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Roper Technologies, Inc.$353.33$.25.07%

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 Roper Technologies Announces Record 2017 Financial Results
   Friday, February 02, 2018 6:55:10 AM ET

Fourth Quarter Revenue Increased 21% and Operating Cash Flow Increased 36%

Full Year Operating Cash Flow Increased to $1.23 Billion

Roper Technologies, Inc. (ROP ), a diversified technology company, reported financial results for the fourth quarter and full year ended December 31, 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.

Fourth Quarter 2017

Fourth quarter GAAP and adjusted revenue increased 21% to $1.23 billion, and organic revenue grew 5%. GAAP gross margin expanded 40 basis points to 62.4% and adjusted gross margin expanded 30 basis points to 62.6%.

GAAP DEPS was $4.27, and adjusted DEPS was $2.70, a 23% increase. Adjusted results exclude a one-time net gain of $215 million resulting from the Tax Cuts and Jobs Act, in addition to customary adjustments.

Adjusted EBITDA grew 21% to $441 million. Operating cash flow and free cash flow both increased 36% to $369 million and $353 million, respectively.

Full Year 2017

Full year GAAP revenue increased 22% to $4.61 billion and adjusted revenue grew 23% to $4.67 billion. GAAP gross margin expanded 70 basis points to 62.2% and adjusted gross margin expanded 90 basis points to 62.6%.

Adjusted EBITDA grew 22% to $1.60 billion. Operating cash flow grew to $1.23 billion, a 28% increase and a 23% increase on an adjusted basis.

"2017 was a remarkable year for Roper as our strategic focus on asset-light diversified technology businesses continued to drive shareholder value,’’ said Brian Jellison, Roper’s Chairman, President and CEO. "Cash flow performance across our operations was outstanding, helping us reduce debt by $1.06 billion and operate with negative working capital for the first time. Our strong organic revenue growth was enhanced by contributions from our large 2016 software acquisitions, Deltek and ConstructConnect, which exceeded our initial revenue and cash flow expectations for the year."

2018 Outlook and Guidance

"The Tax Cuts and Jobs Act will provide significant benefits for Roper," said Mr. Jellison. "The expected decrease in our effective tax rate will lead to increases in both earnings and cash flow in 2018 and beyond. Furthermore, our ability to better access our cash worldwide will enable us to accelerate investment and continue pursuing attractive acquisition opportunities from a robust pipeline."

Roper expects full year adjusted DEPS between $10.88 and $11.20 with first quarter adjusted DEPS between $2.44 and $2.50.

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 Friday, February 2, 2018. The call can be accessed via webcast or by dialing +1 888-455-2265 (US/Canada) or +1 719-325-4747, using confirmation code 1925510. 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 1925510.

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 Operating Cash Flow Reconciliation ($M)

                                             FY 2017    FY 2016    V%
GAAP Operating Cash Flow                     $   1,234  $   964    28 %
Cash taxes related to 2015 sale of Abel Pump     -          37
Adjusted Operating Cash Flow                 $   1,234  $   1,001  23 %

Table 2: Adjusted Revenue Reconciliation and Growth Detail ($M)

                                                            Q4 2017    Q4 2016    V %
GAAP Revenue                                                $   1,227  $   1,011  21 %
Purchase accounting adjustment to acquired deferred revenue     8          7
Adjusted Revenue                                            $   1,235  $   1,018  21 %
Components of Adjusted Revenue Growth
Organic                                                                           5  %
Acquisitions/Divestitures                                                         15 %
Foreign Exchange                                                                  1  %
Total Adjusted Revenue Growth                                                     21 %
                                                            FY 2017    FY 2016    V %
GAAP Revenue                                                $   4,607  $   3,790  22 %
Purchase accounting adjustment to acquired deferred revenue     57         15
Rounding                                                        1          -
Adjusted Revenue                                            $   4,665  $   3,805  23 %
Components of Adjusted Revenue Growth
Organic                                                                           5  %
Acquisitions/Divestitures                                                         17 %
Foreign Exchange                                                                  0  %
Rounding                                                                          1  %
Total Adjusted Revenue Growth                                                     23 %

Table 3: Adjusted Gross Margin Reconciliation ($M)

                                                            Q4 2017      Q4 2016      V Bps
GAAP Revenue                                                $  1,227     $  1,011
Purchase accounting adjustment to acquired deferred revenue    8            7
Adjusted Revenue                                            $  1,235     $  1,018
GAAP Gross Profit                                           $  765       $  627
Purchase accounting adjustment to acquired deferred revenue    8            7
Adjusted Gross Profit                                       $  773       $  634
GAAP Gross Margin                                              62.4  %      62.0  %   +40 bps
Adjusted Gross Margin                                          62.6  %      62.3  %   +30 bps
                                                                                                       FY 2017      FY 2016      V Bps
GAAP Revenue                                                                                           $  4,607     $  3,790
Purchase accounting adjustment to acquired deferred revenue                                               57           15
Rounding                                                                                                  1            -
Adjusted Revenue                                                                                       $  4,665     $  3,805
GAAP Gross Profit                                                                                      $  2,865     $  2,332
Purchase accounting adjustment to acquired deferred revenue                                               57           15
Purchase accounting adjustment for commission expense and acquisition-related inventory step-up charge    (0    )      0
Rounding                                                                                                  -            1
Adjusted Gross Profit                                                                                  $  2,922     $  2,348
GAAP Gross Margin                                                                                         62.2  %      61.5  %   +70 bps
Adjusted Gross Margin                                                                                     62.6  %      61.7  %   +90 bps

Table 4: Adjusted DEPS Reconciliation

                                                            Q4 2017      Q4 2016      V %
GAAP DEPS                                                   $  4.27      $  1.78      141 %
Purchase accounting adjustment to acquired deferred revenue    0.05         0.05
Purchase accounting adjustment for commission expense          (0.01 )      (0.00 )
Acquisition-related expenses deemed significant                -            0.04
Amortization of acquisition-related intangible assets          0.46         0.34
One-time net gain resulting from the Tax Cuts and Jobs Act     (2.07 )      -
Rounding                                                       -            (0.01 )
Adjusted DEPS                                               $  2.70      $  2.20      23  %
                                                            FY 2017      FY 2016      V %
GAAP DEPS                                                   $  9.39      $  6.43      46 %
Purchase accounting adjustment to acquired deferred revenue    0.36         0.10
Purchase accounting adjustment for commission expense          (0.03 )      (0.00 )
Acquisition-related expenses deemed significant                -            0.04
Amortization of acquisition-related intangible assets          1.83         1.27
Gain on sale of divested energy product line                   (0.06 )      -
Impairment charge on minority investment                       0.01         -
Debt extinguishment charge                                     -            0.01
One-time net gain resulting from the Tax Cuts and Jobs Act     (2.08 )      -
Rounding                                                       -            (0.01 )
Adjusted DEPS                                               $  9.42      $  7.84      20 %

Table 5A: Q4 Adjusted EBITDA Reconciliation ($M)

                                                            Q4 2017      Q4 2016      V% / Bps
GAAP Revenue                                                $  1,227     $  1,011
Purchase accounting adjustment to acquired deferred revenue    8            7
Adjusted Revenue                                            $  1,235     $  1,018
GAAP Net Earnings                                           $  444       $  182
Taxes                                                          (140  )      76
Interest expense                                               43           30
Depreciation                                                   13           9
Amortization                                                   74           54
Rounding                                                       (1    )      1
EBITDA                                                      $  433       $  352
Purchase accounting adjustment to acquired deferred revenue    8            7
Purchase accounting adjustment for commission expense          (1    )      (0    )
Acquisition-related expenses deemed significant                -            6
Rounding                                                       1            -
Adjusted EBITDA                                             $  441       $  365       21   %
% of Adjusted Revenue                                          35.7  %      35.9  %   (20) bps

Table 5B: Full Year Adjusted EBITDA Reconciliation ($M)

                                                            FY 2017      FY 2016      V% / Bps
GAAP Revenue                                                $  4,607     $  3,790
Purchase accounting adjustment to acquired deferred revenue    57           15
Rounding                                                       1            -
Adjusted Revenue                                            $  4,665     $  3,805
GAAP Net Earnings                                           $  972       $  659
Taxes                                                          63           282
Interest expense                                               181          112
Depreciation                                                   50           37
Amortization                                                   295          203
Rounding                                                       (1    )      -
EBITDA                                                      $  1,560     $  1,293
Purchase accounting adjustment to acquired deferred revenue    57           15
Purchase accounting adjustment for commission expense          (5    )      (0    )
Acquisition-related inventory step-up charge                   -            0
Acquisition-related expenses deemed significant                -            6
Gain on sale of divested Energy product line                   (9    )      -
Impairment charge on minority investment                       2            -
Debt extinguishment charge                                     -            1
Adjusted EBITDA                                             $  1,605     $  1,315     22   %
% of Adjusted Revenue                                          34.4  %      34.6  %   (20) bps

Table 6: Forecasted Adjusted DEPS Reconciliation

                                                                                            Q1 2018              Full Year 2018
                                                                                            Low End   High End   Low End    High End
GAAP DEPS                                                                                   $   1.87  $    1.93  $   8.64   $    8.96
Purchase accounting adjustments to acquired deferred revenue                                    0.01       0.01      0.03        0.03
Amortization of acquisition-related                                                             0.56       0.56      2.21        2.21
intangible assets
Adjustments to 2017 provisional income tax amounts resulting from the Tax Cuts and Jobs Act TBD       TBD        TBD        TBD
Adjusted DEPS                                                                               $   2.44  $    2.50  $   10.88  $    11.20

A. All 2017 and 2016 adjustments taxed at 35%, all 2018 adjustments taxed at 21%.

B. Actual results and forecast of estimated amortization of acquisition-related intangible assets ($M, except per share data); for comparison purposes, prior period amounts are also shown below. Tax rate of 35% applied to amortization in 2016 and 2017, and a tax rate of 21% applied to amortization in 2018.

          Q4 2016A   FY 2016A   Q4 2017A   FY 2017A   Q1 2018E   FY 2018E
Pretax    $    54    $    201   $    73    $    292   $    74    $    292
After-tax $    35    $    131   $    47    $    190   $    58    $    231
Per share $    0.34  $    1.27  $    0.46  $    1.83  $    0.56  $    2.21

C. One-time net gain resulting from the Tax Cuts and Jobs Act ($215.4M after-tax).

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

          Q1 2018E   FY 2018E
Pretax    $    2     $    5
After-tax $    2     $    3
Per Share $    0.01  $    0.03

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.

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Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(Amounts in thousands)
                                           December 31, 2017   December 31, 2016
ASSETS:
Cash and cash equivalents                  $     671,327       $     757,200
Accounts receivable, net                         641,662             619,854
Inventories, net                                 204,933             181,952
Unbilled receivables                             143,634             129,965
Other current assets                             97,846              87,530
Total current assets                             1,759,402           1,776,501
Property, plant and equipment, net               142,535             141,318
Goodwill                                         8,820,313           8,647,142
Other intangible assets, net                     3,475,218           3,655,843
Deferred taxes                                   30,726              30,620
Other assets                                     88,219              73,503
Total assets                               $     14,316,413    $     14,324,927
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Accounts payable                           $     171,073       $     152,067
Accrued compensation                             198,020             161,730
Deferred revenue                                 566,447             488,399
Other accrued liabilities                        266,574             219,339
Income taxes payable                             26,351              22,762
Current portion of long-term debt, net           800,944             400,975
Total current liabilities                        2,029,409           1,445,272
Long-term debt, net of current portion           4,354,611           5,808,561
Deferred taxes                                   829,657             1,178,205
Other liabilities                                239,172             104,024
Total liabilities                                7,452,849           8,536,062
Common stock                                     1,044               1,036
Additional paid-in capital                       1,602,869           1,489,067
Retained earnings                                5,464,571           4,642,402
Accumulated other comprehensive loss             (186,214   )        (324,739   )
Treasury Stock                                   (18,706    )        (18,901    )
Total stockholders’ equity                       6,863,564           5,788,865
Total liabilities and stockholders’ equity $     14,316,413    $     14,324,927
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(Amounts in thousands, except per share data)
                                              Three months ended December 31,           Twelve months ended December 31,
                                                   2017                 2016                  2017         2016
Net revenues                                  $    1,226,583       $    1,010,800       $     4,607,471  $ 3,789,925
Cost of sales                                      461,471              383,922               1,742,675    1,457,515
Gross profit                                       765,112              626,878               2,864,796    2,332,410
Selling, general and administrative expenses       418,129              337,774               1,654,552    1,277,847
Income from operations                             346,983              289,104               1,210,244    1,054,563
Interest expense, net                              43,365               30,483                180,566      111,559
Other income/(expense), net                        (218      )          (355      )           5,045        (2,352    )
Earnings before income taxes                       303,400              258,266               1,034,723    940,652
Income taxes                                       (140,472  )          76,185                62,951       282,007
Net earnings                                  $    443,872         $    182,081         $     971,772    $ 658,645
Earnings per share:
Basic                                         $    4.33            $    1.79            $     9.51       $ 6.50
Diluted                                       $    4.27            $    1.78            $     9.39       $ 6.43
Weighted-average common shares outstanding:
Basic                                              102,395              101,469               102,168      101,291
Diluted                                            103,863              102,580               103,522      102,464
Roper Technologies, Inc. and Subsidiaries
Selected Segment Financial Data (unaudited)
(Amounts in thousands and percents of net revenues)
                              Three months ended December 31,                                                 Twelve months ended December 31,
                                          2017                                    2016                                    2017                                    2016
                              Amount                   %              Amount                   %              Amount                   %              Amount                   %
Net revenues:
RF Technology                 $           491,438                     $           337,728                     $           1,862,126                   $           1,210,264
Medical & Scientific Imaging              367,711                                 351,987                                 1,410,349                               1,362,813
Industrial Technology                     206,994                                 178,446                                 783,707                                 706,625
Energy Systems & Controls                 160,440                                 142,639                                 551,289                                 510,223
Total                         $           1,226,583                   $           1,010,800                   $           4,607,471                   $           3,789,925
Gross profit:
RF Technology                 $           306,833      62.4        %  $           193,430      57.3        %  $           1,136,929    61.1        %  $           685,923      56.7        %
Medical & Scientific Imaging              262,104      71.3        %              256,941      73.0        %              1,015,200    72.0        %              997,666      73.2        %
Industrial Technology                     102,778      49.7        %              90,683       50.8        %              396,188      50.6        %              357,362      50.6        %
Energy Systems & Controls                 93,397       58.2        %              85,824       60.2        %              316,479      57.4        %              291,459      57.1        %
Total                         $           765,112      62.4        %  $           626,878      62.0        %  $           2,864,796    62.2        %  $           2,332,410    61.5        %
Operating profit*:
RF Technology                 $           136,605      27.8        %  $           99,562       29.5        %  $           479,295      25.7        %  $           372,467      30.8        %
Medical & Scientific Imaging              129,961      35.3        %              129,842      36.9        %              486,575      34.5        %              477,548      35.0        %
Industrial Technology                     60,901       29.4        %              51,601       28.9        %              235,018      30.0        %              202,451      28.7        %
Energy Systems & Controls                 51,709       32.2        %              45,874       32.2        %              151,163      27.4        %              129,602      25.4        %
Total                         $           379,176      30.9        %  $           326,879      32.3        %  $           1,352,051    29.3        %  $           1,182,068    31.2        %
Net Orders:
RF Technology                 $           524,670                     $           378,587                     $           1,929,438                   $           1,278,246
Medical & Scientific Imaging              394,015                                 384,097                                 1,448,269                               1,399,007
Industrial Technology                     219,585                                 175,993                                 826,666                                 704,622
Energy Systems & Controls                 166,258                                 146,008                                 556,692                                 514,300
Total                         $           1,304,528                   $           1,084,685                   $           4,761,065                   $           3,896,175
*Segment operating profit is before unallocated corporate general and administrative expenses. These expenses were $32,193 and $37,775 for the three months ended December 31, 2017 and 2016, respectively, and $141,807 and $127,505 for the twelve months ended December 30, 2017 and 2016, respectively.
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)
                                                                                Years ended December 31,
                                                                                      2017            2016
Cash flows from operating activities:
Net earnings                                                                    $     971,772       $ 658,645
Adjustments to reconcile net earnings to cash flows from operating activities:
Depreciation and amortization of property, plant and equipment                        49,513          37,299
Amortization of intangible assets                                                     295,452         203,154
Amortization of deferred financing costs                                              7,227           5,612
Non-cash stock compensation                                                           83,075          78,827
Gain on sale of assets                                                                (9,393     )    --
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable                                                                   (6,673     )    (20,734    )
Unbilled receivables                                                                  (13,493    )    (1,202     )
Inventories                                                                           (15,363    )    6,353
Accounts payable and accrued liabilities                                              73,333          20,176
Deferred revenue                                                                      74,881          25,190
Income taxes                                                                          (256,971   )    (47,589    )
Other, net                                                                            (18,878    )    (1,946     )
Cash provided by operating activities                                                 1,234,482       963,785
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired                                      (153,736   )    (3,721,758 )
Capital expenditures                                                                  (48,752    )    (37,305    )
Capitalized software expenditures                                                     (10,784    )    (2,801     )
Proceeds from sale of assets                                                          10,628          870
Other, net                                                                            (6,932     )    8,138
Cash used in investing activities                                                     (209,576   )    (3,752,856 )
Cash flows from financing activities:
Proceeds from senior notes                                                            --              1,200,000
Payment of senior notes                                                               (400,000   )    --
Borrowings/(payments) under revolving line of credit, net                             (660,000   )    1,750,000
Principal payments on convertible notes                                               --              (4,284     )
Debt issuance costs                                                                   --              (17,266    )
Cash dividends to stockholders                                                        (142,753   )    (121,130   )
Treasury stock sales                                                                  4,198           3,340
Proceeds from stock based compensation, net                                           28,487          9,998
Redemption premium on convertible debt                                                --              (14,166    )
Other                                                                                 51              (1,229     )
Cash provided by/(used in) financing activities                                       (1,170,017 )    2,805,263
Effect of exchange rate changes on cash                                               59,238          (37,503    )
Net increase/(decrease) in cash and cash equivalents                                  (85,873    )    (21,311    )
Cash and cash equivalents, beginning of year                                          757,200         778,511
Cash and cash equivalents, end of year                                          $     671,327       $ 757,200

Contact Information:

Investor Relations

941-556-2601

investor-relations@ropertech.com

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