Roper Technologies Announces Third Quarter Results

|GlobeNewswire|About: ROP

GAAP Revenue Increased 23%; Adjusted Revenue Increased 24%

Raising Full Year Adjusted DEPS Guidance

SARASOTA, Fla., Oct. 30, 2017 (GLOBE NEWSWIRE) -- Roper Technologies, Inc. (ROP), a diversified technology company, reported financial results for the third quarter ended September 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.

Third quarter GAAP revenue increased 23% to $1.16 billion and adjusted revenue grew 24% to $1.17 billion. GAAP gross margin expanded 140 basis points to 62.6% and adjusted gross margin expanded 170 basis points to 63.0%.

GAAP DEPS was $1.84, a 13% increase, while adjusted DEPS was $2.36, a 20% increase. Adjusted EBITDA grew 24% to $407 million and adjusted EBITDA margin expanded 20 basis points to 34.8%.

“Our businesses performed exceptionally well in the third quarter as our asset-light, niche market strategy continues to produce excellent results,” said Brian Jellison, Roper’s Chairman, President and CEO. “We delivered 24% growth in both adjusted revenue and adjusted EBITDA with 5% organic revenue growth and great operating leverage. Our software and network businesses, including Deltek and ConstructConnect, continued to perform well. We also benefited from broad-based growth and strong margin performance in our product businesses.”

“Our cash performance has helped us to reduce debt by $880 million year to date, demonstrating our ability to quickly de-lever after acquisitions. We see continuing broad-based strength across the enterprise that will drive additional growth in the fourth quarter and position us well for a record 2018,” concluded Mr. Jellison.

2017 Guidance Update

Roper is raising its full year 2017 guidance and now expects adjusted DEPS of $9.27 - $9.33, compared to previous guidance of $9.12 - $9.30.

In the fourth quarter of 2017, the Company expects adjusted DEPS to be between $2.56 and $2.62.

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, October 30, 2017.  The call can be accessed via webcast or by dialing +1 800-231-9012 (US/Canada) or +1 719-325-2168, using confirmation code 7559336.  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 7559336.

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)

  Q3 2017   Q3 2016     V %  
GAAP Revenue $ 1,160     $ 945     23 %  
Purchase accounting adjustment to acquired deferred revenueA,B   12   A   2   B    
Rounding   (1 )     -        
Adjusted Revenue $ 1,171     $ 947     24 %  
               
Components of Adjusted Revenue Growth              
Organic           5 %  
Acquisitions/Divestitures           19 %  
Foreign Exchange           1 %  
Rounding           (1 )%  
Total Adjusted Revenue Growth           24 %  

Table 2:  Adjusted DEPS Reconciliation

  Q3 2017   Q3 2016     V %  
GAAP Diluted Earnings Per Share (DEPS) $ 1.84     $ 1.63     13 %  
Purchase accounting adjustment to acquired deferred revenueA,B   0.07   A   0.01   B    
Purchase accounting adjustment for commission expenseC   (0.01 )     -        
Amortization of Acquisition-related intangible assetsD   0.46       0.31        
Debt Extinguishment ChargeE   -       0.01        
Adjusted DEPS $ 2.36     $ 1.96     20 %  

Table 3:  Adjusted Gross Margin Reconciliation ($M)

  Q3 2017   Q3 2016   V Bps  
GAAP Revenue $ 1,160     $ 945        
Purchase accounting adjustment to acquired deferred revenueA,B   12   A   2   B    
Rounding   (1 )     -        
Adjusted Revenue $ 1,171     $ 947        
             
GAAP Gross Profit $ 726     $ 578        
Purchase accounting adjustment to acquired deferred revenueA,B   12   A   2   B    
Rounding   -       1        
Adjusted Gross Profit $ 738     $ 581        
             
GAAP Gross Margin   62.6 %     61.2 %   +140 bps  
Adjusted Gross Margin   63.0 %     61.3 %   +170 bps  

Table 4:  Adjusted EBITDA Reconciliation ($M)

  Q3 2017   Q3 2016   V% / Bps
GAAP Revenue $ 1,160     $ 945      
Purchase accounting adjustment to acquired deferred revenueA,B   12   A   2   B  
Rounding   (1 )     -      
Adjusted Revenue $ 1,171     $ 947      
           
GAAP Net Earnings $ 190     $ 167      
Taxes   74       73      
Interest expense   46       27      
Depreciation   12       9      
Amortization   74       49      
Rounding   1       -      
EBITDA $ 397     $ 325      
           
Purchase accounting adjustment to acquired deferred revenueA,B   12   A   2   B  
Purchase accounting adjustment for commission expenseC   (1 )     -      
Debt Extinguishment ChargeE   -       1      
Rounding   (1 )     -      
Adjusted EBITDA $ 407     $ 328     24 %
% of Adjusted Revenue   34.8 %     34.6 %   +20bps  

Table 5:  Forecasted Adjusted DEPS Reconciliation

  Q4 2017   Full Year 2017  
  Low End   High End   Low End   High End  
GAAP DEPS $ 2.07   $ 2.13   $ 7.17     $ 7.23    
Purchase accounting adjustments to acquired deferred revenue and commissionsF   0.04     0.04     0.32       0.32    
Amortization of acquisition-related
intangible assets
  0.45     0.45     1.83       1.83    
Gain on sale of divested Energy product lineG   -     -     (0.06 )     (0.06 )  
Impairment charge on minority investmentH   -     -     0.01       0.01    
Adjusted DEPS $ 2.56   $ 2.62   $ 9.27     $ 9.33    

A  Acquisition-related fair value adjustments to deferred revenue related to the acquisitions of ConstructConnect ($1.4M pretax, $0.9M after-tax), and Deltek ($10.2M pretax, $6.6M after-tax).

B  Acquisition-related fair value adjustments to deferred revenue related to the acquisitions of On Center Software ($0.1M pretax, $0.1M 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 ($1.2M pretax, $0.8M 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.

  Q3 2016A   Q4 2016A   FY 2016A    

Q3 2017A
  Q4 2017E   FY 2017E
Pretax $ 49   $ 54   $ 201   $ 73   $ 73   $ 292
After-tax $ 32   $ 35   $ 131   $ 48   $ 47   $ 190
Per share $ 0.31   $ 0.34   $ 1.27   $ 0.46   $ 0.45   $ 1.83

E  Debt Extinguishment Charge ($0.9M pretax, $0.6M after-tax).

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

  Q4 2017E   FY 2017E
Pretax $ 6   $ 51
After-tax $ 4   $ 33
Per Share $ 0.04   $ 0.32

G  Gain on sale of divested Energy product line ($9.4M pretax, $6.1M after-tax).

H  Impairment charge on minority investment ($1.8M pretax, $1.1M after-tax).

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)  
 
  September 30, 2017   December 31, 2016
ASSETS:      
       
Cash and cash equivalents $ 605,616     $ 757,200  
Accounts receivable, net   603,874       619,854  
Inventories, net   209,306       181,952  
Unbilled receivables   157,852       129,965  
Other current assets   115,408       87,530  
Total current assets   1,692,056       1,776,501  
       
Property, plant and equipment, net   141,279       141,318  
Goodwill   8,793,956       8,647,142  
Other intangible assets, net   3,502,687       3,655,843  
Deferred taxes   32,459       30,620  
Other assets   84,236       73,503  
       
Total assets $ 14,246,673     $ 14,324,927  
       
LIABILITIES AND STOCKHOLDERS' EQUITY:      
       
Accounts payable $ 163,719     $ 152,067  
Accrued compensation   168,931       161,730  
Deferred revenue   534,562       488,399  
Other accrued liabilities   261,457       219,339  
Income taxes payable   46,575       22,762  
Current portion of long-term debt, net   401,534       400,975  
Total current liabilities   1,576,778       1,445,272  
       
Long-term debt, net of current portion   4,932,721       5,808,561  
Deferred taxes   1,163,371       1,178,205  
Other liabilities   114,819       104,024  
Total liabilities   7,787,689       8,536,062  
       
Common stock   1,043       1,036  
Additional paid-in capital   1,591,039       1,489,067  
Retained earnings   5,062,926       4,642,402  
Accumulated other comprehensive loss   (177,277 )     (324,739 )
Treasury (TSRMF) stock   (18,747 )     (18,901 )
Total stockholders' equity   6,458,984       5,788,865  
       
Total liabilities and stockholders' equity $ 14,246,673     $ 14,324,927  
 


Roper Technologies, Inc. and Subsidiaries          
Condensed Consolidated Statements of Earnings (unaudited)  
(Amounts in thousands, except per share data)  
 
    Three months ended
September 30,
  Nine months ended
September 30,
      2017       2016       2017     2016  
Net revenues   $ 1,159,912     $ 945,144     $ 3,380,888   $ 2,779,125  
Cost of sales     433,492       366,651       1,281,204     1,073,593  
Gross profit     726,420       578,493       2,099,684     1,705,532  
                 
Selling, general and administrative expenses     415,673       311,103       1,236,423     940,073  
Income from operations     310,747       267,390       863,261     765,459  
                 
Interest expense, net     45,523       26,800       137,201     81,076  
Other income/(expense), net     (659 )     (534 )     5,263     (1,997 )
                 
Earnings before income taxes     264,565       240,056       731,323     682,386  
                 
Income taxes     74,292       72,977       203,423     205,822  
                 
Net earnings   $ 190,273     $ 167,079     $ 527,900   $ 476,564  
                 
Net earnings per share:                
Basic   $ 1.86     $ 1.65     $ 5.17   $ 4.71  
Diluted     1.84       1.63       5.11     4.65  
                 
Weighted average common shares outstanding:                
Basic     102,303       101,372       102,091     101,231  
Diluted     103,680       102,522       103,397     102,424  
                 


Roper Technologies, Inc. and Subsidiaries  
Selected Segment Financial Data (unaudited)  
(Amounts in thousands and percents of net sales)  
 
  Three Months Ended September 30,   Nine Months Ended September 30,
    2017       2016       2017       2016  
  Amount   %   Amount   %   Amount   %   Amount   %
Net revenues:                              
RF Technology $ 480,572       $ 303,565       $ 1,370,688       $ 872,536    
Medical & Scientific Imaging   343,639         338,027         1,042,638         1,010,826    
Industrial Technology   200,442         178,317         576,713         528,179    
Energy Systems & Controls   135,259         125,235         390,849         367,584    
Total $ 1,159,912       $ 945,144       $ 3,380,888       $ 2,779,125    
                               
                               
Gross profit:                              
RF Technology $ 298,883   62.2 %   $ 169,123   55.7 %   $ 830,096   60.6 %   $ 492,493   56.4 %
Medical & Scientific Imaging   247,138   71.9 %     247,432   73.2 %     753,096   72.2 %     740,725   73.3 %
Industrial Technology   102,092   50.9 %     90,950   51.0 %     293,410   50.9 %     266,679   50.5 %
Energy Systems & Controls   78,307   57.9 %     70,988   56.7 %     223,082   57.1 %     205,635   55.9 %
Total $ 726,420   62.6 %   $ 578,493   61.2 %   $ 2,099,684   62.1 %   $ 1,705,532   61.4 %
                               
                               
Operating profit*:                              
RF Technology $ 134,148   27.9 %   $ 94,785   31.2 %   $ 342,690   25.0 %   $ 272,905   31.3 %
Medical & Scientific Imaging   115,506   33.6 %     118,979   35.2 %     356,614   34.2 %     347,706   34.4 %
Industrial Technology   62,255   31.1 %     52,800   29.6 %     174,117   30.2 %     150,850   28.6 %
Energy Systems & Controls   36,351   26.9 %     31,777   25.4 %     99,454   25.4 %     83,728   22.8 %
Total $ 348,260   30.0 %   $ 298,341   31.6 %   $ 972,875   28.8 %   $ 855,189   30.8 %
                               
                               
Net Orders:                              
RF Technology $ 475,003       $ 300,303       $ 1,404,768       $ 899,659    
Medical & Scientific Imaging   351,455         332,624         1,054,254         1,014,910    
Industrial Technology   210,110         173,757         607,081         528,629    
Energy Systems & Controls   134,197         121,818         390,434         368,292    
Total $ 1,170,765       $ 928,502       $ 3,456,537       $ 2,811,490    
 
*Segment operating profit is before unallocated corporate general and administrative expenses. These expenses were $37,513 and $30,951 for the three months ended September 30, 2017 and 2016, respectively, and $109,614 and $89,730 for the nine months ended September 30, 2017 and 2016, respectively.
 


Roper Technologies, Inc. and Subsidiaries  
Condensed Consolidated Statements of Cash Flows (unaudited)  
(Amounts in thousands)  
 
    Nine months ended September 30,
      2017       2016  
Cash flows from operating activities:        
Net earnings   $ 527,900     $ 476,564  
Adjustments to reconcile net earnings to cash flows from operating activities:        
Depreciation and amortization of property, plant and equipment     36,776       27,954  
Amortization of intangible assets     221,518       149,149  
Amortization of deferred financing costs     5,463       4,080  
Non-cash stock compensation     67,598       60,480  
Gain on sale of assets     (9,393 )      
Changes in operating assets and liabilities, net of acquired businesses:        
  Accounts receivable     30,074       (1,660 )
  Unbilled receivables     (27,186 )     3,684  
  Inventories     (19,577 )     (5,916 )
  Accounts payable and accrued liabilities     48,276       17,273  
  Deferred revenue     50,554       19,692  
  Income taxes     (48,370 )     (52,728 )
Other, net     (17,900 )     (5,199 )
  Cash provided by operating activities     865,733       693,373  
         
Cash flows from investing activities:        
Acquisitions of businesses, net of cash acquired     (88,070 )     (277,587 )
Capital expenditures     (35,898 )     (26,933 )
Capitalized software expenditures     (8,043 )     (1,528 )
Proceeds from sale of assets     10,614       866  
Other, net     (6,932 )     1,564  
  Cash used in investing activities     (128,329 )     (303,618 )
         
Cash flows from financing activities:        
Payments under revolving line of credit, net     (880,000 )     (180,000 )
Principal payments on convertible notes           (4,010 )
Cash premiums paid on convertible note conversions           (13,308 )
Cash dividends to stockholders     (106,480 )     (90,632 )
Proceeds from stock based compensation, net     32,932       13,895  
Treasury stock sales     3,194       2,576  
Other     179       (7,816 )
  Cash used in financing activities     (950,175 )     (279,295 )
         
Effect of foreign currency exchange rate changes on cash     61,187       (6,701 )
         
Net (decrease)/increase in cash and cash equivalents     (151,584 )     103,759  
         
Cash and cash equivalents, beginning of period     757,200       778,511  
         
Cash and cash equivalents, end of period   $ 605,616     $ 882,270  
 


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

Source: Roper Technologies, Inc. 2017 GlobeNewswire, Inc.