ROPER TECHNOLOGIES, INC. SARASOTA, Fla., Oct. 27, 2014 /PRNewswire/ -- Roper Industries, Inc. (NYSE: ROP) reported financial results for the third quarter ended September 30, 2014.
Roper reports results - including revenue, 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 $1.54, a 13% increase over last year. Adjusted diluted earnings per share were $1.55, a 9% increase over last year. GAAP revenue increased 7% to $884 million and adjusted revenue increased 6% to $885 million. Orders increased to $893 million and enterprise book-to-bill was 1.01x for the quarter.
GAAP gross margin increased 100 basis points to 59.3% and adjusted gross margin increased to 59.4%, a 70 basis point gain over the prior year. EBITDA margin was a record 33.6% for the quarter. Operating cash flow in the quarter was $226 million, representing 145% conversion of GAAP Net Income.
"Our businesses continue to perform exceptionally well," said Brian Jellison, Roper's Chairman, President and CEO. "Revenue growth in the quarter was broad-based, with organic increases in each segment. We are encouraged by the continued strength in orders, which exceeded revenue in all four segments. We delivered free cash flow of $217 million, representing 24.5% of revenue."
"We invested $303 million in three acquisitions during the quarter," continued Mr. Jellison. "Strategic Healthcare Programs (SHP) and Innovative Product Achievements (IPA) are outstanding additions to our growing Medical platform. FoodLink® brings technology for food traceability and commerce solutions to our iTradeNetwork business. We are pleased with the performance of these businesses and are excited about their growth opportunities. Looking forward, we finished the quarter with substantial capacity for future acquisitions and have an attractive pipeline of opportunities."
2014 Outlook and Guidance
Roper is increasing its full year adjusted diluted earnings per share guidance to $6.32 - $6.38, from its previous range of $6.27 - $6.37, and establishing fourth quarter adjusted diluted earnings per share guidance of $1.75 - $1.81.
The company's guidance includes the recognition of acquired revenue which is excluded under GAAP's purchase accounting rules, and also excludes certain items as detailed later in this press release under the heading "Use of Non-GAAP Financial Measures." The company's guidance excludes the impact of any future acquisitions or divestitures.
Use of Non-GAAP Financial Measures
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. 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. The financial results prepared in accordance with GAAP and reconciliations from these results should be carefully evaluated.
Table 1: Revenue Growth Detail
2014 2013 V%
---- ---- ---
Q3 GAAP Revenue $884 $828 7%
Add: Purchase Accounting Adjustment to 9
Acquired Revenue (Sunquest, MHA)
Add: Purchase Accounting Adjustment to 1
Acquired Deferred Revenue (SHP, FoodLink)
Q3 Adjusted Revenue $885 $837 6%
---- ----
Components of Adjusted Revenue Growth
Organic 4%
Acquisitions 2%
Foreign Exchange --%
---
Total Growth 6%
===
Table 2: Reconciliation of Q3 2014 GAAP DEPS to Adjusted DEPS
2014 2013 V%
---- ---- ---
GAAP Diluted Earnings Per Share (DEPS) $1.54 $1.36 13%
Add: Purchase Accounting Adjustment to $0.01
Acquired Deferred Revenue (FoodLink, SHP),
net of tax
Add: Acquisition-Related Inventory Step-up $0.00
Charge (IPA), net of tax
Add: Purchase Accounting Adjustment for $0.06
Acquired Revenue (Sunquest, MHA)
Adjusted DEPS $1.55 $1.42 9%
===== =====
Table 3: Adjusted Net Income Reconciliation
Q3 2014
-------
GAAP Net Earnings $155.5
Purchase Accounting Adjustment to
Acquired 0.6
Deferred Revenue (FoodLink, SHP), net
of tax
Acquisition-Related Inventory Step-
up Charge 0.3
(IPA), net of tax
Adjusted Net Earnings $156.4
Table 4: Adjusted Gross Margin Reconciliation
2014 2013 V bps
---- ---- -----
Q3 GAAP Revenue $884.1 $827.8
Add: Purchase Accounting Adjustment to 8.9
Acquired Revenue (Sunquest, MHA)
Add: Purchase Accounting Adjustment to 0.9
Acquired Deferred Revenue (SHP, FoodLink)
Rounding 0.1
Q3 Adjusted Revenue (A) 885.1 $836.7
Q3 GAAP Gross Profit 524.0 482.6
Add: Purchase Accounting Adjustment to 8.9
Acquired Revenue (Sunquest, MHA)
Add: Purchase Accounting Adjustment to 0.9
Acquired Deferred Revenue (SHP, FoodLink)
Add: Acquisition-Related Inventory Step-up 0.4
Charge (IPA)
Rounding 0.1
---
Adjusted Gross Profit (B) 525.4 491.5
GAAP Gross Margin 59.3% 58.3% +100 bps
Adjusted Gross Margin (B) / (A) 59.4% 58.7% +70 bps
Table 5: Free Cash Flow
Q3 2014
-------
Operating Cash Flow $226
Less: Capital Expenditures (9)
---
Free Cash Flow $217
====
Table 6: EBITDA Reconciliation
Q3 2014
-------
GAAP Revenue $884
Purchase Accounting Adjustment to
Acquired 1
Deferred Revenue (FoodLink, SHP)
Adjusted Revenue (A) $885
====
GAAP Net Earnings $155.5
Add: Depreciation 10.4
Add: Amortization 39.7
Add: Interest Expense 20.0
Add: Taxes 70.7
Purchase Accounting Adjustment to
Acquired 0.9
Deferred Revenue (FoodLink, SHP)
Acquisition-Related Inventory Step-
up Charge 0.4
(IPA)
EBITDA (B) $297.6
======
EBITDA Margin (B) / (A) 33.6%
Table 7: Q4 Guidance Reconciliation
Low End High End
------- --------
GAAP Diluted Earnings Per Share Guidance $1.74 $1.80
Purchase Accounting Adjustment for Acquired $0.01 $0.01
Deferred Revenue (FoodLink, SHP), net of tax
Acquisition-Related Inventory Step-up Charge $0.00 $0.00
(IPA), net of tax
Adjusted Diluted Earnings Per Share Guidance $1.75 $1.81
===== =====
Table 8: Full Year Guidance Reconciliation
Low End High End
------- --------
GAAP Diluted Earnings Per Share Guidance $6.29 $6.35
Purchase Accounting Adjustment for Acquired $0.02 $0.02
Deferred Revenue (FoodLink, SHP), net of tax
Acquisition-Related Inventory Charge (IPA), $0.01 $0.01
net of tax
Adjusted Diluted Earnings Per Share Guidance $6.32 $6.38
===== =====
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 27, 2014. The call can be accessed via webcast or by dialing +1 888-438-5525 (US/Canada) or +1 719-457-2689, using confirmation code 3987678. Webcast information and conference call materials will be made available in the Investors section of Roper's website (www.roperind.com) prior to the start of the call. Telephonic replays will be available for up to two weeks by calling +1 719-457-0820 and using the access code 3987678.
About Roper Industries
Roper Industries is a diversified technology company and is a constituent of the S&P 500, Fortune 1000, and the Russell 1000 indices. Roper provides engineered products and solutions for global niche markets, including software information networks, medical, water, energy, and transportation. Additional information about Roper is available on the company's website at www.roperind.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 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, 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, 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 Industries,
Inc. and
Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(Amounts in
thousands)
September 30, December 31,
ASSETS 2014 2013
------ ---- ----
CURRENT ASSETS:
Cash and cash
equivalents $564,112 $459,720
Accounts
receivable 528,734 519,075
Inventories 213,440 204,923
Unbilled
receivable 103,124 86,945
Deferred taxes 65,230 64,464
Other current
assets 58,051 38,210
Total current
assets 1,532,691 1,373,337
------------- --------- ---------
PROPERTY, PLANT
AND EQUIPMENT,
NET 115,243 117,310
--------------- ------- -------
OTHER ASSETS:
Goodwill 4,731,394 4,549,998
Other intangible
assets, net 2,020,798 2,039,136
Deferred taxes 29,051 28,773
Other assets 81,089 76,427
Total other
assets 6,862,332 6,694,334
----------- --------- ---------
TOTAL ASSETS $8,510,266 $8,184,981
============ ========== ==========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
---------------
CURRENT
LIABILITIES:
Accounts payable $145,660 $150,313
Accrued
compensation 115,167 107,953
Deferred revenue 221,552 209,332
Other accrued
liabilities 161,057 153,712
Income taxes
payable - 4,275
Deferred taxes 7,495 6,490
Current portion
of long-term
debt 11,074 11,016
--------------- ------ ------
Total current
liabilities 662,005 643,091
------------- ------- -------
NONCURRENT
LIABILITIES:
Long-term debt 2,358,474 2,453,836
Deferred taxes 753,798 783,805
Other liabilities 87,765 91,199
Total liabilities 3,862,042 3,971,931
----------------- --------- ---------
STOCKHOLDERS'
EQUITY:
Common stock 1,021 1,013
Additional paid-
in capital 1,317,906 1,229,233
Retained earnings 3,359,297 2,959,196
Accumulated other
comprehensive
earnings (10,680) 43,083
Treasury stock (19,320) (19,475)
-------------- ------- -------
Total
stockholders'
equity 4,648,224 4,213,050
-------------- --------- ---------
TOTAL LIABILITIES
AND
STOCKHOLDERS'
EQUITY $8,510,266 $8,184,981
================= ========== ==========
Roper Industries, 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,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
Net sales $884,122 $827,810 $2,603,349 $2,348,955
Cost of sales 360,082 345,185 1,067,191 999,247
------------- ------- ------- --------- -------
Gross profit 524,040 482,625 1,536,158 1,349,708
Selling, general
and administrative
expenses 278,382 263,276 820,434 765,436
------------------- ------- ------- ------- -------
Income from
operations 245,658 219,349 715,724 584,272
Interest expense 20,013 24,705 59,352 67,924
Other income 552 409 1,042 453
------------ --- --- ----- ---
Earnings from
continuing
operations before
income taxes 226,197 195,053 657,414 516,801
Income taxes 70,687 58,730 197,317 144,211
------------ ------ ------ ------- -------
Net Earnings $155,510 $136,323 $460,097 $372,590
============ ======== ======== ======== ========
Earnings per share:
Basic $1.55 $1.37 $4.61 $3.76
Diluted $1.54 $1.36 $4.56 $3.72
Weighted average
common and common
equivalent shares
outstanding:
Basic 100,068 99,207 99,837 99,058
Diluted 101,006 100,302 100,803 100,152
======= ======= ======= ======= =======
Roper Industries, 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,
-------------------------------- -------------------------------
2014 2013 2014 2013
---- ---- ---- ----
Amount % Amount % Amount % Amount %
------ --- ------ --- ------ --- ------ ---
Net sales:
Industrial Technology $205,688 $200,684 $607,503 $580,466
Energy Systems & Controls 170,765 155,058 491,804 456,031
Medical & Scientific Imaging 268,809 237,338 793,899 645,739
RF Technology 238,860 234,730 710,143 666,719
Total $884,122 $827,810 $2,603,349 $2,348,955
===== ======== ======== ========== ==========
Gross profit:
Industrial Technology $104,012 50.6% $101,259 50.5% $306,464 50.4% $296,414 51.1%
Energy Systems & Controls 99,233 58.1% 88,104 56.8% 281,055 57.1% 256,431 56.2%
Medical & Scientific Imaging 193,132 71.8% 167,433 70.5% 572,738 72.1% 440,718 68.3%
RF Technology 127,663 53.4% 125,829 53.6% 375,901 52.9% 356,145 53.4%
------- ------- ------- -------
Total $524,040 59.3% $482,625 58.3% $1,536,158 59.0% $1,349,708 57.5%
===== ======== ==== ======== ==== ========== ==== ========== ====
Operating profit*:
Industrial Technology $62,046 30.2% $60,753 30.3% $178,540 29.4% $164,278 28.3%
Energy Systems & Controls 49,033 28.7% 41,076 26.5% 130,844 26.6% 118,432 26.0%
Medical & Scientific Imaging 91,227 33.9% 71,968 30.3% 275,379 34.7% 179,433 27.8%
RF Technology 69,351 29.0% 66,469 28.3% 203,183 28.6% 183,828 27.6%
------ ------ ------- -------
Total $271,657 30.7% $240,266 29.0% $787,946 30.3% $645,971 27.5%
===== ======== ==== ======== ==== ======== ==== ======== ====
Net Orders:
Industrial Technology $205,945 $197,549 $611,074 $581,862
Energy Systems & Controls 173,172 148,922 490,106 466,414
Medical & Scientific Imaging 270,881 262,320 799,021 688,673
RF Technology 243,363 229,484 713,536 711,419
------- ------- ------- -------
Total $893,361 $838,275 $2,613,737 $2,448,368
===== ======== ======== ========== ==========
* Operating profit is before unallocated corporate general and administrative expenses. These expenses were $25,999 and $20,917 for the three months ended September 30, 2014 and 2013, respectively and $72,222
and $61,699 for the nine months ended September 30, 2014 and 2013, respectively.
Roper Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)
Nine months ended
September 30,
-------------
2014 2013
---- ----
Net earnings $460,097 $372,590
Non-cash items:
Depreciation 30,442 28,269
Amortization 117,179 111,210
Stock-based compensation expense 47,011 40,040
Income taxes (54,178) (12,643)
Changes in assets and liabilities:
Receivables (21,840) 29,844
Inventory (8,833) (15,202)
Accounts payable (4,969) 3,557
Accrued liabilities 15,311 9,498
Other, net (988) (390)
---------- ---- ----
Cash provided by operating activities 579,232 566,773
Business acquisitions, net of cash acquired (305,254) (1,014,952)
Capital expenditures (29,835) (33,349)
Other, net (5,304) 1,596
---------- ------ -----
Cash used by investing activities (340,393) (1,046,705)
Principal debt borrowings - 800,000
Principal debt payments (561) (502,115)
Revolver payments, net (95,000) 290,000
Debt issuance costs - (7,717)
Dividends (59,827) (32,706)
Excess tax benefit from share-based payment 14,892 7,763
Proceeds from stock-based compensation, net 26,424 16,839
Premium on convertible debt conversions (1,518) (5,100)
Other, net 2,118 2,556
---------- ----- -----
Cash provided by/(used by) financing activities (113,472) 569,520
Effect of exchange rate changes on cash (20,975) (198)
--------------------------------------- ------- ----
Net increase in cash and equivalents 104,392 89,390
Cash and equivalents, beginning of period 459,720 370,590
----------------------------------------- ------- -------
Cash and equivalents, end of period $564,112 $459,980
=================================== ======== ========
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SOURCE Roper Industries, Inc.
