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Roper Technologies Announces Second Quarter Results

GAAP Revenue Increased 22%; Adjusted Revenue Increased 23%

Raising Full Year Adjusted DEPS Guidance

SARASOTA, Fla., July 31, 2017 (GLOBE NEWSWIRE) -- 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 $932 22%
Purchase accounting adjustment to acquired deferred revenueA,B 16A 2B
Adjusted Revenue$ 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

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

Source:Roper Technologies, Inc.