ROP - Earnings call transcript Q2 2022 | Roper Technologies, Inc.

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Operator

Good morning. The Roper Technologies Conference Call will now begin. Today's call is being recorded and all participants will be in a listen-only mode. [Operator Instructions] I'd like to turn the call over to Zack Moxcey, Vice President, Investor Relations. Please go ahead.

Zack Moxcey

you quarter joining Technologies. financial thank discuss as and second the results morning all us for we Good for Roper

me Officer; Rob our this this call. and financial call replay morning, prepared Jason results. our Finance. Conley, and press on Earlier also Neil and Officer; release O'Callaghan, Joining we President issued today's includes Chief Vice today's a available President release Hunn, available webcast accompany of Accounting information to Chief morning Financial Chief announcing Shannon for Executive Crisci, are are through Officer; Vice Vice and President Executive the We press slides also on which and The call, website. the President are

Page harbor our to begin Now please X. statement. if safe turn with We you

today's which in During as uncertainties press filings. on make we call, to subject the risks release will course SEC our are in and forward-looking of and this page, described our statements

of in primarily on we You will quarter results the should non-GAAP Today, listen for now context discuss X. call to our the an turn that Page And today's to basis. please adjusted information.

as Results During these majority stake in this businesses. sell a operations the businesses on an continuing a Unless Roper our all basis. industrial are the quarter, to in periods for numbers shown announced agreement discontinued reported presented. noted, operations for otherwise presentation are

even the related difference X, on cash the our our of are industrial following found these to in though the quarter, restructuring as to release Neil? telephone second divestitures. commission I'll divestitures. lastly, to pending have Reconciliations items be And hand assets; cash the prepared tax our turn press to flow will our adjusted to our GAAP XXXX consists to After between now to of our we with appendix items: of accounting amortization this requires flow statement our you exclude be payments related if expense presentation in our GAAP can adjusted Page businesses. remarks, participants. Neil. over acquisition-related the the of income they associated the and sale expense from operating And taxes For cash website. classified paid please adjustments we call and purchase results results the questions take intangible

Neil Hunn

Thanks, Thanks Zack, then morning, and highlights morning, get and our everyone. results for quarter year then we'll joining questions. for by out good we'll This detail segment us. review second to start our your our increase financial the and reviewing

please. slide, Next

As performance, majority available of the call an another we turn operational great increasing entered of had north we year; businesses; and takeaways stake for our M&A the and our billion of the of to quarter, third, Page we second, are today's X, the agreement to industrial have during into firepower. X first, for quarter we financial main and we're outlook divest

Looking pleased of the quality execution at across we quarter, the second enterprise. with continue to our be

the growth of our quarter very growth not XX% grow grow revenue businesses an last by across Consistent This during our with XX%. organic solid activity and quite Of order characterized broad-based segments. strong our particular importance, three is commentary having we was the but quarters, improved basis. several on also within only organic we recurring base our quality the did quarter, software the saw nicely as underlying of

of the will our significantly complete the levels well record growth, portfolio the levels in backlog. In very we Once divestiture of addition of majority the of of our product performed and software experiencing across quality to several dimensions. be our improved demand strong businesses industrial high quarter, interest our businesses, very

being products. and being software we medical of First, less about with water balance will and cyclical XX% be portfolio meaningfully the our

in nature, one of working more that increasing third, of north revenue recurring percentage our our of improved occur year, Also, being is we'll Neptune's which finally, software as we even And demand this a Second, capital our of in $X of recurring nature. asset-light such we'll reoccurring our amount with vastly And be replacement consumables. capacity. large of a have the levels revenue generates industrial given medical higher product and XX% anticipate of continue cash significant product divestiture, with will closing profile M&A to we'll later as grow. have billion revenue we

markets, We optimal are to very deployment active and highly of also patient disciplined our remain capital. ensure in but the M&A available super

which to turn and ability quality further wisely, will are both of deploy this We scale our confident the improve in our in capital enterprise.

We execution, a solid are operating very quarter. of for their proud team our

the turn through call walk me summary. let Rob? who Rob, financial our will to Now

Rob Crisci

Thanks, Neil. Good morning, everyone.

On our favorably the beat $X.XX at QX to strong that quite compares of $X.XX of apples-to-apples to our guidance, Turning reported operations now want our sale. discontinued businesses including guidance performance to compared basis, very a industrial QX our of Page an we due $X.XX, guidance, as quarter. X, to $X.XX pending of cover end the the to our part briefly here, to high

Next slide.

Page financial to Turning highlights. covering and QX X the

largest basis Here, our led on segments. businesses, of at Vertafore review $X.XX software exceptional we and is and to Network some Organic businesses. increased revenue by billion. basis the forward. key with to matching well. Software our will perform freight XX% which continued increased earnings guidance our metrics grew continuing strength XX% performance XX% each for reporting across three operations grew moving our X% Deltek organically very financial of reporting Application as a Total continue two revenue

pay of a of Neptune. Net quality XX% new XX.X%, revenue XX% below from Notably, in continuing flow paid $XXX million R&D $XX three-year was XXX by million XXX for organically, year, to XX% portfolio. than companies, many free We higher as XXXX. by negative result but aided our $XX quarter we segment XX% technology-enabled versus XXX, working our XXXX. prior impacted the products in for $XXX adjusted capital million, excellent was was X.XX%, technology an QX flow cash QX EBITDA expect additional was represent was our ops Section still effect a which Section annualized Section higher QX second DEPS increasing XX% to took half. is in that Finally, XX% now change related capitalization to an the resulting EBITDA margin grew million. CAGR and year. like a last cash on basis negatively

the when tax only tax Importantly, are the our the change this tax of timing due, or taxes impacts amount owed of law and rate. not overall

normal payments Zetec been Additionally, in flow. tax payments TransCore, made cash the adjusted those Per quarter, divestitures have out convention, we of of on the CIVCO gains to XXXX related our and Radiotherapy. our the

$X.X our Finally, we are very five-year new billion credit facility. pleased the completion of revolving announce to

their personally for I O'Callaghan in Shannon grateful next to process like We Roper. and for are me continued group to for our thank excellent and work the support, the bank leading

place, with for deployment. summary, our and balance, future the well in meaningful our closing of revolver the we new cash billion sale So in proceeds capital industrial very later positioned this from a $X are year,

over with it back to turn I'll Neil. So that,

Neil Hunn

Rob. for Thanks, your and Congrats these you upsizing to conditions. our extending and team in revolver, market especially

we're X, basis. As few historical our for turn three revenues financial portfolio down network go-forward arrayed to a disclosures we our In segmented Also provided and businesses tech-enabled X-K ago, across of summarize you quarterly issued this time, segments: Page breaking the products. by weeks XX we we the software, software first annual for type. and on application

software XX% our XX% revenues software you of reoccurring in see, revenues nature. are total As XX% are our recurring and related. our of of total or revenue

communicated quarters, of how several continues For our quality improve. to we've stream the revenue

You this can well illustrated here. see point

growth the by Our see growth, organic a our the XX% in is of can underpinned Further, you recurring breadth products. growth and software in growth XX% revenue base. software

our of page. Our our now the strategy clearly and We has on is more for two nearly to quality reflected enterprise, be excited decades for improve this cannot been future. this

saw the this Software for delivery broad. revenue group revenue Revenues up XQ increased to SaaS here Across basis segment walk X% and X% about continued were $XXX were through revenue for in recurring This is XX.X%. growth which of the an and Let's migration Across by Application customer our EBITDA turn XX recurring segment. to our companies, Page on financial segment, models. and the this margins enabled organic quite strength of was quarter. the retention highlights million, strong is this XX% we

great Deltek strength another their across we'll market. serves particular in highlight Deltek. market As we strength with posted all a end end with contractor The start few construction businesses, of quarter team

gains managed to CliniSys and strong and compete its continue had market ability addition, the property operational in the agent Data win insurance enhances to across customers and We gain continues excellent bookings shifted customers ARR the Deltek quarter, in capability. share Vertafore driving large strong was At MGA EPSI we solid meeting Stratic market by and In remain the the Also Strata lifted an of been the which they Systems. many to release momentum, ecosystem. and highlighted segment demand where same The revenue improve offerings. fit during to to the exceedingly DI to for tuck-in continued completed exhibit adoption share to growth. casualty their Innovations acquisition of of cloud-based quarter, and general product This to CliniSys and activity strength. acquisition the EPSI are. continues super has acquisition by EPSI the wallet be legacy health Strata offering. and continues the Strata successfully product time, EPSI support systems cloud-based Strata product has committed and VA. gaining U.K.; us. as demonstrate strong continues to of Vertafore's

loss for Roper, Aderant extending a in share be recurring to space. acceleration in SaaS see to continues large continues the of driving Aderant booking performer their Finally, base. an the revenue solid increases substantial activity gains

mid-single-digit by Looking continued this second in expect the to see year, the for ARR to the XXXX of the of segment, balance half momentum. driven outlook for we growth

The million, on basis in the XX, Page XX% XX% revenue. were XX%. Network were underpinned XX% at an Software to segment strong Turning organic segment margins EBITDA is $XXX by growth for growth and organic quarter recurring revenues in this our in up

continue matching dig the performance, conditions slowing be The side of network freight to we a on favorable. businesses touch market and Canadian while As continued our to business-specific carrier be the into exceptional. U.S.

the in this transportation will to by the the is contracted During the in to benefit it from surge DAT represented a that spot secular trend the a market volumes spot easier arc. increased of We as became share market compared market volumes, the multiyear believe market. ecosystem recent over transact

job user both by value adding continues In revenue nice do per increasing and features a capture. addition, of to improving DAT

positioned the our to Finally, digitization the over to well enable freight further be continue of matching planning spot market. arc horizon, a longer businesses freight

growth Moving business is computer-generated frame a financial XXX% strength. success and combined live-action in to rooted their era pipeline, double the graphics enables to customer quoting enables favorable tech the innovation our and and is of north market capability which supply our retention our processes, single helped drive network recent additions, their our Net business digits that filming strong had and business life grew in long-term chain Foundry that be underwriting fast-paced SaaS software in solid ITrade again. conditions. food and each quarter. continued foundry, ARR insurance

nursing, quarter which businesses, shortages. grew on health home and execution care, in Proud site customers' by their namely our despite growth focus skilled being assisted staffing here. the alternate Finally, constrained of nicely living the health

mid-single-digit the segment, freight outlook the our expect match momentum balance to businesses. continued for by growth revenue moderating year, we the of recurring Turning for for driven growth to this see and organic

products As environment. XX.X% tech-enabled for organic were segment challenging our we turn quarter. in chain very on EBITDA to supply an XX% million, despite were Page $XXX basis up XX, the in the revenues margins this segment

had record backlog. quarter with and Neptune, revenue which ending start Let's orders,

and lead share times been product technology. meter quarters terms both For in in of connectivity new Neptune reading at few releasing static market successful cellular to able and gain a by running, terms keeping has industry-leading being products,

strong hampered our these medical are even the through As will ordering chain remain great great exceptionally the ability to view. were a later a of so Congrats for forward anniversary, teams supply confident this execute your by Hunn quarter. better each XX-year you XX far run quarter our mark Northern next year a franchises such continue of variety our Digital very and well, a said, to ownership fact, Neptune in an executing fun That turns team see challenges during but company. building and product Verathon, challenges. we with activity to and and

population. our horizon, businesses of the each devices increased product of namely tailwinds, and single-use medical benefactors over of secular the the demand the for Looking are aging

it constrained by somewhat demand segment, for the for of As but year, to levels, underpinned chain growth backlog we the see current supply to challenges. the single-digit balance the relates high strong by this outlook and expect

updated our the Now Page balance for let's please outlook year. to turn XX, the review and and increased of

between industrial As a $XX.XX, included to we last adjusted increased DEPS reminder, quarter, our guidance $X.XX $XX.XX be and businesses. from which our

guidance our businesses, industrial we to million going model $X.XX our the Given are divest our removing forward. agreement from

So this on QX organic we're a XX to guidance ops XX again, second strong half previous of on a continuing $XX.XX now increasing in be Embedded full to new between is Based continuing to curtailing and guidance ops guidance equates our visibility, X%, to basis, and X% our ops our XX. growth XX on year basis. $XX.XX.

quarter, range the to establishing we're DEPS guidance X.XX. $X.XX of be As and we the third look in to

our Now questions. comments your get and we'll concluding to

As leave started. which three we you want we to turn points Page we the with to XX, same with

First, we strong and we're full for had performance, a of year. outlook increasing quarter the the

Second, we strategic M&A of actions tremendous businesses. industrial a amount took in majority have of a firepower to third, stake invest we $X our north And billion.

free organically XX% cash to we has grew As XX%, a XX%, compounded and on basis. our flow strong start, XX% revenues DEPS relates it grown EBITDA and three-year

factors during in guidance organic and businesses. record a call, year full demand the based for growth the outlined revenue recurring on our lifting our are growth product We strong specifically DEPS

have and our and to continue active M&A of engaged balance highly reloaded have we opportunities. pipeline sheet a Finally,

We billion M&A have available north firepower. of of $X

at of further start mentioned we've our deploy high As to quality ability capital decades. scale today's the of as enterprise, discipline, the confident improve the with and activity our and remain of equally our to patience are we past in levels and matched our this two over done just call,

increasing Rob our to team revolver. the and finance for and and of kudos term Finally, $X.X the Shannon size billion

we've your acquiring over This that is done to remind same: niche we As what XX strategy will our so. technology We questions, growing for to turn us years continue businesses. let cash everyone flow is market-leading and compound by do and the

growth creation recurring intimacy, high highly revenue, operate a and has compete customer focuses value businesses unchanged. yields margins highly that governance structure our of portfolio based niches. building. levels on operational a which operate Each strong addition, model organic We In and our remains We on market-leading and resilient business defensible businesses long-term of decentralized rates. of

bar improving. Our culture and focuses performance sets continually for on high a very

We are humility. reinforces and all of culture nimbleness paid our transparency, to grow, which

we long-term Finally, with We strategy, disciplined, unchanged, do a shareholder acquire capital and great to in delivers manner. thoughtful and a redeployed team analytical our compounded business. vast value. the resource of majority superior next the centralized corporate highly This this

with So thanks questions. it for open joining let's And us this your up morning. that, to

Operator

Yes, thank you.

will with question We Capital question-and-answer Markets. to comes And of call. the first portion go from Deane the Dray now our [Operator RBC Instructions]

Deane Dray

the the look, first Congrats on new under earnings report Roper.

Neil Hunn

No, thank you.

Deane Dray

X I really breakout you XX and do If in broken of on the How revenue SaaS? well in we the couple migration you as which over could Page as mix the out the Page start, especially expect by new information to on shows like years, change appendix, segment. that conversion to the next same

Neil Hunn

Yes, Deane.

in line, on-premise -- recurring X, SaaS. So the the really, on that both is Page the XX% line the line and in maintenance embedded that

And inside happen so line. that the migration will of

so uplift conversion delivering -- from see and and you'll is, Now because it it'll multi-multiyear that value singular get what happens maintenance SaaS of an a line, but the long-term to tailwind we happens you're that see that we'll the the within in line. -- more as happens, on-prem sort

Deane Dray

for there and the rate of the capital next upon on forward? still run to is course plays And comps earnings look, then just we're the upside timing Section Roper is XXX going working then just total the helpful. mix the I'm for and -- you and one clarify that the the negative out added year. -- tax based of kind And that's sentence that the it that year for how And XX%, for that? impact, It the Okay, new is payments changed and new says all that Rob, doesn't change amount. of the the there glad that calibrating

Rob Crisci

yes. Yes,

mean, yes, is rate. So capital, on the working XX% run the I

a and million I there to get upside, is be continue Yes, grow, total software cash they'll will work time. generate expect right? year. think We this capital is XXX, to these as they should negative $XXX over more for grow it it businesses on headwind -- more

around we quarter paid. basically a million it's So, $XX

it tax know, second the in make quarter. quarter, in As you two was Yes. that's we the payments XX% why

law said about some there's The So, a this. change lot could money then get point, at and obviously, back. that we'd been

just -- to the have deductions now over you it's look certainly, wait So, at you same basically. for the really but deductions time,

Operator

question from next Oppenheimer. the with Glynn Christopher comes And

Christopher Glynn

abnormal new of about Talk wanted products. out in medical that, supply you'd I backlog, characterize the segment So chain and seeing a to you about how revenue talk kind levels it. bit the impacts could margins aspect break of how on the little let's think any if gating the of some

Rob Crisci

Yes.

performance the good. very So was

have we everyone is versus products, like if sells backlog same where you certainly, year. I issues. who double this the mean we're think, So I some year last chain time supply else are look

there's bit little bit that of better revenue. the grow opportunity of gets the second little margin plenty in So half. to A think to We a impact. continue

of I done think business has our job pushing a great through price.

at to a really, takes time But And over it to time. that so that's everyone some little think better really the so is sell a bit price versus cost, start I the higher products well. managing

So, we feel about our good operations. really

Christopher Glynn

Okay. And this for if down look tech-enabled you QX EBITDA the XX, margins year XXXX products, about at quarter. the follow-up, X.X second points Slide versus a are

bridge, you can conceptually gap about that that just Just what represents? talk

Rob Crisci

XXXX the with COVID. quarter the the in big because so Verathon heart was an -- Yes, of of outlier

strong So growth that's virus. as when Verathon the that had to we're fight extremely just trying

'XX And tick a margins from so, I over but is normalized margin a time. those little do that we should bit standpoint, think more probably think up

Operator

Scott next And Day the from you. question comes Thank with Cornelius.

Scott Davis

sort some price of CPI? Is gets about give is just the -- kind -- how CPI? is half a it -- I escalators it in little and there can bit think how I little you passed things? a you basis I price. price the us SaaS, a mean, imagine there Is talk there wanted to those -- bit through is like

Neil Hunn

Yes.

talking sort and there's product. capture the capture and -- is you little you're price software. So mean, if -- price of a obviously, -- value software you're there's about specifically different way the than bit I and

the tied -- see a in to that you're -- CPI software, to and generally for subscription we right, price. able a all So is maintenance is were so the plus touch which

price. price. embedded and to cost businesses. are with also structure that of then it be business arc inflation, software the a each in software thing labor of is just a in product you naturally mean, price. The part other it's it's see in there'll just little but happens taking customers longer I obviously, through in The algorithm to is offset the the and more year. growth rates interest that's every increase The And increasing higher, bit the wages, over businesses time, the less than spiky what a used

So our pipeline you the nice on matchup increase pricing the naturally, get the that of of business. software as is cost labor the a part with of of

Scott Davis

a of of there versus And difference had because more but talk recurring answer, -- is I'm and coffee, a kind go little there and to maybe I of price, three-year you kind cup you of like mean was get confused a me value you mentioned just difference and one non-recurring? is a Dean's I pricing your bit -- in in about but little only It's you old. I kind more think add when back question.

Neil Hunn

confusing. so I No, apologies if was

about. issues So there's we're two talking

and if cost price on the the you're on software; that. perpetual a So taking company, the a on in both well-run of maintenance world you're software on price, software

a not So up sort only thing bad them in the price end initial ends up software they of some where is being you and software. a that the tandem, take do up maintenance companies up you don't on thing move that challenging in

tandem, Our so companies take in them stay together. they up

on-premise shift. asking which pricing was once relationship software about deliver point. between So what's we that's Dean's SaaS we point paid get and the perpetual SaaS and the maintenance, the the

most the our only and so most the migrate most the or the Because them for are shift basis value, hosting you're headaches client. on version bundle doing and so from application security, the of a generally of running lift And oftentimes, and features software on delivering recent to of Xx as all recent eliminating we you're not more. value the advantage recent on-premise value, you're more the keeping to just or take as a sort you also versions customer that, more you're a capture delivering that recurring touch or of cloud, they the SaaS, of able

proposition So that's question value straight about moving versus the price the for to it's environment -- in of increase software. a cloud your what of happens the

Rob Crisci

we're maintenance sense, a and you roughly give today. to XX% just subscription XX% And in

of time, that's over we're revenue So But that already largely know in cloud. convert million -- of you a that to mentioned. that the by subscription time still and go with the period $XXX would revenue license There's long away we're roughly us, Neil customers. as driven

think, it's recurring on the And so good a really line. revenue story, I

Operator

question Thank from Giordano you. Cowen. comes with And the next Joe

Joe Giordano

what's them now? So pushback that gone those and getting the this. GIG kind through curious, some just and I'm like now they code with change have how far? to And of kind you'll maybe from of the what likely you've that some initial gone overall you're of your have Rob, talk the new all discussions cohort Neil, that conversations investors so were things some things of initial were

Neil Hunn

a having would that's with sudden, the Yes. this person. code buy-side like GICS every of it's happened change, a or different light we're all the I switch conversation not say is

cash flow durability little on slow the quite questions conference recurring, but bit same of is same flywheel business it's and generally the which it's what's conversations. your conversation singular our similar. the they're bit here. They change model mix a a have and on business, of what's the risks, to what dynamics the base, between bit of quite legacy evolutionary had a software model, a shareholder discussion, opposite. we A business little the fact, dozen are where In -- little really. a sort We've been your little were a growth with the obviously, we non-recurring, mean, the I what's half

Rob Crisci

past fourth said excitement, at as application intra-quarter lot to we're conference, were and software we the they're I that our XXX. excited at that And S&P at analysts right? was our largest us, I a are these the think really think, just saying in of a we and Because prospects. I look think they of I company, lot know future getting just when

to is with race current shareholder while, investment our excited happy Roper. we're base making to a continually expand of So their course, that shareholder in new also sure

Joe Giordano

So when you the businesses, you finding could material not then like maybe not that about slotted or Roper, clear a the but want think I'm companies at guessing previously enough threshold M&A, to does to a taking that there function internally change happened more DRI makes divestment have profile harder just Or however step negative mathematically -- new that the with make maybe that like in that CRI might look or just of is industrial about? out the the it. Is is accurate? now And you that worry have threshold. improved meet it could business higher business

Neil Hunn

XX of asset I've tell the right? the I That's -- essentially for just we once businesses. it's targets but universe the the not here, It's asset enough about, is material mean, years of why. more are. you worry wonderful plentiful. that's me let entire not becoming cohort looking targets, cohort light And we same at now, as lines we're about asset-light it's So, why staying as even -- are. about -- at yours been almost are software which It's asset-light my to looked we've

Operator

next Allison Wells from comes Poliniak Fargo. Thank the you. with And question

Allison Poliniak

sort that freight I'm talk matching the the match the you trying balance sort impact it the and of terms software of to understanding had growth businesses Is in of high freight to the moderation network there, understand that overall the that maybe it. on of to mid- just growth? On single-digit segment in that business, the could combined?

Rob Crisci

Yes, do that in higher very businesses do the are mid-single-digit occasionally organic of than segment lower than that most of sort that. rarely that, normally businesses

I into the year, of are think just moderation freight so, bit get do, matching the in and you they what of a little have the those as And you sort doing of then growth. half second

Allison Poliniak

And kind in of M&A. to there then tech-enabled there sort kind we of at at guys about looking question, point? products? of hurdle that focus off software table that the be a last are or just is is pulling may this the certainly, you Is M&A on terms it anything What clear that of

Neil Hunn

No, it's a in haven't just It definitely off actioned been there while. not has table. not the off the anything table. We quite

an it's are leader business is would if look stable, criteria, than something forces product the definitely of asset-light that a competitive then of a in we market, small tech-enabled it's sort all at. So our

Operator

Thank comes Barclays. And the question you. from Julian Mitchell next with

Julian Mitchell

just wanted business. of a software on questions couple the to I Maybe ask

were help risk low guess the business? freight from software like, match has update color earlier What's in the U.S. in terms that that the enjoyed to fantastic license lot some this all then week. off, First margin, up And type XXs going freight of in margins about the I of the scary understand you SAP about the any that business to QX. match, of incremental sort see NSS expect recessions of we How after operating We if freight There's there questions us to cyclicality in application leverage. rolling? And Again business. perform been long stories a should year the that in macro? of

Neil Hunn

take the and and in me okay let DAT one, license So application Rob margins the that's One the NSS. if I'll software talk let about

just it's easier is that business spot through to two market a grow secular secular -- of for tailwind was DAT two endures. been is a that also The But summary years enjoyed. it's in five So through able today the more liquid, spectacular freight couple it reasons. at less years, That's XXXX recession. has years that the the had, tailwind the freight secular markets DAT it sort certainly last 'XX. transact version, three on ago. tailwind cyclical a end are tailwind years, why there's There's And grew DAT, of in principally, than just to

that's So share benefactor you customers, of time been to market see its of continue. market that's and the a and this and freight -- going that DAT mark, total spot the increasing over

it then orders may it in to the software, As excuse in As activity period, five-plus it's model, we over as in license the quarter. further market, accelerate DAT years the license the perpetual -- relates business the broker's right? next in the the it and solid continue half but tech-enable me, application will first

maybe I we're different that. lower, price points mean our much, an think SAP much like like modestly right? I our -- something than because are

we're multiples -- $X our mean, So, are price these we're million, we're big sizable these of deal are not million, is that. us our points, -- important -- a $X a But for and $X not customers. deal, I million for

do you to... want So Rob,

Rob Crisci

I mean, be Yes. of slow concerned take plus Then range. that not would structural businesses XX% EBITDA on are these to the step that in sort those would have were that backwards growth margins, I there. all margins margins a

expect that to little. continue to a I'd were if slow even so, And growth

Julian Mitchell

sort then more up And of maybe line. for this Rob following

big should we changes P&L? at costs cash Just things run you divestment, Any in got numbers this like you've Roper? tax sort think sort of those kind look then flow go-forward three the changes metrics Maybe have or conversion. in How from as any about out the corporate in and of an of free there. changes for rate here the we new restated around out go-forward rate

Rob Crisci

tax any of rate. be terms shouldn't There meaningful Yes. in changes

think long cash I of pay these when a in conversion, Company noise I of are there's do the the mean, the to for that around think you sort of lot the about, this term. part best yearas talking also we've we of that's thing transactions to clearly, in terms do price been taxes and

probably it's better and you should beyond, mean, negative if forward more look capital. have we and been even think at working little be I our next I flow free So cash year the a bit conversion because levels to historically

better Just less portfolio, quality cyclicality.

so, little mean I better yes, that conversion should think time. cash run rate bit ops think over continuing moving the I now run you corporate, the And rate get see of flow And a is I worth the forward. right sort

Operator

the from Tusa And you. Thank comes next with JPMorgan. Steve question

Steve Tusa

of usually basis, changed and in perspective? on the the on the third that but of expect Anything fourth. fourth underlying bit gets quarter know kind And question and quarter. a and cash. from kind guys the it third of bounce don't any lumpy from a here little the guide the better in first it color I in cash, second you you'd Just on an kind levels. second to It's seasonally back how on

Rob Crisci

Yes, I right. that's think

the you're So when because fourth working quarter quarter is a seasonally, best lot in capital renewals that's always of software. getting our

the expect well And So to think sort a of capital cash. I we a guy performing tax really in the cash would we lot situation. to is else generate And pretty good be working second of talked half. everything about

Steve Tusa

do of you element about then on And your the recurring, you the in accounting there, percentage is maybe of deals? I the a an revenue there there But percentage XXX those is upfront book those the behave they Do on three-year three-year, as XXX, perspective. book differently side, have when think accounting? a know in per there? different so of of in an businesses that type deals, you there the you from accounting revenue

Jason Conley

term does that a of Only a multiyear have get licenses of very our Steve, of perpetual this portion upfront, it. A is small recognized as Conley. also then licenses, booked And license are that. of part Yes. a there's upfront businesses is XXX, of couple us. that Jason term the portion for lot so

Operator

Goldman Ritchie comes the question with Sachs. you. Thank from Joe And next

Joe Ritchie

Maybe right the going do healthier longer think organic your business is organic think we've to about new rate. achieve this portfolio I question legacy time? kind just wondering that over of about this kind X% like growth thought growth like somewhere rate just to for X% going forward, how term. of on I business if long-term in type historically first I'm businesses the growth this

Neil Hunn

-- it's go-forward Industrial the rate long-term of did announced we growth long-term transaction -- growth historical the the we a rate showed that -- showed with chart businesses, the portfolio the X%. and when about Process So is

we So, day that's the to right try where we baseline, now, of would work we to at say and better. the every new But make sort to then would that expect obviously, that X% norm.

Joe Ritchie

you coming benefit additional think it is business, added And how like added convert, extra, the continue in to if expected And way in whole conversion like your SaaS that how are don't guys of that whole years? then to as do this like an it, about on-prem well there. seems that know then it's to XX% are you of I the call years? XX% that just that we this from recent curious kind I like you'll I'm to kind much on growth your to rate an see guess

Neil Hunn

is bad a let's we a bad the It's there's a for guy a and perpetual as right? Yes. for said it's been, deal. if a go say growth driver. good $X year you're the So a And there's it in guy while, million it's guy, you're selling where modest been a just through minute, deal, to

majority a SaaS year, maybe vast a or that's the that in If I minus. to converts that or revenue deal know, at, year. priced deal, I that maybe booked mean don't plus that's $XXX,XXX You of subscription a

the that end the there's guy between upfront January versus in bad you year, a deal booked SaaS, $XXX,XXX the SaaS that's license on assuming X. So and

bit installed of of for and But a slight guide large to bad our that happens. what us when is of that little the a there's base So is shifting positive lifting maintenance a overwhelmed customers. net

a So as same you of or take cohort if $XXX,XXX them lift to minus cloud paying the $XXX,XXX have going example, into customers in ship plus a -- year. and you in you're a the you year, the this

very are that's it. this. to customers it posture migrate. do they that We're to our wanting get much that customers our that dynamic We've dynamic. out forcing in I be that we're And many slight to take because do to to to if relative of guide. of gotten to the you nets of meeting while years XX where Even had a X it's So good a not years guess, why will and

Rob Crisci

phase right? Deltek have many always is of that to time. an businesses I'll That's very customers were SaaS a they're are this mainly years. last several of of Most the mix have talked beginning, bought over of at every sort really already like we rest businesses journey, kind where been a Yes. of the starting add has one or in that really we about just Aderant. their cloud. I move to the four SaaS, really business five businesses the Other the businesses least really and are been on business the mean different SaaS. on-prem XXX%

Operator

next from The Jeff Sprague comes you. with Research. question Thank Real

Jeff Sprague

question. we're I'll as software, ask annoying transitioning industrial to guess I just an

is Just back deal, look on back announced. obviously, at like the are time deal structure some you on to the that me to is what's to X-K, what the that itself for wasn't this not there was And right? an end the with -- for With then it's on going $XXX XX% debt still upfront, have value clear and might about guys additional how deal detail mean certainly the right? clear me we think the multiple, wasn't billion paying guys you I the very XXx CD&R X.XXX of the million out it taken the equity, If enterprise and X.X billion new like back of deal X.X looks unclear end.

Neil Hunn

way X.X, right? about XX.Xx that so, that just value So, correct, year. new upfront, through the our of maths X.X the would would the right? way, -- this it the it, we And I'll last went we the that's lens was year, think enterprise So it through, put it's I'll partner, XXx is say by

last that return capital equal put XX over to in five amount you the a In the Xx-plus CD&R to of of We, is horizon. model so years, terms look our if is range business. over drive more in that still the capital, amount investment business too, the money-on-money basically their cyclicality given like of in EBITDA CD&R's

we right? then how equity, if that. successful, of to stub think framing are you our and of they a sort It's of a get So of triple

in maybe liquidity XXX couple minus or of there's have billion So the XXX upside million a that the getting we to on of plus or addition there.

things the successful or billion if $X.X years. underscore five the over end back So so billion if next call it, to on $X go and capitalize

Jeff Sprague

on premise the actively do investments with that ready business, get and Is example, they business to M&A incremental or eventual the wouldn't sale? participate that that other would based of For you things kind you dilute other for it in business? in the in the

Neil Hunn

Yes.

So around growth we're So totally right? there, aligned in the the thesis -- Company. of the two implied questions is

thesis. asset, the at cash to a with of sort levered run or businesses these deployment on So building right? the getting source It highest that and we're of as is in to flywheel. it's is that because very aligned how still level, the to Without a of and of organic the one, a a asset So continuing all generative for the a goal into our but growth completely centers the at going capital last of the -- this or details with on that years partner four much the for use doing growth it's Company flywheel M&A execute we've been repeat so in invest a or it primary leverage is being generation us formed, funding. cash then

If in think sort the in So best transaction we'll you decision. CDR kick of it's to a deal-by-deal the And a a We option we there then our have effect. where of going don't is dilutive is shareholders. interest equity, have to make that that. consider

that gave I so, that dilution little before. factored And there be you is math of but bit sort the could dilution, yes, a into of somewhat

Operator

Baird. Rob And from Mason comes question you. Thank with the next

Rob Mason

first, question around technical Just a guidance. the

for year core growth nine. three ago? it guidance basis Did where on the versus an to would is have So, apples-to-apples been eight change the months that

Rob Crisci

X.X% -- we maybe the like higher, businesses were or we seven But Those think raised nine away, our it's I I slightly nine. to higher. eight and say and last in would I mean divested to are slightly so. go we've guide

little raise, by So, I think it's lot. a of but a a net bit not

Rob Mason

would within the slot you Where the segments increase three that -- segments now?

Rob Crisci

given we half, their in the is their really, biggest execute as say second I'd well, just prepared their ability really that doing incredibly a given looks better business They're customers. said and outlook to strong. in to backlog, Neptune. remarks So the deliver has It their

had I'd So Everything is about that's really quite three bit we that's one it ago. say better. else months gotten the a I same as the think

Operator

you. Thank Harbor question Management. Asset is the Clear next And with Blanton Alex

Alex Blanton

What look wanted to in Yes, quarter? this I first just minute. per $X.XX was the at that

Rob Crisci

quarter about was in and $X.XX in quarter. $X.XX first it Yes, the the what second

Alex Blanton

what then your third for for And quarter? that the guidance is

Rob Crisci

disc we're for because So, not it's ops, but the full it year. right, in guiding it's by XXX quarter,

businesses those oil quarter markets. gas best fourth cyclicality the the for and the is given generally, and quarter the So

Alex Blanton

are with on thing look things of that what what with like I'd in Just I some year give billion? to just investors does is are rest is future far How color the going like Yes. give putting what you that future are of I I the that the What What's you kinds was working you there to have about you course. What acquisitions, pipeline trying confidence. for how do $X on? really work because the guess that the to the now? and us work is the the along But said. working would I in think on? it talk Well, total of can been quarter-by-quarter. to was out

Neil Hunn

it. the and question appreciate the I opportunity to address

-- reason to been. We're is So We put very ridiculously the it's anything There's of tuck-ins. -- we're posted activity we've have have of just year. $X a not of we've to in ton the been above-average we just couple billion, run of selective portfolio, while we companies view have size, as we making we're patients. our the a committed a that a of being posture stay this small Obviously, forever for decisions sort level really continued We which always staying. of of criteria. amount be tremendous this a as to And lot we there's discipline and criteria. analytics, a

so and the criteria. right matters, everyone to everyone's meet deal got to be every got And has

keep but the time and timetable right at going on grow it posture of itself. no we're -- so going deal we'll of scale -- to we're busy, the the the that. we and presents do sort continue which enterprise. to to super But the And in to there's this just We're and quality

Alex Blanton

be you that this do some to do able year? think But you'll

Neil Hunn

again, be head have X by Board's to ticking clock But there's would team, in -- no or it. the mine no our get or about There's like we date. dollars do to we We to of back X timetable. would like deployed this

bad So that but decision it's to I making, active market. leads think an

odds we'll just get see the we'll done how... this to are have So, but year, something

Rob Crisci

very on working lot projects of always we're yes, like different we active are. Yes, just a

very certainly we're active. So,

Alex Blanton

the available compared prices And just on. with how are like the are characterize many the with businesses compared the and pipeline past. past so of And what

Neil Hunn

deals -- a or we to We number sufficient it the either it's so never want number us think Yes, -- it's or I for pipeline. in not. size quantify dollar is of by mentioned

why we of I believe remain clearly it's we'll with your said of characteristics over activity beginning year. still comes it's it's, priced. bit I at a sufficient. question, And above-average this to the been reason at that an the we're of right mean the Valuations, so hey, the high-quality right us being market for highly time, right price. And for level patient. and that's so are -- just we patient company the assets

Operator

the you. this I would now question-and-answer to call remarks. Thank And concludes our session. back to turn like over Moxcey closing Zack any for

Zack Moxcey

with our us forward to during call. We next Thank look for you, speaking joining everyone, earnings today. you

Operator

lines. presentation. your today's concludes and dialing This you for now disconnect may you. you Thank in, Thank

Roper (ROP) 22 Jul 222022 Q2 Earnings call transcript