Roper Technologies Announces Record Third Quarter Results
SARASOTA, Fla., Oct. 26, 2015 /PRNewswire/ -- Roper Technologies, Inc. (NYSE: ROP) reported financial results for the third quarter ended September 30, 2015.
Roper reports results, including revenue, gross margin, operating margin, net income and diluted earnings per share, on a GAAP and adjusted basis. Adjusted measures are reconciled to the corresponding GAAP measures at the end of this release.
Third quarter GAAP diluted earnings per share (DEPS) were $1.58, a 3% increase over the prior year, and adjusted DEPS were $1.61, a 4% increase. GAAP revenue was $884 million and adjusted revenue increased to $886 million. GAAP operating profit increased 2% to $250 million, representing 28.3% of revenue. Adjusted operating profit increased to $255 million and adjusted operating margin increased 80 basis points to 28.7%. Orders increased to $894 million and enterprise book-to-bill was 1.01x for the quarter.
GAAP gross margin increased 110 basis points over the prior year to 60.4% and adjusted gross margin increased to 60.7%, a 130 basis point gain. Operating cash flow increased to $227 million, or 25.6% of adjusted revenue, and free cash flow increased to $220 million. Year to date free cash flow increased to $632 million, 15% higher than the prior year.
"Our businesses executed very well in the quarter despite continued headwinds in some energy markets and foreign currency translation," said Brian Jellison, Roper's Chairman, President and CEO. "Margin performance continued to be exceptional across the enterprise. EBITDA margins increased to a record 34.4% in the quarter. Our medical, software and toll and traffic businesses continued to grow organically."
Acquisitions
On October 21, 2015, Roper completed the acquisition of Aderant Holdings, Inc. and on October 2, 2015, Roper completed the sale of ABEL Pumps LP to Hillenbrand, Inc.
"We have now deployed over $1.7 billion in acquisitions in 2015. We continue to execute on our disciplined acquisition strategy focused on companies with leadership positions in niche markets with high recurring revenue, strong cash returns and excellent management teams," said Mr. Jellison.
Roper also announced that it has signed a definitive agreement to acquire CliniSys Group Ltd., a leading European provider of laboratory information management systems, for £170 million. CliniSys expands Roper's suite of diagnostic-related software. Roper expects the acquisition to be completed in the first quarter of 2016, following the completion of customary merger control review.
2015 Outlook and Guidance
Roper is updating its full year adjusted diluted earnings per share guidance to $6.69 – $6.75, from its previous range of $6.61 - $6.75, and establishing fourth quarter adjusted diluted earnings per share guidance of $1.83 - $1.89. The company's guidance excludes the impact of any future acquisitions or divestitures.
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: Q3 Revenue Growth Detail | |||
|
Q3 2015 |
Q3 2014 |
V% | |
|
Q3 GAAP Revenue |
$884M |
$884M |
--% |
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue (FoodLink, SHP, Strata, SoftWriters, Data Innovations, On Center) |
2 |
1 |
|
|
Q3 Adjusted Revenue |
$886M |
$885M |
--% |
|
Components of Adjusted Revenue Growth |
||
|
Organic |
(2%) |
|
|
Acquisitions / Divestitures |
5% |
|
|
Foreign Exchange |
(3%) |
|
|
Total Growth |
0% |
|
Table 2: Reconciliation of GAAP DEPS to Adjusted DEPS | |||
|
Q3 2015 |
Q3 2014 |
V% | |
|
GAAP Diluted Earnings Per Share (DEPS) |
$1.58 |
$1.54 |
3% |
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue (FoodLink, SHP, Strata, SoftWriters, Data Innovations, On Center), net of tax @35%
Add: Acquisition-Related Inventory Step-up Charge (IPA, RF IDeas), net of tax @35% |
$0.01 |
$0.01 |
|
|
$0.01 |
-- |
||
|
Rounding |
$0.01 |
-- |
|
|
$1.61 |
$1.55 |
4% | |
|
Table 3: Free Cash Flow Reconciliation | |||
|
YTD 2015 |
YTD 2014 |
V% | |
|
Operating Cash Flow |
$660M |
$579M |
14% |
|
Less: Capital Expenditures |
(28) |
(30) |
|
|
Free Cash Flow |
$632M |
$549M |
15% |
|
Table 4: Adjusted Revenue and Adjusted Gross Margin Reconciliation | |||
|
2015 |
2014 |
V bps | |
|
Q3 GAAP Revenue |
$883.9M |
$884.1M |
|
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue (FoodLink, SHP, Strata, SoftWriters, Data Innovations, On Center) |
2.2 |
0.9 |
|
|
Rounding |
-- |
0.1 |
|
|
Q3 Adjusted Revenue (A) |
$886.1M |
$885.1M |
|
|
Q3 GAAP Gross Profit |
$533.5M |
$524.0M |
|
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue (FoodLink, SHP, Strata, SoftWriters, Data Innovations, On Center) |
2.2 |
0.9 |
|
|
Add: Acquisition-Related Inventory Step-up Charge (IPA, RF IDeas) |
2.0 |
0.4 |
|
|
Rounding |
-- |
0.1 |
|
|
Adjusted Gross Profit (B) |
$537.7M |
$525.4M |
|
|
GAAP Gross Margin |
60.4% |
59.3% |
+110 bps |
|
Adjusted Gross Margin (B) / (A) |
60.7% |
59.4% |
+130 bps |
|
Table 5: Adjusted Revenue and Adjusted Operating Margin Reconciliation | |||
|
2015 |
2014 |
V bps | |
|
Q3 GAAP Revenue |
$883.9M |
$884.1M |
|
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue (FoodLink, SHP, Strata, SoftWriters, Data Innovations, On Center) |
2.2 |
0.9 |
|
|
Rounding |
-- |
0.1 |
|
|
Q3 Adjusted Revenue (A) |
$886.1M |
$885.1M |
|
|
Q3 GAAP Operating Profit |
$250.4M |
$245.7M |
|
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue (FoodLink, SHP, Strata, SoftWriters, Data Innovations, On Center) |
2.2 |
0.9 |
|
|
Add: Acquisition-Related Inventory Step-up Charge (IPA, RF IDeas) |
2.0 |
0.4 |
|
|
Rounding |
(0.1) |
-- |
|
|
Adjusted Operating Profit (B) |
$254.5M |
$247.0M |
|
|
GAAP Operating Margin |
28.3% |
27.8% |
+50 bps |
|
Adjusted Operating Margin (B) / (A) |
28.7% |
27.9% |
+80 bps |
|
Table 6: Adjusted Revenue and EBITDA Margin Reconciliation | |||
|
2015 |
2014 |
V bps | |
|
Q3 GAAP Revenue |
$883.9M |
$884.1M |
|
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue (FoodLink, SHP, Strata, SoftWriters, Data Innovations, On Center) |
2.2 |
0.9 |
|
|
Rounding |
-- |
0.1 |
|
|
Q3 Adjusted Revenue (A) |
$886.1M |
$885.1M |
|
|
Q3 GAAP Net Earnings |
$160.4M |
$155.5M |
|
|
Add: Interest Expense |
20.4 |
20.0 |
|
|
Add: Taxes |
69.8 |
70.7 |
|
|
Add: Depreciation |
9.0 |
10.4 |
|
|
Add: Amortization |
41.0 |
39.7 |
|
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue (FoodLink, SHP, Strata, SoftWriters, Data Innovations) |
2.2 |
0.9 |
|
|
Add: Acquisition-Related Inventory Step-up Charge (IPA, RF IDeas) |
2.0 |
0.4 |
|
|
EBITDA (B) |
$304.8M |
$297.6M |
|
|
EBITDA Margin (B) / (A) |
34.4% |
33.6% |
+80 bps |
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 26, 2015. The call can be accessed via webcast or by dialing +1 888-468-2440 (US/Canada) or +1 719-457-1512, using confirmation code 363379. 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://www.webcaster4.com/Webcast/Page/866/11027. Telephonic replays will be available for up to two weeks by calling +1 719-457-0820 and using the access code 363379.
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 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" or "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, unfavorable 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 and 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, |
December 31, | ||
|
ASSETS |
2015 |
2014 | |
|
CURRENT ASSETS: |
|||
|
Cash and cash equivalents |
$ 700,578 |
$ 610,430 | |
|
Accounts receivable |
489,183 |
511,538 | |
|
Inventories |
200,820 |
193,766 | |
|
Unbilled receivable |
105,787 |
96,409 | |
|
Deferred taxes |
62,506 |
54,199 | |
|
Assets held for sale |
36,780 |
- | |
|
Other current assets |
52,225 |
45,763 | |
|
Total current assets |
1,647,879 |
1,512,105 | |
|
PROPERTY, PLANT AND EQUIPMENT, NET |
105,280 |
110,876 | |
|
OTHER ASSETS: |
|||
|
Goodwill |
5,325,844 |
4,710,691 | |
|
Other intangible assets, net |
2,246,710 |
1,978,729 | |
|
Deferred taxes |
31,534 |
27,496 | |
|
Other assets |
75,752 |
73,037 | |
|
Total other assets |
7,679,840 |
6,789,953 | |
|
TOTAL ASSETS |
$ 9,432,999 |
$ 8,412,934 | |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
|
CURRENT LIABILITIES: |
|||
|
Accounts payable |
$ 142,261 |
$ 143,847 | |
|
Accrued compensation |
107,266 |
117,374 | |
|
Deferred revenue |
237,289 |
190,953 | |
|
Other accrued liabilities |
160,312 |
160,738 | |
|
Deferred taxes |
2,993 |
3,943 | |
|
Current portion of long-term debt |
6,911 |
11,092 | |
|
Total current liabilities |
657,032 |
627,947 | |
|
NONCURRENT LIABILITIES: |
|||
|
Long-term debt |
2,792,067 |
2,203,031 | |
|
Deferred taxes |
769,730 |
735,826 | |
|
Other liabilities |
85,265 |
90,770 | |
|
Total liabilities |
4,304,094 |
3,657,574 | |
|
STOCKHOLDERS' EQUITY: |
|||
|
Common stock |
1,026 |
1,021 | |
|
Additional paid-in capital |
1,392,296 |
1,325,338 | |
|
Retained earnings |
3,932,195 |
3,520,201 | |
|
Accumulated other comprehensive earnings |
(177,472) |
(71,927) | |
|
Treasury stock |
(19,140) |
(19,273) | |
|
Total stockholders' equity |
5,128,905 |
4,755,360 | |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 9,432,999 |
$ 8,412,934 | |
|
Roper Technologies, Inc. and Subsidiaries |
||||||||
|
Condensed Consolidated Statements of Earnings (unaudited) |
||||||||
|
(Amounts in thousands, except per share data) |
||||||||
|
Three months ended |
Nine months ended | |||||||
|
September 30, |
September 30, | |||||||
|
2015 |
2014 |
2015 |
2014 | |||||
|
Net sales |
$883,933 |
$884,122 |
$2,638,755 |
$2,603,349 | ||||
|
Cost of sales |
350,450 |
360,082 |
1,053,200 |
1,067,191 | ||||
|
Gross profit |
533,483 |
524,040 |
1,585,555 |
1,536,158 | ||||
|
Selling, general and administrative expenses |
283,112 |
278,382 |
836,314 |
820,434 | ||||
|
Income from operations |
250,371 |
245,658 |
749,241 |
715,724 | ||||
|
Interest expense |
20,369 |
20,013 |
60,382 |
59,352 | ||||
|
Other income/(expense) |
251 |
552 |
(1,948) |
1,042 | ||||
|
Earnings from continuing operations before |
||||||||
|
income taxes |
230,253 |
226,197 |
686,911 |
657,414 | ||||
|
Income taxes |
69,836 |
70,687 |
199,441 |
197,317 | ||||
|
Net Earnings |
$160,417 |
$155,510 |
$ 487,470 |
$ 460,097 | ||||
|
Earnings per share: |
||||||||
|
Basic |
$ 1.59 |
$ 1.55 |
$ 4.85 |
$ 4.61 | ||||
|
Diluted |
$ 1.58 |
$ 1.54 |
$ 4.80 |
$ 4.56 | ||||
|
Weighted average common and common |
||||||||
|
equivalent shares outstanding: |
||||||||
|
Basic |
100,681 |
100,068 |
100,545 |
99,837 | ||||
|
Diluted |
101,607 |
101,006 |
101,512 |
100,803 | ||||
|
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, | |||||||||||||||
|
2015 |
2014 |
2015 |
2014 | |||||||||||||
|
Amount |
% |
Amount |
% |
Amount |
% |
Amount |
% | |||||||||
|
Net sales: |
||||||||||||||||
|
Medical & Scientific Imaging |
$ 299,621 |
$ 268,809 |
$ 893,583 |
$ 793,899 |
||||||||||||
|
RF Technology |
253,556 |
238,860 |
752,068 |
710,143 |
||||||||||||
|
Industrial Technology |
186,147 |
205,688 |
563,342 |
607,503 |
||||||||||||
|
Energy Systems & Controls |
144,609 |
170,765 |
429,762 |
491,804 |
||||||||||||
|
Total |
$ 883,933 |
$ 884,122 |
$2,638,755 |
$2,603,349 |
||||||||||||
|
Gross profit: |
||||||||||||||||
|
Medical & Scientific Imaging |
$ 222,655 |
74.3% |
$ 193,132 |
71.8% |
$ 660,971 |
74.0% |
$ 572,738 |
72.1% | ||||||||
|
RF Technology |
133,692 |
52.7% |
127,663 |
53.4% |
397,874 |
52.9% |
375,901 |
52.9% | ||||||||
|
Industrial Technology |
92,245 |
49.6% |
104,012 |
50.6% |
281,052 |
49.9% |
306,464 |
50.4% | ||||||||
|
Energy Systems & Controls |
84,891 |
58.7% |
99,233 |
58.1% |
245,658 |
57.2% |
281,055 |
57.1% | ||||||||
|
Total |
$ 533,483 |
60.4% |
$ 524,040 |
59.3% |
$1,585,555 |
60.1% |
$1,536,158 |
59.0% | ||||||||
|
Operating profit*: |
||||||||||||||||
|
Medical & Scientific Imaging |
$ 108,399 |
36.2% |
$ 91,227 |
33.9% |
$ 325,439 |
36.4% |
$ 275,379 |
34.7% | ||||||||
|
RF Technology |
74,604 |
29.4% |
69,351 |
29.0% |
228,521 |
30.4% |
203,183 |
28.6% | ||||||||
|
Industrial Technology |
52,298 |
28.1% |
62,046 |
30.2% |
162,383 |
28.8% |
178,540 |
29.4% | ||||||||
|
Energy Systems & Controls |
42,300 |
29.3% |
49,033 |
28.7% |
110,424 |
25.7% |
130,844 |
26.6% | ||||||||
|
Total |
$ 277,601 |
31.4% |
$ 271,657 |
30.7% |
$ 826,767 |
31.3% |
$ 787,946 |
30.3% | ||||||||
|
Net Orders: |
||||||||||||||||
|
Medical & Scientific Imaging |
$ 317,743 |
$ 270,881 |
$ 900,176 |
$ 799,021 |
||||||||||||
|
RF Technology |
245,694 |
243,363 |
751,143 |
713,536 |
||||||||||||
|
Industrial Technology |
184,846 |
205,945 |
555,431 |
611,074 |
||||||||||||
|
Energy Systems & Controls |
145,478 |
173,172 |
416,803 |
490,106 |
||||||||||||
|
Total |
$ 893,761 |
$ 893,361 |
$2,623,553 |
$2,613,737 |
||||||||||||
|
* Operating profit is before unallocated corporate general and administrative expenses. These expenses |
||||||||||||||||
|
were $27,230 and $25,999 for the three months ended September 30, 2015 and 2014, respectively and |
||||||||||||||||
|
$77,526 and $72,222 for the nine months ended September 30, 2015 and 2014, respectively. |
||||||||||||||||
|
Roper Technologies, Inc. and Subsidiaries |
||||
|
Condensed Consolidated Statements of Cash Flows (unaudited) | ||||
|
(Amounts in thousands) |
||||
|
Nine months ended | ||||
|
September 30, | ||||
|
2015 |
2014 | |||
|
Net earnings |
$ 487,470 |
$ 460,097 | ||
|
Non-cash items: |
||||
|
Depreciation |
28,454 |
30,442 | ||
|
Amortization |
119,766 |
117,179 | ||
|
Stock-based compensation expense |
47,035 |
47,011 | ||
|
Income taxes |
(35,165) |
(54,178) | ||
|
Changes in assets and liabilities: |
||||
|
Receivables |
26,051 |
(21,840) | ||
|
Inventory |
(7,047) |
(8,833) | ||
|
Accounts payable |
(2,085) |
(4,969) | ||
|
Accrued liabilities |
(6,603) |
15,311 | ||
|
Other, net |
1,691 |
(988) | ||
|
Cash provided by operating activities |
659,567 |
579,232 | ||
|
Business acquisitions, net of cash acquired |
(1,024,779) |
(305,254) | ||
|
Capital expenditures |
(27,503) |
(29,835) | ||
|
Other, net |
(4,369) |
(5,304) | ||
|
Cash used by investing activities |
(1,056,651) |
(340,393) | ||
|
Principal debt payments |
(4,006) |
(561) | ||
|
Revolver borrowings/(payments), net |
590,000 |
(95,000) | ||
|
Dividends |
(75,210) |
(59,827) | ||
|
Excess tax benefit from share-based payment |
11,593 |
14,892 | ||
|
Proceeds from stock-based compensation, net |
19,237 |
26,424 | ||
|
Premium on convertible debt conversions |
(13,126) |
(1,518) | ||
|
Other, net |
844 |
2,118 | ||
|
Cash provided by/(used by) financing activities |
529,332 |
(113,472) | ||
|
Effect of exchange rate changes on cash |
(42,100) |
(20,975) | ||
|
Net increase in cash and equivalents |
90,148 |
104,392 | ||
|
Cash and equivalents, beginning of period |
610,430 |
459,720 | ||
|
Cash and equivalents, end of period |
$700,578 |
$564,112 | ||
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SOURCE Roper Technologies, Inc.