ROPER TECHNOLOGIES INC - FORM 8-K - EX-99.1

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8-K - ROPER TECHNOLOGIES INC	cover8k.htm

Contact Information:
Investor Relations

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

Roper Technologies, Inc.

Roper Technologies Announces Second Quarter Results

GAAP Revenue Increased 22%; Adjusted Revenue Increased 23%

Raising Full Year Adjusted DEPS Guidance

Sarasota, Florida, July 31, 2017 ... Roper Technologies, Inc. (NYSE: 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^A,B		16	^A		2	^B
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^A,B		0.10			0.02
Purchase accounting adjustment for commission expense^C		(0.01	)		-
Amortization of Acquisition-related intangible assets, after tax^D		0.46			0.31
Gain on Sale of divested energy product line^E		(0.06	)		-
Impairment Charge on minority investment^F		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^A,B		16	^A		2	^B
Adjusted Revenue	$	1,151		$	934

GAAP Gross Profit	$	706		$	568
Purchase accounting adjustment to acquired deferred revenue^A,B		16	^A		2	^B
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^A,B		16	^A		2	^B
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^A,B		16	^A		2	^B
Purchase accounting adjustment for commission expense, pretax^C		(1	)		-
Gain on sale of divested Energy product line^E		(9	)		-
Impairment charge on minority investment^F		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^G		0.07		0.07		0.32			0.32
Amortization of acquisition-related intangible assets, after-tax^D		0.45		0.45		1.82			1.82
Gain on sale of divested Energy product line^E						(0.06	)		(0.06	)
Impairment charge on minority investment^F						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

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