ROPER TECHNOLOGIES INC - FORM 8-K - EX-99.1 - July 25, 2016

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8-K - ROPER TECHNOLOGIES INCcover8k.htm
Exhibit 99.1


Contact Information:
 Investor Relations
941-556-2601
investor-relations@ropertech.com
Roper Technologies, Inc.



Roper Technologies Announces Second Quarter Results



Sarasota, Florida, July 25, 2016 ... Roper Technologies, Inc. (NYSE: ROP) reported financial results for the second quarter ended June 30, 2016.

Roper reports results, including revenue, operating margin, net income and diluted earnings per share, on both a GAAP basis and an adjusted basis.  Adjusted measures are reconciled to the corresponding GAAP measures in the attached tables.

Second quarter GAAP revenue increased 5% to $932 million and adjusted revenue grew 5% to $934 million.  GAAP diluted earnings per share (DEPS) were $1.54 and adjusted DEPS were $1.56.  Orders increased 9% in the quarter to $956 million, and backlog was a record $1.14 billion.

GAAP gross margin increased to 60.9% and adjusted gross margin increased 90 basis points to 61.0 %.  EBITDA increased 4% to $314 million.

"Continued weakness in oil and gas and some traffic project delays impacted our results, while the balance of our businesses performed well in the quarter," said Brian Jellison, Roper's Chairman, President and CEO.  "Strong organic revenue growth in our medical, application software and water businesses coupled with our recent acquisitions resulted in 5% revenue growth in the quarter.  Operating cash flow was $170 million in the quarter, bringing year to date adjusted operating cash flow to $414 million with cash conversion of 132%.  Orders in the quarter were up 9% to a record $956 million, helping to build our momentum for a stronger second half of 2016."

"Our recent acquisitions performed well in the quarter.  With our strong cash performance, ample liquidity and a full pipeline of attractive acquisition opportunities, we expect to invest over $1 billion this year," Mr. Jellison concluded.
 
2016 Guidance Update

In a somewhat lower global growth environment, and as a result of continued headwinds in energy end markets and delays in toll & traffic projects, Roper expects adjusted DEPS to be in the range of $6.57 - $6.71, with third quarter adjusted DEPS of $1.59 - $1.63.  The Company expects revenue in the second half to increase between 7%-9%, including organic growth of 2%-4%.  The Company's guidance excludes the impact of any 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.

 
Table 1:  Revenue Growth Detail
   
2016
    
2015
      
V%
 
Q2 GAAP Revenue
  
$
931.6
    
$
889.5
      
4.7
%
Add:  Purchase Accounting Adjustment to Acquired Deferred Revenue
    
2.5
      
2.5
          
Rounding
    
(0.1
)
    
0.1
          
Q2 Adjusted Revenue
  
$
934.0
    
$
892.1
      
4.7
%
                         
Components of Adjusted Revenue Growth
                        
Acquisitions
                    
8.1
%
Divestiture
                    
(0.7
%)
Organic
                    
(2.4
%)
Foreign Exchange
                    
(0.3
%)
Total Growth
                    
4.7
%

 
Table 2:  Reconciliation of Q2 2016 GAAP DEPS to Adjusted DEPS
     
Q2 2016
  
GAAP Diluted Earnings Per Share (DEPS)
  
$
1.54
  
Add:  Purchase Accounting Adjustment to Acquired Deferred Revenue
  
$
0.02
  
Add:  Acquisition-Related Inventory Step-up Charge
  
$
0.00
  
Adjusted DEPS
  
$
1.56
  
 
Table 3:  Q2 2016 Adjusted Gross Margin Reconciliation
   
2016
    
2015
  
V% / V Bps
Q2 GAAP Revenue
  
$
931.6
    
$
889.5
    
Add:  Purchase Accounting Adjustment to Acquired Deferred Revenue
    
2.5
      
2.5
    
Rounding
    
(0.1
)
    
0.1
    
Q2 Adjusted Revenue
  
$
934.0
    
$
892.1
    
                      
Q2 GAAP Gross Profit
  
$
567.5
    
$
533.9
    
Add:  Purchase Accounting Adjustment to Acquired Deferred Revenue
    
2.5
      
2.5
    
Add:  Acquisition-Related Inventory Step-up Charge
    
0.2
      
--
    
Rounding
    
(0.1
)
    
--
    
Adjusted Gross Profit (B)
    
570.1
      
536.4
    
                      
GAAP Gross Margin
    
60.9
%
    
60.0
%
+90 bps
                      
Adjusted Gross Margin (B) / (A)
    
61.0
%
    
60.1
%
+90 bps

Table 4:  Q2 EBITDA Reconciliation
   
2016
    
2015
      
V%
 
GAAP Net Earnings
  
$
158.1
    
$
171.3
          
Add:  Taxes
    
66.8
      
59.0
          
Add:  Amortization
    
50.2
      
40.3
          
Add:  Interest Expense
    
26.9
      
20.2
          
Add:  Depreciation
    
9.4
      
9.5
          
Add:  Purchase Accounting Adjustment to Acquired Deferred Revenue
    
2.5
      
2.5
          
Add:  Acquisition-Related Inventory Step-up Charge
    
0.2
      
--
          
Rounding
    
(0.2
)
    
--
          
EBITDA
    
313.9
      
302.8
      
+4%
 

Table 5:  2016 Cash Flow Reconciliation
     
Q1
      
Q2
    
YTD
  
2016 GAAP Operating Cash Flow
  
$
207.1
    
$
169.7
    
$
376.8
  
Add:  Tax Related to 2015 Sale of Abel Pump
    
37.4
      
--
      
37.4
  
Rounding
    
--
      
--
      
0.1
  
Adjusted Operating Cash Flow
  
$
244.5
    
$
169.7
    
$
414.3
  
Less:  Capital Expenditures
    
(9.5
)
    
(8.8
)
    
(18.3
)
Rounding
    
--
      
--
      
(0.1
)
Adjusted Free Cash Flow
  
$
235.0
    
$
160.9
    
$
395.9
  

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 25, 2016.  The call can be accessed via webcast or by dialing +1 888-505-4368 (US/Canada) or +1 719-325-2435, using confirmation code 8694046.  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/866/16252 .  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 8694046.


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.

# # #
 
Roper Technologies, Inc. and Subsidiaries
            
Condensed Consolidated Balance Sheets (unaudited)
            
(Amounts in thousands)
            
             
             
   
June 30,
    
December 31,
  
ASSETS
  
2016
    
2015
  
             
CURRENT ASSETS:
            
  Cash and cash equivalents
  
$
622,294
    
$
778,511
  
  Accounts receivable
    
509,437
      
488,271
  
  Inventories
    
191,390
      
189,868
  
  Unbilled receivable
    
119,053
      
122,042
  
  Other current assets
    
107,999
      
39,355
  
    Total current assets
    
1,550,173
      
1,618,047
  
                 
PROPERTY, PLANT AND EQUIPMENT, NET
    
104,282
      
105,510
  
                 
OTHER ASSETS:
                
  Goodwill
    
5,973,770
      
5,824,726
  
  Other intangible assets, net
    
2,581,293
      
2,528,996
  
  Deferred taxes
    
30,506
      
31,532
  
  Other assets
    
57,094
      
59,554
  
    Total other assets
    
8,642,663
      
8,444,808
  
                 
TOTAL ASSETS
  
$
10,297,118
    
$
10,168,365
  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
  Accounts payable
  
$
135,598
    
$
139,737
  
  Accrued compensation
    
103,267
      
119,511
  
  Deferred revenue
    
280,984
      
267,030
  
  Other accrued liabilities
    
186,124
      
168,513
  
  Income taxes payable
    
21,182
      
18,532
  
  Current portion of long-term debt
    
5,886
      
6,805
  
    Total current liabilities
    
733,041
      
720,128
  
                 
NONCURRENT LIABILITIES:
                
  Long-term debt
    
3,086,263
      
3,264,417
  
  Deferred taxes
    
834,599
      
810,856
  
  Other liabilities
    
92,198
      
74,017
  
    Total liabilities
    
4,746,101
      
4,869,418
  
                 
STOCKHOLDERS' EQUITY:
                
  Common stock
    
1,033
      
1,028
  
  Additional paid-in capital
    
1,467,227
      
1,419,262
  
  Retained earnings
    
4,359,258
      
4,110,530
  
  Accumulated other comprehensive earnings
    
(257,506
)
    
(212,779
)
  Treasury stock
    
(18,995
)
    
(19,094
)
    Total stockholders' equity
    
5,551,017
      
5,298,947
  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  
$
10,297,118
    
$
10,168,365
  
 
 
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,
  
   
2016
    
2015
    
2016
    
2015
  
                         
Net sales
  
$
931,558
    
$
889,541
    
$
1,833,981
    
$
1,754,822
  
Cost of sales
    
364,038
      
355,630
      
706,942
      
702,750
  
                                 
Gross profit
    
567,520
      
533,911
      
1,127,039
      
1,052,072
  
                                 
Selling, general and administrative expenses
    
314,442
      
281,937
      
628,970
      
553,202
  
                                 
Income from operations
    
253,078
      
251,974
      
498,069
      
498,870
  
                                 
Interest expense
    
26,863
      
20,177
      
54,276
      
40,013
  
Other expense
    
(1,334
)
    
(1,520
)
    
(1,463
)
    
(2,199
)
                                 
Earnings from continuing operations before
                                
   income taxes
    
224,881
      
230,277
      
442,330
      
456,658
  
                                 
Income taxes
    
66,812
      
58,997
      
132,845
      
129,605
  
                                 
Net Earnings
  
$
158,069
    
$
171,280
    
$
309,485
    
$
327,053
  
                                 
                                 
                                 
                                 
                                 
Earnings per share:
                                
  Basic
  
$
1.56
    
$
1.70
    
$
3.06
    
$
3.26
  
  Diluted
  
$
1.54
    
$
1.69
    
$
3.02
    
$
3.22
  
                                 
Weighted average common and common
                                
  equivalent shares outstanding:
                                
    Basic
    
101,249
      
100,573
      
101,160
      
100,475
  
    Diluted
    
102,466
      
101,569
      
102,376
      
101,468
  
 
 
 
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,   
  
     2016    
2015
    
2016
    
2015
  
   
Amount
    
%
    
Amount
    
%
    
Amount
    
%
    
Amount
    
%
  
Net sales:
                                                
  Medical & Scientific Imaging
  
$
340,585
          
$
302,262
          
$
672,799
          
$
593,962
        
  RF Technology
    
288,761
            
255,558
            
568,971
            
498,512
        
  Industrial Technology
    
178,627
            
186,467
            
349,862
            
377,195
        
  Energy Systems & Controls
    
123,585
            
145,254
            
242,349
            
285,153
        
    Total
  
$
931,558
          
$
889,541
          
$
1,833,981
          
$
1,754,822
        
                                                         
                                                         
Gross profit:
                                                        
  Medical & Scientific Imaging
  
$
246,396
      
72.3
%
  
$
222,990
      
73.8
%
  
$
493,293
      
73.3
%
  
$
438,316
      
73.8
%
  RF Technology
    
163,005
      
56.4
%
    
134,136
      
52.5
%
    
323,370
      
56.8
%
    
264,182
      
53.0
%
  Industrial Technology
    
89,709
      
50.2
%
    
93,565
      
50.2
%
    
175,729
      
50.2
%
    
188,807
      
50.1
%
  Energy Systems & Controls
    
68,410
      
55.4
%
    
83,220
      
57.3
%
    
134,647
      
55.6
%
    
160,767
      
56.4
%
    Total
  
$
567,520
      
60.9
%
  
$
533,911
      
60.0
%
  
$
1,127,039
      
61.5
%
  
$
1,052,072
      
60.0
%
                                                                 
                                                                 
Operating profit*:
                                                                
  Medical & Scientific Imaging
  
$
114,271
      
33.6
%
  
$
109,261
      
36.1
%
  
$
228,727
      
34.0
%
  
$
217,040
      
36.5
%
  RF Technology
    
89,354
      
30.9
%
    
79,940
      
31.3
%
    
178,120
      
31.3
%
    
153,917
      
30.9
%
  Industrial Technology
    
51,291
      
28.7
%
    
52,188
      
28.0
%
    
98,050
      
28.0
%
    
110,085
      
29.2
%
  Energy Systems & Controls
    
27,769
      
22.5
%
    
37,702
      
26.0
%
    
51,951
      
21.4
%
    
68,124
      
23.9
%
    Total
  
$
282,685
      
30.3
%
  
$
279,091
      
31.4
%
  
$
556,848
      
30.4
%
  
$
549,166
      
31.3
%
                                                                 
                                                                 
Net Orders:
                                                                
  Medical & Scientific Imaging
  
$
338,436
            
$
306,637
            
$
682,286
            
$
582,433
          
  RF Technology
    
318,231
              
252,322
              
599,356
              
505,449
          
  Industrial Technology
    
175,967
              
181,845
              
354,872
              
370,585
          
  Energy Systems & Controls
    
123,704
              
140,255
              
246,474
              
271,325
          
    Total
  
$
956,338
            
$
881,059
            
$
1,882,988
            
$
1,729,792
          
                                                                 
                                                                 
                                                                 
* Operating profit is before unallocated corporate general and administrative expenses. These expenses were $29,607 and $27,117 for the three months ended June 30, 2016 and 2015, respectively, and $58,779 and $50,296 for the six months ended June 30, 2016 and 2015, respectively.            
  
 
Roper Technologies, Inc. and Subsidiaries
            
Condensed Consolidated Statements of Cash Flows (unaudited)
        
(Amounts in thousands)
            
             
             
   
Six months ended
  
   
June 30,
  
   
2016
    
2015
  
             
Net earnings
  
$
309,485
    
$
327,053
  
Non-cash items:
                
Depreciation
    
19,052
      
19,417
  
Amortization
    
99,719
      
78,758
  
Stock-based compensation expense
    
39,092
      
29,438
  
Income taxes
    
(77,931
)
    
(36,257
)
Changes in assets and liabilities:
                
Receivables
    
(10,202
)
    
29,688
  
Inventory
    
(104
)
    
(7,972
)
Accounts payable
    
(5,481
)
    
1,820
  
Accrued liabilities
    
7,763
      
(5,443
)
Other, net
    
(4,561
)
    
(3,554
)
  Cash provided by operating activities
    
376,832
      
432,948
  
                 
Business acquisitions, net of cash acquired
    
(274,968
)
    
(589,727
)
Capital expenditures
    
(18,348
)
    
(20,673
)
Other, net
    
79
      
(3,928
)
  Cash used in investing activities
    
(293,237
)
    
(614,328
)
                 
Principal debt payments
    
(289
)
    
(3,884
)
Revolver borrowings/(payments), net
    
(180,000
)
    
315,000
  
Dividends
    
(60,383
)
    
(50,099
)
Excess tax benefit from share-based payment*
    
-
      
8,781
  
Proceeds from stock-based compensation, net
    
8,516
      
15,315
  
Premium on convertible debt conversions
    
(915
)
    
(12,721
)
Other, net
    
1,094
      
849
  
  Cash provided by/(used in) financing activities
    
(231,977
)
    
273,241
  
                 
Effect of exchange rate changes on cash
    
(7,835
)
    
(23,720
)
                 
Net increase/(decrease) in cash and equivalents
    
(156,217
)
    
68,141
  
Cash and equivalents, beginning of period
    
778,511
      
610,430
  
                 
Cash and equivalents, end of period
    $
622,294
      $
678,571
  
                 
*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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