ROP
$308.88
Roper Industries
($2.52)
(.81%)
Earnings Details
2nd Quarter June 2018
Thursday, July 26, 2018 6:55:00 AM
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Summary

Roper Technologies Raises Guidance

Roper Industries (ROP) reported 2nd Quarter June 2018 earnings of $2.89 per share on revenue of $1.3 billion. The consensus earnings estimate was $2.70 per share on revenue of $1.2 billion. Revenue grew 14.0% on a year-over-year basis.

The company said it expects third quarter earnings of $2.89 to $2.95 per share and now expects 2018 earnings of $11.40 to $11.56 per share. The company's previous guidance was 2018 earnings of $11.08 to $11.32 per share. The current consensus earnings estimate is $2.89 per share for the quarter ending September 30, 2018 and $11.31 per share for the year ending December 31, 2018.

Roper Industries Inc designs, manufactures and distributes energy systems and controls, scientific and industrial imaging products and software, industrial technology products and radio frequency products and services.

Results
Reported Earnings
$2.89
Earnings Whisper
-
Consensus Estimate
$2.70
Reported Revenue
$1.29 Bil
Revenue Estimate
$1.23 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Roper Technologies Announces Record Second Quarter Results

GAAP Revenue Increased 14%; Organic Revenue Increased 9%

GAAP DEPS Increased 26%; Adjusted DEPS Increased 29% to $2.89

SARASOTA, Fla., July 26, 2018 (GLOBE NEWSWIRE) -- Roper Technologies, Inc. (NYSE:ROP), a leading diversified technology company, reported financial results for the second quarter ended June 30, 2018.

Roper reports results – including revenue, gross margin, earnings before taxes, net income, and diluted earnings per share (“DEPS”) – on both a GAAP basis and an adjusted basis.

Second quarter GAAP revenue increased 14% to $1.29 billion, adjusted revenue increased 13% to $1.30 billion, and organic revenue increased 9%. GAAP and adjusted gross margin were 63.1%, expanding 90 basis points on a GAAP basis and 40 basis points on an adjusted basis. EBITDA increased 14% to $449 million and EBITDA margin expanded 30 basis points to 34.6%.

GAAP earnings before taxes grew 23% to $313 million and adjusted earnings before taxes grew 17% to $392 million. GAAP DEPS was $2.19, a 26% increase, while adjusted DEPS was $2.89, a 29% increase. Operating cash flow increased 55% to $266 million.

"We delivered another record quarter with strong, broad-based growth across each of our four reporting segments as we continue to create value in our diverse set of niche markets,” said Brian Jellison, Roper’s Chairman, President, and CEO. “Our 9% organic revenue growth combined with nimble execution throughout our businesses drove margin expansion and record operating cash flow.”

“During the second quarter, we added another industry-leading, niche application software business to our family with the acquisition of PowerPlan. We also announced an agreement to divest our Gatan business, which will enhance our ability to deploy capital in the future and continue to drive value for our shareholders. As a result of continued positive momentum across the enterprise, we are raising our 2018 guidance and remain on track for a record year," concluded Mr. Jellison.

2018 Guidance

The Company now expects full year Adjusted DEPS of $11.40 - $11.56, compared to previous guidance of $11.08 - $11.32.

For the third quarter of 2018, the Company expects Adjusted DEPS of $2.89 - $2.95.

The Company’s guidance excludes the impact of future acquisitions or divestitures, and also excludes the impact of the pending Gatan divestiture.

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 Thursday, July 26, 2018.  The call can be accessed via webcast or by dialing +1 877-260-1479 (US/Canada) or +1 334-323-0522, using confirmation code 2195537.  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 2195537.

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 2018 Q2 2017 V % 
GAAP Revenue$1,294 $1,135 14% 
Purchase accounting adjustment to acquired deferred revenue 2A 16   
Adjusted Revenue$1,296 $1,151 13% 
       
Components of Adjusted Revenue Growth      
Organic    9% 
Acquisitions/Divestitures    2% 
Foreign Exchange    1% 
Rounding    1% 
Total Adjusted Revenue Growth    13% 

Table 2: Adjusted Gross Margin Reconciliation ($M)

 Q2 2018 Q2 2017 V Bps 
GAAP Revenue$1,294  $1,135    
Purchase accounting adjustment to acquired deferred revenue 2 A 16    
Adjusted Revenue$1,296  $1,151    
       
GAAP Gross Profit$816  $706    
Purchase accounting adjustment to acquired deferred revenue 2 A 16    
Adjusted Gross Profit$818  $722    
       
GAAP Gross Margin 63.1%  62.2% +90 bps 
Adjusted Gross Margin 63.1%  62.7% +40 bps 


Table 3: Adjusted EBITDA Reconciliation ($M)

 Q2 2018 Q2 2017 V% / Bps
GAAP Revenue$1,294  $1,135   
Purchase accounting adjustment to acquired deferred revenue 2 A 16   
Adjusted Revenue$1,296  $1,151   
      
GAAP Net Earnings$228  $180   
Taxes 85   76   
Interest expense 43   46   
Depreciation 13   12   
Amortization 78   74   
Rounding -   (1)  
EBITDA$447  $387   
      
Purchase accounting adjustment to acquired deferred revenue 2 A 16   
Purchase accounting adjustment for commission expense -   (1)  
Gain on sale of divested energy product line -   (9)  
Impairment charge on minority investment -   2   
Rounding -   (1)  
Adjusted EBITDA$449  $394  14%
% of Adjusted Revenue 34.6%  34.3% +30 bps

Table 4: Adjusted Earnings Before Taxes Reconciliation ($M)

 Q2 2018 Q2 2017 V % 
GAAP Earnings Before Taxes$313 $255  23% 
Purchase accounting adjustment to acquired deferred revenue 2A 16    
Purchase accounting adjustment for commission expense -  (1)   
Amortization of acquisition-related
intangible assetsB
 77  73    
Gain on sale of divested energy product line -  (9)   
Impairment charge on minority investment -  2    
Adjusted Earnings Before Taxes$392 $336  17% 


Table 5: Adjusted DEPS Reconciliation
C

 Q2 2018 Q2 2017 V % 
GAAP DEPS$2.19 $1.74  26% 
Purchase accounting adjustment to acquired deferred revenue 0.01A 0.10    
Purchase accounting adjustment for commission expense -  (0.01)   
Amortization of acquisition-related intangible assetsB 0.58  0.46    
Recognition of deferred tax expense due to held-for-sale classification of GatanD 0.10  -    
Measurement period adjustment to 2017 provisional income tax amounts resulting from the Tax Cuts and Jobs ActE 0.01  -    
Gain on sale of divested energy product line -  (0.06)   
Impairment charge on minority investment -  0.01    
Adjusted DEPS$2.89 $2.24  29% 

Table 6: Forecasted Adjusted DEPS ReconciliationC

 Q3 2018 Full Year 2018 
 Low End High End Low End High End 
GAAP DEPS$2.26 $2.32 $8.86 $9.02 
Purchase accounting adjustments to acquired deferred revenue and commissionsF 0.01  0.01  0.06  0.06 
Amortization of acquisition-related intangible assetsB 0.62  0.62  2.37  2.37 
Recognition of deferred tax expense due to held-for-sale classification of GatanD -  -  0.10  0.10 
Measurement period adjustment to 2017 provisional income tax amounts resulting from the Tax Cuts and Jobs ActE -  -  0.01  0.01 
Adjustments to 2017 provisional income tax amounts resulting from the Tax Cuts and Jobs Act TBD  TBD  TBD  TBD 
Adjusted DEPS$2.89 $2.95 $11.40 $11.56 

A. Acquisition-related fair value adjustment to deferred revenue related to the acquisitions of Deltek, Onvia, and PowerPlan ($2M pretax, $2M after-tax)

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 2017, and tax rate of 21% applied to amortization in 2018.

 Q2 2017A Q2 2018A Q3 2018E FY 2018E
Pretax$73 $77 $82 $314
After-tax$48 $61 $64 $248
Per share$0.46 $0.58 $0.62 $2.37

C. All 2017 adjustments taxed at 35%, all 2018 adjustments taxed at 21%.

D. Recognition of $10 million deferred tax expense due to held-for-sale classification of Gatan.

E. Measurement period adjustment of $1 million to 2017 provisional income tax amounts resulting from the Tax Cuts and Jobs Act.

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

 Q3 2018E FY 2018E
Pretax$2 $7
After-tax$2 $6
Per Share$0.01 $0.06
      

About Roper Technologies

Roper Technologies is a constituent of the S&P 500, Fortune 1000, and the Russell 1000 indices. Roper operates businesses that design and develop software (both license and software-as-a-service) and engineered products and solutions for a variety of niche end markets. 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 millions) 
 
 June 30, 2018 December 31, 2017 
ASSETS:    
     
Cash and cash equivalents$421.8  $671.3  
Accounts receivable, net 669.3   641.7  
Inventories, net 201.9   204.9  
Income taxes receivable 47.9   24.4  
Unbilled receivables 180.0   143.6  
Other current assets 81.7   73.5  
Current assets held for sale 48.5     
Total current assets 1,651.1   1,759.4  
     
Property, plant and equipment, net 138.6   142.5  
Goodwill 9,389.4   8,820.3  
Other intangible assets, net 3,964.0   3,475.2  
Deferred taxes 29.9   30.7  
Other assets 99.8   88.3  
Assets held for sale 88.2     
     
Total assets$15,361.0  $14,316.4  
     
LIABILITIES AND STOCKHOLDERS' EQUITY:    
     
Accounts payable$165.2  $171.1  
Accrued compensation 181.4   198.0  
Deferred revenue 620.0   566.4  
Other accrued liabilities 234.4   266.6  
Income taxes payable 28.7   26.4  
Current portion of long-term debt, net 801.7   800.9  
Current liabilities held for sale 35.0     
Total current liabilities 2,066.4   2,029.4  
     
Long-term debt, net of current portion 4,821.7   4,354.6  
Deferred taxes 963.7   829.6  
Other liabilities 204.9   239.2  
Liabilities held for sale 1.4     
Total liabilities 8,058.1   7,452.8  
     
Common stock 1.1   1.0  
Additional paid-in capital 1,691.6   1,602.9  
Retained earnings 5,833.4   5,464.6  
Accumulated other comprehensive loss (204.6)  (186.2) 
Treasury stock (18.6)  (18.7) 
Total stockholders' equity 7,302.9   6,863.6  
     
Total liabilities and stockholders' equity$15,361.0  $14,316.4  
 


Roper Technologies, Inc. and Subsidiaries      
Condensed Consolidated Statements of Earnings (unaudited) 
(Amounts in millions, except per share data) 
 
  Three months ended June 30, Six months ended June 30, 
   2018  2017  2018  2017 
Net revenues $1,293.7 $1,134.7 $2,496.2 $2,221.0 
Cost of sales  477.8  429.0  929.8  847.7 
Gross profit  815.9  705.7  1,566.4  1,373.3 
          
Selling, general and administrative expenses  461.6  411.5  911.9  820.8 
Income from operations  354.3  294.2  654.5  552.5 
          
Interest expense, net  43.2  45.8  86.4  91.7 
Other income, net  2.3  7.0  0.6  5.9 
          
Earnings before income taxes  313.4  255.4  568.7  466.7 
          
Income taxes  85.0  75.9  129.0  129.1 
          
Net earnings $228.4 $179.5 $439.7 $337.6 
          
Net earnings per share:         
Basic $2.21 $1.76 $4.26 $3.31 
Diluted $2.19 $1.74 $4.22 $3.27 
          
Weighted average common shares outstanding:         
Basic  103.2  102.1  103.1  102.0 
Diluted  104.4  103.4  104.3  103.2 
          


Roper Technologies, Inc. and Subsidiaries            
Selected Segment Financial Data (unaudited) 
(Amounts in millions and percents of net revenues) 
 
 
 Three Months Ended June 30, Six Months Ended June 30,
  2018   2017   2018   2017 
 Amount % Amount % Amount % Amount %
Net revenues:               
RF Technology$537.4   $460.5   $1,019.0   $890.1  
Medical & Scientific Imaging 373.7    350.8    740.0    699.0  
Industrial Technology 231.6    192.9    447.7    376.3  
Energy Systems & Controls 151.0    130.5    289.5    255.6  
Total$1,293.7   $1,134.7   $2,496.2   $2,221.0  
                
                
Gross profit:               
RF Technology$344.4 64.1% $279.7 60.7% $646.1 63.4% $531.2 59.7%
Medical & Scientific Imaging 265.6 71.1%  254.1 72.4%  526.6 71.2%  506.0 72.4%
Industrial Technology 118.8 51.3%  98.2 50.9%  227.4 50.8%  191.3 50.8%
Energy Systems & Controls 87.1 57.7%  73.7 56.5%  166.3 57.4%  144.8 56.7%
Total$815.9 63.1% $705.7 62.2% $1,566.4 62.8% $1,373.3 61.8%
                
                
Operating profit*:               
RF Technology$157.6 29.3% $119.5 26.0% $277.9 27.3% $208.5 23.4%
Medical & Scientific Imaging 125.6 33.6%  121.3 34.6%  246.3 33.3%  241.1 34.5%
Industrial Technology 74.1 32.0%  58.3 30.2%  139.8 31.2%  111.9 29.7%
Energy Systems & Controls 41.9 27.7%  32.9 25.2%  77.1 26.6%  63.1 24.7%
Total$399.2 30.9% $332.0 29.3% $741.1 29.7% $624.6 28.1%
                
 
*Segment operating profit is before unallocated corporate general and administrative expenses. These expenses were $44.9 and $37.8 for the three months ended June 30, 2018 and 2017, respectfully, and $86.6 and $72.1 for the six months ended June 30, 2018 and 2017, respectively.
 


Roper Technologies, Inc. and Subsidiaries  
Condensed Consolidated Statements of Cash Flows (unaudited)     
(Amounts in millions)     
      
  Six months ended June 30, 
   2018   2017  
Cash flows from operating activities:     
Net earnings $439.7  $337.6  
Adjustments to reconcile net earnings to cash flows from operating activities:     
Depreciation and amortization of property, plant and equipment  25.2   24.3  
Amortization of intangible assets  153.0   147.2  
Amortization of deferred financing costs  3.2   3.6  
Non-cash stock compensation  54.0   43.9  
Gain on sale of assets     (9.4) 
Changes in operating assets and liabilities, net of acquired businesses:     
   Accounts receivable  (28.4)  50.1  
   Unbilled receivables  (24.0)  (16.9) 
   Inventories  (15.2)  (13.2) 
   Accounts payable and accrued liabilities  (30.8)  15.3  
   Deferred revenue  39.5   33.3  
   Income taxes  (61.7)  (51.0) 
Other, net  (6.7)  (14.7) 
   Cash provided by operating activities  547.8   550.1  
      
Cash flows from investing activities:     
Acquisitions of businesses, net of cash acquired  (1,182.3)  (35.5) 
Capital expenditures  (23.1)  (24.8) 
Capitalized software expenditures  (4.4)  (5.7) 
Proceeds from sale of assets     10.5  
Other, net  (0.8)  (6.6) 
   Cash used in investing activities  (1,210.6)  (62.1) 
      
Cash flows from financing activities:     
Borrowings/(payments) under revolving line of credit, net  465.0   (570.0) 
Cash dividends to stockholders  (84.5)  (70.9) 
Proceeds from stock-based compensation, net  32.7   20.7  
Treasury stock sales  2.8   2.0  
Other  0.4   (0.2) 
   Cash provided by/(used in) financing activities  416.4   (618.4) 
      
Effect of foreign currency exchange rate changes on cash  (3.1)  36.5  
      
Net decrease in cash and cash equivalents  (249.5)  (93.9) 
      
Cash and cash equivalents, beginning of period  671.3   757.2  
      
Cash and cash equivalents, end of period $421.8  $663.3  
 


Contact Information:

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

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Source: Roper Technologies, Inc.