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Roper Technologies Announces Record 2017 Financial Results

Company Release - 2/2/2018 6:55 AM ET

Fourth Quarter Revenue Increased 21% and Operating Cash Flow Increased 36%

Full Year Operating Cash Flow Increased to $1.23 Billion

SARASOTA, Fla., Feb. 02, 2018 (GLOBE NEWSWIRE) -- Roper Technologies, Inc. (NYSE:ROP), a diversified technology company, reported financial results for the fourth quarter and full year ended December 31, 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.

Fourth Quarter 2017

Fourth quarter GAAP and adjusted revenue increased 21% to $1.23 billion, and organic revenue grew 5%. GAAP gross margin expanded 40 basis points to 62.4% and adjusted gross margin expanded 30 basis points to 62.6%.

GAAP DEPS was $4.27, and adjusted DEPS was $2.70, a 23% increase. Adjusted results exclude a one-time net gain of $215 million resulting from the Tax Cuts and Jobs Act, in addition to customary adjustments.

Adjusted EBITDA grew 21% to $441 million. Operating cash flow and free cash flow both increased 36% to $369 million and $353 million, respectively.

Full Year 2017

Full year GAAP revenue increased 22% to $4.61 billion and adjusted revenue grew 23% to $4.67 billion. GAAP gross margin expanded 70 basis points to 62.2% and adjusted gross margin expanded 90 basis points to 62.6%.

Adjusted EBITDA grew 22% to $1.60 billion. Operating cash flow grew to $1.23 billion, a 28% increase and a 23% increase on an adjusted basis.

“2017 was a remarkable year for Roper as our strategic focus on asset-light diversified technology businesses continued to drive shareholder value,’’ said Brian Jellison, Roper’s Chairman, President and CEO. “Cash flow performance across our operations was outstanding, helping us reduce debt by $1.06 billion and operate with negative working capital for the first time. Our strong organic revenue growth was enhanced by contributions from our large 2016 software acquisitions, Deltek and ConstructConnect, which exceeded our initial revenue and cash flow expectations for the year.”

2018 Outlook and Guidance

“The Tax Cuts and Jobs Act will provide significant benefits for Roper,” said Mr. Jellison. “The expected decrease in our effective tax rate will lead to increases in both earnings and cash flow in 2018 and beyond. Furthermore, our ability to better access our cash worldwide will enable us to accelerate investment and continue pursuing attractive acquisition opportunities from a robust pipeline.”

Roper expects full year adjusted DEPS between $10.88 and $11.20 with first quarter adjusted DEPS between $2.44 and $2.50.

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 Friday, February 2, 2018.  The call can be accessed via webcast or by dialing +1 888-455-2265 (US/Canada) or +1 719-325-4747, using confirmation code 1925510.  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 1925510.

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 Operating Cash Flow Reconciliation ($M)

 FY 2017 FY 2016 V% 
GAAP Operating Cash Flow$ 1,234 $ 964 28% 
Cash taxes related to 2015 sale of Abel Pump -  37   
Adjusted Operating Cash Flow$ 1,234 $ 1,001 23% 
          

Table 2:  Adjusted Revenue Reconciliation and Growth Detail ($M)

 Q4 2017 Q4 2016 V % 
GAAP Revenue$ 1,227 $1,011 21% 
Purchase accounting adjustment to acquired deferred revenue 8  7   
Adjusted Revenue$ 1,235 $ 1,018 21% 
       
Components of Adjusted Revenue Growth      
Organic    5% 
Acquisitions/Divestitures    15% 
Foreign Exchange    1% 
Total Adjusted Revenue Growth    21% 


 FY 2017 FY 2016 V % 
GAAP Revenue$ 4,607 $3,790 22% 
Purchase accounting adjustment to acquired deferred revenue 57  15   
Rounding 1  -   
Adjusted Revenue$ 4,665 $ 3,805 23% 
       
Components of Adjusted Revenue Growth      
Organic    5% 
Acquisitions/Divestitures    17% 
Foreign Exchange    0% 
Rounding    1% 
Total Adjusted Revenue Growth    23% 
        


Table 3:  Adjusted Gross Margin Reconciliation ($M)

 Q4 2017 Q4 2016 V Bps 
GAAP Revenue$ 1,227  $ 1,011    
Purchase accounting adjustment to acquired deferred revenue 8   7    
Adjusted Revenue$ 1,235  $ 1,018    
       
GAAP Gross Profit$ 765  $ 627    
Purchase accounting adjustment to acquired deferred revenue 8   7    
Adjusted Gross Profit$ 773  $ 634    
       
GAAP Gross Margin 62.4%  62.0% +40 bps 
Adjusted Gross Margin 62.6%  62.3% +30 bps 


 FY 2017 FY 2016 V Bps 
GAAP Revenue$ 4,607  $3,790    
Purchase accounting adjustment to acquired deferred revenue 57   15    
Rounding 1   -    
Adjusted Revenue$ 4,665  $ 3,805    
       
GAAP Gross Profit$ 2,865  $ 2,332    
Purchase accounting adjustment to acquired deferred revenue 57   15    
Purchase accounting adjustment for commission expense and acquisition-related inventory step-up charge (0)  0    
Rounding -   1    
Adjusted Gross Profit$ 2,922  $ 2,348    
       
GAAP Gross Margin 62.2%  61.5% +70 bps 
Adjusted Gross Margin 62.6%  61.7% +90 bps 
           


Table 4:  Adjusted DEPS ReconciliationA

 Q4 2017 Q4 2016 V % 
GAAP DEPS$ 4.27  $ 1.78  141% 
Purchase accounting adjustment to acquired deferred revenue 0.05   0.05    
Purchase accounting adjustment for commission expense  (0.01)  (0.00)   
Acquisition-related expenses deemed significant -   0.04    
Amortization of acquisition-related intangible assetsB 0.46   0.34    
One-time net gain resulting from the Tax Cuts and Jobs ActC (2.07)  -    
Rounding -   (0.01)   
Adjusted DEPS$ 2.70  $ 2.20  23% 


 FY 2017 FY 2016 V % 
GAAP DEPS$ 9.39  $ 6.43  46% 
Purchase accounting adjustment to acquired deferred revenue 0.36   0.10    
Purchase accounting adjustment for commission expense  (0.03)  (0.00)   
Acquisition-related expenses deemed significant -   0.04    
Amortization of acquisition-related intangible assetsB 1.83   1.27    
Gain on sale of divested energy product line (0.06)  -    
Impairment charge on minority investment 0.01   -    
Debt extinguishment charge -   0.01    
One-time net gain resulting from the Tax Cuts and Jobs ActC (2.08)  -    
Rounding -   (0.01)   
Adjusted DEPS$ 9.42  $ 7.84  20% 
            


Table 5A:  Q4 Adjusted EBITDA Reconciliation ($M)

 Q4 2017 Q4 2016 V% / Bps 
GAAP Revenue$ 1,227  $ 1,011    
Purchase accounting adjustment to acquired deferred revenue 8   7    
Adjusted Revenue$ 1,235  $ 1,018    
       
GAAP Net Earnings$ 444  $ 182    
Taxes (140)  76    
Interest expense 43   30    
Depreciation 13   9    
Amortization 74   54    
Rounding (1)  1    
EBITDA$ 433  $ 352    
       
Purchase accounting adjustment to acquired deferred revenue 8   7    
Purchase accounting adjustment for commission expense (1)  (0)   
Acquisition-related expenses deemed significant -   6    
Rounding 1   -    
Adjusted EBITDA$ 441  $ 365  21% 
% of Adjusted Revenue 35.7%  35.9% (20) bps 
           



Table 5B:  Full Year Adjusted EBITDA Reconciliation ($M)

 FY 2017 FY 2016 V% / Bps 
GAAP Revenue$ 4,607  $ 3,790    
Purchase accounting adjustment to acquired deferred revenue 57   15    
Rounding 1   -    
Adjusted Revenue$ 4,665  $ 3,805    
       
GAAP Net Earnings$ 972  $ 659    
Taxes 63   282    
Interest expense 181   112    
Depreciation 50   37    
Amortization 295   203    
Rounding (1)  -    
EBITDA$ 1,560  $ 1,293    
       
Purchase accounting adjustment to acquired deferred revenue 57   15    
Purchase accounting adjustment for commission expense (5)  (0)   
Acquisition-related inventory step-up charge -   0    
Acquisition-related expenses deemed significant -   6    
Gain on sale of divested Energy product line (9)  -    
Impairment charge on minority investment 2   -    
Debt extinguishment charge -   1    
Adjusted EBITDA$ 1,605  $ 1,315  22% 
% of Adjusted Revenue 34.4%  34.6% (20) bps 
           


Table 6:  Forecasted Adjusted DEPS ReconciliationA

 Q1 2018 Full Year 2018 
 Low End High End Low End High End 
GAAP DEPS$ 1.87 $ 1.93 $ 8.64 $ 8.96 
Purchase accounting adjustments to acquired deferred revenueD 0.01  0.01  0.03  0.03 
Amortization of acquisition-related
intangible assetsB
 0.56  0.56  2.21  2.21 
Adjustments to 2017 provisional income tax amounts resulting from the Tax Cuts and Jobs ActTBD TBD TBD TBD 
 

Adjusted DEPS
$ 2.44 $ 2.50 $ 10.88 $ 11.20 


A. All 2017 and 2016 adjustments taxed at 35%, all 2018 adjustments taxed at 21%. 

B. 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 35% applied to amortization in 2016 and 2017, and a tax rate of 21% applied to amortization in 2018.

 Q4 2016A FY 2016A Q4 2017A FY 2017A Q1 2018E FY 2018E
Pretax$ 54 $ 201 $ 73 $ 292 $ 74 $ 292
After-tax$ 35 $ 131 $ 47 $ 190 $ 58 $ 231
Per share$ 0.34 $ 1.27 $ 0.46 $ 1.83 $ 0.56 $ 2.21

C. One-time net gain resulting from the Tax Cuts and Jobs Act ($215.4M after-tax).

D. Forecasted acquisition-related fair value adjustments to acquired deferred revenue of Deltek and Onvia, as shown below ($M, except per share data).

 Q1 2018E FY 2018E
Pretax$ 2 $ 5
After-tax$ 2 $ 3
Per Share$ 0.01 $ 0.03
      


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) 
   
 December 31, 2017 December 31, 2016 
ASSETS:    
     
Cash and cash equivalents$  671,327   $  757,200   
Accounts receivable, net  641,662     619,854   
Inventories, net  204,933     181,952   
Unbilled receivables  143,634     129,965   
Other current assets  97,846     87,530   
Total current assets  1,759,402     1,776,501   
     
Property, plant and equipment, net  142,535     141,318   
Goodwill  8,820,313     8,647,142   
Other intangible assets, net  3,475,218     3,655,843   
Deferred taxes  30,726     30,620   
Other assets  88,219     73,503   
     
Total assets$  14,316,413   $  14,324,927   
     
LIABILITIES AND STOCKHOLDERS' EQUITY:    
     
Accounts payable$  171,073   $  152,067   
Accrued compensation  198,020     161,730   
Deferred revenue  566,447     488,399   
Other accrued liabilities  266,574     219,339   
Income taxes payable  26,351     22,762   
Current portion of long-term debt, net  800,944     400,975   
Total current liabilities  2,029,409     1,445,272   
     
Long-term debt, net of current portion  4,354,611     5,808,561   
Deferred taxes  829,657     1,178,205   
Other liabilities  239,172     104,024   
Total liabilities  7,452,849     8,536,062   
   
Common stock  1,044     1,036   
Additional paid-in capital  1,602,869     1,489,067   
Retained earnings  5,464,571     4,642,402   
Accumulated other comprehensive loss  (186,214)   (324,739) 
Treasury Stock  (18,706)   (18,901) 
Total stockholders' equity  6,863,564     5,788,865   
     
Total liabilities and stockholders' equity$  14,316,413   $  14,324,927   
     

 

        
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(Amounts in thousands, except per share data) 
          
  Three months ended December 31, Twelve months ended December 31, 
   2017   2016   2017  2016  
Net revenues $1,226,583  $1,010,800  $4,607,471 $3,789,925  
Cost of sales  461,471   383,922   1,742,675  1,457,515  
Gross profit  765,112   626,878   2,864,796  2,332,410  
Selling, general and administrative expenses  418,129   337,774   1,654,552  1,277,847  
Income from operations  346,983   289,104   1,210,244  1,054,563  
Interest expense, net  43,365   30,483   180,566  111,559  
Other income/(expense), net  (218)  (355)  5,045  (2,352) 
Earnings before income taxes  303,400   258,266   1,034,723  940,652  
Income taxes  (140,472)  76,185   62,951  282,007  
Net earnings $443,872  $182,081  $971,772 $658,645  
          
Earnings per share:         
Basic $4.33  $1.79  $9.51 $6.50  
Diluted $4.27  $1.78  $9.39 $6.43  
          
Weighted-average common shares outstanding:         
Basic  102,395   101,469   102,168  101,291  
Diluted  103,863   102,580   103,522  102,464  
          

 

                 
Roper Technologies, Inc. and Subsidiaries
Selected Segment Financial Data (unaudited)
(Amounts in thousands and percents of net revenues)
                 
  Three months ended December 31, Twelve months ended December 31,
   2017   2016   2017   2016 
  Amount % Amount % Amount % Amount %
Net revenues:                
RF Technology $  491,438   $  337,728   $  1,862,126   $  1,210,264  
Medical & Scientific Imaging   367,711     351,987     1,410,349     1,362,813  
Industrial Technology   206,994     178,446     783,707     706,625  
Energy Systems & Controls   160,440     142,639     551,289     510,223  
Total $  1,226,583   $  1,010,800   $  4,607,471   $  3,789,925  
Gross profit:                
RF Technology $  306,833 62.4% $  193,430 57.3% $  1,136,929 61.1% $  685,923 56.7%
Medical & Scientific Imaging   262,104 71.3%   256,941 73.0%   1,015,200 72.0%   997,666 73.2%
Industrial Technology   102,778 49.7%   90,683 50.8%   396,188 50.6%   357,362 50.6%
Energy Systems & Controls   93,397 58.2%   85,824 60.2%   316,479 57.4%   291,459 57.1%
Total $  765,112 62.4% $  626,878 62.0% $  2,864,796 62.2% $  2,332,410 61.5%
Operating profit*:                
RF Technology $  136,605 27.8% $  99,562 29.5% $  479,295 25.7% $  372,467 30.8%
Medical & Scientific Imaging   129,961 35.3%   129,842 36.9%   486,575 34.5%   477,548 35.0%
Industrial Technology   60,901 29.4%   51,601 28.9%   235,018 30.0%   202,451 28.7%
Energy Systems & Controls   51,709 32.2%   45,874 32.2%   151,163 27.4%   129,602 25.4%
Total $  379,176 30.9% $  326,879 32.3% $  1,352,051 29.3% $  1,182,068 31.2%
Net Orders:            
RF Technology $  524,670   $  378,587   $  1,929,438   $  1,278,246  
Medical & Scientific Imaging   394,015     384,097     1,448,269     1,399,007 
Industrial Technology   219,585     175,993     826,666     704,622  
Energy Systems & Controls   166,258     146,008     556,692     514,300  
Total $  1,304,528   $  1,084,685   $  4,761,065   $  3,896,175  
                 
                 
*Segment operating profit is before unallocated corporate general and administrative expenses. These expenses were $32,193 and $37,775 for the three months ended December 31, 2017 and 2016, respectively, and $141,807 and $127,505 for the twelve months ended December 30, 2017 and 2016, respectively.
                 

 

  
Roper Technologies, Inc. and Subsidiaries 
Condensed Consolidated Statements of Cash Flows (unaudited) 
(Amounts in thousands) 
 
  Years ended December 31, 
   2017   2016  
Cash flows from operating activities:     
Net earnings $971,772  $658,645  
Adjustments to reconcile net earnings to cash flows from operating activities:     
Depreciation and amortization of property, plant and equipment  49,513   37,299  
Amortization of intangible assets  295,452   203,154  
Amortization of deferred financing costs  7,227   5,612  
Non-cash stock compensation  83,075   78,827  
Gain on sale of assets  (9,393)    
Changes in operating assets and liabilities, net of acquired businesses:     
 Accounts receivable  (6,673)  (20,734) 
 Unbilled receivables  (13,493)  (1,202) 
 Inventories  (15,363)  6,353  
 Accounts payable and accrued liabilities  73,333   20,176  
 Deferred revenue  74,881   25,190  
 Income taxes  (256,971)  (47,589) 
Other, net  (18,878)  (1,946) 
     Cash provided by operating activities  1,234,482   963,785  
Cash flows from investing activities:     
Acquisitions of businesses, net of cash acquired  (153,736)  (3,721,758) 
Capital expenditures  (48,752)  (37,305) 
Capitalized software expenditures  (10,784)  (2,801) 
Proceeds from sale of assets  10,628   870  
Other, net  (6,932)  8,138  
    Cash used in investing activities  (209,576)  (3,752,856) 
Cash flows from financing activities:     
Proceeds from senior notes     1,200,000  
Payment of senior notes  (400,000)    
Borrowings/(payments) under revolving line of credit, net  (660,000)  1,750,000  
Principal payments on convertible notes     (4,284) 
Debt issuance costs     (17,266) 
Cash dividends to stockholders  (142,753)  (121,130) 
Treasury stock sales  4,198   3,340  
Proceeds from stock based compensation, net  28,487   9,998  
Redemption premium on convertible debt     (14,166) 
Other  51   (1,229) 
    Cash provided by/(used in) financing activities  (1,170,017)  2,805,263  
Effect of exchange rate changes on cash  59,238   (37,503) 
Net increase/(decrease) in cash and cash equivalents  (85,873)  (21,311) 
Cash and cash equivalents, beginning of year  757,200   778,511  
Cash and cash equivalents, end of year $671,327  $757,200  
 

 

Contact Information:
Investor Relations
941-556-2601
investor-relations@ropertech.com

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