Eye on Roper Industries

| About: Roper Technologies, (ROP)

Some of the numerous markets served by Roper Industries (NYSE:ROP) include water treatment and supply, energy, research/medical, industrial, and radio frequency. About two-third of the company’s sales are generated in the U.S. The remainder comes primarily from Canada, Europe, and Asia.

ROP operates four segments:

Industrial Technology is the largest, accounting for 32% of Q1 sales. This segment makes industrial pumps for moving liquids and solids, equipment and related consumables for analyzing and testing various materials, equipment for finding leaks and testing the integrity of assemblies and subassemblies, flow meters and calibration products, and water meter and automatic meter reading products for residential, industrial, and commercial markets.

Energy Systems and Controls, which produced 22% of Q1 sales, manufactures control systems; automated and manual equipment for testing physical and elemental fluid properties; values, sensors, switches and control products for engines, compressors, turbines and other kinds of powered equipment; and nondestructive inspection and measurement equipment such as probes, robotics, and machinery vibration sensors developed primarily for hazardous settings.

The RF Technology segment produced 27% of Q1 revenues. It makes radio frequency identification tags and readers, satellite-based communications hardware, as well as software used in toll and traffic processing, freight matching, mobile asset tracking, and remote temperature monitoring.

Finally, the Scientific and Industrial Imaging segment produced 19% of Q1 sales. It makes high-resolution digital imaging products for scientific and industrial applications, patient positioning products used with ultrasound imaging, and handheld computers for utility applications. It also supplies complementary software.

ROP 1 Net sales climbed 17% to $1.7 billion in 2006. The gross and operating profit margins improved 67 and 163 basis points, respectively, to 50.64% and 19.85%. Net income jumped 26.2% to $193.3 million or $2.13 per share. Net sales for Q1 2007 were higher by 25% at $478.4 million. The gross profit margin fell slightly due to acquisition-related costs and higher copper prices. However, better SG&A expense management helped the operating profit margin expand by 178 basis points to 19.41%. Net income jumped 36.5% to $51.4 million or 56 cents per share.

While the diversified nature of ROP’s operations may limit top line growth, it also provides a cushion against weakness in any particular market. For example, strong internal growth in the Industrial Technology and RF Technology segments helped offset weakness in Scientific and Industrial Imaging in Q1. The majority of the company’s businesses should continue posting strong growth over the near term. Indeed, orders booked in Q1 grew 25.6% to $493 million resulting in a book-to-bill ratio of 1.03. The resulting backlog of $519.9 million was up $15.3 million from the record level at the end of 2006 and up $133.9 million from the prior year.

ROP also continues to augment its offerings through acquisitions. Late last year it acquired Dynisco, a supplier of sensors and software used in highly engineered testing, measurement, and control applications. Dynisco’s strong presence in Asia will boost ROP’s limited exposure in that region.


About this article:

Tagged: , , , Scientific & Technical Instruments
Problem with this article? Please tell us. Disagree with this article? .