OREANDA-NEWS. Roper Technologies, Inc. (NYSE: ROP) reported financial results for the first quarter ended March 31, 2016.

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. 

First quarter GAAP revenue increased 4% to $902 million and adjusted revenue grew 4% to $906 million.  GAAP diluted earnings per share (DEPS) were $1.48 and adjusted DEPS were $1.50. Orders increased 9% in the quarter and backlog increased 7% to a record $1.12 billion.  

GAAP gross margin increased to 62.0% and adjusted gross margin increased 210 basis points to 62.1%.  EBITDA increased 4% to $307 million.  Operating cash flow was $207 million, which included tax payments associated with the gain on the divestiture of Abel Pump in the fourth quarter of 2015.  Excluding these tax payments, adjusted operating cash flow was $245 million and adjusted free cash flow was $235 million, representing 26% of revenue.

"We are very pleased with our performance in the quarter," said Brian Jellison, Roper's Chairman, President and CEO.  "Although energy markets were weak as expected, strong contributions from our software and medical products businesses resulted in record revenue for the quarter.  Our businesses continued to generate strong margin performance, with gross margin expansion in all four segments.  In addition, orders strengthened across the enterprise, with three segments recording a book-to-bill ratio of 1.03 or greater."

"During the quarter we completed the acquisition of Clinisys Group, Ltd., adding to our platform of software solutions for hospital laboratories," Mr. Jellison continued.  "In addition, we acquired PCI Medical, a provider of disinfection systems that complement our Civco Medical Solutions business.  Roper's pipeline of acquisition opportunities remains attractive and the Company expects to deploy over $1 billion in 2016."

2016 Guidance

Roper maintained its guidance for full year adjusted diluted earnings per share of $6.85 - $7.15.  The Company expects second quarter adjusted diluted earnings per share to be $1.56 - $1.61.  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%

Q1 GAAP Revenue

$902.4

$865.3

4.3%

Add:  Purchase Accounting Adjustment to Acquired Deferred Revenue

3.3

1.9

 

Q1 Adjusted Revenue

$905.7

$867.2

4.4%

       

Components of Adjusted Revenue Growth

     

Acquisitions

   

9.6%

Divestiture

   

(1.0%)

Organic

   

(3.2%)

Foreign Exchange

   

(1.0%)

Total Growth

   

4.4%

Table 2:  Reconciliation of Q1 2016 GAAP DEPS to Adjusted DEPS

 

Q1 2016

GAAP Diluted Earnings Per Share (DEPS)

$ 1.48

Add:  Purchase Accounting Adjustment to Acquired Deferred Revenue

$ 0.02

Add:  Acquisition-Related Inventory Step-up Charge

$ 0.00

Adjusted DEPS

$ 1.50

Table 3:  Q1 2016 Adjusted Gross Margin Reconciliation

 

2016

2015

V% / V Bps

Q1 GAAP Revenue

$902.4

$865.3

 

Add:  Purchase Accounting Adjustment to Acquired Deferred Revenue

3.3

1.9

 

Q1 Adjusted Revenue

$905.7

$867.2

 
       

Q1 GAAP Gross Profit

$559.5

$518.2

 

Add:  Purchase Accounting Adjustment to Acquired Deferred Revenue

3.3

1.9

 

Add:  Acquisition-Related Inventory Step-up Charge

0.1

--

 

Adjusted Gross (B)

562.9

520.1

 
       

GAAP Gross Margin

62.0%

59.9%

+210 bps

       

Adjusted Gross Margin (B) / (A)

62.1%

60.0%

+210 bps

Table 4:  Q1 EBITDA Reconciliation

 

2016

2015

V%

GAAP Net Earnings

$151.4

$155.8

 

Add:  Taxes

66.0

70.6

 

Add:  Amortization

49.5

38.4

 

Add:  Interest Expense

27.4

19.8

 

Add:  Depreciation

9.7

9.9

 

Add:  Purchase Accounting Adjustment to Acquired Deferred Revenue

3.3

1.9

 

Add:  Acquisition-Related Inventory Step-up Charge

0.1

--

 

Rounding

0.1

--

 

EBITDA

307.5

296.4

+4%

Table 5:  Q1 Cash Flow Reconciliation

 

2016

GAAP Operating Cash Flow

$207.1

Add:  Tax Related to 2015 Sale of Abel Pump

37.4

Adjusted Operating Cash Flow

$244.5

Less:  Capital Expenditures

(9.5)

Adjusted Free Cash Flow

$235.0

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, April 25, 2016.  The call can be accessed via webcast or by dialing +1 888-430-8694 (US/Canada) or +1 719-325-2315, using confirmation code 8649870.  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/866/14512 .  Telephonic replays will be available for up to two weeks and can be accessed by using the following registration URL https://jsp.premiereglobal.com/webrsvp/ with access code 8649870.

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)

     
       
       
 

March 31,

 

December 31,

ASSETS

2016

 

2015

       

CURRENT ASSETS:

     

  Cash and cash equivalents

$        523,033

 

$        778,511

  Accounts receivable

514,616

 

488,271

  Inventories 

196,321

 

189,868

  Unbilled receivable

120,746

 

122,042

  Other current assets

77,616

 

39,355

    Total current assets

1,432,332

 

1,618,047

       

PROPERTY, PLANT AND EQUIPMENT, NET

106,212

 

105,510

       

OTHER ASSETS:

     

  Goodwill

5,975,803

 

5,824,726

  Other intangible assets, net

2,622,157

 

2,528,996

  Deferred taxes

31,254

 

31,532

  Other assets

56,650

 

59,554

    Total other assets

8,685,864

 

8,444,808

       

TOTAL ASSETS

$    10,224,408

 

$    10,168,365

       
       

LIABILITIES AND STOCKHOLDERS' EQUITY

     
       

CURRENT LIABILITIES:

     

  Accounts payable

$        140,421

 

$        139,737

  Accrued compensation

91,288

 

119,511

  Deferred revenue

275,230

 

267,030

  Other accrued liabilities

185,305

 

168,513

  Income taxes payable

80,879

 

18,532

  Current portion of long-term debt

6,365

 

6,805

    Total current liabilities

779,488

 

720,128

       

NONCURRENT LIABILITIES:

     

  Long-term debt

3,105,340

 

3,264,417

  Deferred taxes

826,425

 

810,856

  Other liabilities

71,920

 

74,017

    Total liabilities

4,783,173

 

4,869,418

       

STOCKHOLDERS' EQUITY:

     

  Common stock

1,031

 

1,028

  Additional paid-in capital

1,438,695

 

1,419,262

  Retained earnings

4,231,589

 

4,110,530

  Accumulated other comprehensive earnings

(211,036)

 

(212,779)

  Treasury stock

(19,044)

 

(19,094)

    Total stockholders' equity

5,441,235

 

5,298,947

       

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$    10,224,408

 

$    10,168,365

Roper Technologies, Inc. and Subsidiaries

   

Condensed Consolidated Statements of Earnings (unaudited)

(Amounts in thousands, except per share data)

       
         
         
   

Three months ended

   

March 31,

   

2016

 

2015

         

Net sales

 

$  902,423

 

$  865,281

Cost of sales

 

342,904

 

347,120

         

Gross profit

 

559,519

 

518,161

         

Selling, general and administrative expenses

 

314,528

 

271,265

         

Income from operations

 

244,991

 

246,896

         

Interest expense

 

27,413

 

19,836

Other expense

 

(129)

 

(679)

         

Earnings from continuing operations before

       

   income taxes

 

217,449

 

226,381

         

Income taxes

 

66,033

 

70,608

         

Net Earnings

 

$  151,416

 

$  155,773

         
         
         
         
         

Earnings per share:

       

  Basic

 

$       1.50

 

$       1.55

  Diluted

 

$       1.48

 

$       1.54

         

Weighted average common and common

       

  equivalent shares outstanding:

       

    Basic

 

101,071

 

100,377

    Diluted

 

102,318

 

101,361

Roper Technologies, Inc. and Subsidiaries

           

Selected Segment Financial Data (unaudited)

           

(Amounts in thousands and percents of net sales)

               
                 
                 
   

Three months ended March 31,

   

2016

 

2015

   

Amount

 

%

 

Amount

 

%

Net sales:

               

  Medical & Scientific Imaging

 

$  332,214

     

$  291,700

   

  RF Technology

 

280,210

     

242,954

   

  Industrial Technology

 

171,235

     

190,728

   

  Energy Systems & Controls

 

118,764

     

139,899

   

    Total

 

$  902,423

     

$  865,281

   
                 
                 

Gross profit:

               

  Medical & Scientific Imaging

 

$  246,897

 

74.3%

 

$  215,326

 

73.8%

  RF Technology

 

160,365

 

57.2%

 

130,046

 

53.5%

  Industrial Technology

 

86,020

 

50.2%

 

95,242

 

49.9%

  Energy Systems & Controls

 

66,237

 

55.8%

 

77,547

 

55.4%

    Total

 

$  559,519

 

62.0%

 

$  518,161

 

59.9%

                 
                 

Operating profit*:

               

  Medical & Scientific Imaging

 

$  114,456

 

34.5%

 

$  107,779

 

36.9%

  RF Technology

 

88,766

 

31.7%

 

73,977

 

30.4%

  Industrial Technology

 

46,759

 

27.3%

 

57,897

 

30.4%

  Energy Systems & Controls

 

24,182

 

20.4%

 

30,422

 

21.7%

    Total

 

$  274,163

 

30.4%

 

$  270,075

 

31.2%

                 
                 

Net Orders:

               

  Medical & Scientific Imaging

 

$  343,850

     

$  275,796

   

  RF Technology

 

281,125

     

253,127

   

  Industrial Technology

 

178,905

     

188,740

   

  Energy Systems & Controls

 

122,770

     

131,070

   

    Total

 

$  926,650

     

$  848,733

   
                 
                 
                 

  *  Operating profit is before unallocated corporate general and administrative expenses.  These expenses 

       were $29,172 and $23,179  for the three months ended March 31, 2016 and 2015, respectively.

 

Roper Technologies, Inc. and Subsidiaries

   

Condensed Consolidated Statements of Cash Flows (unaudited)

(Amounts in thousands)

       
         
         
   

Three months ended

   

March 31,

   

2016

2015

         

Net earnings

 

$    151,416

 

$    155,773

Non-cash items:

       

Depreciation

 

9,702

 

9,880

Amortization

 

49,549

 

38,428

Stock-based compensation expense

 

18,979

 

13,801

Income taxes

 

20,127

 

38,837

Changes in assets and liabilities:

       

Receivables

 

(14,059)

 

9,262

Inventory

 

(3,907)

 

(7,680)

Accounts payable

 

(1,273)

 

7,078

Accrued liabilities

 

(18,458)

 

1,627

Other, net

 

(5,004)

 

(6,607)

  Cash provided by operating activities

 

207,072

 

260,399

         

Business acquisitions, net of cash acquired

 

(265,248)

 

(589,577)

Capital expenditures

 

(9,489)

 

(9,950)

Other, net

 

781

 

(3,596)

  Cash used in investing activities

 

(273,956)

 

(603,123)

         

Principal debt payments

 

(289)

 

(3,454)

Revolver borrowings/(payments), net

 

(160,000)

 

415,000

Dividends

 

(30,173)

 

(25,024)

Excess tax benefit from share-based payment*

 

-

 

4,093

Proceeds from stock-based compensation, net

 

690

 

6,267

Premium on convertible debt conversions

 

(915)

 

(11,236)

Other, net

 

505

 

498

  Cash provided by/(used in) financing activities

 

(190,182)

 

386,144

         

Effect of exchange rate changes on cash

 

1,588

 

(38,357)

         

Net increase/(decrease) in cash and equivalents

 

(255,478)

 

5,063

Cash and equivalents, beginning of period

 

778,511

 

610,430

         

Cash and equivalents, end of period

 

523,033

 

$615,493

         

*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.