Roper Industries Announces Record Fourth Quarter and Full Year 2014 Results
SARASOTA, Fla., Jan. 26, 2015 /PRNewswire/ -- Roper Industries, Inc. (NYSE: ROP), a diversified technology company, reported financial results for the fourth quarter and full year ended December 31, 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.
Fourth Quarter 2014
Fourth quarter GAAP diluted earnings per share (DEPS) were $1.84 and adjusted diluted earnings per share were $1.85, both 12% increases over last year. GAAP revenue increased 6% to $946 million and adjusted revenue increased 7% to $948 million. Organic revenue increased 7% for the quarter.
GAAP operating margin increased 100 basis points over the prior year to 30.0% and adjusted operating margin increased to 30.1%, a 110 basis point gain. EBITDA margin was a record 35.3% for the quarter. Operating cash flow in the quarter was $261 million, an 11% increase over last year, and represented 140% conversion of GAAP net income.
Full Year 2014
Full year GAAP diluted earnings per share increased 19% to $6.40. Adjusted diluted earnings per share were $6.42, a 14% increase over the prior year. GAAP revenue was $3.55 billion, an increase of 10% over the prior year, and adjusted revenue was $3.55 billion, an increase of 9%.
GAAP operating margin increased 220 basis points to 28.2% and adjusted operating margin was also 28.2%, a 120 basis point increase over the prior year. Operating cash flow was $840 million. Free cash flow was $803 million and represented 23% of revenue.
"We were very pleased with our performance in the fourth quarter, which completed another terrific year for Roper," said Brian Jellison, Roper's Chairman, President and CEO. "Our leading positions in favorable niche markets combined with outstanding execution by our businesses delivered record levels for sales, net earnings, EBITDA and cash flow."
Strata Acquisition
On Friday, January 23rd, Roper announced the acquisition of Strata Decision Technology, L.L.C., the leading cloud-based analytics platform for financial planning, decision support and continuous cost improvement for the healthcare industry. Over 1,000 hospitals, including many of the largest and most influential healthcare delivery systems in the United States, subscribe to the Strata SaaS (software-as-a-service) platform. Strata will become part of Roper's Medical segment.
2015 Outlook and Guidance
"We enter 2015 with positive momentum across our businesses," said Mr. Jellison. "We expect continued organic growth, led by our Medical and RF segments. Our acquisition pipeline remains active and we expect to deploy over $1 billion in 2015."
Roper expects 2015 full year adjusted diluted earnings per share (DEPS) between $6.70 and $6.94 with first quarter DEPS between $1.47 and $1.53. The company's guidance excludes 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
| 2014 |
2013 |
V% |
|
| Q4 GAAP Revenue |
$946.1 |
$889.2 |
6% |
| Add: Purchase Accounting Adjustment to |
1.4 |
||
| Q4 Adjusted Revenue |
$947.5 |
$889.2 |
7% |
| Components of Adjusted Revenue Growth |
|||
| Organic |
7% |
||
| Acquisitions |
2% |
||
| Foreign Exchange |
(2%) |
||
| Total Growth |
7% |
||
Table 2: Reconciliation of Q4 2014 GAAP DEPS to Adjusted DEPS
| 2014 |
2013 |
V% |
|
| GAAP Diluted Earnings Per Share (DEPS) |
$1.84 |
$1.65 |
12% |
| Add: Purchase Accounting Adjustment to |
$0.01 |
||
| Add: Acquisition-Related Inventory Step-up |
$0.00 |
||
| Adjusted DEPS |
$1.85 |
$1.65 |
12% |
Table 3: Reconciliation of 2014 GAAP DEPS to Adjusted DEPS
| 2014 |
2013 |
V% |
|
| GAAP Diluted Earnings Per Share (DEPS) |
$6.40 |
$5.37 |
19% |
| Add: Fair Value Adjustment to Acquired |
$0.05 |
||
| Add: Acquisition-Related Revenue |
$0.17 |
||
| Add: Special Charge for Vendor-Supplied |
$0.06 |
||
| Add: Purchase Accounting Adjustment to |
$0.02 |
||
| Add: Acquisition-Related Inventory Step-up |
$0.01 |
||
| Rounding |
($0.01) |
||
| Adjusted DEPS |
$6.42 |
$5.65 |
14% |
Table 4: 2014 Full Year Adjusted Revenue and Adjusted Operating Margin Reconciliation
| 2014 |
2013 |
V% / V Bps |
|
| Full Year GAAP Revenue |
$3,549.5 |
$3,238.1 |
+10% |
| Add: Fair Value Adjustment to Acquired |
7.0 |
||
| Add: Acquisition-Related Revenue |
26.4 |
||
| Add: Purchase Accounting Adjustment to |
2.3 |
||
| Adjusted Revenue (A) |
$3,551.8 |
$3,271.5 |
+9% |
| GAAP Operating Profit |
$999.5 |
$842.4 |
|
| Add: Fair Value Adjustment to Acquired |
7.0 |
||
| Add: Acquisition-Related Revenue |
26.4 |
||
| Add: Special Charge for Vendor-Supplied |
9.1 |
||
| Add: Purchase Accounting Adjustment to |
2.3 |
||
| Add: Acquisition-Related Inventory Step-up |
0.8 |
||
| Rounding |
0.1 |
||
| Adjusted Operating (B) |
1,002.7 |
884.9 |
|
| GAAP Operating Margin |
28.2% |
26.0% |
+220 bps |
| Adjusted Operating Margin (B) / (A) |
28.2% |
27.0% |
+110 bps |
Table 5: Fourth Quarter Adjusted Revenue and Adjusted Operating Margin Reconciliation
| 2014 |
2013 |
V bps |
|
| Q4 GAAP Revenue |
$946.1 |
$889.2 |
|
| Add: Purchase Accounting Adjustment to |
1.4 |
||
| Q4 Adjusted Revenue (A) |
$947.5 |
$889.2 |
|
| Q4 GAAP Operating Profit |
$283.7 |
$258.1 |
|
| Add: Purchase Accounting Adjustment to |
1.4 |
||
| Add: Acquisition-Related Inventory Step-up |
0.4 |
||
| Rounding |
0.1 |
||
| Adjusted Operating Profit (B) |
$285.6 |
$258.1 |
|
| GAAP Operating Margin |
30.0% |
29.0% |
+100 bps |
| Adjusted Operating Margin (B) / (A) |
30.1% |
29.0% |
+110 bps |
Table 6: Free Cash Flow
| 2014 |
|
| Operating Cash Flow |
$840.4 |
| Less: Capital Expenditures |
(37.6) |
| Free Cash Flow |
$802.8 |
Table 7: EBITDA Reconciliation
| Q4 2014 |
|
| GAAP Revenue |
$946.1 |
| Purchase Accounting Adjustment to Acquired |
1.4 |
| Adjusted Revenue (A) |
$947.5 |
| GAAP Net Earnings |
$185.9 |
| Add: Depreciation |
10.4 |
| Add: Amortization |
39.2 |
| Add: Interest Expense |
19.3 |
| Add: Taxes |
78.1 |
| Purchase Accounting Adjustment to Acquired |
1.4 |
| Acquisition-Related Inventory Step-up Charge (IPA) |
0.4 |
| Rounding |
0.1 |
| EBITDA (B) |
$334. 8 |
| EBITDA Margin (B) / (A) |
35.3% |
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, January 26, 2015. The call can be accessed via webcast or by dialing +1 888-395-3227 (US/Canada) or +1 719-325-2472, using confirmation code 9919388. 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. The webcast can also be accessed directly by using the following URL http://www.videonewswire.com/event.asp?id=101389. Telephonic replays will be available for up to two weeks by calling +1 719-457-0820 and using the access code 9919388.
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) |
|||
| December 31, |
December 31, |
||
| ASSETS |
2014 |
2013 |
|
| CURRENT ASSETS: |
|||
| Cash and cash equivalents |
$ 610,430 |
$ 459,720 |
|
| Accounts receivable |
511,538 |
519,075 |
|
| Inventories |
193,766 |
204,923 |
|
| Unbilled receivable |
96,409 |
86,945 |
|
| Deferred taxes |
54,199 |
64,464 |
|
| Other current assets |
45,763 |
38,210 |
|
| Total current assets |
1,512,105 |
1,373,337 |
|
| PROPERTY, PLANT AND EQUIPMENT, NET |
110,876 |
117,310 |
|
| OTHER ASSETS: |
|||
| Goodwill |
4,710,691 |
4,549,998 |
|
| Other intangible assets, net |
1,978,729 |
2,039,136 |
|
| Deferred taxes |
27,496 |
28,773 |
|
| Other assets |
73,037 |
76,427 |
|
| Total other assets |
6,789,953 |
6,694,334 |
|
| TOTAL ASSETS |
$ 8,412,934 |
$ 8,184,981 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
| CURRENT LIABILITIES: |
|||
| Accounts payable |
$ 143,847 |
$ 150,313 |
|
| Accrued compensation |
117,374 |
107,953 |
|
| Deferred revenue |
190,953 |
209,332 |
|
| Other accrued liabilities |
160,738 |
153,712 |
|
| Income taxes payable |
- |
4,275 |
|
| Deferred taxes |
3,943 |
6,490 |
|
| Current portion of long-term debt |
11,092 |
11,016 |
|
| Total current liabilities |
627,947 |
643,091 |
|
| NONCURRENT LIABILITIES: |
|||
| Long-term debt |
2,203,031 |
2,453,836 |
|
| Deferred taxes |
735,826 |
783,805 |
|
| Other liabilities |
90,770 |
91,199 |
|
| Total liabilities |
3,657,574 |
3,971,931 |
|
| STOCKHOLDERS' EQUITY: |
|||
| Common stock |
1,021 |
1,013 |
|
| Additional paid-in capital |
1,325,338 |
1,229,233 |
|
| Retained earnings |
3,520,201 |
2,959,196 |
|
| Accumulated other comprehensive earnings |
(71,927) |
43,083 |
|
| Treasury stock |
(19,273) |
(19,475) |
|
| Total stockholders' equity |
4,755,360 |
4,213,050 |
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 8,412,934 |
$ 8,184,981 |
|
| Roper Industries, Inc. and Subsidiaries |
||||||||
| Condensed Consolidated Statements of Earnings (unaudited) |
||||||||
| (Amounts in thousands, except per share data) |
||||||||
| Three months ended |
Twelve months ended |
|||||||
| December 31, |
December 31, |
|||||||
| 2014 |
2013 |
2014 |
2013 |
|||||
| Net sales |
$ 946,145 |
$ 889,173 |
$ 3,549,494 |
$ 3,238,128 |
||||
| Cost of sales |
380,404 |
355,953 |
1,447,595 |
1,355,200 |
||||
| Gross profit |
565,741 |
533,220 |
2,101,899 |
1,882,928 |
||||
| Selling, general and administrative expenses |
281,992 |
275,131 |
1,102,426 |
1,040,567 |
||||
| Income from operations |
283,749 |
258,089 |
999,473 |
842,361 |
||||
| Interest expense |
19,285 |
20,115 |
78,637 |
88,039 |
||||
| Other income/(expense) |
(422) |
(645) |
620 |
(192) |
||||
| Earnings from continuing operations before |
||||||||
| income taxes |
264,042 |
237,329 |
921,456 |
754,130 |
||||
| Income taxes |
78,106 |
71,626 |
275,423 |
215,837 |
||||
| Net Earnings |
$ 185,936 |
$ 165,703 |
$ 646,033 |
$ 538,293 |
||||
| Earnings per share: |
||||||||
| Basic |
$ 1.86 |
$ 1.67 |
$ 6.47 |
$ 5.43 |
||||
| Diluted |
$ 1.84 |
$ 1.65 |
$ 6.40 |
$ 5.37 |
||||
| Weighted average common and common |
||||||||
| equivalent shares outstanding: |
||||||||
| Basic |
100,151 |
99,315 |
99,916 |
99,123 |
||||
| Diluted |
101,122 |
100,380 |
100,884 |
100,209 |
||||
| Roper Industries, Inc. and Subsidiaries |
||||||||||||||||
| Selected Segment Financial Data (unaudited) |
||||||||||||||||
| (Amounts in thousands and percents of net sales) |
||||||||||||||||
| Three months ended December 31, |
Twelve months ended December 31, |
|||||||||||||||
| 2014 |
2013 |
2014 |
2013 |
|||||||||||||
| Amount |
% |
Amount |
% |
Amount |
% |
Amount |
% |
|||||||||
| Net sales: |
||||||||||||||||
| Industrial Technology |
$ 219,642 |
$ 199,098 |
$ 827,145 |
$ 779,564 |
||||||||||||
| Energy Systems & Controls |
200,009 |
195,889 |
691,813 |
651,920 |
||||||||||||
| Medical & Scientific Imaging |
286,410 |
256,542 |
1,080,309 |
902,281 |
||||||||||||
| RF Technology |
240,084 |
237,644 |
950,227 |
904,363 |
||||||||||||
| Total |
$ 946,145 |
$ 889,173 |
$3,549,494 |
$3,238,128 |
||||||||||||
| Gross profit: |
||||||||||||||||
| Industrial Technology |
$ 111,104 |
50.6% |
$ 101,873 |
51.2% |
$ 417,568 |
50.5% |
$ 398,287 |
51.1% |
||||||||
| Energy Systems & Controls |
122,232 |
61.1% |
117,778 |
60.1% |
403,287 |
58.3% |
374,209 |
57.4% |
||||||||
| Medical & Scientific Imaging |
206,669 |
72.2% |
184,272 |
71.8% |
779,407 |
72.1% |
624,990 |
69.3% |
||||||||
| RF Technology |
125,736 |
52.4% |
129,297 |
54.4% |
501,637 |
52.8% |
485,442 |
53.7% |
||||||||
| Total |
$ 565,741 |
59.8% |
$ 533,220 |
60.0% |
$2,101,899 |
59.2% |
$1,882,928 |
58.1% |
||||||||
| Operating profit*: |
||||||||||||||||
| Industrial Technology |
$ 69,056 |
31.4% |
$ 58,775 |
29.5% |
$ 247,596 |
29.9% |
$ 223,053 |
28.6% |
||||||||
| Energy Systems & Controls |
72,177 |
36.1% |
65,247 |
33.3% |
203,021 |
29.3% |
183,679 |
28.2% |
||||||||
| Medical & Scientific Imaging |
100,488 |
35.1% |
88,739 |
34.6% |
375,867 |
34.8% |
268,172 |
29.7% |
||||||||
| RF Technology |
67,994 |
28.3% |
69,704 |
29.3% |
271,177 |
28.5% |
253,532 |
28.0% |
||||||||
| Total |
$ 309,715 |
32.7% |
$ 282,465 |
31.8% |
$1,097,661 |
30.9% |
$ 928,436 |
28.7% |
||||||||
| Net Orders: |
||||||||||||||||
| Industrial Technology |
$ 197,847 |
$ 190,475 |
$ 808,921 |
$ 772,337 |
||||||||||||
| Energy Systems & Controls |
202,030 |
207,155 |
692,136 |
673,569 |
||||||||||||
| Medical & Scientific Imaging |
282,169 |
270,157 |
1,081,190 |
958,830 |
||||||||||||
| RF Technology |
242,295 |
232,338 |
955,831 |
943,757 |
||||||||||||
| Total |
$ 924,341 |
$ 900,125 |
$3,538,078 |
$3,348,493 |
||||||||||||
| * Operating profit is before unallocated corporate general and administrative expenses. These expenses
|
||||||||||||||||
| Roper Industries, Inc. and Subsidiaries |
|||||
| Condensed Consolidated Statements of Cash Flows (unaudited) |
|||||
| (Amounts in thousands) |
|||||
| Twelve months ended |
|||||
| December 31, |
|||||
| 2014 |
2013 |
||||
| Net earnings |
$ 646,033 |
$ 538,293 |
|||
| Non-cash items: |
|||||
| Depreciation |
40,890 |
37,756 |
|||
| Amortization |
156,394 |
151,434 |
|||
| Stock-based compensation expense |
63,027 |
53,133 |
|||
| Income taxes |
(46,619) |
(6,427) |
|||
| Changes in assets and liabilities: |
|||||
| Receivables |
(10,709) |
18,046 |
|||
| Inventory |
6,349 |
(12,687) |
|||
| Accounts payable |
(5,070) |
9,014 |
|||
| Accrued liabilities |
(15,385) |
14,291 |
|||
| Other, net |
5,531 |
(300) |
|||
| Cash provided by operating activities |
840,441 |
802,553 |
|||
| Business acquisitions, net of cash acquired |
(305,379) |
(1,074,413) |
|||
| Capital expenditures |
(37,644) |
(42,528) |
|||
| Other, net |
(5,082) |
1,078 |
|||
| Cash used by investing activities |
(348,105) |
(1,115,863) |
|||
| Principal debt borrowings |
- |
800,000 |
|||
| Principal debt payments |
(561) |
(503,702) |
|||
| Revolver borrowings (payments), net |
(250,000) |
150,000 |
|||
| Debt issuance costs |
- |
(7,717) |
|||
| Dividends |
(79,859) |
(49,092) |
|||
| Excess tax benefit from share-based payment |
21,081 |
11,709 |
|||
| Proceeds from stock-based compensation, net |
10,463 |
7,944 |
|||
| Redemption premium on convertible debt |
(1,518) |
(9,124) |
|||
| Other, net |
2,290 |
3,615 |
|||
| Cash provided by (used in) financing activities |
(298,104) |
403,633 |
|||
| Effect of exchange rate changes on cash |
(43,522) |
(1,193) |
|||
| Net increase in cash and equivalents |
150,710 |
89,130 |
|||
| Cash and equivalents, beginning of period |
459,720 |
370,590 |
|||
| Cash and equivalents, end of period |
$610,430 |
$459,720 |
|||
SOURCE Roper Industries, Inc.
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