Contact Information: Investor Relations 941-556-2601 investor-relations@roperind.com | Roper Industries, Inc. |
Roper Industries Announces Results For 2009 Third Quarter
Orders Increased Sequentially; Net Earnings Were $56 Million;
Operating Cash Flow Reached $87 Million
Sarasota, Florida, October 26, 2009 .... Roper Industries, Inc. (NYSE: ROP) reported financial results for the third quarter ended September 30, 2009.
Net earnings for the third quarter were $56 million, or $0.61 per diluted share. Excluding restructuring expenses, adjusted net earnings were $58 million, or $0.63 per diluted share. Sales during the quarter were $486 million, an 18% decrease compared to the same period in 2008. Orders were $499 million, and represented 103% of sales, marking the first time since the second quarter of 2008 that orders exceeded sales. Operating cash flow was $87 million, or 18% of revenue, bringing year-to-date operating cash flow to $248 million. Free cash flow (operating cash flow less capital expenditures) during the quarter was $81 million, representing 143% of net income in the quarter. Year-to-date free cash flow is $229 million, or 137% of year-to-date net income.
“More than half our businesses experienced greater than 10% growth in orders over the second quarter, and this improvement in order momentum is expected to continue in the fourth quarter,” said Brian Jellison, Roper’s Chairman, President and CEO. “Although sales in the quarter were 4% lower than second quarter levels, in part due to some orders shifting to the fourth quarter, we were pleased with the performance of our businesses in terms of margins, cost controls and cash flow. In addition, we increased cash and liquidity during the quarter with a successful $500 million 10-year bond offering that increases our flexibility as we pursue strategic acquisition opportunities.”
Operating margin was 18.9% in the quarter, or 19.5% excluding restructuring costs. Decremental margin (change in operating profit divided by change in sales), excluding the RF segment was 34% in the quarter, including the cost of restructuring, and 31% excluding restructuring costs. “Our decremental margin performance again demonstrated the success of our operating model, with its focus on breakeven analysis and quick payback restructuring actions,” Mr. Jellison concluded.
Outlook and Guidance
Roper expects full year operating cash flow to be in excess of $350 million. Adjusting for the additional interest costs related to the recent bond offering, the Company now expects full-year earnings per diluted share between $2.57 and $2.63, which excludes the impact of restructuring costs and future acquisitions.
Table 1: Sequential Income Statement (Millions)
Q3 2009 | Q2 2009 | |
Net Orders | $499 | $489 |
Net Sales | 486 | 505 |
Cost of Sales | 240 | 250 |
Gross Profit | $246 | $255 |
Selling, General & Administrative Expenses | 154 | 159 |
Operating Profit | $92 | $96 |
Table 2: Operating Margin (Millions)
Q3 2009 | ||
(1) | Operating Profit | $91.9 |
Restructuring Costs, All Segments | 2.7 | |
(2) | Adjusted Operating Profit | $94.6 |
(3) | Revenue | $486 |
Operating Margin (1)/(3) | 18.9% | |
Adjusted Operating Margin (2)/(3) | 19.5% |
Table 3: Sales Growth
Q3 2009 | |
Organic Growth | (19%) |
Acquisitions / Divestitures | 2% |
Foreign Currency (FX) | (1%) |
Total Sales Growth | (18%) |
Conference Call to be Held at 8:30 AM (ET) October 26, 2009
A conference call to discuss these results has been scheduled for 8:30 AM ET on Monday, October 26, 2009. The call can be accessed via webcast or by dialing +1 800-967-7141 (US/Canada) or +1 719-457-2638, using confirmation code 6889450. Webcast information and conference call materials will be made available in the Investors section of Roper’s website (www.roperind.com) prior to the start of the call. Telephonic replays will be available for up to two weeks by calling +1 888-203-1112 (US/Canada) or +1 719-457-0820 and using the access code 6889450.
About Roper Industries
Roper Industries is a diversified growth company and is a component of the Fortune 1000, S&P MidCap 400 and the Russell 1000 Indexes. Roper provides engineered products and solutions for global niche markets, including water, energy, radio frequency and research/medical applications. Additional information about Roper Industries is available on the Company’s website at www.roperind.com.
The information provided in this press release contains forward looking statements within the meaning of the federal securities laws. These forward looking statements 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 and profit expectations. Forward looking statements may be indicated by words or phrases such as "anticipate," "estimate," "plans," "expects," "projects," "should," "will," "believes" or "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 our 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, unfavorable 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 and 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.
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Roper Industries, Inc. and Subsidiaries | ||||||||
Condensed Consolidated Balance Sheets (unaudited) | ||||||||
(Amounts in thousands) | ||||||||
September 30, | December 31, | |||||||
ASSETS | 2009 | 2008 | ||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 256,024 | $ | 178,069 | ||||
Accounts receivable | 323,959 | 376,855 | ||||||
Inventories | 174,055 | 185,919 | ||||||
Deferred taxes | 27,540 | 29,390 | ||||||
Unbilled receivable | 60,344 | 61,168 | ||||||
Other current assets | 65,572 | 26,906 | ||||||
Total current assets | 907,494 | 858,307 | ||||||
PROPERTY, PLANT AND EQUIPMENT, NET | 104,748 | 112,463 | ||||||
OTHER ASSETS: | ||||||||
Goodwill | 2,142,765 | 2,118,852 | ||||||
Other intangible assets, net | 759,241 | 804,020 | ||||||
Deferred taxes | 31,190 | 28,050 | ||||||
Other assets | 56,383 | 49,846 | ||||||
Total other assets | 2,989,579 | 3,000,768 | ||||||
TOTAL ASSETS | $ | 4,001,821 | $ | 3,971,538 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 100,561 | $ | 121,807 | ||||
Accrued liabilities | 224,483 | 261,682 | ||||||
Income taxes payable | - | 1,892 | ||||||
Deferred taxes | 1,079 | - | ||||||
Current portion of long-term debt | 119,852 | 233,526 | ||||||
Total current liabilities | 445,975 | 618,907 | ||||||
NONCURRENT LIABILITIES: | ||||||||
Long-term debt | 1,004,357 | 1,033,689 | ||||||
Deferred taxes | 286,352 | 272,182 | ||||||
Other liabilities | 42,662 | 42,826 | ||||||
Total liabilities | 1,779,346 | 1,967,604 | ||||||
STOCKHOLDERS' EQUITY: | ||||||||
Common stock | 931 | 919 | ||||||
Additional paid-in capital | 846,966 | 815,736 | ||||||
Retained earnings | 1,332,555 | 1,187,467 | ||||||
Accumulated other comprehensive earnings | 63,425 | 21,513 | ||||||
Treasury stock | (21,402 | ) | (21,701 | ) | ||||
Total stockholders' equity | 2,222,475 | 2,003,934 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 4,001,821 | $ | 3,971,538 |
Roper Industries, Inc. and Subsidiaries | ||||||||||||||||
Condensed Consolidated Statements of Earnings (unaudited) | ||||||||||||||||
(Amounts in thousands, except per share data) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Net sales | $ | 485,676 | $ | 593,100 | $ | 1,496,030 | $ | 1,730,509 | ||||||||
Cost of sales | 240,156 | 284,340 | 744,304 | 840,029 | ||||||||||||
Gross profit | 245,520 | 308,760 | 751,726 | 890,480 | ||||||||||||
Selling, general and administrative expenses | 153,648 | 176,461 | 477,098 | 523,374 | ||||||||||||
Income from operations | 91,872 | 132,299 | 274,628 | 367,106 | ||||||||||||
Interest expense | 14,437 | 16,122 | 41,708 | 42,141 | ||||||||||||
Other income (expense) | 105 | (2,836 | ) | 2,917 | (1,695 | ) | ||||||||||
Earnings from continuing operations before | ||||||||||||||||
income taxes | 77,540 | 113,341 | 235,837 | 323,270 | ||||||||||||
Income taxes | 21,130 | 39,312 | 68,280 | 112,267 | ||||||||||||
Net Earnings | $ | 56,410 | $ | 74,029 | $ | 167,557 | $ | 211,003 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.62 | $ | 0.83 | $ | 1.85 | $ | 2.36 | ||||||||
Diluted | $ | 0.61 | $ | 0.79 | $ | 1.81 | $ | 2.24 | ||||||||
Weighted average common and common | ||||||||||||||||
equivalent shares outstanding: | ||||||||||||||||
Basic | 90,877 | 89,629 | 90,526 | 89,381 | ||||||||||||
Diluted | 92,908 | 94,251 | 92,635 | 94,026 |
Roper Industries, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||
Selected Segment Financial Data (unaudited) | ||||||||||||||||||||||||||||||||
(Amounts in thousands and percents of net sales) | ||||||||||||||||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||||||||||
Industrial Technology | $ | 130,538 | $ | 169,065 | $ | 397,730 | $ | 525,929 | ||||||||||||||||||||||||
Energy Systems & Controls | 102,988 | 137,535 | 314,997 | 410,638 | ||||||||||||||||||||||||||||
Scientific & Industrial Imaging | 78,934 | 94,610 | 238,914 | 282,206 | ||||||||||||||||||||||||||||
RF Technology | 173,216 | 191,890 | 544,389 | 511,736 | ||||||||||||||||||||||||||||
Total | $ | 485,676 | $ | 593,100 | $ | 1,496,030 | $ | 1,730,509 | ||||||||||||||||||||||||
Gross profit: | ||||||||||||||||||||||||||||||||
Industrial Technology | $ | 62,060 | 47.5 | % | $ | 82,215 | 48.6 | % | $ | 190,501 | 47.9 | % | $ | 253,719 | 48.2 | % | ||||||||||||||||
Energy Systems & Controls | 52,464 | 50.9 | % | 75,172 | 54.7 | % | 164,123 | 52.1 | % | 223,720 | 54.5 | % | ||||||||||||||||||||
Scientific & Industrial Imaging | 44,169 | 56.0 | % | 51,457 | 54.4 | % | 132,385 | 55.4 | % | 154,135 | 54.6 | % | ||||||||||||||||||||
RF Technology | 86,827 | 50.1 | % | 99,916 | 52.1 | % | 264,717 | 48.6 | % | 258,906 | 50.6 | % | ||||||||||||||||||||
Total | $ | 245,520 | 50.6 | % | $ | 308,760 | 52.1 | % | $ | 751,726 | 50.2 | % | $ | 890,480 | 51.5 | % | ||||||||||||||||
Operating profit*: | ||||||||||||||||||||||||||||||||
Industrial Technology | $ | 30,547 | 23.4 | % | $ | 43,767 | 25.9 | % | $ | 91,614 | 23.0 | % | $ | 136,627 | 26.0 | % | ||||||||||||||||
Energy Systems & Controls | 19,214 | 18.7 | % | 32,541 | 23.7 | % | 59,926 | 19.0 | % | 96,359 | 23.5 | % | ||||||||||||||||||||
Scientific & Industrial Imaging | 14,818 | 18.8 | % | 18,746 | 19.8 | % | 43,300 | 18.1 | % | 54,091 | 19.2 | % | ||||||||||||||||||||
RF Technology | 38,918 | 22.5 | % | 50,191 | 26.2 | % | 115,724 | 21.3 | % | 119,902 | 23.4 | % | ||||||||||||||||||||
Total | $ | 103,497 | 21.3 | % | $ | 145,245 | 24.5 | % | $ | 310,564 | 20.8 | % | $ | 406,979 | 23.5 | % | ||||||||||||||||
Operating profit excluding restructuring*: | ||||||||||||||||||||||||||||||||
Industrial Technology | $ | 31,494 | 24.1 | % | $ | 43,767 | 25.9 | % | $ | 95,931 | 24.1 | % | $ | 136,627 | 26.0 | % | ||||||||||||||||
Energy Systems & Controls | 20,503 | 19.9 | % | 32,541 | 23.7 | % | 63,739 | 20.2 | % | 96,359 | 23.5 | % | ||||||||||||||||||||
Scientific & Industrial Imaging | 15,195 | 19.3 | % | 18,746 | 19.8 | % | 44,797 | 18.8 | % | 54,091 | 19.2 | % | ||||||||||||||||||||
RF Technology | 38,976 | 22.5 | % | 50,191 | 26.2 | % | 116,542 | 21.4 | % | 119,902 | 23.4 | % | ||||||||||||||||||||
Total | $ | 106,168 | 21.9 | % | $ | 145,245 | 24.5 | % | $ | 321,009 | 21.5 | % | $ | 406,979 | 23.5 | % | ||||||||||||||||
Net Orders: | ||||||||||||||||||||||||||||||||
Industrial Technology | $ | 125,776 | $ | 163,442 | $ | 391,049 | $ | 514,326 | ||||||||||||||||||||||||
Energy Systems & Controls | 104,593 | 134,970 | 298,551 | 402,553 | ||||||||||||||||||||||||||||
Scientific & Industrial Imaging | 84,329 | 102,933 | 235,433 | 289,606 | ||||||||||||||||||||||||||||
RF Technology | 184,243 | 179,274 | 534,251 | 538,624 | ||||||||||||||||||||||||||||
Total | $ | 498,941 | $ | 580,619 | $ | 1,459,284 | $ | 1,745,109 | ||||||||||||||||||||||||
* Operating profit is before unallocated corporate general and administrative expenses. These expenses | ||||||||||||||||||||||||||||||||
were $11,625 and $12,946 for the three months ended September 30, 2009 and 2008, respectively, and | ||||||||||||||||||||||||||||||||
$35,936 and $39,873 for the nine months ended September 30, 2009 and 2008, respectively. |
Roper Industries, Inc. and Subsidiaries | ||||||||
Condensed Consolidated Statements of Cash Flows (unaudited) | ||||||||
(Amounts in thousands) | ||||||||
Nine months ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Net earnings | $ | 167,557 | $ | 211,003 | ||||
Non-cash items: | ||||||||
Depreciation | 25,828 | 24,775 | ||||||
Amortization | 51,280 | 50,588 | ||||||
Stock-based compensation expense | 20,821 | 22,848 | ||||||
Income taxes | (24,146 | ) | 2,602 | |||||
Changes in assets and liabilities: | ||||||||
Receivables | 54,127 | (5,517 | ) | |||||
Inventory | 14,496 | (12,157 | ) | |||||
Accounts payable | (22,354 | ) | 5,358 | |||||
Accrued liabilities | (42,375 | ) | 2,234 | |||||
Other, net | 2,615 | 3,805 | ||||||
Cash provided by operating activities | 247,849 | 305,539 | ||||||
Business acquisitions, net of cash acquired | (1,248 | ) | (701,935 | ) | ||||
Capital expenditures | (18,708 | ) | (20,787 | ) | ||||
Other, net | 6,983 | (4,084 | ) | |||||
Cash used by investing activities | (12,973 | ) | (726,806 | ) | ||||
Principal debt borrowings | 500,000 | 850,000 | ||||||
Principal debt payments | (466,186 | ) | (957,745 | ) | ||||
Revolver borrowings (payments), net | (179,000 | ) | 393,000 | |||||
Debt issuance costs | (4,310 | ) | (10,169 | ) | ||||
Dividends | (22,343 | ) | (19,393 | ) | ||||
Excess tax benefit from share-based payment | 1,055 | 4,688 | ||||||
Proceeds from exercise of stock options | 4,845 | 10,050 | ||||||
Other, net | (604 | ) | 918 | |||||
Cash provided by (used by) financing activities | (166,543 | ) | 271,349 | |||||
Effect of exchange rate changes on cash | 9,622 | (2,578 | ) | |||||
Net increase (decrease) in cash and equivalents | 77,955 | (152,496 | ) | |||||
Cash and equivalents, beginning of period | 178,069 | 308,768 | ||||||
Cash and equivalents, end of period | $ | 256,024 | $ | 156,272 |