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Section 1: 8-K

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

April 28, 2017
 
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
 
ROPER TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION)

1-12273
51-0263969
 
 
 
 
(COMMISSION FILE NUMBER)
(IRS EMPLOYER IDENTIFICATION NO.)
 
 
 
 
6901 PROFESSIONAL PKWY. EAST, SUITE 200, SARASOTA, FLORIDA
34240
 
 
 
 
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)

(941) 556-2601
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
(FORMER NAME OR ADDRESS, IF CHANGED SINCE LAST REPORT)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

Item 2.02. Results of Operations and Financial Condition.

On April 28, 2017, Roper Technologies, Inc. (the "Company") issued a press release containing information about the Company's results of operations for the quarter ended March 31, 2017. A copy of the press release is furnished as Exhibit 99.1.  In the press release, the Company uses several non-GAAP financial measures: Adjusted Revenue, Adjusted Gross Margin, Adjusted Diluted Earnings per Share and Adjusted EBITDA.

Business combination accounting rules required Roper to account for the fair value of deferred revenue assumed in connection with the 2015 acquisitions of Data Innovations, SoftWriters, Strata Decision Technology,  OnCenter Software, Aderant and Atlas Database Software and the 2016 acquisitions of CliniSys, ConstructConnect and Deltek. The fair value is based on the assumed cost of having a third-party provide the relevant support services rather than the contracted amount under the contracts. Because the fair value is less than the contracted amount, Roper's GAAP revenues for up to eighteen months subsequent to the acquisitions will not reflect the full amount of revenue that would have otherwise been recorded by the acquired companies had they remained independent companies.  The Adjusted Revenue measure is intended to reflect the full amount that would have been recognized as revenue, absent the fair value adjustment.
 
Business combination accounting rules require Roper to increase the carrying value of inventory acquired to fair value at the date of purchase (inventory step-up).  Roper's GAAP gross profit for the two quarters subsequent to the acquisition of PCI Medical in the first quarter of 2016 did not reflect the full amount of gross profit that would have otherwise been recorded by the entities had they remained independent companies.  The Adjusted Gross Profit measure is intended to reflect the full amount that would have been recognized by the company, absent the fair value adjustment.
 
Business combination accounting rules required Roper to account for the fair value of prepaid commissions related to deferred revenue assumed in connection with the 2016 acquisition of Deltek. The fair value of the commissions that had already been paid at the time of the acquisition was determined to be zero; therefore Roper's GAAP results for up to eighteen months subsequent to the acquisition will not reflect the full amount of expense that would have otherwise been recorded by Deltek had they remained an independent company.
 
The Adjusted Revenue, Adjusted Gross Margin, and Adjusted Diluted Earnings per Share reflect these adjustments. The Company believes these non-GAAP measures are useful to investors as a measure of the ongoing performance of its business.
 
Adjusted EBITDA as shown in the press release is defined as adjusted net earnings plus (a) interest expense, (b) income taxes and (c) depreciation and amortization. The Company believes EBITDA is an important indicator of operational performance of the Company's business. EBITDA as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies. In addition, EBITDA: (a) does not represent net income or cash flows from operations as defined by GAAP; (b) is not necessarily indicative of cash available to fund the Company's cash flow needs; and (c) should not be considered as an alternative to net earnings, operating income, cash flows from operating activities or the Company's other financial information determined under GAAP. The Company believes that the line on the Company's consolidated statement of operations entitled net earnings is the most directly comparable GAAP measure to EBITDA.
 

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.
 
 
99.1 Press Release of the Company dated April 28, 2017.
 
 
 

 
 
Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
Roper Technologies, Inc.
 
 
 
 
 
 
 
(Registrant)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BY:
/s/ John Humphrey
 
Date: April 28, 2017
 
 
 
 
 
John Humphrey,
Executive Vice President and Chief Financial Officer
 
 
 
 

 



EXHIBIT INDEX
 
 
 
 
Exhibit No.
 
Description
 
 
 
 
 
 
99.1
 
Press Release of the Company dated April 28, 2017
 



(Back To Top)

Section 2: EX-99.1

Exhibit 99.1
 
Contact Information:
Investor Relations
941-556-2601
investor-relations@ropertech.com
Roper Technologies, Inc.


Roper Technologies Announces First Quarter Results
GAAP Revenue Increased 20%; Adjusted Revenue Increased 22%
Operating Cash Flow Increased to $378 Million

Sarasota, Florida, April 28, 2017 ... Roper Technologies, Inc. (NYSE: ROP), a diversified technology company, reported financial results for the first quarter ended March 31, 2017.

Roper reports results – including revenue, operating margin, net income and diluted earnings per share – on a GAAP basis and an adjusted basis.

First quarter GAAP revenue increased 20% to $1.09 billion and adjusted revenue grew 22% to $1.11 billion.  GAAP diluted earnings per share (DEPS) were $1.53 (+3%), while adjusted diluted earnings per share increased 17% to $2.11.

GAAP gross margin was 61.5% while adjusted gross margin was 62.2%. Operating cash flow increased to $378 million and adjusted EBITDA increased 18% to $362 million.

"Our businesses performed exceptionally well in the first quarter," said Brian Jellison, Roper's Chairman, President and CEO.  "Our significant revenue increase included 5% organic growth, as our software and medical businesses continued their strong performance and we benefited from improvement in industrial and energy markets. Growth was broad-based as revenue in each of our four segments increased organically in the quarter."

"Our cash flow performance was outstanding in the quarter with significant contributions from our recent application software acquisitions, Deltek and ConstructConnect, as well as strong execution across the enterprise. We are very pleased by our great start to 2017," concluded Mr. Jellison.


2017 Guidance

Roper is raising its full year 2017 guidance. The Company now expects full year Adjusted DEPS of $8.98 - $9.28, compared to previous guidance of $8.82 - $9.22.

For the second quarter of 2017, the Company expects Adjusted DEPS to be between $2.16 and $2.24.

The Company's guidance excludes the impact of future acquisitions or divestitures.
 
 
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 Friday, April 28, 2017.  The call can be accessed via webcast or by dialing +1 877-857-6149 (US/Canada) or +1 719-325-4845, using confirmation code 4090618.  Webcast information and conference call materials will be made available in the Investors section of Roper's website (www.ropertech.com) prior to the start of the call. The webcast can also be accessed directly by using the following URL http://edge.media-server.com/m/p/skmkjsqe.  Telephonic replays will be available for up to two weeks and can be accessed by using the following registration URL https://event.replay with access code 4090618.

 
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 ($M)
 
   
Q1 2017
     
Q1 2016
   
V %
 
GAAP Revenue
$
1,086
   
$
902
   
20
%
Purchase accounting adjustment to acquired deferred revenueA,B
 
22
A 
   
3
B 
   
Rounding
          
1
 
   
Adjusted Revenue
$
1,108
   
$
906
   
22
%
                     
Components of Adjusted Revenue Growth
                   
Organic
     
   
5
%
Acquisitions
     
   
+18
%
Foreign Exchange
     
   
(1
)%
Total Adjusted Revenue Growth
     
   
22
%
 
Table 2:  Reconciliation of Q1 2017 GAAP DEPS to Adjusted DEPS
 
     
Q1 2017
     
Q1 2016
 
GAAP Diluted Earnings Per Share (DEPS)
 
$
1.53
   
$
1.48
 
Purchase accounting adjustment to acquired deferred revenueA,B
   
0.14
A 
   
0.02
B 
Purchase accounting adjustment for commission expenseC
   
(0.01
)C 
   
-
 
Acquisition-related inventory step-up chargeD
   
-
     
0
D 
Amortization of Acquisition-related intangible assets, after tax F
   
0.45
F 
   
0.31
F 
                 
Adjusted DEPS
 
$
2.11
   
$
1.81
 
 
Table 3:  Q1 Free Cash Flow Reconciliation ($M)
 
     
Q1 2017
     
Q1 2016
    V % 
 
GAAP Operating Cash Flow
 
$
378
   
$
207
   
+83%
 
Cash taxes related to 2015 sale of Abel Pump
 
       
37
       
Rounding
 
       
1
       
Adjusted Operating Cash Flow
 
$
378
   
$
245
   
+55%
 
Capital expenditures
   
(15
)    
(9
)      
Capitalized software expenditures
   
(3
)    
(1
)      
Rounding
   
-
     
(1
)      
Adjusted Free Cash Flow
 
$
360
   
$
234
   
+54%
 
 

Table 4:  Adjusted Gross Margin Reconciliation (M)
 
     
Q1 2017
     
Q1 2016
   
 V Bps
 
GAAP Revenue
 
$
1,086
   
$
902
   
 
Purchase accounting adjustment to acquired deferred revenueA,B
   
22
 A    
3
 B  
 
Rounding
 
     
1
   
 
Adjusted Revenue
 
$
1,108
   
$
906
   
 
                            
GAAP Gross Profit
 
$
668
   
$
560
   
 
Purchase accounting adjustment to acquired deferred revenueA,B
   
22
 A    
3
 B  
 
Rounding
   
(1
)  
   
 
Adjusted Gross Profit
 
$
689
   
$
563
   
 
                            
GAAP Gross Margin
   
61.5%
 
   
62.0%
 
 
 (50) bps
 
Adjusted Gross Margin
   
62.2%
 
   
62.1%
 
 
 + 10 bps
 
 
Table 5:  Q1 EBITDA Reconciliation ($M)
 
     
Q1 2017
     
Q1 2016
      V %
 
GAAP Revenue
 
$
1,086
   
$
902
   
 
Purchase accounting adjustment to acquired deferred revenueA,B
   
22
 A    
3
B 
 
 
Rounding
 
     
1
   
 
Adjusted Revenue
 
$
1,108
   
$
906
   
 
                        
GAAP Net Earnings
 
$
158
   
$
151
   
 
Taxes
   
53
     
66
   
 
Interest expense
   
46
     
27
   
 
Depreciation
   
12
     
10
   
 
Amortization
   
73
     
50
   
 
Purchase accounting adjustment to acquired deferred revenue, pretaxA,B
   
22
 A    
3
B 
 
 
Purchase accounting adjustment for prepaid commission expense, pretaxC
   
(2
)  
   
 
Acquisition-related inventory step-up charge, pretaxD
   
-
     
0
D 
 
 
Rounding
   
-
     
-
   
 
Adjusted EBITDA
 
$
362
   
$
307
     +18%
 
% of Adjusted Revenue
   
32.7%
 
   
34.0%
   
 
 
Table 6:  Forecasted Diluted Earnings Per Share (DEPS)
 
     
Q2 2017   
   
Full Year 2017    
 
   
Low End
   
High End
   
Low End
   
High End
 
GAAP DEPS
 
$
1.62
   
$
1.70
   
$
6.86
   
$
7.16
 
Purchase accounting adjustments to acquired deferred revenue and commissionsE
   
0.09
E 
   
0.09
E 
   
0.32
E 
   
0.32
E 
Amortization of acquisition-related intangible assets, after-taxF
   
0.45
F 
   
0.45
F 
   
1.80
F 
   
1.80
F 
Adjusted DEPS
 
$
2.16
   
$
2.24
   
$
8.98
   
$
9.28
 
 


A
Acquisition-related fair value adjustments to deferred revenue related to the acquisitions of CliniSys ($0.0M pretax, $0.0M after-tax), ConstructConnect ($5.3M pretax, $3.4M after-tax) and Deltek ($16.3M pretax, $10.6M after-tax).
B
Acquisition-related fair value adjustments to deferred revenue related to the acquisitions of Strata ($0.2M pretax, $0.1M after-tax), Softwriters ($0.0M pretax, $0.0M after-tax), Data Innovations ($0.7m pre-tax, $0.4M after-tax), On Center Software ($0.4M pretax, $0.3M after-tax), Aderant ($1.8M pretax, $1.2M after-tax), Atlas Medical ($0.1M pretax, $0.0M after-tax) and Clinisys ($0.1M pretax, $0.1M after-tax)
C
Purchase Accounting Adjustment for Commission Expense related to the acquisition of Deltek ($1.8M pretax, $1.2M after-tax),
D
Acquisition-related inventory step-up charge related to the acquisition of PCI Medical ($0.1M pretax, $0.1M after-tax)
E
Forecasted acquisition-related fair value adjustments to acquired deferred revenue and commissions of ConstructConnect and Deltek, as shown below ($M, except per share data)
 
 
   
Q2 2017
   
FY 2017
 
Pretax
 
$
15
   
$
51
 
After-tax
 
$
10
   
$
33
 
Per Share
 
$
0.09
   
$
0.32
 
 
F
Actual results and forecast of estimated amortization of acquisition-related intangible assets ($M); For comparison purposes, prior period amounts are also shown below. Tax Rate of 35% applied to amortization in all periods.

     
Q1 2016A
 
   
Q2 2016A
 
 
FY 2016A
     
Q1 2017A
 
   
Q2 2017E
 
 
FY 2017E
 
Pretax
 
$
49
   
$
50
   
$
201
   
$
72
   
$
72
   
$
286
 
After-tax
 
$
32
   
$
32
   
$
131
   
$
47
   
$
47
   
$
186
 
Per share
 
$
0.31
   
$
0.31
   
$
1.27
   
$
0.45
   
$
0.45
   
$
1.80
 

 

Roper Technologies, Inc. and Subsidiaries
           
Condensed Consolidated Balance Sheets (unaudited)
           
(Amounts in thousands)
           
   
March 31,
   
December 31,
 
   
2017
   
2016
 
ASSETS
           
             
CURRENT ASSETS:
           
  Cash and cash equivalents
 
$
730,666
   
$
757,200
 
  Accounts receivable
   
549,838
     
619,854
 
  Inventories
   
191,426
     
181,952
 
  Unbilled receivable
   
143,589
     
129,965
 
  Other current assets
   
97,104
     
87,530
 
    Total current assets
   
1,712,623
     
1,776,501
 
                 
PROPERTY, PLANT AND EQUIPMENT, NET
   
144,113
     
141,318
 
                 
OTHER ASSETS:
               
  Goodwill and other intangible assets, net
   
12,268,952
     
12,302,985
 
  Deferred taxes
   
30,300
     
30,620
 
  Other assets
   
74,066
     
73,503
 
    Total other assets
   
12,373,318
     
12,407,108
 
                 
TOTAL ASSETS
 
$
14,230,054
   
$
14,324,927
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
CURRENT LIABILITIES:
               
  Accounts payable
 
$
152,638
   
$
152,067
 
  Accrued compensation
   
131,584
     
161,730
 
  Deferred revenue
   
513,820
     
488,399
 
  Other accrued liabilities
   
251,298
     
219,339
 
  Income taxes payable
   
88,126
     
22,762
 
  Current portion of long-term debt
   
401,072
     
400,975
 
    Total current liabilities
   
1,538,538
     
1,445,272
 
                 
NONCURRENT LIABILITIES:
               
  Long-term debt
   
5,439,700
     
5,808,561
 
  Deferred taxes
   
1,169,151
     
1,178,205
 
  Other liabilities
   
111,875
     
104,024
 
    Total liabilities
   
8,259,264
     
8,536,062
 
                 
STOCKHOLDERS' EQUITY:
               
  Common stock
   
1,039
     
1,036
 
  Additional paid-in capital
   
1,518,213
     
1,489,067
 
  Retained earnings
   
4,764,711
     
4,642,402
 
  Accumulated other comprehensive earnings
   
(294,327
)
   
(324,739
)
  Treasury stock
   
(18,846
)
   
(18,901
)
    Total stockholders' equity
   
5,970,790
     
5,788,865
 
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
14,230,054
   
$
14,324,927
 
 

 
Roper Technologies, Inc. and Subsidiaries
           
Condensed Consolidated Statements of Earnings (unaudited)
       
(Amounts in thousands, except per share data)
       
             
             
   
Three months ended
 
   
March 31,
 
   
2017
   
2016
 
             
Net sales
 
$
1,086,305
   
$
902,423
 
Cost of sales
   
418,691
     
342,904
 
                 
Gross profit
   
667,614
     
559,519
 
                 
Selling, general and administrative expenses
   
409,358
     
314,528
 
                 
Income from operations
   
258,256
     
244,991
 
                 
Interest expense
   
45,865
     
27,413
 
Other expense
   
(1,047
)
   
(129
)
                 
Earnings from continuing operations before
               
   income taxes
   
211,344
     
217,449
 
                 
Income taxes
   
53,273
     
66,033
 
                 
Net Earnings
 
$
158,071
   
$
151,416
 
                 
                 
                 
                 
                 
Earnings per share:
               
  Basic
 
$
1.55
   
$
1.50
 
  Diluted
 
$
1.53
   
$
1.48
 
                 
Weighted average common and common
               
  equivalent shares outstanding:
               
    Basic
   
101,885
     
101,071
 
    Diluted
   
103,078
     
102,318
 
 
 

Roper Technologies, Inc. and Subsidiaries
                       
Selected Segment Financial Data (unaudited)
                       
(Amounts in thousands and percents of net sales)
                       
                         
                         
   
Three months ended March 31,
 
   
2017  
   
2016   
 
   
Amount
   
%
   
Amount
   
%
 
Net sales:
                       
  Medical & Scientific Imaging
 
$
348,235
   
   
$
332,214
   
 
  RF Technology
   
429,619
   
     
280,210
   
 
  Industrial Technology
   
183,404
   
     
171,235
   
 
  Energy Systems & Controls
   
125,047
   
     
118,764
   
 
    Total
 
$
1,086,305
   
   
$
902,423
   
 
                             
                             
Gross profit:
                           
  Medical & Scientific Imaging
 
$
251,930
     
72.3
%
 
$
246,897
     
74.3
%
  RF Technology
   
251,478
     
58.5
%
   
160,365
     
57.2
%
  Industrial Technology
   
93,151
     
50.8
%
   
86,020
     
50.2
%
  Energy Systems & Controls
   
71,055
     
56.8
%
   
66,237
     
55.8
%
    Total
 
$
667,614
     
61.5
%
 
$
559,519
     
62.0
%
                                 
                                 
Operating profit*:
                               
  Medical & Scientific Imaging
 
$
119,793
     
34.4
%
 
$
114,456
     
34.5
%
  RF Technology
   
88,984
     
20.7
%
   
88,766
     
31.7
%
  Industrial Technology
   
53,613
     
29.2
%
   
46,759
     
27.3
%
  Energy Systems & Controls
   
30,236
     
24.2
%
   
24,182
     
20.4
%
    Total
 
$
292,626
     
26.9
%
 
$
274,163
     
30.4
%
                                 
                                 
Net Orders:
                               
  Medical & Scientific Imaging
 
$
350,777
   
   
$
343,850
   
 
  RF Technology
   
441,289
   
     
281,125
   
 
  Industrial Technology
   
195,316
   
     
178,905
   
 
  Energy Systems & Controls
   
126,727
   
     
122,770
   
 
    Total
 
$
1,114,109
   
   
$
926,650
   
 
                                 
* Operating profit is before unallocated corporate general and administrative expenses. These expenses
 
were $34,370 and $29,172 for the three months ended March 31, 2017 and 2016, respectively.
 
 
 

Roper Technologies, Inc. and Subsidiaries
           
Condensed Consolidated Statements of Cash Flows (unaudited)
       
(Amounts in thousands)
           
             
             
   
Three months ended
 
   
March 31,
 
   
2017
   
2016
 
             
Net earnings
 
$
158,071
   
$
151,416
 
Non-cash items:
               
Depreciation
   
12,377
     
9,702
 
Amortization
   
72,998
     
49,549
 
Stock-based compensation expense
   
21,049
     
18,979
 
Income taxes
   
39,013
     
20,127
 
Changes in assets and liabilities:
               
Receivables
   
59,536
     
(14,059
)
Inventory
   
(7,905
)
   
(3,907
)
Accounts payable
   
(2,009
)
   
(1,273
)
Accrued liabilities
   
34,094
     
(18,458
)
Other, net
   
(9,007
)
   
(5,004
)
  Cash provided by operating activities
   
378,217
     
207,072
 
                 
Business acquisitions, net of cash acquired
   
(2,829
)
   
(265,248
)
Capital expenditures
   
(14,930
)
   
(9,489
)
Capitalized software expenditures
   
(3,169
)
   
(665
)
Other, net
   
(391
)
   
1,446
 
  Cash used in investing activities
   
(21,319
)
   
(273,956
)
                 
Principal debt payments
   
-
     
(289
)
Revolver payments, net
   
(370,000
)
   
(160,000
)
Dividends
   
(35,443
)
   
(30,173
)
Proceeds from stock-based compensation, net
   
7,576
     
690
 
Premium on convertible debt conversions
   
-
     
(915
)
Other, net
   
782
     
505
 
  Cash used in financing activities
   
(397,085
)
   
(190,182
)
                 
Effect of exchange rate changes on cash
   
13,653
     
1,588
 
                 
Net decrease in cash and equivalents
   
(26,534
)
   
(255,478
)
Cash and equivalents, beginning of period
   
757,200
     
778,511
 
                 
Cash and equivalents, end of period
 
$
730,666
   
$
523,033
 
 
 
 
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