Roper Industries Announces Record Results for Fourth Quarter and Full Year 2013

Fourth-Quarter Diluted Earnings Per Share of $1.65

Full-Year Operating Cash Flow Increased 18% to $803 million

News provided by

Roper Industries, Inc.

Jan 27, 2014, 07:00 ET

SARASOTA, Fla., Jan. 27, 2014 /PRNewswire/ -- Roper Industries, Inc. (NYSE: ROP), a diversified growth company, reported financial results for the fourth quarter and full year ended December 31, 2013.

Roper reports full year results, including revenue, operating margin, net income and diluted earnings per share, on a GAAP and adjusted basis.  Fourth quarter results are presented on a GAAP basis with no adjustments.  Adjusted measures are reconciled to the corresponding GAAP measures at the end of this release. 

Fourth Quarter 2013

Net earnings for the fourth quarter were $166 million or $1.65 per diluted share.  Fourth quarter revenue was $889 million, 10% higher than in 2012 and 9% higher than 2012 fourth quarter adjusted revenue of $816 million. Orders increased 16% to $900 million, including 10% organic growth.  Operating margin expanded to 29.0%.  Operating cash flow in the quarter was $236 million, representing 27% of revenue.

"We are very pleased with our fourth-quarter performance, with record orders, revenue, margin and cash flow," said Brian Jellison, Roper's Chairman, President and CEO.  "Gross margin in the quarter was 60.0% and EBITDA reached $307 million, or 34.5% of revenue. Our asset-light businesses in favorable niche markets continue to deliver exceptional results.  Free cash flow in the quarter was $227 million, which represented 137% of net earnings."

Full Year 2013

2013 GAAP diluted earnings per share were $5.37 and adjusted diluted earnings per share were $5.65.  GAAP revenue was $3.24 billion, an increase of 8% over the prior year, while adjusted revenue was $3.27 billion, an increase of 9%.  GAAP operating margin increased 70 basis points to 26.0% and adjusted operating margin was 27.0%, a 130 basis point increase over the prior year. 

"2013 was another outstanding year for Roper as we once again achieved record results for sales, orders, backlog, net earnings and cash flow," said Mr. Jellison.  "We delivered $803 million of operating cash flow for the year and $760 million of free cash flow.  In May, we acquired Managed Health Care Associates (MHA), which has already proven to be an exciting new growth platform.  We ended the year with a strong balance sheet, including over $1.6 billion in cash and available liquidity."

2014 Outlook and Guidance

The company's guidance for 2014 is provided on a GAAP basis and excludes future acquisitions.

Roper expects 2014 full year diluted earnings per share (DEPS) between $6.05 and $6.25 with expected first quarter DEPS between $1.30 and $1.35.  "We enter 2014 with record year-end backlog, exciting growth opportunities and an expectation for record performance," said Mr. Jellison.

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:  Q4 Revenue Growth Detail



Q4 2012

Q4 2013

V%

GAAP Revenue

$810

$889

10%

Adjusted Revenue

$816

$889

9%




Adjusted Revenue Growth:


     Organic Growth

4%

     Acquisitions

5%

     Foreign Exchange

--

     Total Growth

9%




Table 2:  Free Cash Flow Reconciliation


Q4 2013

FY 2013

Operating Cash Flow

236

803

Less: Capital Expenditures

(9)

(43)

Free Cash Flow

227

760



Table 3:  EBITDA Reconciliation

Q4 2013

Revenue (B)

$889.2


Net Earnings

165.7

Add:  Interest Expense

20.1

Add:  Income Taxes

71.6

Add:  Depreciation & Amortization

49.7

EBITDA (A)

$307.1




% of Revenue (A) / (B)

34.5%


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 27, 2014.  The call can be accessed via webcast or by dialing +1 888-417-8465 (US/Canada) or +1 719-325-2432, using confirmation code 6035185.  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 6035185.

About Roper Industries

Roper Industries is a diversified growth 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 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 Industries, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(Amounts in thousands)









December 31,

December 31,

ASSETS

2013

2012




CURRENT ASSETS:


  Cash and cash equivalents

$        459,720

$       370,590

  Accounts receivable

519,075

526,408

  Inventories 

204,923

190,867

  Unbilled receivable

86,945

72,193

  Deferred taxes

64,464

41,992

  Other current assets

38,210

43,492

    Total current assets

1,373,337

1,245,542




PROPERTY, PLANT AND EQUIPMENT, NET

117,310

110,397




OTHER ASSETS:


  Goodwill

4,549,998

3,868,857

  Other intangible assets, net

2,039,136

1,698,867

  Deferred taxes

28,773

78,644

  Other assets

76,427

68,797

    Total other assets

6,694,334

5,715,165




TOTAL ASSETS

$     8,184,981

$    7,071,104








LIABILITIES AND STOCKHOLDERS' EQUITY






CURRENT LIABILITIES:


  Accounts payable

$        150,313

$       138,340

  Accrued compensation

107,953

110,724

  Deferred revenue

209,332

185,912

  Other accrued liabilities

153,712

128,351

  Income taxes payable

4,275

-

  Deferred taxes

6,490

3,868

  Current portion of long-term debt

11,016

519,015

    Total current liabilities

643,091

1,086,210




NONCURRENT LIABILITIES:


  Long-term debt

2,453,836

1,503,107

  Deferred taxes

783,805

707,278

  Other liabilities

91,199

86,783

    Total liabilities

3,971,931

3,383,378




STOCKHOLDERS' EQUITY:


  Common stock

1,013

1,006

  Additional paid-in capital

1,229,233

1,158,001

  Retained earnings

2,959,196

2,489,858

  Accumulated other comprehensive earnings

43,083

58,537

  Treasury stock

(19,475)

(19,676)

    Total stockholders' equity

4,213,050

3,687,726




TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$     8,184,981

$    7,071,104




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,


2013

2012

2013

2012









Net sales

$  889,173

$  809,910

$3,238,128

$2,993,489

Cost of sales

355,953

343,549

1,355,200

1,321,772









Gross profit

533,220

466,361

1,882,928

1,671,717









Selling, general and administrative expenses

275,131

241,119

1,040,567

914,130









Income from operations

258,089

225,242

842,361

757,587









Interest expense

20,115

20,509

88,039

67,525

Loss on extinguishment of debt

-

-

-

(1,043)

Other income/(expense)

(645)

106

(192)

(2,338)









Earnings from continuing operations before income taxes

237,329

204,839

754,130

686,681









Income taxes

71,626

61,309

215,837

203,321









Net Earnings

$  165,703

$  143,530

$   538,293

$   483,360













































Earnings per share:







  Basic

$       1.67

$       1.46

$        5.43

$        4.95

  Diluted

$       1.65

$       1.44

$        5.37

$        4.86









Weighted average common and common equivalent shares outstanding:







    Basic

99,315

98,422

99,123

97,702

    Diluted

100,380

99,576

100,209

99,558









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,


2013

2012

2013

2012


Amount

%

Amount

%

Amount

%

Amount

%

Net sales:















  Industrial Technology

$   199,098


$  197,152


$   779,564


$   795,240

  Energy Systems & Controls

195,889


184,608


651,920


646,116

  Medical & Scientific Imaging

256,542


217,628


902,281


703,835

  RF Technology

237,644


210,522


904,363


848,298

    Total

$   889,173


$  809,910


$3,238,128


$2,993,489



































Gross profit:















  Industrial Technology(1)

$   101,873

51.2%

$  106,178

53.9%

$   398,287

51.1%

$   410,180

51.6%

  Energy Systems & Controls

117,778

60.1%

109,291

59.2%

374,209

57.4%

363,616

56.3%

  Medical & Scientific Imaging(2)

184,272

71.8%

139,084

63.9%

624,990

69.3%

453,495

64.4%

  RF Technology

129,297

54.4%

111,808

53.1%

485,442

53.7%

444,426

52.4%

    Total

$   533,220

60.0%

$  466,361

57.6%

$1,882,928

58.1%

$1,671,717

55.8%


































Operating profit*:















  Industrial Technology(1)

$     58,775

29.5%

$    64,480

32.7%

$   223,053

28.6%

$   244,691

30.8%

  Energy Systems & Controls

65,247

33.3%

61,075

33.1%

183,679

28.2%

179,824

27.8%

  Medical & Scientific Imaging(2)

88,739

34.6%

62,015

28.5%

268,172

29.7%

187,246

26.6%

  RF Technology

69,704

29.3%

56,819

27.0%

253,532

28.0%

223,335

26.3%

    Total

$   282,465

31.8%

$  244,389

30.2%

$   928,436

28.7%

$   835,096

27.9%


































Net Orders:















  Industrial Technology

$   190,475


$  185,285


$   772,337


$   783,362

  Energy Systems & Controls

207,155


175,596


673,569


634,051

  Medical & Scientific Imaging

270,157


208,784


958,830


703,034

  RF Technology

232,338


209,399


943,757


871,225

    Total

$   900,125


$  779,064


$3,348,493


$2,991,672




















































*  Operating profit is before unallocated corporate general and administrative expenses.  These expenses were $24,376 and $19,147 for the three months ended December 31, 2013 and 2012, respectively, and $86,075 and $77,509 for the twelve months ended December 31, 2013 and 2012, respectively.

















(1)  Includes a favorable fourth quarter 2012 accounts payable correction of $5.5 million.

















(2)  Includes a fourth quarter 2012 charge for inventory and tooling for a medical product line of $4.0 million.

Roper Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(Amounts in thousands)












Twelve months ended


December 31,


2013

2012





Net earnings

$    538,293

$    483,360

Non-cash items:



Depreciation

37,756

37,888

Amortization

151,434

116,860

Stock-based compensation expense

53,133

40,773

Income taxes

(6,427)

(15,988)

Changes in assets and liabilities:



Receivables

18,046

(21,577)

Inventory

(12,687)

18,361

Accounts payable

9,014

(8,480)

Accrued liabilities

14,291

17,689

Other, net

(300)

8,966

  Cash provided by operating activities

802,553

677,852





Business acquisitions, net of cash acquired

(1,074,413)

(1,467,772)

Capital expenditures

(42,528)

(38,405)

Other, net

1,078

632

  Cash used by investing activities

(1,115,863)

(1,505,545)





Principal debt borrowings

800,000

900,000

Principal debt payments

(503,702)

(57,304)

Revolver borrowings (payments), net

150,000

100,000

Debt issuance costs

(7,717)

(12,213)

Dividends

(49,092)

(69,903)

Excess tax benefit from share-based payment

11,709

30,747

Proceeds from stock-based compensation, net

7,944

37,679

Redemption premium on convertible debt

(9,124)

(76,641)

Other, net

3,615

1,505

  Cash provided by (used in) financing activities

403,633

853,870





Effect of exchange rate changes on cash

(1,193)

6,312





Net increase in cash and equivalents

89,130

32,489

Cash and equivalents, beginning of period

370,590

338,101





Cash and equivalents, end of period

$459,720

$370,590





ROPER INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENT OF EARNINGS -  RECONCILIATION OF GAAP TO NON-GAAP (Adjusted)

(Amounts in thousands, except per share data)


















Adjustments







Sunquest Fair Value

MHA Purchase

Special Charge

2013



2013

Adjustment

Accounting

Related to

Year-To-Date



Year-To-Date

to Acquired

Adjustment

Vendor-Supplied

Adjusted 



GAAP

Deferred Revenue

To Revenue

Component

Non-GAAP

Net Orders

$   3,348,493

$                    -

$   26,433

$                  -

$  3,374,926













Net Sales

$   3,238,128

$            6,980

$   26,433

$                  -

$  3,271,541

Cost of Sales

1,355,200

-

-


1,355,200

Gross Profit

1,882,928

6,980

26,433


1,916,341

Selling, general and administrative expenses

954,492

-

-

(9,100)

945,392

Segment income from operations

928,436

6,980

26,433

9,100

970,949

Corporate general and administrative expenses

86,075

-

-

-

86,075

Income from operations

842,361

6,980

26,433

9,100

884,874

Interest Expense

88,039

-

-

-

88,039

Other income (expense)

(192)

-

-

-

(192)

Earnings from continuing operations before income taxes

754,130

6,980

26,433

9,100

796,643

Income Taxes (1)

215,837

2,443

9,252

3,185

230,717

  Tax Rate

28.6%

35.0%

35.0%

35.0%

29.0%













Net Earnings

$      538,293

$            4,537

$   17,181

$          5,915

$    565,926













Weighted average common shares outstanding

100,209






100,209













Diluted earnings per share

$            5.37






$          5.65

























(1) For the adjustment, the company used a 35% tax rate, as these adjustments are US-based items and 35% is the statutory tax rate in the United States

SOURCE Roper Industries, Inc.

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