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Roper Technologies, Inc.$252.62$.24.10%

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 Roper Technologies Announces Second Quarter Results
   Monday, July 31, 2017 6:55:06 AM ET

GAAP Revenue Increased 22%; Adjusted Revenue Increased 23%

Raising Full Year Adjusted DEPS Guidance

Roper Technologies, Inc. (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 revenue     16         2
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 revenue         0.10          0.02
Purchase accounting adjustment for commission expense               (0.01 )       -
Amortization of Acquisition-related intangible assets, after tax    0.46          0.31
Gain on Sale of divested energy product line                        (0.06 )       -
Impairment Charge on minority investment                            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 revenue    16           2
Adjusted Revenue                                            $  1,151     $  934
GAAP Gross Profit                                           $  706       $  568
Purchase accounting adjustment to acquired deferred revenue    16           2
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 revenue            16           2
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, pretax    16           2
Purchase accounting adjustment for commission expense, pretax          (1    )      -
Gain on sale of divested Energy product line                           (9    )      -
Impairment charge on minority investment                               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 commissions     0.07       0.07     0.32         0.32
Amortization of acquisition-related intangible assets, after-tax                 0.45       0.45     1.82         1.82
Gain on sale of divested Energy product line                                                         (0.06 )      (0.06 )
Impairment charge on minority investment                                                             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

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