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Roper Technologies Announces First Quarter Results

GAAP Revenue Increased 20%; Adjusted Revenue Increased 22%

Operating Cash Flow Increased to $378 Million

SARASOTA, Fla., April 28, 2017 (GLOBE NEWSWIRE) -- Roper Technologies, Inc. (NYSE:ROP), a diversified technology company, reported financial results for the first quarter ended March 31, 2017.

Roper reports results – including revenue, operating margin, net income and diluted earnings per share – on a GAAP basis and an adjusted basis.

First quarter GAAP revenue increased 20% to $1.09 billion and adjusted revenue grew 22% to $1.11 billion. GAAP diluted earnings per share (DEPS) were $1.53 (+3%), while adjusted diluted earnings per share increased 17% to $2.11.

GAAP gross margin was 61.5% while adjusted gross margin was 62.2%. Operating cash flow increased to $378 million and adjusted EBITDA increased 18% to $362 million.

“Our businesses performed exceptionally well in the first quarter,” said Brian Jellison, Roper’s Chairman, President and CEO. “Our significant revenue increase included 5% organic growth, as our software and medical businesses continued their strong performance and we benefited from improvement in industrial and energy markets. Growth was broad-based as revenue in each of our four segments increased organically in the quarter.”

“Our cash flow performance was outstanding in the quarter with significant contributions from our recent application software acquisitions, Deltek and ConstructConnect, as well as strong execution across the enterprise. We are very pleased by our great start to 2017,” concluded Mr. Jellison.

2017 Guidance

Roper is raising its full year 2017 guidance. The Company now expects full year Adjusted DEPS of $8.98 - $9.28, compared to previous guidance of $8.82 - $9.22.

For the second quarter of 2017, the Company expects Adjusted DEPS to be between $2.16 and $2.24.

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 Friday, April 28, 2017. The call can be accessed via webcast or by dialing +1 877-857-6149 (US/Canada) or +1 719-325-4845, using confirmation code 4090618. 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 http://edge.media-server.com/m/p/skmkjsqe. 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 4090618.

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: Revenue Growth Detail ($M)

Q1 2017 Q1 2016 V %
GAAP Revenue $1,086 $902 20%
Purchase accounting adjustment to
acquired deferred revenueA,B
22 A 3 B
Rounding 1
Adjusted Revenue $1,108 $906 22%
Components of Adjusted Revenue Growth
Organic 5%
Acquisitions +18%
Foreign Exchange (1%)
Total Adjusted Revenue Growth 22%


Table 2: Reconciliation of Q1 2017 GAAP DEPS to Adjusted DEPS

Q1 2017 Q1 2016
GAAP Diluted Earnings Per Share (DEPS) $1.53 $1.48
Purchase accounting adjustment to acquired deferred
revenueA,B
0.14 A 0.02 B
Purchase accounting adjustment for commission
expenseC
(0.01) C -
Acquisition-related inventory step-up chargeD - 0.00 D
Amortization of Acquisition-related intangible assets,
after tax F
0.45 F 0.31 F
Adjusted DEPS $2.11 $1.81


Table 3: Q1 Free Cash Flow Reconciliation ($M)

Q1 2017 Q1 2016 V %
GAAP Operating Cash Flow $378 $207 + 83%
Cash taxes related to 2015 sale of Abel
Pump
37
Rounding 1
Adjusted Operating Cash Flow $378 $245 + 55%
Capital expenditures (15) (9)
Capitalized software expenditures (3) (1)
Rounding - (1)
Adjusted Free Cash Flow $360 $234 + 54%


Table 4: Adjusted Gross Margin Reconciliation ($M)

Q1 2017 Q1 2016 V Bps
GAAP Revenue $1,086 $902
Purchase accounting adjustment to
acquired deferred revenueA,B
22 A 3 B
Rounding 1
Adjusted Revenue $1,108 $906
GAAP Gross Profit $668 $560
Purchase accounting adjustment to
acquired deferred revenueA,B
22 A 3 B
Rounding (1)
Adjusted Gross Profit $689 $563
GAAP Gross Margin 61.5% 62.0% (50) bps
Adjusted Gross Margin 62.2% 62.1% + 10 bps


Table 5: Q1 EBITDA Reconciliation ($M)

Q1 2017 Q1 2016 V%
GAAP Revenue $1,086 $902
Purchase accounting adjustment to acquired deferred
revenueA,B
22 A 3 B
Rounding 1
Adjusted Revenue $1,108 $906
GAAP Net Earnings $158 $151
Taxes 53 66
Interest expense 46 27
Depreciation 12 10
Amortization 73 50
Purchase accounting adjustment to acquired deferred
revenue, pretaxA,B
22 A 3 B
Purchase accounting adjustment for commission
expense, pretaxC
(2)
Acquisition-related inventory step-up charge, pretaxD - 0 D
Rounding - -
Adjusted EBITDA $362 $307 +18%
% of Adjusted Revenue 32.7% 34.0%


Table 6: Forecasted Diluted Earnings Per Share (DEPS)

Q2 2017 Full Year 2017
Low End High End Low End High End
GAAP DEPS $1.62 $1.70 $6.86 $7.16
Purchase accounting adjustments to
acquired deferred revenue and
commissionsE
0.09 E 0.09 E 0.32 E 0.32 E
Amortization of acquisition-related
intangible assets, after-taxF
0.45 F 0.45 F 1.80 F 1.80 F
Adjusted DEPS $2.16 $2.24 $8.98 $9.28

A Acquisition-related fair value adjustments to deferred revenue related to the acquisitions of CliniSys ($0.0M pretax, $0.0M after-tax), ConstructConnect ($5.3M pretax, $3.4M after-tax) and Deltek ($16.3M pretax, $10.6M after-tax).

B Acquisition-related fair value adjustments to deferred revenue related to the acquisitions of Strata ($0.2M pretax, $0.1M after-tax), Softwriters ($0.0M pretax, $0.0M after-tax), Data Innovations ($0.7M pre-tax, $0.4M after-tax), On Center Software ($0.4M pretax, $0.3M after-tax), Aderant ($1.8M pretax, $1.2M after-tax), Atlas Medical ($0.1M pretax, $0.0M after-tax) and CliniSys ($0.1M pretax, $0.1M after-tax)

C Purchase Accounting Adjustment for Commission Expense related to the acquisition of Deltek ($1.8M pretax, $1.2M after-tax),

D Acquisition-related inventory step-up charge related to the acquisition of PCI Medical ($0.1M pretax, $0.1M after-tax)

E Forecasted acquisition-related fair value adjustments to acquired deferred revenue and commissions of ConstructConnect and Deltek, as shown below ($M, except per share data)

Q2 2017 FY 2017
Pretax $15 $51
After-tax $10 $33
Per Share $0.09 $0.32

F 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.

Q1 2016A
Q2 2016A
FY 2016A

Q1 2017A

Q2 2017E
FY 2017E
Pretax $49 $50 $201 $72 $72 $286
After-tax $32 $32 $131 $47 $47 $186
Per share $0.31 $0.31 $1.27 $0.45 $0.45 $1.80

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 integrate 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, 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, 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)
March 31, December 31,
ASSETS2017 2016
CURRENT ASSETS:
Cash and cash equivalents$730,666 $757,200
Accounts receivable 549,838 619,854
Inventories 191,426 181,952
Unbilled receivable 143,589 129,965
Other current assets 97,104 87,530
Total current assets 1,712,623 1,776,501
PROPERTY, PLANT AND EQUIPMENT, NET 144,113 141,318
OTHER ASSETS:
Goodwill and other intangible assets, net 12,268,952 12,302,985
Deferred taxes 30,300 30,620
Other assets 74,066 73,503
Total other assets 12,373,318 12,407,108
TOTAL ASSETS$14,230,054 $14,324,927
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable$152,638 $152,067
Accrued compensation 131,584 161,730
Deferred revenue 513,820 488,399
Other accrued liabilities 251,298 219,339
Income taxes payable 88,126 22,762
Current portion of long-term debt 401,072 400,975
Total current liabilities 1,538,538 1,445,272
NONCURRENT LIABILITIES:
Long-term debt 5,439,700 5,808,561
Deferred taxes 1,169,151 1,178,205
Other liabilities 111,875 104,024
Total liabilities 8,259,264 8,536,062
STOCKHOLDERS' EQUITY:
Common stock 1,039 1,036
Additional paid-in capital 1,518,213 1,489,067
Retained earnings 4,764,711 4,642,402
Accumulated other comprehensive earnings (294,327) (324,739)
Treasury stock (18,846) (18,901)
Total stockholders' equity 5,970,790 5,788,865
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$14,230,054 $14,324,927



Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(Amounts in thousands, except per share data)
Three months ended
March 31,
2017 2016
Net sales $1,086,305 $902,423
Cost of sales 418,691 342,904
Gross profit 667,614 559,519
Selling, general and administrative expenses 409,358 314,528
Income from operations 258,256 244,991
Interest expense 45,865 27,413
Other expense (1,047) (129)
Earnings from continuing operations before income taxes 211,344 217,449
Income taxes 53,273 66,033
Net Earnings $158,071 $151,416
Earnings per share:
Basic $1.55 $1.50
Diluted $1.53 $1.48
Weighted average common and common equivalent shares outstanding:
Basic 101,885 101,071
Diluted 103,078 102,318


Roper Technologies, Inc. and Subsidiaries
Selected Segment Financial Data (unaudited)
(Amounts in thousands and percents of net sales)
Three months ended March 31,
2017 2016
Amount % Amount %
Net sales:
Medical & Scientific Imaging $348,235 $332,214
RF Technology 429,619 280,210
Industrial Technology 183,404 171,235
Energy Systems & Controls 125,047 118,764
Total $1,086,305 $902,423
Gross profit:
Medical & Scientific Imaging $251,930 72.3% $246,897 74.3%
RF Technology 251,478 58.5% 160,365 57.2%
Industrial Technology 93,151 50.8% 86,020 50.2%
Energy Systems & Controls 71,055 56.8% 66,237 55.8%
Total $667,614 61.5% $559,519 62.0%
Operating profit*:
Medical & Scientific Imaging $119,793 34.4% $114,456 34.5%
RF Technology 88,984 20.7% 88,766 31.7%
Industrial Technology 53,613 29.2% 46,759 27.3%
Energy Systems & Controls 30,236 24.2% 24,182 20.4%
Total $292,626 26.9% $274,163 30.4%
Net Orders:
Medical & Scientific Imaging $350,777 $343,850
RF Technology 441,289 281,125
Industrial Technology 195,316 178,905
Energy Systems & Controls 126,727 122,770
Total $1,114,109 $926,650
* Operating profit is before unallocated corporate general and administrative expenses. These expenses were $34,370 and $29,172 for the three months ended March 31, 2017 and 2016, respectively.



Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)
Three months ended
March 31,
2017 2016
Net earnings $158,071 $151,416
Non-cash items:
Depreciation 12,377 9,702
Amortization 72,998 49,549
Stock-based compensation expense 21,049 18,979
Income taxes 39,013 20,127
Changes in assets and liabilities:
Receivables 59,536 (14,059)
Inventory (7,905) (3,907)
Accounts payable (2,009) (1,273)
Accrued liabilities 34,094 (18,458)
Other, net (9,007) (5,004)
Cash provided by operating activities 378,217 207,072
Business acquisitions, net of cash acquired (2,829) (265,248)
Capital expenditures (14,930) (9,489)
Capitalized software expenditures (3,169) (665)
Other, net (391) 1,446
Cash used in investing activities (21,319) (273,956)
Principal debt payments - (289)
Revolver payments, net (370,000) (160,000)
Dividends (35,443) (30,173)
Proceeds from stock-based compensation, net 7,576 690
Premium on convertible debt conversions - (915)
Other, net 782 505
Cash used in financing activities (397,085) (190,182)
Effect of exchange rate changes on cash 13,653 1,588
Net decrease in cash and equivalents (26,534) (255,478)
Cash and equivalents, beginning of period 757,200 778,511
Cash and equivalents, end of period 730,666 523,033


Contact Information: Investor Relations 941-556-2601 investor-relations@ropertech.com

Source:Roper Technologies, Inc.