Roper Technologies Announces Third Quarter Results
SARASOTA, Fla., Oct. 31, 2016 /PRNewswire/ -- Roper Technologies, Inc. (NYSE: ROP) reported financial results for the third quarter ended September 30, 2016.
Roper reports results, including revenue, gross margin, operating margin, net income and diluted earnings per share, on a GAAP and adjusted basis. Adjusted measures are reconciled to the corresponding GAAP measures at the end of this release.
Third quarter GAAP diluted earnings per share (DEPS) were $1.63, a 3% increase over the prior year, and adjusted DEPS were $1.65. GAAP revenue increased 7% to $945 million and adjusted revenue increased 7% to $947 million. Organic revenue increased 2% led by the Company's medical, software, toll and traffic and water meter technology businesses.
GAAP operating profit increased 7% to $267 million, representing 28.3% of revenue. Adjusted operating profit increased to $270 million, 28.5% of adjusted revenue. Orders increased 4% to $929 million. GAAP gross margin increased 80 basis points over the prior year to 61.2% and adjusted gross margin increased to 61.3%, a 60 basis point gain.
Operating cash flow increased 40% to $317 million, or 33.5% of GAAP revenue and 33.4% of adjusted revenue. Free cash flow increased 40% to $308 million.
"Our businesses executed very well in the quarter, establishing record levels for orders, revenue, net earnings, EBITDA and cash flow," said Brian Jellison, Roper's Chairman, President and CEO. "Growth in revenue was led by medical, software and water businesses more than offsetting continued weakness in energy end markets. Cash flow was exceptionally strong, bringing year-to-date free cash flow to $704 million, an increase of 11% over last year's level."
TransCore MTA All-Electronic Tolling Project
New York City's Metropolitan Transportation Authority (MTA) has selected the Company's TransCore business to convert nine of its bridges and tunnels to All-Electronic Tolling (AET). Under an accelerated roll-out schedule, TransCore expects to finish converting the first three facilities by January 2017. The remaining conversions will be completed by November 2017.
"We are excited to have won this important project to serve the largest tolling authority in the United States with our industry-leading technology. TransCore's Infinity Digital Lane SystemTM will enable the MTA to eliminate existing gated toll plazas, allowing traffic to flow freely on these bridges and tunnels," added Mr. Jellison.
ConstructConnect Acquisition
Roper separately announced today an agreement to acquire ConstructConnect, a leading provider of cloud-based data, collaboration, and workflow automation solutions to the commercial construction industry.
"We are excited to acquire another industry-leading Software as a Service (SaaS) and informatics business," said Mr. Jellison. "ConstructConnect has created the largest cloud-based network for collaboration between participants in the commercial construction industry. Its solutions facilitate the pre-construction process from opportunity identification through project award, driving efficiency and creating revenue opportunities for its users." said Mr. Jellison.
The purchase price for the acquisition is $632 million and the transaction is expected to close this week. Roper expects ConstructConnect to generate approximately $150 million of revenue in 2017.
Guidance Update and Outlook
Roper is establishing fourth quarter 2016 adjusted diluted earnings per share guidance of $1.77 - $1.89 and updating its full year adjusted diluted earnings per share guidance to $6.48 – $6.60. The company's guidance excludes the impact of any future acquisitions or divestitures.
"We had a strong third quarter with excellent cash performance. While product orders for fourth quarter delivery were modestly weaker than expected, the ConstructConnect acquisition, MTA project win and positive momentum across our software and services businesses give us confidence as we look forward to 2017," concluded Mr. Jellison.
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: Q3 Revenue Growth Detail |
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|
Q3 2016 |
Q3 2015 |
V% |
|
|
Q3 GAAP Revenue |
$945.1 |
$883.9 |
6.9% |
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue |
2.2 |
2.2 |
|
|
Q3 Adjusted Revenue |
$947.3 |
$886.1 |
6.9% |
|
Components of Adjusted Revenue Growth |
|||
|
Organic |
1.6% |
||
|
Acquisitions / Divestitures |
5.9% |
||
|
Foreign Exchange |
(0.6%) |
||
|
Total Growth |
6.9% |
||
|
Table 2: Reconciliation of GAAP DEPS to Adjusted DEPS |
|||
|
Q3 2016 |
Q3 2015 |
V% |
|
|
GAAP Diluted Earnings Per Share (DEPS) |
$1.63 |
$1.58 |
3% |
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue, net of tax @35% |
$0.01 |
$0.01 |
|
|
-- |
$0.01 |
||
|
Add: Debt Extinguishment Charge, net of tax @35% |
$0.01 |
-- |
|
|
Rounding |
-- |
$0.01 |
|
|
Adjusted DEPS |
$1.65 |
$1.61 |
2% |
|
Table 3: Q3 Cash Flow Reconciliation |
|||
|
Q3 2016 |
Q3 2015 |
V% |
|
|
Q3 GAAP Operating Cash Flow |
$316.5 |
$226.6 |
40% |
|
Less: Capital Expenditures |
(8.6) |
(6.8) |
|
|
Rounding |
0.1 |
-- |
|
|
Q3 Free Cash Flow |
$308.0 |
$219.8 |
40% |
|
Table 4: 2016 Cash Flow Reconciliation |
|||
|
YTD 2016 |
YTD 2015 |
V% |
|
|
2016 GAAP Operating Cash Flow |
$693.4 |
$659.6 |
5% |
|
Add: Tax Related to 2015 Sale of Abel Pump |
37.4 |
-- |
|
|
Adjusted Operating Cash Flow |
$730.8 |
$659.6 |
11% |
|
Less: Capital Expenditures |
(26.9) |
(27.5) |
|
|
Adjusted Free Cash Flow |
$703.9 |
$632.1 |
11% |
|
Table 5: Adjusted Revenue and Adjusted Gross Margin Reconciliation |
|||
|
2016 |
2015 |
V bps |
|
|
Q3 GAAP Revenue |
$945.1 |
$883.9 |
|
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue |
2.2 |
2.2 |
|
|
Q3 Adjusted Revenue (A) |
$947.3 |
$886.1 |
|
|
Q3 GAAP Gross Profit |
$578.5 |
$533.5 |
|
|
Add: Purchase Accounting Adjustment to Acquired Deferred |
2.2 |
2.2 |
|
|
Add: Acquisition-Related Inventory Step-up Charge |
-- |
2.0 |
|
|
Adjusted Gross Profit (B) |
$580.7 |
$537.7 |
|
|
GAAP Gross Margin |
61.2% |
60.4% |
+80 bps |
|
Adjusted Gross Margin (B) / (A) |
61.3% |
60.7% |
+60 bps |
|
Table 6: Adjusted Revenue and Adjusted Operating Margin Reconciliation |
|||
|
2016 |
2015 |
V bps |
|
|
Q3 GAAP Revenue |
$945.1 |
$883.9 |
|
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue |
2.2 |
2.2 |
|
|
Q3 Adjusted Revenue (A) |
$947.3 |
$886.1 |
|
|
Q3 GAAP Operating Profit |
$267.4 |
$250.4 |
|
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue |
2.2 |
2.2 |
|
|
Add: Acquisition-Related Inventory Step-up Charge |
-- |
2.0 |
|
|
Rounding |
-- |
(0.1) |
|
|
Adjusted Operating Profit (B) |
$269.6 |
$254.5 |
|
|
GAAP Operating Margin |
28.3% |
28.3% |
0 bps |
|
Adjusted Operating Margin (B) / (A) |
28.5% |
28.7% |
(20) bps |
|
Table 7: Adjusted Revenue and EBITDA Margin Reconciliation |
|||
|
2016 |
2015 |
V bps |
|
|
Q3 GAAP Revenue |
$945.1 |
$883.9 |
|
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue |
2.2 |
2.2 |
|
|
Q3 Adjusted Revenue (A) |
$947.3 |
$886.1 |
|
|
Q3 GAAP Net Earnings |
$167.1 |
$160.4 |
|
|
Add: Interest Expense |
26.8 |
20.4 |
|
|
Add: Taxes |
73.0 |
69.8 |
|
|
Add: Depreciation |
8.9 |
9.0 |
|
|
Add: Amortization |
49.4 |
41.0 |
|
|
Add: Purchase Accounting Adjustment to Acquired Deferred Revenue |
2.2 |
2.2 |
|
|
Add: Acquisition-Related Inventory Step-up Charge |
-- |
2.0 |
|
|
Add: Debt Extinguishment Charge |
0.9 |
-- |
|
|
Rounding |
(0.1) |
-- |
|
|
EBITDA (B) |
$328.2 |
$304.8 |
|
|
EBITDA Margin (B) / (A) |
34.6% |
34.4% |
+20 bps |
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, October 31, 2016. The call can be accessed via webcast or by dialing +1 888-297-0353 (US/Canada) or +1 719-325-2165, using confirmation code 7873619. 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://www.webcaster4.com/Webcast/Page/866/17746. Telephonic replays will be available for up to two weeks and can be accessed by using the following registration URL https://premiereglobal.com/webrsvp with access code 7873619.
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 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" or "intends" and similar words and phrases. These statements reflect management's current beliefs and are not guarantees of future performance. They involve risks and uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement. Such risks and uncertainties include our ability to integrate acquisitions and realize expected synergies. We also face other general risks, including our ability to realize cost savings from our operating initiatives, general economic conditions, unfavorable changes in foreign exchange rates, difficulties associated with exports, risks associated with our international operations, difficulties in making and integrating acquisitions, risks associated with newly acquired businesses, increased product liability and insurance costs, increased warranty exposure, future competition, changes in the supply of, or price for, parts and components, environmental compliance costs and liabilities, risks and cost associated with asbestos related litigation and 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) |
|||
|
September 30, |
December 31, |
||
|
ASSETS |
2016 |
2015 |
|
|
CURRENT ASSETS: |
|||
|
Cash and cash equivalents |
$ 882,270 |
$ 778,511 |
|
|
Accounts receivable |
498,006 |
488,271 |
|
|
Inventories |
197,529 |
189,868 |
|
|
Unbilled receivable |
119,109 |
122,042 |
|
|
Other current assets |
77,897 |
39,355 |
|
|
Total current assets |
1,774,811 |
1,618,047 |
|
|
PROPERTY, PLANT AND EQUIPMENT, NET |
103,847 |
105,510 |
|
|
OTHER ASSETS: |
|||
|
Goodwill |
5,969,328 |
5,824,726 |
|
|
Other intangible assets, net |
2,541,482 |
2,528,996 |
|
|
Deferred taxes |
30,663 |
31,532 |
|
|
Other assets |
59,997 |
59,554 |
|
|
Total other assets |
8,601,470 |
8,444,808 |
|
|
TOTAL ASSETS |
$ 10,480,128 |
$ 10,168,365 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
|
CURRENT LIABILITIES: |
|||
|
Accounts payable |
$ 144,235 |
$ 139,737 |
|
|
Accrued compensation |
106,906 |
119,511 |
|
|
Deferred revenue |
290,231 |
267,030 |
|
|
Other accrued liabilities |
200,463 |
168,513 |
|
|
Income taxes payable |
28,003 |
18,532 |
|
|
Current portion of long-term debt |
1,902 |
6,805 |
|
|
Total current liabilities |
771,740 |
720,128 |
|
|
NONCURRENT LIABILITIES: |
|||
|
Long-term debt |
3,087,151 |
3,264,417 |
|
|
Deferred taxes |
821,349 |
810,856 |
|
|
Other liabilities |
87,381 |
74,017 |
|
|
Total liabilities |
4,767,621 |
4,869,418 |
|
|
STOCKHOLDERS' EQUITY: |
|||
|
Common stock |
1,033 |
1,028 |
|
|
Additional paid-in capital |
1,482,963 |
1,419,262 |
|
|
Retained earnings |
4,495,907 |
4,110,530 |
|
|
Accumulated other comprehensive earnings |
(248,452) |
(212,779) |
|
|
Treasury stock |
(18,944) |
(19,094) |
|
|
Total stockholders' equity |
5,712,507 |
5,298,947 |
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 10,480,128 |
$ 10,168,365 |
|
|
Roper Technologies, Inc. and Subsidiaries |
||||||||
|
Condensed Consolidated Statements of Earnings (unaudited) |
||||||||
|
(Amounts in thousands, except per share data) |
||||||||
|
Three months ended |
Nine months ended |
|||||||
|
September 30, |
September 30, |
|||||||
|
2016 |
2015 |
2016 |
2015 |
|||||
|
Net sales |
$ 945,144 |
$ 883,933 |
$2,779,125 |
$2,638,755 |
||||
|
Cost of sales |
366,651 |
350,450 |
1,073,593 |
1,053,200 |
||||
|
Gross profit |
578,493 |
533,483 |
1,705,532 |
1,585,555 |
||||
|
Selling, general and administrative expenses |
311,103 |
283,112 |
940,073 |
836,314 |
||||
|
Income from operations |
267,390 |
250,371 |
765,459 |
749,241 |
||||
|
Interest expense |
26,800 |
20,369 |
81,076 |
60,382 |
||||
|
Debt extinguishment costs |
871 |
871 |
||||||
|
Other income/(expense) |
337 |
251 |
(1,126) |
(1,948) |
||||
|
Earnings from continuing operations before |
||||||||
|
income taxes |
240,056 |
230,253 |
682,386 |
686,911 |
||||
|
Income taxes |
72,977 |
69,836 |
205,822 |
199,441 |
||||
|
Net Earnings |
$ 167,079 |
$ 160,417 |
$ 476,564 |
$ 487,470 |
||||
|
Earnings per share: |
||||||||
|
Basic |
$ 1.65 |
$ 1.59 |
$ 4.71 |
$ 4.85 |
||||
|
Diluted |
$ 1.63 |
$ 1.58 |
$ 4.65 |
$ 4.80 |
||||
|
Weighted average common and common |
||||||||
|
equivalent shares outstanding: |
||||||||
|
Basic |
101,372 |
100,681 |
101,231 |
100,545 |
||||
|
Diluted |
102,522 |
101,607 |
102,424 |
101,512 |
||||
|
Roper Technologies, Inc. and Subsidiaries |
||||||||||||||||
|
Selected Segment Financial Data (unaudited) |
||||||||||||||||
|
(Amounts in thousands and percents of net sales) |
||||||||||||||||
|
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
|
2016 |
2015 |
2016 |
2015 |
|||||||||||||
|
Amount |
% |
Amount |
% |
Amount |
% |
Amount |
% |
|||||||||
|
Net sales: |
||||||||||||||||
|
Medical & Scientific Imaging |
$ 338,027 |
$ 299,621 |
$1,010,826 |
$ 893,583 |
||||||||||||
|
RF Technology |
303,565 |
253,556 |
872,536 |
752,068 |
||||||||||||
|
Industrial Technology |
178,317 |
186,147 |
528,179 |
563,342 |
||||||||||||
|
Energy Systems & Controls |
125,235 |
144,609 |
367,584 |
429,762 |
||||||||||||
|
Total |
$ 945,144 |
$ 883,933 |
$2,779,125 |
$2,638,755 |
||||||||||||
|
Gross profit: |
||||||||||||||||
|
Medical & Scientific Imaging |
$ 247,432 |
73.2% |
$ 222,655 |
74.3% |
$ 740,725 |
73.3% |
$ 660,971 |
74.0% |
||||||||
|
RF Technology |
169,123 |
55.7% |
133,692 |
52.7% |
492,493 |
56.4% |
397,874 |
52.9% |
||||||||
|
Industrial Technology |
90,950 |
51.0% |
92,245 |
49.6% |
266,679 |
50.5% |
281,052 |
49.9% |
||||||||
|
Energy Systems & Controls |
70,988 |
56.7% |
84,891 |
58.7% |
205,635 |
55.9% |
245,658 |
57.2% |
||||||||
|
Total |
$ 578,493 |
61.2% |
$ 533,483 |
60.4% |
$1,705,532 |
61.4% |
$1,585,555 |
60.1% |
||||||||
|
Operating profit*: |
||||||||||||||||
|
Medical & Scientific Imaging |
$ 118,979 |
35.2% |
$ 108,399 |
36.2% |
$ 347,706 |
34.4% |
$ 325,439 |
36.4% |
||||||||
|
RF Technology |
94,785 |
31.2% |
74,604 |
29.4% |
272,905 |
31.3% |
228,521 |
30.4% |
||||||||
|
Industrial Technology |
52,800 |
29.6% |
52,298 |
28.1% |
150,850 |
28.6% |
162,383 |
28.8% |
||||||||
|
Energy Systems & Controls |
31,777 |
25.4% |
42,300 |
29.3% |
83,728 |
22.8% |
110,424 |
25.7% |
||||||||
|
Total |
$ 298,341 |
31.6% |
$ 277,601 |
31.4% |
$ 855,189 |
30.8% |
$ 826,767 |
31.3% |
||||||||
|
Net Orders: |
||||||||||||||||
|
Medical & Scientific Imaging |
$ 332,624 |
$ 317,743 |
$1,014,910 |
$ 900,176 |
||||||||||||
|
RF Technology |
300,303 |
245,694 |
899,659 |
751,143 |
||||||||||||
|
Industrial Technology |
173,757 |
184,846 |
528,629 |
555,431 |
||||||||||||
|
Energy Systems & Controls |
121,818 |
145,478 |
368,292 |
416,803 |
||||||||||||
|
Total |
$ 928,502 |
$ 893,761 |
$2,811,490 |
$2,623,553 |
||||||||||||
|
* Operating profit is before unallocated corporate general and administrative expenses. These expenses |
||||||||||||||||
|
were $30,951 and $27,230 for the three months ended September 30, 2016 and 2015, respectively and |
||||||||||||||||
|
$89,730 and $77,526 for the nine months ended September 30, 2016 and 2015, respectively. |
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|
Roper Technologies, Inc. and Subsidiaries |
||||
|
Condensed Consolidated Statements of Cash Flows (unaudited) |
||||
|
(Amounts in thousands) |
||||
|
Nine months ended |
||||
|
September 30, |
||||
|
2016 |
2015 |
|||
|
Net earnings |
$ 476,564 |
$ 487,470 |
||
|
Non-cash items: |
||||
|
Depreciation |
27,954 |
28,454 |
||
|
Amortization |
149,149 |
119,766 |
||
|
Stock-based compensation expense |
60,480 |
47,035 |
||
|
Income taxes |
(52,728) |
(35,165) |
||
|
Changes in assets and liabilities: |
||||
|
Receivables |
2,024 |
26,051 |
||
|
Inventory |
(5,916) |
(7,047) |
||
|
Accounts payable |
3,122 |
(2,085) |
||
|
Accrued liabilities |
33,843 |
(6,603) |
||
|
Other, net |
(1,119) |
1,691 |
||
|
Cash provided by operating activities |
693,373 |
659,567 |
||
|
Business acquisitions, net of cash acquired |
(277,587) |
(1,024,779) |
||
|
Capital expenditures |
(26,933) |
(27,503) |
||
|
Other, net |
902 |
(4,369) |
||
|
Cash used in investing activities |
(303,618) |
(1,056,651) |
||
|
Principal debt payments |
(4,010) |
(4,006) |
||
|
Revolver borrowings/(payments), net |
(180,000) |
590,000 |
||
|
Debt issuance costs |
(6,763) |
|||
|
Dividends |
(90,632) |
(75,210) |
||
|
Excess tax benefit from share-based payment* |
- |
11,593 |
||
|
Proceeds from stock-based compensation, net |
13,895 |
19,237 |
||
|
Premium on convertible debt conversions |
(13,308) |
(13,126) |
||
|
Other, net |
1,523 |
844 |
||
|
Cash provided by/(used in) financing activities |
(279,295) |
529,332 |
||
|
Effect of exchange rate changes on cash |
(6,701) |
(42,100) |
||
|
Net increase in cash and equivalents |
103,759 |
90,148 |
||
|
Cash and equivalents, beginning of period |
778,511 |
610,430 |
||
|
Cash and equivalents, end of period |
$ 882,270 |
$ 700,578 |
||
|
*In the first quarter of 2016, the Company adopted ASU 2016-09, which requires excess tax benefits to be classified along with other income tax cash flows as an operating activity. |
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SOURCE Roper Technologies, Inc.