Roper Technologies, Inc. (NYSE: ROP), a leading diversified technology company, reported financial results for the first quarter ended March 31, 2019.

First quarter GAAP and adjusted revenue increased 7% to $1.29 billion, and organic revenue increased by 6%. GAAP and adjusted gross margin were 63.0%, expanding 60 basis points and 50 basis points, respectively. EBITDA increased 13% to $438 million and EBITDA margin expanded 170 basis points to 34.0%.

GAAP earnings before taxes grew 64% to $419 million and adjusted earnings before taxes grew 15% to $382 million. GAAP diluted earnings per share (“DEPS”) was $3.53, a 74% increase, while adjusted DEPS was $3.30, a 26% increase. GAAP and adjusted results include a discrete tax benefit of $43 million, or $0.41 per share.

GAAP operating cash flow was $290 million, which included tax payments associated with the gain on sale from the Scientific Imaging businesses, completed in the quarter. Excluding these tax payments, adjusted operating cash flow increased 17% to $330 million.

“Our diversified portfolio of businesses delivered another excellent quarter, highlighted by strong organic growth, operating leverage, and cash flow performance,” said Neil Hunn, Roper’s President and CEO. “EBITDA grew 13% for the enterprise and margins expanded in each of our four segments, demonstrating the strength and breadth of our asset-light, niche market business model.”

“We completed the acquisition of Foundry last week, welcoming another industry-leading, niche software business to the Roper family. We remain well positioned and confident in our ability to continue compounding cash flow through a combination of organic growth and disciplined capital deployment,” concluded Mr. Hunn.

Increasing 2019 Guidance

The Company now expects full year Adjusted DEPS of $12.70 - $13.00, compared to previous guidance of $12.00 - $12.40.

For the second quarter of 2019, the Company expects Adjusted DEPS of $3.00 - $3.04.

The Company’s guidance excludes the impact of unannounced future acquisitions or divestitures.

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.

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, April 25, 2019.  The call can be accessed via webcast or by dialing +1 800-239-9838 (US/Canada) or +1 323-994-2093, using confirmation code 6073937.  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 6073937.

     
Table 1: Adjusted Revenue Reconciliation and Growth Detail ($M)    
           
  Q1 2018   Q1 2019   V %
GAAP Revenue $ 1,203     $ 1,287     7  %
Purchase accounting adjustment to acquired deferred revenue 2     1    A  
Adjusted Revenue $ 1,205     $ 1,288     7  %
           
           
Components of Adjusted Revenue Growth          
Organic         6  %
Acquisitions/Divestitures         2  %
Foreign Exchange         (1) %
Total Adjusted Revenue Growth         7  %
           
           
Table 2: Adjusted Gross Margin Reconciliation ($M)      
           
  Q1 2018   Q1 2019   V% / Bps
GAAP Revenue $ 1,203     $ 1,287     7  %
Purchase accounting adjustment to acquired deferred revenue 2     1    A  
Adjusted Revenue $ 1,205     $ 1,288     7  %
           
GAAP Gross Profit $ 750     $ 811      
Purchase accounting adjustment to acquired deferred revenue 2     1   A  
Adjusted Gross Profit $ 753     $ 811     8  %
           
GAAP Gross Margin 62.4 %   63.0 %   +60 bps  
Adjusted Gross Margin 62.5 %   63.0 %   +50 bps  
           
           
Table 3: Adjusted EBITDA Reconciliation ($M)        
           
  Q1 2018   Q1 2019   V% / Bps
GAAP Revenue $ 1,203     $ 1,287     7 %
Purchase accounting adjustment to acquired deferred revenue 2     1    A  
Adjusted Revenue $ 1,205     $ 1,288     7 %
           
GAAP Net Earnings 211     370      
Taxes 44     50      
Interest Expense 43     44      
Depreciation 13     12      
Amortization 75     83      
EBITDA $ 386     $ 558     44 %
           
Purchase accounting adjustment to acquired deferred revenue and commission expense 2     —      
Gain on sale of Scientific Imaging businesses B —     (120 )    
Adjusted EBITDA $ 389     $ 438     13 %
% of Adjusted Revenue 32.3 %   34.0 %   +170 bps  
           
Table 4: Adjusted Earnings Before Taxes Reconciliation ($M)    
           
  Q1 2018   Q1 2019   V %
GAAP Earnings Before Taxes $ 255     $ 419     64 %
Purchase accounting adjustment to acquired deferred revenue and commission expense 2     —      
Amortization of acquisition-related intangible assets C 74     82      
Gain on sale of Scientific Imaging businesses B —     (120 )    
Adjusted Earnings Before Taxes $ 332     $ 382     15 %
Table 5: Adjusted DEPS Reconciliation D          
           
  Q1 2018   Q1 2019   V %
GAAP DEPS $ 2.03     $ 3.53     74 %
Purchase accounting adjustment to acquired deferred revenue and commission expense 0.02     —      
Amortization of acquisition-related intangible assets C 0.56     0.62      
Gain on sale of Scientific Imaging businesses B —     (0.86 )    
Rounding —     0.01      
Adjusted DEPS $ 2.61     $ 3.30     26 %
Table 6: Cash Flow Reconciliation ($M)          
           
  Q1 2018   Q1 2019   V %
GAAP Operating Cash Flow $ 282     $ 290     3 %
Add: Cash taxes paid on sale of Scientific Imaging businesses —     39      
Adjusted Operating Cash Flow 282     330     17 %
Capital Expenditures (10 )   (16 )    
Capitalized Software Expenditures (2 )   (2 )    
Adjusted Free Cash Flow $ 270     $ 312     15 %
Table 7: Forecasted Adjusted DEPS Reconciliation D
           
  Q2 2019   Full Year 2019
  Low End   High End   Low End   High End
GAAP DEPS $ 2.38     $ 2.42     $ 11.08     $ 11.38  
Amortization of acquisition-related intangible assets C 0.62     0.62     2.48     2.48  
Gain on sale of Scientific Imaging businesses B —     —     (0.86 )   (0.86 )
Adjusted DEPS $ 3.00     $ 3.04     $ 12.70     $ 13.00  

A.   Q1'19 acquisition-related fair value adjustment to deferred revenue related to the acquisition of PowerPlan ($1M pretax, $0M after-tax).

B.   Gain on sale of Scientific Imaging businesses ($120M pretax, $90M after-tax).

C.  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 21% applied to amortization.

               
  Q1’18A   Q1’19A   Q2’19E   FY’19E
Pretax $ 74     $ 82     $ 83     $ 330  
After-tax $ 59     $ 65     $ 65     $ 261  
Per share $ 0.56     $ 0.62     $ 0.62     $ 2.48  

D.  All 2018 and 2019 adjustments taxed at 21%, except for the gain on sale of the Scientific Imagining businesses which was taxed at 25%.

Note: Numbers may not foot due to rounding.

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)  
 
  March 31, 2019   December 31, 2018
ASSETS:      
       
Cash and cash equivalents $ 392.5     $ 364.4  
Accounts receivable, net   629.3       700.8  
Inventories, net   207.5       190.8  
Income taxes receivable   18.5       21.7  
Unbilled receivables   194.4       169.4  
Other current assets   91.5       80.0  
Current assets held for sale   52.3       83.6  
Total current assets   1,586.0       1,610.7  
       
Property, plant and equipment, net   132.2       128.7  
Right-of-use assets   260.4       —  
Goodwill   9,365.4       9,346.8  
Other intangible assets, net   3,766.8       3,842.1  
Deferred taxes   93.0       52.2  
Other assets   104.8       101.1  
Assets held for sale   95.3       167.9  
       
Total assets $ 15,403.9     $ 15,249.5  
       
LIABILITIES AND STOCKHOLDERS' EQUITY:      
       
Accounts payable $ 172.6     $ 165.3  
Accrued compensation   164.3       248.3  
Deferred revenue   691.1       677.9  
Other accrued liabilities   245.3       258.0  
Income taxes payable   78.7       58.3  
Current operating lease liabilities   52.7       —  
Short-term debt   14.1       —  
Current portion of long-term debt, net   1.7       1.5  
Current liabilities held for sale   24.2       38.9  
Total current liabilities   1,444.7       1,448.2  
       
Long-term debt, net of current portion   4,487.0       4,940.2  
Deferred taxes   920.5       931.1  
Operating lease liabilities   216.3       —  
Other liabilities   190.1       191.5  
Liabilities held for sale   7.9       —  
Total liabilities   7,266.5       7,511.0  
       
Common stock   1.1       1.1  
Additional paid-in capital   1,799.9       1,751.5  
Retained earnings   6,569.4       6,247.7  
Accumulated other comprehensive loss   (214.6 )     (243.3 )
Treasury stock   (18.4 )     (18.5 )
Total stockholders' equity   8,137.4       7,738.5  
       
Total liabilities and stockholders' equity $ 15,403.9     $ 15,249.5  
 

 

   
Roper Technologies, Inc. and Subsidiaries  
Condensed Consolidated Statements of Earnings (unaudited)
(Amounts in millions, except per share data)  
 
  Three months ended March 31,
  2019   2018
Net revenues $ 1,287.2     $ 1,202.5  
Cost of sales   476.6       452.0  
Gross profit   810.6       750.5  
       
Selling, general and administrative expenses   464.2       450.3  
Income from operations   346.4       300.2  
       
Interest expense, net   43.7       43.2  
Other income/(expense), net   (3.1 )     (1.7 )
Gain on disposal of business   119.6       —  
       
Earnings before income taxes   419.2       255.3  
       
Income taxes   49.6       44.0  
       
Net earnings $ 369.6     $ 211.3  
       
Net earnings per share:      
Basic $ 3.57     $ 2.05  
Diluted $ 3.53     $ 2.03  
       
Weighted average common shares outstanding:      
Basic   103.6       102.9  
Diluted   104.7       104.2  
       

 

         
Roper Technologies, Inc. and Subsidiaries        
Selected Segment Financial Data (unaudited)  
(Amounts in millions and percents of net revenues)  
 
 
  Three Months Ended March 31,
  2019   2018
       
  Amount   %   Amount   %
               
Net revenues:              
Application Software $ 381.2       $ 323.9    
Network Software & Systems   345.7         313.9    
Measurement & Analytical Solutions   401.8         404.0    
Process Technologies   158.5         160.7    
Total $ 1,287.2       $ 1,202.5    
               
               
Gross profit:              
Application Software $ 253.4   66.5%   $ 213.9   66.0%
Network Software & Systems   239.0   69.1%     212.7   67.8%
Measurement & Analytical Solutions   231.2   57.5%     234.0   57.9%
Process Technologies   87.0   54.9%     89.9   55.9%
Total $ 810.6   63.0%   $ 750.5   62.4%
               
               
Operating profit*:              
Application Software $ 91.4   24.0%   $ 70.2   21.7%
Network Software & Systems   125.3   36.2%     106.0   33.8%
Measurement & Analytical Solutions   118.1   29.4%     115.4   28.6%
Process Technologies   50.1   31.6%     50.3   31.3%
Total $ 384.9   29.9%   $ 341.9   28.4%
               
 
*Segment operating profit is before unallocated corporate general and administrative expenses. These expenses were $38.5 and $41.7 for the three months ended March 31, 2019 and 2018, respectively.
 

 

   
Roper Technologies, Inc. and Subsidiaries  
Condensed Consolidated Statements of Cash Flows (unaudited)      
(Amounts in millions)      
       
  Three months ended March 31,
  2019   2018
Cash flows from operating activities:      
Net earnings $ 369.6     $ 211.3  
Adjustments to reconcile net earnings to cash flows from operating activities:      
Depreciation and amortization of property, plant and equipment   11.7       12.6  
Amortization of intangible assets   82.9       75.3  
Amortization of deferred financing costs   1.7       1.6  
Non-cash stock compensation   25.3       26.0  
Gain on disposal of businesses, net of associated income tax   (89.6 )     —  
Changes in operating assets and liabilities, net of acquired businesses:      
Accounts receivable   88.9       17.3  
Unbilled receivables   (25.3 )     (10.5 )
Inventories   (19.5 )     (9.0 )
Accounts payable and accrued liabilities   (92.8 )     (45.9 )
Deferred revenue   11.9       26.3  
Income taxes, excluding tax associated with gain on disposal of businesses   (17.6 )     (13.8 )
Cash tax paid for gain on disposal of businesses   (39.4 )     —  
Other, net   (17.5 )     (9.5 )
Cash provided by operating activities   290.3       281.7  
       
Cash flows from (used in) investing activities:      
Acquisitions of businesses, net of cash acquired   (3.2 )     (38.9 )
Capital expenditures   (15.8 )     (9.7 )
Capitalized software expenditures   (2.0 )     (1.9 )
Proceeds from disposal of business   220.4       —  
Other, net   (2.2 )     (1.0 )
Cash from (used in) investing activities   197.2       (51.5 )
       
Cash flows used in financing activities:      
Payments under revolving line of credit, net   (455.0 )     (535.0 )
Cash dividends to stockholders   (47.7 )     (42.1 )
Proceeds from stock-based compensation, net   22.0       23.8  
Treasury stock sales   2.2       1.6  
Other   14.2       0.1  
Cash used in financing activities   (464.3 )     (551.6 )
       
Effect of foreign currency exchange rate changes on cash   4.9       16.3  
       
Net increase (decrease) in cash and cash equivalents   28.1       (305.1 )
       
Cash and cash equivalents, beginning of period   364.4       671.3  
       
Cash and cash equivalents, end of period $ 392.5     $ 366.2  
       

Contact Information: Investor Relations941-556-2601investor-relations@ropertech.com

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