Exhibit 99.1
Contact Information: Investor Relations 941-556-2601 investor-relations@roperind.com | Roper Industries, Inc. |
Roper Industries Announces Record Third Quarter Results
Substantial Increases in Orders, Revenue and Net Earnings
Operating Cash Flow Increased 25% to $256 million
Sarasota, Florida, October 28, 2013 ... Roper Industries, Inc. (NYSE: ROP) reported financial results for the third quarter ended September 30, 2013.
Roper reports results, including revenue, operating margin, net income and diluted earnings per share, on a GAAP and adjusted basis. Adjusted measures are reconciled to the corresponding GAAP measures at the end of this release.
Third quarter GAAP net earnings increased 17% to $136 million compared to $117 million in the comparable period in the prior year. Adjusted net earnings were $142 million, a 15% increase from the prior year. Third quarter GAAP diluted earnings per share were $1.36 and adjusted diluted earnings per share were $1.42, within the company's guidance of $1.40 - $1.46. Orders increased 18% to $846 million. GAAP revenue increased 11% to $828 million and adjusted revenue increased 11% to $837 million.
GAAP gross margin increased 260 basis points to 58.3% and adjusted gross margin increased to 58.7%, a 280 basis point gain over the prior year. Operating cash flow in the quarter was $256 million, a 25% increase over the prior year.
"We are pleased to deliver record third quarter results with strong operating performance, exceptional margins and outstanding cash flow," said Brian Jellison, Roper's Chairman, President and CEO. "Orders increased 18%, including 7% organic growth in the quarter and backlog increased to a record $1.04 billion. Organic revenue increased 3%, slightly below our expectations, primarily due to declines in our nuclear test business and lower than expected growth in energy end markets. We posted record margin performance and exceptional cash flow, with free cash flow of $244 million."
On October 4, 2013, the company completed the acquisition of Advanced Sensors Ltd, a leading technology provider of instrumentation and detection solutions for offshore oil and gas applications, for £34 million. "Advanced Sensors adds new technology and capabilities to our PAC business," said Mr. Jellison. "We continue to have an attractive pipeline of acquisition opportunities and are well positioned with well over $1 billion of cash and available liquidity."
2013 Outlook and Guidance
Roper is reaffirming that it expects operating cash flow for 2013 to exceed $800 million as a result of its continued strong margin and cash performance.
"We believe that growth in energy and select other markets will be slower than anticipated in the fourth quarter and, as such, we are updating our revenue and diluted earnings per share guidance for the full year," said Mr. Jellison. "We now expect fourth quarter revenue to increase 7% - 9% compared to last year, including organic growth of 3% - 4%. We expect full year adjusted diluted earnings per share to be in the range of $5.57 - $5.63 compared to our previous guidance of $5.72 - $5.86. Fourth quarter adjusted diluted earnings per share is expected to be $1.57 - $1.63."
The company's guidance for full year adjusted diluted earnings per share includes the recognition of acquired revenue which will be excluded under GAAP's purchase accounting rules, and also excludes certain items as detailed later in this press release under the heading "Use of Non-GAAP Financial Measures." The company's guidance excludes the impact of any future acquisitions.
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, October 28, 2013. The call can be accessed via webcast or by dialing +1 888-389-5988 (US/Canada) or +1 719-325-2454, using confirmation code 1799585. 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 +1 719-457-0820 and using the access code 1799585.
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. 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: Third Quarter Revenue Growth
GAAP | Adjusted | |
Acquisitions / Divestitures | 8% | 9% |
Organic | 3% | 3% |
Foreign Currency | - | - |
Rounding | --- | (1%) |
Total Revenue Growth | 11% | 11% |
Table 2: Third Quarter Adjusted Diluted Earnings Per Share
Q3 2013 | |
GAAP Diluted Earnings Per Share | $1.36 |
Add: Purchase Accounting Adjustment for Acquired Revenue (Sunquest, MHA) | 0.06 |
Adjusted Diluted Earnings Per Share | $1.42 |
Table 3: Free Cash Flow
Q3 2013 | Q3 2012 | ||
Operating Cash Flow | $255.8 | $205.4 | |
Less: Capital Expenditures | (11.5) | (8.7) | |
Free Cash Flow | $244.3 | $196.7 |
Table 4: Full Year 2013 Adjusted Diluted Earnings Per Share Guidance
Low End | High End | |||
GAAP Diluted Earnings Per Share Guidance | $5.25 | $5.34 | ||
Add: Purchase Accounting Adjustment for Acquired Revenue | $0.22 | $0.22 | ||
Add: Second Quarter Charge for Vendor-Supplied Component Quality Issue | $0.06 | $0.06 | ||
Add: Estimated Second Half Impact from Vendor-Supplied Component Quality Issue | $0.03 | $0.01 | ||
Adjusted Diluted Earnings Per Share Guidance | $5.56 | $5.63 | ||
Previous Adjusted Diluted Earnings Per Share Guidance | $5.72 | $5.86 |
About Roper Industries
Roper Industries is a diversified growth company and is a constituent of the S&P 500, Fortune 1000, and the Russell 1000 indices. Roper provides engineered products and solutions for global niche markets, including software information networks, medical, water, energy, and transportation. Additional information about Roper 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 | 2013 | 2012 | ||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 459,980 | $ | 370,590 | ||||
Accounts receivable, net | 505,284 | 526,408 | ||||||
Inventories, net | 204,722 | 190,867 | ||||||
Unbilled receivable | 85,375 | 72,193 | ||||||
Deferred taxes | 88,421 | 41,992 | ||||||
Other current assets | 45,417 | 43,492 | ||||||
Total current assets | 1,389,199 | 1,245,542 | ||||||
PROPERTY, PLANT AND EQUIPMENT, NET | 117,785 | 110,397 | ||||||
OTHER ASSETS: | ||||||||
Goodwill | 4,541,772 | 3,868,857 | ||||||
Other intangible assets, net | 2,051,685 | 1,698,867 | ||||||
Deferred taxes | 68,048 | 78,644 | ||||||
Other assets | 77,086 | 68,797 | ||||||
Total other assets | 6,738,591 | 5,715,165 | ||||||
TOTAL ASSETS | $ | 8,245,575 | $ | 7,071,104 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 142,987 | $ | 138,340 | ||||
Accrued compensation | 100,901 | 110,724 | ||||||
Deferred revenue | 212,275 | 185,912 | ||||||
Other accrued liabilities | 153,293 | 128,351 | ||||||
Deferred taxes | 12,431 | 3,868 | ||||||
Current portion of long-term debt | 12,250 | 519,015 | ||||||
Total current liabilities | 634,137 | 1,086,210 | ||||||
NONCURRENT LIABILITIES: | ||||||||
Long-term debt | 2,593,607 | 1,503,107 | ||||||
Deferred taxes | 862,986 | 707,278 | ||||||
Other liabilities | 92,032 | 86,783 | ||||||
Total liabilities | 4,182,762 | 3,383,378 | ||||||
STOCKHOLDERS' EQUITY: | ||||||||
Common stock | 1,013 | 1,006 | ||||||
Additional paid-in capital | 1,219,648 | 1,158,001 | ||||||
Retained earnings | 2,813,356 | 2,489,858 | ||||||
Accumulated other comprehensive earnings | 48,318 | 58,537 | ||||||
Treasury stock | (19,522 | ) | (19,676 | ) | ||||
Total stockholders' equity | 4,062,813 | 3,687,726 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 8,245,575 | $ | 7,071,104 |
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, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net sales | $ | 827,810 | $ | 747,641 | $ | 2,348,955 | $ | 2,183,579 | ||||||||
Cost of sales | 345,185 | 331,086 | 999,247 | 978,223 | ||||||||||||
Gross profit | 482,625 | 416,555 | 1,349,708 | 1,205,356 | ||||||||||||
Selling, general and administrative expenses | 263,276 | 233,298 | 765,436 | 673,011 | ||||||||||||
Income from operations | 219,349 | 183,257 | 584,272 | 532,345 | ||||||||||||
Interest expense | 24,705 | 16,456 | 67,924 | 47,016 | ||||||||||||
Loss on extinguishment of debt | - | (1,043 | ) | - | (1,043 | ) | ||||||||||
Other income/(expense) | 409 | (1,380 | ) | 453 | (2,444 | ) | ||||||||||
Earnings from continuing operations before | ||||||||||||||||
income taxes | 195,053 | 164,378 | 516,801 | 481,842 | ||||||||||||
Income taxes | 58,730 | 47,670 | 144,211 | 142,012 | ||||||||||||
Net Earnings | $ | 136,323 | $ | 116,708 | $ | 372,590 | $ | 339,830 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 1.37 | $ | 1.19 | $ | 3.76 | $ | 3.49 | ||||||||
Diluted | $ | 1.36 | $ | 1.17 | $ | 3.72 | $ | 3.41 | ||||||||
Weighted average common and common | ||||||||||||||||
equivalent shares outstanding: | ||||||||||||||||
Basic | 99,207 | 97,876 | 99,058 | 97,460 | ||||||||||||
Diluted | 100,302 | 99,757 | 100,152 | 99,543 |
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, | |||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||||||||||
Industrial Technology | $ | 200,684 | $ | 199,008 | $ | 580,466 | $ | 598,088 | ||||||||||||||||||||||||
Energy Systems & Controls | 155,058 | 158,169 | 456,031 | 461,508 | ||||||||||||||||||||||||||||
Medical & Scientific Imaging | 237,338 | 172,475 | 645,739 | 486,207 | ||||||||||||||||||||||||||||
RF Technology | 234,730 | 217,989 | 666,719 | 637,776 | ||||||||||||||||||||||||||||
Total | $ | 827,810 | $ | 747,641 | $ | 2,348,955 | $ | 2,183,579 | ||||||||||||||||||||||||
Gross profit: | ||||||||||||||||||||||||||||||||
Industrial Technology | $ | 101,259 | 50.5 | % | $ | 102,569 | 51.5 | % | $ | 296,414 | 51.1 | % | $ | 304,002 | 50.8 | % | ||||||||||||||||
Energy Systems & Controls | 88,104 | 56.8 | % | 87,782 | 55.5 | % | 256,431 | 56.2 | % | 254,325 | 55.1 | % | ||||||||||||||||||||
Medical & Scientific Imaging | 167,433 | 70.5 | % | 112,013 | 64.9 | % | 440,718 | 68.3 | % | 314,411 | 64.7 | % | ||||||||||||||||||||
RF Technology | 125,829 | 53.6 | % | 114,191 | 52.4 | % | 356,145 | 53.4 | % | 332,618 | 52.2 | % | ||||||||||||||||||||
Total | $ | 482,625 | 58.3 | % | $ | 416,555 | 55.7 | % | $ | 1,349,708 | 57.5 | % | $ | 1,205,356 | 55.2 | % | ||||||||||||||||
Operating profit*: | ||||||||||||||||||||||||||||||||
Industrial Technology | $ | 60,753 | 30.3 | % | $ | 60,628 | 30.5 | % | $ | 164,278 | 28.3 | % | $ | 180,211 | 30.1 | % | ||||||||||||||||
Energy Systems & Controls | 41,076 | 26.5 | % | 42,890 | 27.1 | % | 118,432 | 26.0 | % | 118,749 | 25.7 | % | ||||||||||||||||||||
Medical & Scientific Imaging | 71,968 | 30.3 | % | 46,190 | 26.8 | % | 179,433 | 27.8 | % | 125,231 | 25.8 | % | ||||||||||||||||||||
RF Technology | 66,469 | 28.3 | % | 58,002 | 26.6 | % | 183,828 | 27.6 | % | 166,516 | 26.1 | % | ||||||||||||||||||||
Total | $ | 240,266 | 29.0 | % | $ | 207,710 | 27.8 | % | $ | 645,971 | 27.5 | % | $ | 590,707 | 27.1 | % | ||||||||||||||||
Net Orders: | ||||||||||||||||||||||||||||||||
Industrial Technology | $ | 197,549 | $ | 191,955 | $ | 581,862 | $ | 598,077 | ||||||||||||||||||||||||
Energy Systems & Controls | 148,922 | 147,304 | 466,414 | 458,455 | ||||||||||||||||||||||||||||
Medical & Scientific Imaging | 262,320 | 177,528 | 688,673 | 494,250 | ||||||||||||||||||||||||||||
RF Technology | 229,484 | 202,959 | 711,419 | 661,826 | ||||||||||||||||||||||||||||
Total | $ | 838,275 | $ | 719,746 | $ | 2,448,368 | $ | 2,212,608 |
* Operating profit is before unallocated corporate general and administrative expenses. These expenses were $20,917 and $24,453 for the three months ended September 30, 2013 and 2012, respectively and $61,699 and $58,362 for the nine months ended September 30, 2013 and 2012, respectively.
Roper Industries, Inc. and Subsidiaries | ||||||||
Condensed Consolidated Statements of Cash Flows (unaudited) | ||||||||
(Amounts in thousands) | ||||||||
Nine months ended | ||||||||
September 30, | ||||||||
2013 | 2012 | |||||||
Net earnings | $ | 372,590 | $ | 339,830 | ||||
Non-cash items: | ||||||||
Depreciation | 28,269 | 28,402 | ||||||
Amortization | 111,210 | 82,398 | ||||||
Stock-based compensation expense | 40,040 | 30,143 | ||||||
Income taxes | (12,643 | ) | (14,258 | ) | ||||
Changes in assets and liabilities: | ||||||||
Receivables | 29,844 | 3,987 | ||||||
Inventory | (15,202 | ) | (2,985 | ) | ||||
Accounts payable | 3,557 | 5,041 | ||||||
Accrued liabilities | 9,498 | (13,658 | ) | |||||
Other, net | (390 | ) | 7,314 | |||||
Cash provided by operating activities | 566,773 | 466,214 | ||||||
Business acquisitions, net of cash acquired | (1,014,952 | ) | (1,445,549 | ) | ||||
Capital expenditures | (33,349 | ) | (29,236 | ) | ||||
Other, net | 1,596 | 654 | ||||||
Cash used by investing activities | (1,046,705 | ) | (1,474,131 | ) | ||||
Principal debt borrowings | 800,000 | - | ||||||
Principal debt payments | (502,115 | ) | (26,826 | ) | ||||
Revolver borrowings, net | 290,000 | 1,050,000 | ||||||
Debt issuance costs | (7,717 | ) | (4,551 | ) | ||||
Dividends | (32,706 | ) | (40,102 | ) | ||||
Excess tax benefit from share-based payment | 7,763 | 19,873 | ||||||
Proceeds from stock-based compensation, net | 16,839 | 40,105 | ||||||
Premium on convertible debt conversions | (5,100 | ) | (19,149 | ) | ||||
Other, net | 2,556 | 644 | ||||||
Cash provided by financing activities | 569,520 | 1,019,994 | ||||||
Effect of exchange rate changes on cash | (198 | ) | 4,931 | |||||
Net increase in cash and equivalents | 89,390 | 17,008 | ||||||
Cash and equivalents, beginning of period | 370,590 | 338,101 | ||||||
Cash and equivalents, end of period | $ | 459,980 | $ | 355,109 |
ROPER INDUSTRIES INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS - RECONCILIATION OF GAAP TO NON-GAAP | ||||||||||||||||
(Amounts in thousands, except per share data) | ||||||||||||||||
Adjustments | ||||||||||||||||
2013 3rd Quarter GAAP | Sunquest Fair Value Adjustment to Acquired Deferred Revenue | MHA Purchase Accounting Adjustment to Revenue | 2013 3rd Quarter Adjusted Non-GAAP | |||||||||||||
Net Orders | $ | 838,275 | $ | - | $ | 7,893 | $ | 846,168 | ||||||||
Net Sales | $ | 827,810 | $ | 1,007 | $ | 7,893 | $ | 836,710 | ||||||||
Cost of Sales | 345,185 | - | - | 345,185 | ||||||||||||
Gross Profit | 482,625 | 1,007 | 7,893 | 491,525 | ||||||||||||
Selling, general and administrative expenses | 242,359 | - | - | 242,359 | ||||||||||||
Segment income from operations | 240,266 | 1,007 | 7,893 | 249,166 | ||||||||||||
Corporate general and administrative expenses | 20,917 | - | - | 20,917 | ||||||||||||
Income from operations | 219,349 | 1,007 | 7,893 | 228,249 | ||||||||||||
Interest Expense | 24,705 | - | - | 24,705 | ||||||||||||
Other income (expense) | 409 | - | - | 409 | ||||||||||||
Earnings from continuing operations before income taxes | 195,053 | 1,007 | 7,893 | 203,953 | ||||||||||||
IncomeTaxes (1) | 58,730 | 352 | 2,763 | 61,845 | ||||||||||||
Tax Rate | 30.1 | % | 35.0 | % | 35.0 | % | 30.3 | % | ||||||||
Net Earnings | $ | 136,323 | $ | 655 | $ | 5,130 | $ | 142,108 | ||||||||
Weighted average common shares outstanding | 100,302 | 100,302 | ||||||||||||||
Diluted earnings per share | $ | 1.36 | $ | 1.42 | ||||||||||||
(1) For the adjustment, the company used a 35% tax rate, as these adjustments are US-based items and 35% is the statutory tax rate in the United States |