ROP
$246.16
Roper Industries
($.40)
(.16%)
Earnings Details
2nd Quarter June 2017
Monday, July 31, 2017 6:55:06 AM
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Summary

Roper Industries Misses

Roper Industries (ROP) reported 2nd Quarter June 2017 earnings of $2.24 per share on revenue of $1.1 billion. The consensus earnings estimate was $2.22 per share on revenue of $1.2 billion. The Earnings Whisper number was $2.25 per share. Revenue grew 21.8% on a year-over-year basis.

The company said it expects third quarter earnings of $2.24 to $2.30 per share and now expects 2017 earnings of $9.12 to $9.30 per share. The company's previous guidance was 2017 earnings of $8.98 to $9.28 per share. The current consensus earnings estimate is $2.32 per share for the quarter ending September 30, 2017 and $9.19 per share for the year ending December 31, 2017.

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
$2.24
Earnings Whisper
$2.25
Consensus Estimate
$2.22
Reported Revenue
$1.13 Bil
Revenue Estimate
$1.16 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Roper Technologies Announces Second Quarter Results

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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