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Roper Industries Announces Third Quarter Results

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

Sunquest Results Included from August 22, 2012

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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