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 Reconciliation A
  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 assets B   0.46       0.34        
One-time net gain resulting from the Tax Cuts and Jobs Act C   (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 assets B   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 Act C   (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 Reconciliation A

  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 revenue D   0.01     0.01     0.03     0.03  
Amortization of acquisition-related intangible assets B   0.56     0.56     2.21     2.21  
Adjustments to 2017 provisional income tax amounts resulting from the Tax Cuts and Jobs Act TBD   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.

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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 Relations941-556-2601 investor-relations@ropertech.com

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