GAAP gross margin increased 130 basis points to 62.2% and adjusted gross margin increased 170 basis points to 62.7%.

GAAP DEPS were $1.74, a 13% increase, while adjusted DEPS was $2.24, a 20% increase. Adjusted EBITDA grew 26% to $394 million and adjusted EBITDA margin grew 70 basis points to 34.3%.

“Our businesses continued to deliver excellent revenue and EBITDA growth in the quarter,” said Brian Jellison, Roper’s Chairman, President and CEO. “Revenue grew organically 6% with broad-based contributions from all four reporting segments. We also benefited significantly from our recent acquisitions, Deltek and ConstructConnect, which continue to perform exceptionally well.

“Outstanding margin and cash flow performance once again demonstrated the ability of our asset-light, niche market businesses to deliver excellent results. EBITDA as a percentage of revenue increased in all segments. Importantly, our year to date operating cash flow grew 33%, allowing us to reduce debt by $570 million. We are very pleased with our strong first half performance and we are well positioned to continue our positive momentum throughout the second half of the year,” concluded Mr. Jellison.

2017 Guidance

Roper is raising its full year 2017 guidance and now expects adjusted DEPS of $9.12 - $9.30, compared to previous guidance of $8.98 - $9.28.

In the third quarter of 2017, the Company expects adjusted DEPS to be between $2.24 and $2.30.

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 Monday, July 31, 2017. The call can be accessed via webcast or by dialing +1 888-596-2581 (US/Canada) or +1 719-325-4799, using confirmation code 6827048. 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 https://event.webcast. 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 6827048.

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:  Adjusted Revenue Reconciliation and Growth Detail ($M)

 Q2 2017 Q2 2016 V % 
GAAP Revenue$1,135 $932    22% 
Purchase accounting adjustment to acquired deferred revenueA,B   16A   2B    
Adjusted Revenue$   1,151 $      934 23% 
       
Components of Adjusted Revenue Growth      
Organic    6% 
Acquisitions/Divestitures    18% 
Foreign Exchange    (1)% 
Total Adjusted Revenue Growth    23% 
        

Table 2:  Adjusted DEPS Reconciliation

 Q2 2017 Q2 2016 V % 
GAAP Diluted Earnings Per Share (DEPS)$1.74  $1.54 13% 
Purchase accounting adjustment to acquired deferred revenueA,B   0.10   0.02   
Purchase accounting adjustment for commission expenseC (0.01)  -   
Amortization of Acquisition-related intangible assets, after taxD 0.46   0.31   
Gain on Sale of divested energy product lineE (0.06)  -   
Impairment Charge on minority investmentF 0.01   -   
Adjusted DEPS$   2.24  $    1.87    20% 
           


Table 3:  Adjusted Gross Margin Reconciliation ($M)

 Q2 2017 Q2 2016 V Bps 
GAAP Revenue$  1,135  $   932    
Purchase accounting adjustment to acquired deferred revenueA,B 16 A   2 B    
Adjusted Revenue$1,151  $934    
       
GAAP Gross Profit$706  $568    
Purchase accounting adjustment to acquired deferred revenueA,B   16 A 2 B  
Adjusted Gross Profit$722  $570    
       
GAAP Gross Margin 62.2%  60.9%  +130 bps 
Adjusted Gross Margin 62.7%  61.0% +170 bps 
           


Table 4:  Adjusted EBITDA Reconciliation ($M)

 Q2 2017 Q2 2016 V% / Bps 
GAAP Revenue$1,135  $932    
Purchase accounting adjustment to acquired deferred revenueA,B 16 A   2 B    
Adjusted Revenue$  1,151  $    934    
       
GAAP Net Earnings$180  $158    
Taxes 76   67    
Interest expense 46   27    
Depreciation 12   9    
Amortization 74   50    
Rounding (1)     
EBITDA$387  $311  24% 
% of GAAP Revenue 34.1%  33.4% +70 bps 
       
Purchase accounting adjustment to acquired deferred revenue, pretaxA,B   16 A 2 B  
Purchase accounting adjustment for commission expense, pretaxC (1)  -    
Gain on sale of divested Energy product lineE (9)  -    
Impairment charge on minority investmentF 2   -    
Rounding (1)  1    
Adjusted EBITDA$394  $314          26% 
% of Adjusted Revenue 34.3%  33.6% +70bps 
           

Table 5:  Adjusted Operating Cash Flow Reconciliation

 1H 2017 1H 2016 V %
GAAP Operating Cash Flow$      550 $      377     46%
Cash paid for taxes on 2015 ABEL sale   -  37  
Adjusted Operating Cash Flow$550 $414 33%
         


Table 6:  Forecasted Adjusted DEPS Reconciliation

 Q3 2017 Full Year 2017 
 Low End High End Low End High End 
GAAP DEPS$1.72 $1.78 $7.03  $7.21  
Purchase accounting adjustments to acquired deferred revenue and commissionsG   0.07  0.07  0.32   0.32  
Amortization of acquisition-related intangible assets, after-tax       0.45        0.45  1.82   1.82  
Gain on sale of divested Energy product lineE        (0.06)    (0.06) 
Impairment charge on minority investmentF     0.01   0.01  
               
Adjusted DEPS$2.24 $2.30 $9.12  $9.30  

A  Acquisition-related fair value adjustments to deferred revenue related to the acquisitions of ConstructConnect ($3.0M pretax, $1.9M after-tax), and Deltek ($13.2M pretax, $8.6M after-tax).

B  Acquisition-related fair value adjustments to deferred revenue related to the acquisitions of On Center Software ($0.4M pretax, $0.2M after-tax), Aderant ($1.8M pretax, $1.2M after-tax), Atlas Medical ($0.1M pretax, $0.1M after-tax) and CliniSys ($0.2M pretax, $0.1M after-tax).

C  Purchase Accounting Adjustment for Commission Expense related to the acquisition of Deltek ($1.5M pretax, $1.0M after-tax).

D  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.

 Q2 2016A Q3 2016A FY 2016A Q2 2017A Q3 2017E FY 2017E
Pretax$50 $49 $201 $73 $72 $289
After-tax$32 $32 $131 $48 $47 $188
Per share  $0.31 $0.31 $1.27 $0.46 $0.45 $1.82

E  Gain on sale of divested Energy product line ($9.4M pretax, $6.1M after-tax).

F  Impairment charge on minority investment ($1.8M pretax, $1.1M after-tax).

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

 Q3 2017 FY 2017E
Pretax$10 $51
After-tax$7 $33
Per Share  $0.07 $0.32
      

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 identify and complete acquisitions consistent with our business strategies, integrate acquisitions that have been completed, realize expected benefits and synergies from, and manage other risks associated with, the newly acquired businesses. We also face other general risks, including our ability to realize cost savings from our operating initiatives, general economic conditions and the conditions of the specific markets in which we operate, changes in foreign exchange rates, difficulties associated with exports, risks associated with our international operations, 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)  
     
     
 June 30, December 31, 
ASSETS 2017   2016  
     
CURRENT ASSETS:    
Cash and cash equivalents$663,344  $757,200  
Accounts receivable 576,362   619,854  
Inventories 199,842   181,952  
Unbilled receivable 146,944   129,965  
Other current assets 114,619   87,530  
Total current assets 1,701,111   1,776,501  
     
PROPERTY, PLANT AND EQUIPMENT, NET 142,641   141,318  
     
OTHER ASSETS:    
Goodwill and other intangible assets, net 12,258,824   12,302,985  
Deferred taxes 31,539   30,620  
Other assets 79,173   73,503  
Total other assets 12,369,536   12,407,108  
     
TOTAL ASSETS$14,213,288  $14,324,927  
     
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
CURRENT LIABILITIES:    
Accounts payable$155,371  $152,067  
Accrued compensation 156,665   161,730  
Deferred revenue 516,362   488,399  
Other accrued liabilities 238,975   219,339  
Income taxes payable 29,826   22,762  
Current portion of long-term debt 401,297   400,975  
Total current liabilities 1,498,496   1,445,272  
     
NONCURRENT LIABILITIES:    
Long-term debt 5,241,103   5,808,561  
Deferred taxes 1,158,965   1,178,205  
Other liabilities 114,238   104,024  
Total liabilities 8,012,802   8,536,062  
     
STOCKHOLDERS' EQUITY:    
Common stock 1,041   1,036  
Additional paid-in capital 1,554,562   1,489,067  
Retained earnings 4,908,492   4,642,402  
Accumulated other comprehensive earnings (244,812)  (324,739) 
Treasury stock (18,797)  (18,901) 
Total stockholders' equity 6,200,486   5,788,865  
     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $14,213,288  $14,324,927  
     

 

       
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(Amounts in thousands, except per share data) 
         
         
  Three months ended Six months ended
  June 30, June 30,
  2017 2016 2017 2016
         
Net sales $1,134,671 $931,558  $2,220,976 $1,833,981 
Cost of sales  429,021  364,038   847,712  706,942 
         
Gross profit  705,650  567,520   1,373,264  1,127,039 
         
Selling, general and administrative expenses  411,392  314,442   820,750  628,970 
         
Income from operations  294,258  253,078   552,514  498,069 
         
Interest expense  45,813  26,863   91,678  54,276 
Other income/(expense), net  6,969  (1,334)  5,922  (1,463)
         
Earnings from continuing operations before income taxes  255,414  224,881   466,758  442,330 
         
Income taxes  75,858  66,812   129,131  132,845 
         
Net earnings $179,556 $158,069  $337,627 $309,485 
         
         
Earnings per share:        
Basic $1.76 $1.56  $3.31 $3.06 
Diluted $1.74 $1.54  $3.27 $3.02 
         
Weighted average common and common equivalent shares outstanding:          
Basic  102,081  101,249   101,983  101,160 
Diluted  103,409  102,466   103,247  102,376 
         

 

               
Roper Technologies, Inc. and Subsidiaries
Selected Segment Financial Data (unaudited)
(Amounts in thousands and percents of net sales)
                 
                 
  Three months ended June 30, Six months ended June 30,
  2017
 2016
 2017
 2016
  Amount % Amount % Amount % Amount %
Net sales:                
Medical & Scientific Imaging $350,764    340,585   $698,999   $672,799  
RF Technology  460,497    288,761    890,116    568,971  
Industrial Technology  192,867    178,627    376,271    349,862  
Energy Systems & Controls  130,543    123,585    255,590    242,349  
Total $1,134,671   $931,558   $2,220,976   $1,833,981  
                 
                 
Gross profit:                
Medical & Scientific Imaging $254,028 72.4% $246,396 72.3% $505,958 72.4% $493,293 73.3%
RF Technology  279,735 60.7%  163,005 56.4%  531,213 59.7%  323,370 56.8%
Industrial Technology  98,167 50.9%  89,709 50.2%  191,318 50.8%  175,729 50.2%
Energy Systems & Controls  73,720 56.5%  68,410 55.4%  144,775 56.6%  134,647 55.6%
Total $705,650 62.2% $567,520 60.9% $1,373,264 61.8% $1,127,039 61.5%
                 
                 
Operating profit*:                
Medical & Scientific Imaging $121,315 34.6% $114,271 33.6% $241,108 34.5% $228,727 34.0%
RF Technology  119,558 26.0%  89,354 30.9%  208,542 23.4%  178,120 31.3%
Industrial Technology  58,249 30.2%  51,291 28.7%  111,862 29.7%  98,050 28.0%
Energy Systems & Controls  32,867 25.2%  27,769 22.5%  63,103 24.7%  51,951 21.4%
Total $331,989 29.3% $282,685 30.3% $624,615 28.1% $556,848 30.4%
                 
                 
Net Orders:                
Medical & Scientific Imaging $352,018   $338,436   $702,795   $682,286  
RF Technology  488,476    318,231    929,765    599,356  
Industrial Technology  201,655    175,967    396,971    354,872  
Energy Systems & Controls  129,510    123,704    256,237    246,474  
Total $1,171,659   $956,338   $2,285,768   $1,882,988  
                 
                 
*Segment operating profit is before unallocated corporate general and administrative expenses. These expenses were $37,731 and $29,607 for the three months ended June 30, 2017 and 2016, respectively, and $72,101 and $58,779 for the six months ended June 30, 2017 and 2016, respectively.
                 

 

    
Roper Technologies, Inc. and Subsidiaries
 
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)  
      
      
  Six months ended 
  June 30, 
  2017 2016 
      
Net earnings $   337,627  $   309,485  
Non-cash items:     
Depreciation  24,284   19,052  
Amortization  147,186   99,719  
Stock-based compensation expense  43,864   39,092  
Gain on sale of assets  (9,393)  -  
Income taxes  (51,019)  (77,931) 
Changes in assets and liabilities:     
Receivables  33,197   (10,202) 
Inventory  (13,177)  (104) 
Accounts payable  (360)  (5,481) 
Accrued liabilities  48,996   7,763  
Other, net  (11,113)  (4,561) 
Cash provided by operating activities  550,092   376,832  
      
Business acquisitions, net of cash acquired  (35,515)  (274,968) 
Capital expenditures  (24,797)  (18,348) 
Capitalized software expenditures  (5,725)  (1,249) 
Proceeds from sale of assets  10,506   758  
Other, net  (6,531)  570  
Cash used in investing activities  (62,062)  (293,237) 
      
Revolver payments, net  (570,000)  (180,000) 
Dividends  (70,937)  (60,383) 
Proceeds from stock-based compensation, net    20,711   8,516  
Other, net  1,854   (110) 
Cash used in financing activities  (618,372)  (231,977) 
      
Effect of exchange rate changes on cash  36,486   (7,835) 
      
Net decrease in cash and equivalents  (93,856)  (156,217) 
Cash and equivalents, beginning of period  757,200   778,511  
      
Cash and equivalents, end of period $663,344  $622,294  
      
Contact Information:
Investor Relations
941-556-2601
investor-relations@ropertech.com

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