Roper Technologies announces first quarter financial results
First quarter 2024 highlights
- Revenue increased 14% to
$1.68 billion ; organic revenue increased 8% - GAAP DEPS increased 33% to
$3.54 ; adjusted DEPS increased 13% to$4.41 - GAAP net earnings increased 34% to
$382 million - Adjusted EBITDA increased 16% to
$676 million - Operating cash flow increased 14% to
$531 million
"We had a great start to 2024, highlighted by 14% total revenue growth, 8% organic revenue growth, 16% EBITDA growth, and a 31% free cash flow margin," said
"We are increasing our full year 2024 outlook, supported by our strong first quarter results, continued customer demand for our businesses' mission critical solutions, and the ongoing expansion of our recurring revenue base. With significant M&A capacity and a robust pipeline of attractive acquisition opportunities, we remain well positioned to execute our disciplined and process-driven capital deployment strategy," concluded
Increasing 2024 guidance
Roper now expects full year 2024 adjusted DEPS of
For the second quarter of 2024, the Company expects adjusted DEPS of
The Company’s guidance excludes the impact of unannounced future acquisitions or divestitures.
Conference call to be held at
A conference call to discuss these results has been scheduled for
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.
Minority interests
Following the sale of a majority stake in its industrial businesses to CD&R, Roper holds a minority interest in Indicor. The fair value of Roper’s equity investment in Indicor is updated on a quarterly basis and reported as "equity investments (gain) loss, net." Roper also holds a minority interest in Certinia, a leading provider of professional services automation software. The Company’s investment is accounted for under the equity method and its proportionate share of earnings or loss associated with this investment is reported as "equity investments (gain) loss, net." Roper makes non-GAAP adjustments for the impacts associated with these investments.
Table 1: Revenue and adjusted EBITDA reconciliation ($M) (from continuing operations) |
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Q1 2023 | Q1 2024 | V % | |||||||||
GAAP revenue | $ | 1,470 | $ | 1,681 | 14 | % | |||||
Components of revenue growth | |||||||||||
Organic | 8 | % | |||||||||
Acquisitions | 6 | % | |||||||||
Foreign exchange | — | % | |||||||||
Revenue growth | 14 | % | |||||||||
Adjusted EBITDA reconciliation | |||||||||||
GAAP net earnings | $ | 284 | $ | 382 | |||||||
Taxes | 76 | 102 | |||||||||
Interest expense | 37 | 53 | |||||||||
Depreciation | 9 | 9 | |||||||||
Amortization | 175 | 185 | |||||||||
EBITDA | $ | 581 | $ | 731 | 26 | % | |||||
Transaction-related expenses for completed acquisitions | — | 2 | |||||||||
Financial impacts associated with the minority investments in Indicor & CertiniaA |
1 | (57 | ) | ||||||||
Adjusted EBITDA | $ | 582 | $ | 676 | 16 | % | |||||
% of revenue | 39.6 | % | 40.2 | % | +60 bps |
Table 2: Adjusted DEPS reconciliation (from continuing operations) |
|||||||||||
Q1 2023 | Q1 2024 | V % | |||||||||
GAAP DEPS | $ | 2.66 | $ | 3.54 | 33 | % | |||||
Transaction-related expenses for completed acquisitions | — | 0.01 | |||||||||
Financial impacts associated with the minority investments in Indicor & CertiniaA | (0.02 | ) | (0.45 | ) | |||||||
Amortization of acquisition-related intangible assetsB | 1.26 | 1.31 | |||||||||
Adjusted DEPS | $ | 3.90 | $ | 4.41 | 13 | % | |||||
Table 3: Cash flow reconciliation ($M) (from continuing operations) |
|||||||||||
Q1 2023 | Q1 2024 | V % | |||||||||
Operating cash flow | $ | 465 | $ | 531 | 14 | % | |||||
Capital expenditures | (10 | ) | (9 | ) | |||||||
Capitalized software expenditures | (10 | ) | (10 | ) | |||||||
Free cash flow | $ | 445 | $ | 513 | 15 | % | |||||
Table 4: Forecasted adjusted DEPS reconciliation (from continuing operations) |
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Q2 2024 | FY 2024 | ||||||||||||||
Low end | High end | Low end | High end | ||||||||||||
GAAP DEPSC | $ | 3.07 | $ | 3.11 | $ | 12.71 | $ | 12.91 | |||||||
Transaction-related expenses for completed acquisitions | — | — | 0.01 | 0.01 | |||||||||||
Financial impacts associated with the minority investments in Indicor & CertiniaA | TBD | TBD | TBD | TBD | |||||||||||
Amortization of acquisition-related intangible assetsB | 1.35 | 1.35 | 5.33 | 5.33 | |||||||||||
Adjusted DEPS | $ | 4.42 | $ | 4.46 | $ | 18.05 | $ | 18.25 | |||||||
Footnotes:
A. | Adjustments related to the financial impacts associated with the minority investments in Indicor & Certinia as shown below ($M, except per share data). Forecasted results do not include any potential impacts associated with our minority investments in Indicor or Certinia, as these potential impacts cannot be reasonably predicted. These impacts will be excluded from all non-GAAP results in future periods. | ||||||||||||||
Q1 2023A | Q1 2024A | Q2 2024E | FY 2024E | ||||||||||||
Pretax | $ | 1 | $ | (57 | ) | TBD | TBD | ||||||||
After-tax | $ | (2 | ) | $ | (48 | ) | TBD | TBD | |||||||
Per share | $ | (0.02 | ) | $ | (0.45 | ) | TBD | TBD | |||||||
B. | Actual results and forecast of estimated amortization of acquisition-related intangible assets as shown below ($M, except per share data). These adjustments are taxed at 21%. | ||||||||||||||
Q1 2023A | Q1 2024A | Q2 2024E | FY 2024E | ||||||||||||
Pretax | $ | 170 | $ | 178 | $ | 185 | $ | 730 | |||||||
After-tax | $ | 135 | $ | 141 | $ | 147 | $ | 577 | |||||||
Per share | $ | 1.26 | $ | 1.31 | $ | 1.35 | $ | 5.33 | |||||||
C. | Forecasted GAAP DEPS do not include any potential impacts associated with our minority investments in Indicor or Certinia. These impacts will be excluded from all non-GAAP results in future periods. | ||||||||||||||
Note: Numbers may not foot due to rounding.
About
Contact information:
Investor Relations
941-556-2601
investor-relations@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, acquired businesses, including obtaining any required regulatory approvals with respect thereto. 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, including risks related to labor shortages and rising interest rates, changes in foreign exchange rates, difficulties associated with exports, risks associated with our international operations, cybersecurity and data privacy risks, including litigation resulting therefrom, risks related to political instability, armed hostilities, incidents of terrorism, public health crises (such as the COVID-19 pandemic) or natural disasters, increased product liability and insurance costs, increased warranty exposure, future competition, changes in the supply of, or price for, parts and components, including as a result of the current inflationary environment and ongoing supply chain constraints, environmental compliance costs and liabilities, risks and cost associated with 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
Condensed Consolidated Balance Sheets (unaudited) | |||||||
(Amounts in millions) | |||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 198.4 | $ | 214.3 | |||
Accounts receivable, net | 763.5 | 829.9 | |||||
Inventories, net | 126.0 | 118.6 | |||||
Income taxes receivable | 25.2 | 47.7 | |||||
Unbilled receivables | 118.2 | 106.4 | |||||
Other current assets | 194.4 | 164.5 | |||||
Total current assets | 1,425.7 | 1,481.4 | |||||
Property, plant and equipment, net | 119.6 | 119.6 | |||||
18,310.8 | 17,118.8 | ||||||
Other intangible assets, net | 8,830.9 | 8,212.1 | |||||
Deferred taxes | 31.2 | 32.2 | |||||
Equity investments | 852.5 | 795.7 | |||||
Other assets | 407.8 | 407.7 | |||||
Total assets | $ | 29,978.5 | $ | 28,167.5 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY: | |||||||
Accounts payable | $ | 145.2 | $ | 143.0 | |||
Accrued compensation | 165.2 | 250.0 | |||||
Deferred revenue | 1,507.7 | 1,583.8 | |||||
Other accrued liabilities | 464.2 | 446.5 | |||||
Income taxes payable | 127.5 | 40.4 | |||||
Current portion of long-term debt, net | 499.7 | 499.5 | |||||
Total current liabilities | 2,909.5 | 2,963.2 | |||||
Long-term debt, net of current portion | 7,222.3 | 5,830.6 | |||||
Deferred taxes | 1,624.9 | 1,513.1 | |||||
Other liabilities | 424.2 | 415.8 | |||||
Total liabilities | 12,180.9 | 10,722.7 | |||||
Common stock | 1.1 | 1.1 | |||||
Additional paid-in capital | 2,837.1 | 2,767.0 | |||||
Retained earnings | 15,118.0 | 14,816.3 | |||||
Accumulated other comprehensive loss | (141.9 | ) | (122.8 | ) | |||
(16.7 | ) | (16.8 | ) | ||||
Total stockholders’ equity | 17,797.6 | 17,444.8 | |||||
Total liabilities and stockholders’ equity | $ | 29,978.5 | $ | 28,167.5 | |||
Condensed Consolidated Statements of Earnings (unaudited) | |||||||
(Amounts in millions, except per share data) | |||||||
Three months ended |
|||||||
2024 | 2023 | ||||||
Net revenues | $ | 1,680.7 | $ | 1,469.7 | |||
Cost of sales | 499.7 | 451.1 | |||||
Gross profit | 1,181.0 | 1,018.6 | |||||
Selling, general and administrative expenses | 699.7 | 617.6 | |||||
Income from operations | 481.3 | 401.0 | |||||
Interest expense, net | 53.2 | 37.4 | |||||
Equity investments (gain) loss, net | (57.0 | ) | 1.2 | ||||
Other expense, net | 1.2 | 2.3 | |||||
Earnings before income taxes | 483.9 | 360.1 | |||||
Income taxes | 101.9 | 75.8 | |||||
Net earnings from continuing operations | 382.0 | 284.3 | |||||
Net loss from discontinued operations | — | (1.2 | ) | ||||
Net earnings | $ | 382.0 | $ | 283.1 | |||
Net earnings per share from continuing operations: | |||||||
Basic | $ | 3.57 | $ | 2.67 | |||
Diluted | $ | 3.54 | $ | 2.66 | |||
Net loss per share from discontinued operations: | |||||||
Basic | $ | — | $ | (0.01 | ) | ||
Diluted | $ | — | $ | (0.01 | ) | ||
Net earnings per share: | |||||||
Basic | $ | 3.57 | $ | 2.66 | |||
Diluted | $ | 3.54 | $ | 2.65 | |||
Weighted average common shares outstanding: | |||||||
Basic | 107.0 | 106.3 | |||||
Diluted | 107.9 | 107.0 |
Selected Segment Financial Data (unaudited) | |||||||||||||||
(Amounts in millions; percentages of net revenues) | |||||||||||||||
Three months ended |
|||||||||||||||
2024 | 2023 | ||||||||||||||
Amount | % | Amount | % | ||||||||||||
Net revenues: | |||||||||||||||
Application Software | $ | 895.2 | $ | 761.4 | |||||||||||
370.8 | 354.5 | ||||||||||||||
Technology Enabled Products | 414.7 | 353.8 | |||||||||||||
Total | $ | 1,680.7 | $ | 1,469.7 | |||||||||||
Gross profit: | |||||||||||||||
Application Software | $ | 625.7 | 69.9 | % | $ | 520.5 | 68.4 | % | |||||||
316.3 | 85.3 | % | 299.4 | 84.5 | % | ||||||||||
Technology Enabled Products | 239.0 | 57.6 | % | 198.7 | 56.2 | % | |||||||||
Total | $ | 1,181.0 | 70.3 | % | $ | 1,018.6 | 69.3 | % | |||||||
Operating profit*: | |||||||||||||||
Application Software | $ | 239.6 | 26.8 | % | $ | 193.2 | 25.4 | % | |||||||
167.0 | 45.0 | % | 147.5 | 41.6 | % | ||||||||||
Technology Enabled Products | 136.2 | 32.8 | % | 115.5 | 32.6 | % | |||||||||
Total | $ | 542.8 | 32.3 | % | $ | 456.2 | 31.0 | % | |||||||
* Segment operating profit is before unallocated corporate general and administrative expenses and enterprise-wide stock-based compensation. These expenses were |
Condensed Consolidated Statements of Cash Flows (unaudited) | |||||||
(Amounts in millions) | |||||||
Three months ended |
|||||||
2024 | 2023 | ||||||
Cash flows from operating activities: | |||||||
Net earnings from continuing operations | $ | 382.0 | $ | 284.3 | |||
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities: | |||||||
Depreciation and amortization of property, plant and equipment | 9.2 | 8.6 | |||||
Amortization of intangible assets | 185.0 | 175.1 | |||||
Amortization of deferred financing costs | 2.2 | 2.6 | |||||
Non-cash stock compensation | 33.6 | 29.6 | |||||
Equity investments (gain) loss, net | (57.0 | ) | 1.2 | ||||
Income tax provision | 101.9 | 75.8 | |||||
Changes in operating assets and liabilities, net of acquired businesses: | |||||||
Accounts receivable | 79.4 | 98.0 | |||||
Unbilled receivables | (12.2 | ) | (8.7 | ) | |||
Inventories | (7.9 | ) | (3.8 | ) | |||
Accounts payable | 0.3 | 11.2 | |||||
Other accrued liabilities | (69.3 | ) | (103.7 | ) | |||
Deferred revenue | (70.5 | ) | (61.4 | ) | |||
Cash income taxes paid | (19.0 | ) | (16.0 | ) | |||
Other, net | (26.2 | ) | (27.9 | ) | |||
Cash provided by operating activities from continuing operations | 531.5 | 464.9 | |||||
Cash used in operating activities from discontinued operations | — | (1.2 | ) | ||||
Cash provided by operating activities | 531.5 | 463.7 | |||||
Cash flows used in investing activities: | |||||||
Acquisitions of businesses, net of cash acquired | (1,858.7 | ) | (1.1 | ) | |||
Capital expenditures | (9.3 | ) | (9.8 | ) | |||
Capitalized software expenditures | (9.6 | ) | (9.9 | ) | |||
Other, net | (1.0 | ) | (2.8 | ) | |||
Cash used in investing activities from continuing operations | (1,878.6 | ) | (23.6 | ) | |||
Cash used in disposition of discontinued operations | — | (3.2 | ) | ||||
Cash used in investing activities | (1,878.6 | ) | (26.8 | ) | |||
Cash flows from (used in) financing activities: | |||||||
Borrowings under revolving line of credit, net | 1,390.0 | — | |||||
Cash dividends to stockholders | (80.5 | ) | (72.3 | ) | |||
Proceeds from stock-based compensation, net | 21.7 | 15.1 | |||||
5.8 | 4.7 | ||||||
Other, net | (0.1 | ) | — | ||||
Cash provided by (used in) financing activities | 1,336.9 | (52.5 | ) | ||||
Effect of exchange rate changes on cash | (5.7 | ) | 4.4 | ||||
Net increase (decrease) in cash and cash equivalents | (15.9 | ) | 388.8 | ||||
Cash and cash equivalents, beginning of period | 214.3 | 792.8 | |||||
Cash and cash equivalents, end of period | $ | 198.4 | $ | 1,181.6 | |||
Source: Roper Technologies, Inc.