Roper Industries Announces Record Third Quarter Results
GAAP Diluted Earnings Per Share (DEPS) $1.54; Adjusted DEPS $1.55
Operating Cash Flow of $226 million, 25.6% of Revenue
Full Year Guidance Increased
SARASOTA, Fla., Oct. 27, 2014 /PRNewswire/ -- Roper Industries, Inc. (NYSE: ROP) reported financial results for the third quarter ended September 30, 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.
Third quarter GAAP diluted earnings per share (DEPS) were $1.54, a 13% increase over last year. Adjusted diluted earnings per share were $1.55, a 9% increase over last year. GAAP revenue increased 7% to $884 million and adjusted revenue increased 6% to $885 million. Orders increased to $893 million and enterprise book-to-bill was 1.01x for the quarter.
GAAP gross margin increased 100 basis points to 59.3% and adjusted gross margin increased to 59.4%, a 70 basis point gain over the prior year. EBITDA margin was a record 33.6% for the quarter. Operating cash flow in the quarter was $226 million, representing 145% conversion of GAAP Net Income.
"Our businesses continue to perform exceptionally well," said Brian Jellison, Roper's Chairman, President and CEO. "Revenue growth in the quarter was broad-based, with organic increases in each segment. We are encouraged by the continued strength in orders, which exceeded revenue in all four segments. We delivered free cash flow of $217 million, representing 24.5% of revenue."
"We invested $303 million in three acquisitions during the quarter," continued Mr. Jellison. "Strategic Healthcare Programs (SHP) and Innovative Product Achievements (IPA) are outstanding additions to our growing Medical platform. FoodLink® brings technology for food traceability and commerce solutions to our iTradeNetwork business. We are pleased with the performance of these businesses and are excited about their growth opportunities. Looking forward, we finished the quarter with substantial capacity for future acquisitions and have an attractive pipeline of opportunities."
2014 Outlook and Guidance
Roper is increasing its full year adjusted diluted earnings per share guidance to $6.32 – $6.38, from its previous range of $6.27 - $6.37, and establishing fourth quarter adjusted diluted earnings per share guidance of $1.75 - $1.81.
The company's guidance includes the recognition of acquired revenue which is excluded under GAAP's purchase accounting rules, and also excludes certain items as detailed later in this press release under the heading "Use of Non-GAAP Financial Measures." The company's guidance excludes the impact of any future acquisitions or divestitures.
Use of Non-GAAP Financial Measures
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. 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. 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% |
|
| Q3 GAAP Revenue |
$884 |
$828 |
7% |
| Add: Purchase Accounting Adjustment to |
9 |
||
| Add: Purchase Accounting Adjustment to |
1 |
||
| Q3 Adjusted Revenue |
$885 |
$837 |
6% |
| Components of Adjusted Revenue Growth |
|||
| Organic |
4% |
||
| Acquisitions |
2% |
||
| Foreign Exchange |
--% |
||
| Total Growth |
6% |
||
| Table 2: Reconciliation of Q3 2014 GAAP DEPS to Adjusted DEPS |
|||
| 2014 |
2013 |
V% |
|
| GAAP Diluted Earnings Per Share (DEPS) |
$1.54 |
$1.36 |
13% |
| Add: Purchase Accounting Adjustment to |
$0.01 |
||
| Add: Acquisition-Related Inventory Step-up |
$0.00 |
||
| Add: Purchase Accounting Adjustment for |
$0.06 |
||
| Adjusted DEPS |
$1.55 |
$1.42 |
9% |
| Table 3: Adjusted Net Income Reconciliation |
|
| Q3 2014 |
|
| GAAP Net Earnings |
$155.5 |
| Purchase Accounting Adjustment to Acquired |
0.6 |
| Acquisition-Related Inventory Step-up Charge |
0.3 |
| Adjusted Net Earnings |
$156.4 |
| Table 4: Adjusted Gross Margin Reconciliation |
|||
| 2014 |
2013 |
V bps |
|
| Q3 GAAP Revenue |
$884.1 |
$827.8 |
|
| Add: Purchase Accounting Adjustment to |
8.9 |
||
| Add: Purchase Accounting Adjustment to |
0.9 |
||
| Rounding |
0.1 |
||
| Q3 Adjusted Revenue (A) |
885.1 |
$836.7 |
|
| Q3 GAAP Gross Profit |
524.0 |
482.6 |
|
| Add: Purchase Accounting Adjustment to |
8.9 |
||
| Add: Purchase Accounting Adjustment to |
0.9 |
||
| Add: Acquisition-Related Inventory Step-up |
0.4 |
||
| Rounding |
0.1 |
||
| Adjusted Gross Profit (B) |
525.4 |
491.5 |
|
| GAAP Gross Margin |
59.3% |
58.3% |
+100 bps |
| Adjusted Gross Margin (B) / (A) |
59.4% |
58.7% |
+70 bps |
| Table 5: Free Cash Flow |
|
| Q3 2014 |
|
| Operating Cash Flow |
$226 |
| Less: Capital Expenditures |
(9) |
| Free Cash Flow |
$217 |
| Table 6: EBITDA Reconciliation |
|
| Q3 2014 |
|
| GAAP Revenue |
$884 |
| Purchase Accounting Adjustment to Acquired |
1 |
| Adjusted Revenue (A) |
$885 |
| GAAP Net Earnings |
$155.5 |
| Add: Depreciation |
10.4 |
| Add: Amortization |
39.7 |
| Add: Interest Expense |
20.0 |
| Add: Taxes |
70.7 |
| Purchase Accounting Adjustment to Acquired |
0.9 |
| Acquisition-Related Inventory Step-up Charge |
0.4 |
| EBITDA (B) |
$297.6 |
| EBITDA Margin (B) / (A) |
33.6% |
| Table 7: Q4 Guidance Reconciliation |
||
| Low End |
High End |
|
| GAAP Diluted Earnings Per Share Guidance |
$1.74 |
$1.80 |
| Purchase Accounting Adjustment for Acquired |
$0.01 |
$0.01 |
| Acquisition-Related Inventory Step-up Charge |
$0.00 |
$0.00 |
| Adjusted Diluted Earnings Per Share Guidance |
$1.75 |
$1.81 |
| Table 8: Full Year Guidance Reconciliation |
||
| Low End |
High End |
|
| GAAP Diluted Earnings Per Share Guidance |
$6.29 |
$6.35 |
| Purchase Accounting Adjustment for Acquired |
$0.02 |
$0.02 |
| Acquisition-Related Inventory Charge (IPA), |
$0.01 |
$0.01 |
| Adjusted Diluted Earnings Per Share Guidance |
$6.32 |
$6.38 |
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, October 27, 2014. The call can be accessed via webcast or by dialing +1 888-438-5525 (US/Canada) or +1 719-457-2689, using confirmation code 3987678. 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 3987678.
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) |
|||
| September 30, |
December 31, |
||
| ASSETS |
2014 |
2013 |
|
| CURRENT ASSETS: |
|||
| Cash and cash equivalents |
$ 564,112 |
$ 459,720 |
|
| Accounts receivable |
528,734 |
519,075 |
|
| Inventories |
213,440 |
204,923 |
|
| Unbilled receivable |
103,124 |
86,945 |
|
| Deferred taxes |
65,230 |
64,464 |
|
| Other current assets |
58,051 |
38,210 |
|
| Total current assets |
1,532,691 |
1,373,337 |
|
| PROPERTY, PLANT AND EQUIPMENT, NET |
115,243 |
117,310 |
|
| OTHER ASSETS: |
|||
| Goodwill |
4,731,394 |
4,549,998 |
|
| Other intangible assets, net |
2,020,798 |
2,039,136 |
|
| Deferred taxes |
29,051 |
28,773 |
|
| Other assets |
81,089 |
76,427 |
|
| Total other assets |
6,862,332 |
6,694,334 |
|
| TOTAL ASSETS |
$ 8,510,266 |
$ 8,184,981 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
| CURRENT LIABILITIES: |
|||
| Accounts payable |
$ 145,660 |
$ 150,313 |
|
| Accrued compensation |
115,167 |
107,953 |
|
| Deferred revenue |
221,552 |
209,332 |
|
| Other accrued liabilities |
161,057 |
153,712 |
|
| Income taxes payable |
- |
4,275 |
|
| Deferred taxes |
7,495 |
6,490 |
|
| Current portion of long-term debt |
11,074 |
11,016 |
|
| Total current liabilities |
662,005 |
643,091 |
|
| NONCURRENT LIABILITIES: |
|||
| Long-term debt |
2,358,474 |
2,453,836 |
|
| Deferred taxes |
753,798 |
783,805 |
|
| Other liabilities |
87,765 |
91,199 |
|
| Total liabilities |
3,862,042 |
3,971,931 |
|
| STOCKHOLDERS' EQUITY: |
|||
| Common stock |
1,021 |
1,013 |
|
| Additional paid-in capital |
1,317,906 |
1,229,233 |
|
| Retained earnings |
3,359,297 |
2,959,196 |
|
| Accumulated other comprehensive earnings |
(10,680) |
43,083 |
|
| Treasury stock |
(19,320) |
(19,475) |
|
| Total stockholders' equity |
4,648,224 |
4,213,050 |
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 8,510,266 |
$ 8,184,981 |
|
| Roper Industries, Inc. and Subsidiaries |
||||||||
| Condensed Consolidated Statements of Earnings (unaudited) |
||||||||
| (Amounts in thousands, except per share data) |
||||||||
| Three months ended |
Nine months ended |
|||||||
| September 30, |
September 30, |
|||||||
| 2014 |
2013 |
2014 |
2013 |
|||||
| Net sales |
$884,122 |
$827,810 |
$2,603,349 |
$2,348,955 |
||||
| Cost of sales |
360,082 |
345,185 |
1,067,191 |
999,247 |
||||
| Gross profit |
524,040 |
482,625 |
1,536,158 |
1,349,708 |
||||
| Selling, general and administrative expenses |
278,382 |
263,276 |
820,434 |
765,436 |
||||
| Income from operations |
245,658 |
219,349 |
715,724 |
584,272 |
||||
| Interest expense |
20,013 |
24,705 |
59,352 |
67,924 |
||||
| Other income |
552 |
409 |
1,042 |
453 |
||||
| Earnings from continuing operations before |
||||||||
| income taxes |
226,197 |
195,053 |
657,414 |
516,801 |
||||
| Income taxes |
70,687 |
58,730 |
197,317 |
144,211 |
||||
| Net Earnings |
$155,510 |
$136,323 |
$ 460,097 |
$ 372,590 |
||||
| Earnings per share: |
||||||||
| Basic |
$ 1.55 |
$ 1.37 |
$ 4.61 |
$ 3.76 |
||||
| Diluted |
$ 1.54 |
$ 1.36 |
$ 4.56 |
$ 3.72 |
||||
| Weighted average common and common |
||||||||
| equivalent shares outstanding: |
||||||||
| Basic |
100,068 |
99,207 |
99,837 |
99,058 |
||||
| Diluted |
101,006 |
100,302 |
100,803 |
100,152 |
||||
| Roper Industries, Inc. and Subsidiaries |
||||||||||||||||
| Selected Segment Financial Data (unaudited) |
||||||||||||||||
| (Amounts in thousands and percents of net sales) |
||||||||||||||||
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2014 |
2013 |
2014 |
2013 |
|||||||||||||
| Amount |
% |
Amount |
% |
Amount |
% |
Amount |
% |
|||||||||
| Net sales: |
||||||||||||||||
| Industrial Technology |
$ 205,688 |
$ 200,684 |
$ 607,503 |
$ 580,466 |
||||||||||||
| Energy Systems & Controls |
170,765 |
155,058 |
491,804 |
456,031 |
||||||||||||
| Medical & Scientific Imaging |
268,809 |
237,338 |
793,899 |
645,739 |
||||||||||||
| RF Technology |
238,860 |
234,730 |
710,143 |
666,719 |
||||||||||||
| Total |
$ 884,122 |
$ 827,810 |
$2,603,349 |
$2,348,955 |
||||||||||||
| Gross profit: |
||||||||||||||||
| Industrial Technology |
$ 104,012 |
50.6% |
$ 101,259 |
50.5% |
$ 306,464 |
50.4% |
$ 296,414 |
51.1% |
||||||||
| Energy Systems & Controls |
99,233 |
58.1% |
88,104 |
56.8% |
281,055 |
57.1% |
256,431 |
56.2% |
||||||||
| Medical & Scientific Imaging |
193,132 |
71.8% |
167,433 |
70.5% |
572,738 |
72.1% |
440,718 |
68.3% |
||||||||
| RF Technology |
127,663 |
53.4% |
125,829 |
53.6% |
375,901 |
52.9% |
356,145 |
53.4% |
||||||||
| Total |
$ 524,040 |
59.3% |
$ 482,625 |
58.3% |
$1,536,158 |
59.0% |
$1,349,708 |
57.5% |
||||||||
| Operating profit*: |
||||||||||||||||
| Industrial Technology |
$ 62,046 |
30.2% |
$ 60,753 |
30.3% |
$ 178,540 |
29.4% |
$ 164,278 |
28.3% |
||||||||
| Energy Systems & Controls |
49,033 |
28.7% |
41,076 |
26.5% |
130,844 |
26.6% |
118,432 |
26.0% |
||||||||
| Medical & Scientific Imaging |
91,227 |
33.9% |
71,968 |
30.3% |
275,379 |
34.7% |
179,433 |
27.8% |
||||||||
| RF Technology |
69,351 |
29.0% |
66,469 |
28.3% |
203,183 |
28.6% |
183,828 |
27.6% |
||||||||
| Total |
$ 271,657 |
30.7% |
$ 240,266 |
29.0% |
$ 787,946 |
30.3% |
$ 645,971 |
27.5% |
||||||||
| Net Orders: |
||||||||||||||||
| Industrial Technology |
$ 205,945 |
$ 197,549 |
$ 611,074 |
$ 581,862 |
||||||||||||
| Energy Systems & Controls |
173,172 |
148,922 |
490,106 |
466,414 |
||||||||||||
| Medical & Scientific Imaging |
270,881 |
262,320 |
799,021 |
688,673 |
||||||||||||
| RF Technology |
243,363 |
229,484 |
713,536 |
711,419 |
||||||||||||
| Total |
$ 893,361 |
$ 838,275 |
$2,613,737 |
$2,448,368 |
||||||||||||
| * Operating profit is before unallocated corporate general and administrative expenses. These expenses were $25,999 and $20,917 for the three months ended September 30, 2014 and 2013, respectively and $72,222 and $61,699 for the nine months ended September 30, 2014 and 2013, respectively. |
||||||||||||||||
| Roper Industries, Inc. and Subsidiaries |
||||
| Condensed Consolidated Statements of Cash Flows (unaudited) |
||||
| (Amounts in thousands) |
||||
| Nine months ended |
||||
| September 30, |
||||
| 2014 |
2013 |
|||
| Net earnings |
$ 460,097 |
$ 372,590 |
||
| Non-cash items: |
||||
| Depreciation |
30,442 |
28,269 |
||
| Amortization |
117,179 |
111,210 |
||
| Stock-based compensation expense |
47,011 |
40,040 |
||
| Income taxes |
(54,178) |
(12,643) |
||
| Changes in assets and liabilities: |
||||
| Receivables |
(21,840) |
29,844 |
||
| Inventory |
(8,833) |
(15,202) |
||
| Accounts payable |
(4,969) |
3,557 |
||
| Accrued liabilities |
15,311 |
9,498 |
||
| Other, net |
(988) |
(390) |
||
| Cash provided by operating activities |
579,232 |
566,773 |
||
| Business acquisitions, net of cash acquired |
(305,254) |
(1,014,952) |
||
| Capital expenditures |
(29,835) |
(33,349) |
||
| Other, net |
(5,304) |
1,596 |
||
| Cash used by investing activities |
(340,393) |
(1,046,705) |
||
| Principal debt borrowings |
- |
800,000 |
||
| Principal debt payments |
(561) |
(502,115) |
||
| Revolver payments, net |
(95,000) |
290,000 |
||
| Debt issuance costs |
- |
(7,717) |
||
| Dividends |
(59,827) |
(32,706) |
||
| Excess tax benefit from share-based payment |
14,892 |
7,763 |
||
| Proceeds from stock-based compensation, net |
26,424 |
16,839 |
||
| Premium on convertible debt conversions |
(1,518) |
(5,100) |
||
| Other, net |
2,118 |
2,556 |
||
| Cash provided by/(used by) financing activities |
(113,472) |
569,520 |
||
| Effect of exchange rate changes on cash |
(20,975) |
(198) |
||
| Net increase in cash and equivalents |
104,392 |
89,390 |
||
| Cash and equivalents, beginning of period |
459,720 |
370,590 |
||
| Cash and equivalents, end of period |
$564,112 |
$459,980 |
||
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/roper-industries-announces-record-third-quarter-results-839957776.html
SOURCE Roper Industries, Inc.
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