Roper Industries Announces Record Second Quarter Results

Jul 29, 2013, 07:00 ET from Roper Industries, Inc.

SARASOTA, Fla., July 29, 2013 /PRNewswire/ -- Roper Industries, Inc. (NYSE: ROP) reported financial results for the second quarter ended June 30, 2013.

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. 

Second quarter GAAP diluted earnings per share were $1.11 and adjusted diluted earnings per share were $1.31.  GAAP revenue increased 8% to $784 million and adjusted revenue increased 11% to $805 million.  Orders increased to $835 million and represented a book-to-bill ratio of 1.04. 

GAAP gross margin reached 56.8% and adjusted gross margin increased to 57.9%, a 300 basis point gain over the prior year.  Operating cash flow in the quarter was $140 million, a 17% increase over the prior year.  Free cash flow increased 19% to $129 million.

"We are pleased with our second quarter results and see positive momentum in our businesses," said Brian Jellison, Roper's Chairman, President and CEO.  "We delivered organic growth consistent with our expectations while securing significant orders for second half delivery, supporting our ability to achieve improving organic growth throughout the year.  Backlog increased 17% to a record $1.03 billion.  Our significant expansion in gross margin was broad-based, with increases in all four segments."

"We completed the acquisition of Managed Health Care Associates, Inc. (MHA) on May 1, 2013 and its early performance reinforces our confidence about its future," continued Mr. Jellison. "We also successfully issued $800 million of senior notes in the quarter, further strengthening our balance sheet. We maintain substantial capacity for future acquisitions and have an attractive pipeline of opportunities."

Special Charge

Second quarter GAAP results include a pretax charge of $9.1 million, or $0.06 per diluted share, in the Industrial Technology segment.  The company determined that a vendor-supplied component in a refrigeration-system valve did not meet our quality standards.  The company decided to exchange affected product, and has recorded this charge to reflect the estimated program cost, while it engages in an ongoing discussion with the vendor. 

2013 Outlook and Guidance

The company is updating its full year adjusted diluted earnings per share guidance to be between $5.72 - $5.86 compared to $5.76 - $5.94 previously.  "We expect total sales growth in the second half of the year to be 12% - 14%," said Mr. Jellison.  "Contributions from acquisitions continue to be on-track and due to changes in certain niche businesses, we expect second half organic growth between 6% - 8%, compared to our prior expectation of 7% - 9%." The company expects full year operating cash flow to exceed $800 million, consistent with the company's previous guidance. 

The company's guidance for full year adjusted diluted earnings per share includes the recognition of acquired revenue which will be 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.  

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, July 29, 2013.  The call can be accessed via webcast or by dialing +1 888-428-9490 (US/Canada) or +1 719-325-2472, using confirmation code 6227963.  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 6227963.

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.  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: Second Quarter Revenue Growth

GAAP

Adjusted

Acquisitions / Divestitures

8%

11%

Organic

1%

1%

Foreign Currency

-

-

Rounding

(1%)

(1%)

Total Revenue Growth

8%

11%

 

Table 2: Gross Margin Reconciliation

Q2 2013

Q2 2012

% Change

GAAP Revenue

$784.0

$724.9

+8%

Add:  Purchase Accounting Adjustment for Acquired Revenue

20.9

0.0

n.a.

Adjusted Revenue (B)

$804.9

$724.9

+11%

GAAP Gross Profit

$445.5

$397.6

+12%

Add:  Purchase Accounting Adjustment for Acquired Revenue

20.9

0.0

n.a.

Adjusted Gross Profit (A)

$466.4

$397.6

+17%

Adjusted Gross Margin (A)/(B)

57.9%

54.9%

+300 bps

 

Table 3: Second Quarter Adjusted Diluted Earnings Per Share

Q2 2013

GAAP Diluted Earnings Per Share

$1.11

Add: Purchase Accounting Adjustment for Acquired Revenue (Sunquest, MHA)

0.14

Add: Special Charge for Vendor-Supplied Component Quality Issue

0.06

Adjusted Diluted Earnings Per Share

$1.31

 

Table 4: Free Cash Flow

Q2 2013

Q2 2012

Operating Cash Flow

$139.7

$119.3

Less:  Capital Expenditures

(10.6)

(10.5)

Free Cash Flow

$129.1

$108.8

 

Table 5: Full Year 2013 Adjusted Diluted Earnings Per Share Guidance

Low End

High End

GAAP Diluted Earnings Per Share Guidance

$5.41

$5.57

Add:  Purchase Accounting Adjustment for Acquired Revenue

$0.22

$0.22

Add: Second Quarter Charge for Vendor-Supplied Component Quality Issue

$0.06

$0.06

Add:  Estimated Second Half Impact from Vendor-Supplied Component Quality Issue

$0.03

$0.01

Adjusted Diluted Earnings Per Share Guidance

$5.72

$5.86

Previous Adjusted Diluted Earnings Per Share Guidance

$5.76

$5.94

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 and profit 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 our 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)

June 30,

December 31,

ASSETS

2013

2012

CURRENT ASSETS:

  Cash and cash equivalents

$      374,571

$         370,590

  Accounts receivable, net

547,572

526,408

  Inventories, net

197,458

190,867

  Unbilled receivable

84,319

72,193

  Deferred taxes

58,582

41,992

  Other current assets

65,633

43,492

    Total current assets

1,328,135

1,245,542

PROPERTY, PLANT AND EQUIPMENT, NET

115,677

110,397

OTHER ASSETS:

  Goodwill

4,521,774

3,868,857

  Other intangible assets, net

2,084,677

1,698,867

  Deferred taxes

86,579

78,644

  Other assets

76,900

68,797

    Total other assets

6,769,930

5,715,165

TOTAL ASSETS

$   8,213,742

$      7,071,104

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

  Accounts payable

$      139,296

$         138,340

  Accrued compensation

83,862

110,724

  Deferred revenue

209,249

185,912

  Other accrued liabilities

171,050

128,351

  Deferred taxes

10,595

3,868

  Current portion of long-term debt

512,799

519,015

    Total current liabilities

1,126,851

1,086,210

NONCURRENT LIABILITIES:

  Long-term debt

2,245,424

1,503,107

  Deferred taxes

856,551

707,278

  Other liabilities

95,368

86,783

    Total liabilities

4,324,194

3,383,378

STOCKHOLDERS' EQUITY:

  Common stock

1,012

1,006

  Additional paid-in capital

1,198,269

1,158,001

  Retained earnings

2,693,421

2,489,858

  Accumulated other comprehensive earnings

16,416

58,537

  Treasury stock

(19,570)

(19,676)

    Total stockholders' equity

3,889,548

3,687,726

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$   8,213,742

$      7,071,104

 

Roper Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (unaudited)

(Amounts in thousands, except per share data)

Three months ended

Six months ended

June 30,

June 30,

2013

2012

2013

2012

Net sales

$784,010

$724,872

$1,521,145

$1,435,938

Cost of sales

338,503

327,264

654,062

647,137

Gross profit

445,507

397,608

867,083

788,801

Selling, general and administrative expenses

265,761

218,824

502,160

439,713

Income from operations

179,746

178,784

364,923

349,088

Interest expense

22,361

15,077

43,219

30,560

Other income/(expense)

2,536

(574)

44

(1,064)

Earnings from continuing operations before

   income taxes

159,921

163,133

321,748

317,464

Income taxes

48,568

48,320

85,481

94,342

Net Earnings

$111,353

$114,813

$   236,267

$   223,122

Earnings per share:

  Basic

$     1.12

$     1.18

$        2.39

$        2.29

  Diluted

$     1.11

$     1.15

$        2.36

$        2.24

Weighted average common and common

  equivalent shares outstanding:

    Basic

99,089

97,460

98,983

97,249

    Diluted

100,162

99,619

100,071

99,500

 

Roper Industries, Inc. and Subsidiaries

Selected Segment Financial Data (unaudited)

(Amounts in thousands and percents of net sales)

Three months ended June 30,

Six months ended June 30,

2013

2012

2013

2012

Amount

%

Amount

%

Amount

%

Amount

%

Net sales:

  Industrial Technology

$  197,543

$  203,944

$   379,782

$   399,080

  Energy Systems & Controls

155,331

154,737

300,973

303,339

  Medical & Scientific Imaging

207,957

150,921

408,401

313,732

  RF Technology

223,179

215,270

431,989

419,787

    Total

$  784,010

$  724,872

$1,521,145

$1,435,938

Gross profit:

  Industrial Technology

$  101,844

51.6%

$  102,770

50.4%

$   195,155

51.4%

$   201,433

50.5%

  Energy Systems & Controls

87,421

56.3%

86,135

55.7%

168,327

55.9%

166,543

54.9%

  Medical & Scientific Imaging

138,416

66.6%

96,212

63.7%

273,285

66.9%

202,398

64.5%

  RF Technology

117,826

52.8%

112,491

52.3%

230,316

53.3%

218,427

52.0%

    Total

$  445,507

56.8%

$  397,608

54.9%

$   867,083

57.0%

$   788,801

54.9%

Operating profit*:

  Industrial Technology

$    50,580

25.6%

$    62,076

30.4%

$   103,525

27.3%

$   119,583

30.0%

  Energy Systems & Controls

41,634

26.8%

40,202

26.0%

77,356

25.7%

75,859

25.0%

  Medical & Scientific Imaging

47,537

22.9%

35,679

23.6%

107,465

26.3%

79,041

25.2%

  RF Technology

60,729

27.2%

58,161

27.0%

117,359

27.2%

108,514

25.8%

    Total

$  200,480

25.6%

$  196,118

27.1%

$   405,705

26.7%

$   382,997

26.7%

Net Orders:

  Industrial Technology

$  204,506

$  202,120

$   384,313

$   406,122

  Energy Systems & Controls

159,955

157,775

317,492

311,151

  Medical & Scientific Imaging

210,233

148,386

426,353

316,722

  RF Technology

241,817

255,195

481,935

458,867

    Total

$  816,511

$  763,476

$1,610,093

$1,492,862

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

       were $20,734 and $17,334 for the three months ended June 30, 2013 and 2012, respectively and

       $40,782 and $33,909 for the six months ended June 30, 2013 and 2012, respectively.

 

Roper Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(Amounts in thousands)

Six months ended

June 30,

2013

2012

Net earnings

$    236,267

$    223,122

Non-cash items:

Depreciation

18,742

18,950

Amortization

71,794

52,289

Stock-based compensation expense

26,284

19,704

Income taxes

(17,925)

(18,615)

Changes in assets and liabilities:

Receivables

(1,847)

(12,565)

Inventory

(10,362)

(5,452)

Accounts payable

1,012

(1,827)

Accrued liabilities

(10,103)

(18,544)

Other, net

(2,855)

3,721

  Cash provided by operating activities

311,007

260,783

Business acquisitions, net of cash acquired

(1,007,513)

(36,872)

Capital expenditures

(21,889)

(20,532)

Other, net

1,314

544

  Cash used by investing activities

(1,028,088)

(56,860)

Principal debt borrowings

800,000

-

Principal debt payments

(1,671)

(13,215)

Revolver payments, net

(58,000)

-

Debt issuance costs

(7,517)

-

Dividends

(16,338)

(26,673)

Excess tax benefit from share-based payment

5,654

11,070

Proceeds from stock-based compensation, net

10,998

9,165

Premium on convertible debt conversions

(4,040)

-

Other, net

1,826

16

  Cash provided by/(used by) financing activities

730,912

(19,637)

Effect of exchange rate changes on cash

(9,850)

(3,489)

Net increase in cash and equivalents

3,981

180,797

Cash and equivalents, beginning of period

370,590

338,101

Cash and equivalents, end of period

$374,571

$518,898

 

ROPER INDUSTRIES INC.

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

(Amounts in thousands, except per share data)

Adjustments

Sunquest Fair Value

MHA Purchase

Special Charge

2013

2013

Adjustment

Accounting

Related to

2nd Quarter

2nd Quarter

to Acquired

Adjustment

Vendor-Supplied

Adjusted 

GAAP

Deferred Revenue

To Revenue

Component

Non-GAAP

Net Orders

$             816,511

$                                 -

$          18,540

$                         -

$            835,051

Net Sales

$             784,010

$                        2,380

$          18,540

$                         -

$            804,930

Cost of Sales

338,503

-

-

338,503

Gross Profit

445,507

2,380

18,540

466,427

Selling, general and administrative expenses

245,027

-

-

(9,100)

235,927

Segment income from operations

200,480

2,380

18,540

9,100

230,500

Corporate general and administrative expenses

20,734

-

-

-

20,734

Income from operations

179,746

2,380

18,540

9,100

209,766

Interest Expense

22,361

-

-

-

22,361

Other income (expense)

2,536

-

-

-

2,536

Earnings from continuing operations before income taxes

159,921

2,380

18,540

9,100

189,941

Income Taxes (1)

48,568

833

6,489

3,185

59,075

  Tax Rate

30.4%

35.0%

35.0%

35.0%

31.1%

Net Earnings

$             111,353

$                        1,547

$          12,051

$                5,915

$            130,866

Weighted average common shares outstanding

100,162

100,162

Diluted earnings per share

$                    1.11

$                   1.31

(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.



RELATED LINKS

http://www.roperind.com