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Roper Technologies, Inc.$256.34($.16)(.06%)

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 Roper Technologies Announces First Quarter Results
   Friday, April 28, 2017 6:55:14 AM ET

GAAP Revenue Increased 20%; Adjusted Revenue Increased 22%

Operating Cash Flow Increased to $378 Million

Roper Technologies, Inc. (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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">2017 Guidance</span>

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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Conference Call to be Held at 8:30 AM (ET) Today</span>

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          22          3
acquired deferred revenue
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        0.14           0.02
revenue
Purchase accounting adjustment for commission              (0.01 )        -
expense
Acquisition-related inventory step-up charge               -              0.00
Amortization of Acquisition-related intangible assets,     0.45           0.31
after tax
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                37
Pump
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     22            3
acquired deferred revenue
Rounding                                            1
Adjusted Revenue                   $  1,108      $  906
GAAP Gross Profit                  $  668        $  560
Purchase accounting adjustment to     22            3
acquired deferred revenue
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      22           3
revenue
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      22           3
revenue, pretax
Purchase accounting adjustment for commission            (2    )
expense, pretax
Acquisition-related inventory step-up charge, pretax     -            0
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       0.09        0.09       0.32        0.32
acquired deferred revenue and
commissions
Amortization of acquisition-related      0.45        0.45       1.80        1.80
intangible assets, after-tax
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,
ASSETS                                     2017                 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

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