Contact Information: Investor Relations 941-556-2601 investor-relations@ropertech.com |  Roper Technologies, Inc. |
Roper Technologies Announces Second Quarter Results
GAAP Revenue Increased 22%; Adjusted Revenue Increased 23%
Raising Full Year Adjusted DEPS Guidance
Sarasota, Florida, July 31, 2017 ... 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 | 16 | A | 2 | B | ||||||||
| 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-taxD | 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 | ||||