Roper Industries Announces Third Quarter Results

Record Third Quarter Orders, Revenue, EBITDA, Net Earnings and Operating Cash Flow

Sunquest Results Included from August 22, 2012

News provided by

Roper Industries, Inc.

Oct 25, 2012, 07:00 ET

SARASOTA, Fla., Oct. 25, 2012 /PRNewswire/ -- Roper Industries, Inc. (NYSE: ROP), a diversified growth company, reported financial results for the third quarter ended September 30, 2012. 

Roper reports results, including revenue, operating margin, net income and diluted earnings per share, on a GAAP and non-GAAP basis.  The non-GAAP measures are reconciled to the corresponding GAAP measures at the end of this release. 

Third quarter GAAP diluted earnings per share were $1.17.  Non-GAAP diluted earnings per share were $1.24, which were at the higher end of the company's guidance range.  GAAP revenue was a record $748 million.  Non-GAAP revenue, which excludes a fair value adjustment to acquired deferred revenue, was $751 million.  GAAP operating margin increased 100 basis points to 24.5%, while non-GAAP operating margin was 25.7%, a 220 basis point increase over the prior year.  Operating cash flow in the quarter was a record $205 million, an increase of 23% over the comparable period in the prior year. 

"Our businesses continued to perform exceptionally well in the quarter," said Brian Jellison, Roper's Chairman, President and CEO.  "Strong operating performance led to substantial margin expansion in all four of our segments.  We achieved record free cash flow of $197 million, representing 26% of revenue.  In addition, gross margin increased to 56% in the quarter.  Despite the uncertain economic outlook, we remain confident our high-quality, asset-light businesses will continue to perform well."

Mr. Jellison continued, "During the quarter, we completed the acquisition of Sunquest Information Systems, adding to our growing medical and software businesses.  Sunquest, with leading software solutions used by over 1,700 hospitals worldwide, adds substantial recurring revenue with long term customer relationships and high retention rates.  We are excited about the continued growth opportunities in these areas." 

2012 Outlook and Guidance

As a result of the third quarter results and outlook for the remainder of the year, the company is establishing fourth quarter non-GAAP diluted earnings per share guidance of $1.43 - $1.49.  The company's full year non-GAAP diluted earnings per share guidance is $4.91 - $4.97. 

The company's guidance is provided on a non-GAAP basis, and excludes future acquisitions, the fair value adjustment to acquired deferred revenue resulting from the Sunquest acquisition, transaction related expenses for Sunquest, and the third quarter debt extinguishment charge.

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: Q3 Revenue Growth

 

Q3 2011

Q3 2012

V%

GAAP Revenue

$713

$748

5%

Non-GAAP Revenue

$713

$751

5%




Components of growth


     Organic Growth

3%

     Acquisitions

4%

     Foreign Exchange

(2%)

     Total Growth

5%

Table 2: Free Cash Flow

 

Q3 2012  

GAAP Revenue (B)

$748

Non-GAAP Revenue (C)

$751


Operating Cash Flow

205

Less: Capital Expenditures

(9)

Rounding

1

Free Cash Flow (A)

197


% of GAAP Revenue (A) / (B)

26.3%

% of Non-GAAP Revenue (A) / (C)

26.2%

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 Thursday, October 25, 2012.  The call can be accessed via webcast or by dialing +1 888-230-6285 (US/Canada) or +1 913-312-0680, using confirmation code 6548072.  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 6548072.

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 water, energy, transportation, medical, education, and SaaS-based information networks. 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)











September 30,

December 31,

ASSETS

2012

2011




CURRENT ASSETS:


  Cash and cash equivalents

$        355,109

$       338,101

  Accounts receivable, net

490,260

439,134

  Inventories, net

210,426

204,758

  Unbilled receivable

69,785

63,829

  Deferred taxes

40,776

38,004

  Other current assets

51,308

31,647

    Total current assets

1,217,664

1,115,473




PROPERTY, PLANT AND EQUIPMENT, NET

110,348

108,775




OTHER ASSETS:


  Goodwill

3,868,256

2,866,426

  Other intangible assets, net

1,712,686

1,094,142

  Deferred taxes

78,203

63,006

  Other assets

62,481

71,595

    Total other assets

5,721,626

4,095,169




TOTAL ASSETS

$     7,049,638

$    5,319,417








LIABILITIES AND STOCKHOLDERS' EQUITY






CURRENT LIABILITIES:


  Accounts payable

$        151,159

$       141,943

  Accrued liabilities

405,606

322,904

  Income taxes payable

-

8,895

  Deferred taxes

3,508

10,548

  Current portion of long-term debt

551,803

69,906

    Total current liabilities

1,112,076

554,196




NONCURRENT LIABILITIES:


  Long-term debt

1,552,976

1,015,110

  Deferred taxes

708,412

482,603

  Other liabilities

89,556

72,412

    Total liabilities

3,463,020

2,124,321




STOCKHOLDERS' EQUITY:


  Common stock

1,003

987

  Additional paid-in capital

1,186,591

1,117,093

  Retained earnings

2,362,606

2,063,110

  Accumulated other comprehensive earnings

56,148

33,800

  Treasury stock

(19,730)

(19,894)

    Total stockholders' equity

3,586,618

3,195,096




TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$     7,049,638

$    5,319,417




  










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,


2012

2011

2012

2011









Net sales

$747,641

$712,705

$2,183,579

$2,057,885

Cost of sales

331,086

330,149

978,223

948,170









Gross profit

416,555

382,556

1,205,356

1,109,715









Selling, general and administrative expenses

233,298

215,341

673,011

636,530









Income from operations

183,257

167,215

532,345

473,185









Interest expense

16,456

15,373

47,016

48,265

Loss on extinguishment of debt

(1,043)

-

(1,043)

-

Other income/(expense)

(1,380)

690

(2,444)

8,644









Earnings from continuing operations before income taxes

164,378

152,532

481,842

433,564









Income taxes

47,670

42,251

142,012

127,993









Net Earnings

$116,708

$110,281

$   339,830

$   305,571













































Earnings per share:







  Basic

$     1.19

$     1.15

$        3.49

$        3.19

  Diluted

$     1.17

$     1.12

$        3.41

$        3.11









Weighted average common and common







  equivalent shares outstanding:







    Basic

97,876

96,083

97,460

95,792

    Diluted

99,757

98,308

99,543

98,285









  


















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,


2012

2011

2012

2011


Amount

%

Amount

%

Amount

%

Amount

%

Net sales:















  Industrial Technology

$199,008


$185,258


$   598,088


$   538,695

  Energy Systems & Controls

158,169


150,385


461,508


425,768

  Medical & Scientific Imaging

172,475


156,470


486,207


452,835

  RF Technology

217,989


220,592


637,776


640,587

    Total

$747,641


$712,705


$2,183,579


$2,057,885



































Gross profit:















  Industrial Technology

$102,569

51.5%

$  91,238

49.2%

$   304,002

50.8%

$   269,020

49.9%

  Energy Systems & Controls

87,782

55.5%

81,832

54.4%

254,325

55.1%

232,390

54.6%

  Medical & Scientific Imaging

112,013

64.9%

99,035

63.3%

314,411

64.7%

285,295

63.0%

  RF Technology

114,191

52.4%

110,451

50.1%

332,618

52.2%

323,010

50.4%

    Total

$416,555

55.7%

$382,556

53.7%

$1,205,356

55.2%

$1,109,715

53.9%


































Operating profit*:















  Industrial Technology

$  60,628

30.5%

$  52,238

28.2%

$   180,211

30.1%

$   150,156

27.9%

  Energy Systems & Controls

42,890

27.1%

38,675

25.7%

118,749

25.7%

105,423

24.8%

  Medical & Scientific Imaging

46,190

26.8%

38,610

24.7%

125,231

25.8%

108,999

24.1%

  RF Technology

58,002

26.6%

52,552

23.8%

166,516

26.1%

150,413

23.5%

    Total

$207,710

27.8%

$182,075

25.5%

$   590,707

27.1%

$   514,991

25.0%


































Net Orders:















  Industrial Technology

$191,955


$192,905


$   598,077


$   582,969

  Energy Systems & Controls

147,304


151,294


458,455


436,633

  Medical & Scientific Imaging

177,528


159,140


494,250


459,452

  RF Technology

202,959


215,244


661,826


649,513

    Total

$719,746


$718,583


$2,212,608


$2,128,567




















































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

       were $24,453 and $14,860 for the three months ended September 30, 2012 and 2011, respectively and




       $58,362 and $41,806 for the nine months ended September 30, 2012 and 2011, respectively.





Roper Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(Amounts in thousands)












Nine months ended


September 30,


2012

2011





Net earnings

$    339,830

$    305,571

Non-cash items:



Depreciation

28,402

27,669

Amortization

82,398

77,056

Stock-based compensation expense

30,143

23,466

Income taxes

(14,258)

5,888

Changes in assets and liabilities:



Receivables

3,987

(16,531)

Inventory

(2,985)

(28,422)

Accounts payable

5,041

3,910

Accrued liabilities

(13,658)

12,806

Other, net

7,314

(2,339)

  Cash provided by operating activities

466,214

409,074





Business acquisitions, net of cash acquired

(1,445,549)

(227,197)

Capital expenditures

(29,236)

(29,143)

Other, net

654

(132)

  Cash used by investing activities

(1,474,131)

(256,472)





Principal debt payments

(26,826)

(25,057)

Revolver borrowings/(payments), net

1,050,000

(145,000)

Debt issuance costs

(4,551)

-

Dividends

(40,102)

(31,529)

Excess tax benefit from share-based payment

19,873

4,101

Proceeds from exercise of stock options

40,105

14,479

Redemption premium on convertible debt

(19,149)

-

Other, net

644

1,052

  Cash provided/(used) by financing activities

1,019,994

(181,954)





Effect of exchange rate changes on cash

4,931

5,412





Net increase/(decrease) in cash and equivalents

17,008

(23,940)

Cash and equivalents, beginning of period

338,101

270,394





Cash and equivalents, end of period

$355,109

$246,454





ROPER INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENT OF EARNINGS -  RECONCILIATION OF GAAP TO NON-GAAP

(Amounts in thousands, except per share data)


















Adjustments




2012

Fair Value Adjustment

Sunquest

Debt

2012



3rd Quarter

to Acquired

Acquisition-Related

Extinguishment

3rd Quarter



GAAP

Deferred Revenue

Expenses

Charge

Non-GAAP













Net sales

$         747,641

$           3,130

$                -

$                -

$   750,771

Cost of sales

331,086

-

-

-

331,086

Gross profit

416,555

3,130

-

-

419,685













Selling, general and administrative expenses

208,845

-

-

-

208,845

Segment income from operations

207,710

3,130

-

-

210,840













Corporate general and administrative expenses

24,453

-

(6,308)

-

18,145

Income from operations

183,257

3,130

6,308

-

192,695













Interest expense

16,456

-

-

-

16,456

Other income / (expense)

(2,423)

-

-

1,043

(1,380)

Earnings from continuing operations before income taxes

164,378

3,130

6,308

1,043

174,859













Income taxes (1)

47,670

1,095

2,208

365

51,338













Net earnings

$             116,708

$               2,035

$               4,100

$                   678

$     123,521












Weighted average diluted common shares outstanding

99,757






99,757













Diluted earnings per share

$                    1.17






$            1.24


























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

SOURCE Roper Industries, Inc.

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