Roper Industries Announces Record Third Quarter Results

Substantial Increases in Orders, Revenue and Net Earnings

Operating Cash Flow Increased 25% to $256 million

Oct 28, 2013, 07:00 ET from Roper Industries, Inc.

SARASOTA, Fla., Oct. 28, 2013 /PRNewswire/ -- Roper Industries, Inc. (NYSE: ROP) reported financial results for the third quarter ended September 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. 

Third quarter GAAP net earnings increased 17% to $136 million compared to $117 million in the comparable period in the prior year.  Adjusted net earnings were $142 million, a 15% increase from the prior year.  Third quarter GAAP diluted earnings per share were $1.36 and adjusted diluted earnings per share were $1.42, within the company's guidance of $1.40 - $1.46.  Orders increased 18% to $846 million.  GAAP revenue increased 11% to $828 million and adjusted revenue increased 11% to $837 million

GAAP gross margin increased 260 basis points to 58.3% and adjusted gross margin increased to 58.7%, a 280 basis point gain over the prior year.  Operating cash flow in the quarter was $256 million, a 25% increase over the prior year.  

"We are pleased to deliver record third quarter results with strong operating performance, exceptional margins and outstanding cash flow," said Brian Jellison, Roper's Chairman, President and CEO.  "Orders increased 18%, including 7% organic growth in the quarter and backlog increased to a record $1.04 billion.  Organic revenue increased 3%, slightly below our expectations, primarily due to declines in our nuclear test business and lower than expected growth in energy end markets.  We posted record margin performance and exceptional cash flow, with free cash flow of $244 million."

On October 4, 2013, the company completed the acquisition of Advanced Sensors Ltd, a leading technology provider of instrumentation and detection solutions for offshore oil and gas applications, for £34 million.  "Advanced Sensors adds new technology and capabilities to our PAC business," said Mr. Jellison.  "We continue to have an attractive pipeline of acquisition opportunities and are well positioned with well over $1 billion of cash and available liquidity."

2013 Outlook and Guidance

Roper is reaffirming that it expects operating cash flow for 2013 to exceed $800 million as a result of its continued strong margin and cash performance.

"We believe that growth in energy and select other markets will be slower than anticipated in the fourth quarter and, as such, we are updating our revenue and diluted earnings per share guidance for the full year," said Mr. Jellison.  "We now expect fourth quarter revenue to increase 7% - 9% compared to last year, including organic growth of 3% - 4%.  We expect full year adjusted diluted earnings per share to be in the range of $5.57 - $5.63 compared to our previous guidance of $5.72 - $5.86.  Fourth quarter adjusted diluted earnings per share is expected to be $1.57 - $1.63." 

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, October 28, 2013.  The call can be accessed via webcast or by dialing +1 888-389-5988 (US/Canada) or +1 719-325-2454, using confirmation code 1799585.  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 1799585.

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: Third Quarter Revenue Growth

GAAP

Adjusted

Acquisitions / Divestitures

8%

9%

Organic

3%

3%

Foreign Currency

-

-

Rounding

---

(1%)

Total Revenue Growth

11%

11%

 

Table 2: Third Quarter Adjusted Diluted Earnings Per Share

Q3 2013

GAAP Diluted Earnings Per Share

$1.36

Add: Purchase Accounting Adjustment for Acquired

Revenue (Sunquest, MHA)

0.06

Adjusted Diluted Earnings Per Share

$1.42

 

Table 3: Free Cash Flow

Q3 2013

Q3 2012

Operating Cash Flow

$255.8

$205.4

Less:  Capital Expenditures

(11.5)

(8.7)

Free Cash Flow

$244.3

$196.7

 

Table 4: Full Year 2013 Adjusted Diluted Earnings Per Share Guidance

Low End

High End

GAAP Diluted Earnings Per Share Guidance

$5.25

$5.34

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

$5.56

$5.63

Previous Adjusted Diluted Earnings Per Share Guidance

$5.72

$5.86

 

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)

September 30,

December 31,

ASSETS

2013

2012

CURRENT ASSETS:

  Cash and cash equivalents

$        459,980

$       370,590

  Accounts receivable, net

505,284

526,408

  Inventories, net

204,722

190,867

  Unbilled receivable

85,375

72,193

  Deferred taxes

88,421

41,992

  Other current assets

45,417

43,492

    Total current assets

1,389,199

1,245,542

PROPERTY, PLANT AND EQUIPMENT, NET

117,785

110,397

OTHER ASSETS:

  Goodwill

4,541,772

3,868,857

  Other intangible assets, net

2,051,685

1,698,867

  Deferred taxes

68,048

78,644

  Other assets

77,086

68,797

    Total other assets

6,738,591

5,715,165

TOTAL ASSETS

$     8,245,575

$    7,071,104

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

  Accounts payable

$        142,987

$       138,340

  Accrued compensation

100,901

110,724

  Deferred revenue

212,275

185,912

  Other accrued liabilities

153,293

128,351

  Deferred taxes

12,431

3,868

  Current portion of long-term debt

12,250

519,015

    Total current liabilities

634,137

1,086,210

NONCURRENT LIABILITIES:

  Long-term debt

2,593,607

1,503,107

  Deferred taxes

862,986

707,278

  Other liabilities

92,032

86,783

    Total liabilities

4,182,762

3,383,378

STOCKHOLDERS' EQUITY:

  Common stock

1,013

1,006

  Additional paid-in capital

1,219,648

1,158,001

  Retained earnings

2,813,356

2,489,858

  Accumulated other comprehensive earnings

48,318

58,537

  Treasury stock

(19,522)

(19,676)

    Total stockholders' equity

4,062,813

3,687,726

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$     8,245,575

$    7,071,104

  

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,

2013

2012

2013

2012

Net sales

$ 827,810

$  747,641

$ 2,348,955

$ 2,183,579

Cost of sales

345,185

331,086

999,247

978,223

Gross profit

482,625

416,555

1,349,708

1,205,356

Selling, general and administrative expenses

263,276

233,298

765,436

673,011

Income from operations

219,349

183,257

584,272

532,345

Interest expense

24,705

16,456

67,924

47,016

Loss on extinguishment of debt

-

(1,043)

-

(1,043)

Other income/(expense)

409

(1,380)

453

(2,444)

Earnings from continuing operations before

   income taxes

195,053

164,378

516,801

481,842

Income taxes

58,730

47,670

144,211

142,012

Net Earnings

$136,323

$116,708

$   372,590

$   339,830

Earnings per share:

  Basic

$       1.37

$       1.19

$          3.76

$          3.49

  Diluted

$       1.36

$       1.17

$          3.72

$          3.41

Weighted average common and common

  equivalent shares outstanding:

    Basic

99,207

97,876

99,058

97,460

    Diluted

100,302

99,757

100,152

99,543

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,

2013

2012

2013

2012

Amount

%

Amount

%

Amount

%

Amount

%

Net sales:

  Industrial Technology

$200,684

$199,008

$   580,466

$   598,088

  Energy Systems & Controls

155,058

158,169

456,031

461,508

  Medical & Scientific Imaging

237,338

172,475

645,739

486,207

  RF Technology

234,730

217,989

666,719

637,776

    Total

$827,810

$747,641

$2,348,955

$2,183,579

Gross profit:

  Industrial Technology

$101,259

50.5%

$102,569

51.5%

$   296,414

51.1%

$   304,002

50.8%

  Energy Systems & Controls

88,104

56.8%

87,782

55.5%

256,431

56.2%

254,325

55.1%

  Medical & Scientific Imaging

167,433

70.5%

112,013

64.9%

440,718

68.3%

314,411

64.7%

  RF Technology

125,829

53.6%

114,191

52.4%

356,145

53.4%

332,618

52.2%

    Total

$482,625

58.3%

$416,555

55.7%

$1,349,708

57.5%

$1,205,356

55.2%

Operating profit*:

  Industrial Technology

$  60,753

30.3%

$  60,628

30.5%

$   164,278

28.3%

$   180,211

30.1%

  Energy Systems & Controls

41,076

26.5%

42,890

27.1%

118,432

26.0%

118,749

25.7%

  Medical & Scientific Imaging

71,968

30.3%

46,190

26.8%

179,433

27.8%

125,231

25.8%

  RF Technology

66,469

28.3%

58,002

26.6%

183,828

27.6%

166,516

26.1%

    Total

$240,266

29.0%

$207,710

27.8%

$   645,971

27.5%

$   590,707

27.1%

Net Orders:

  Industrial Technology

$197,549

$191,955

$   581,862

$   598,077

  Energy Systems & Controls

148,922

147,304

466,414

458,455

  Medical & Scientific Imaging

262,320

177,528

688,673

494,250

  RF Technology

229,484

202,959

711,419

661,826

    Total

$838,275

$719,746

$2,448,368

$2,212,608

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

       were $20,917 and $24,453 for the three months ended September 30, 2013 and 2012, respectively and

       $61,699 and $58,362 for the nine months ended September 30, 2013 and 2012, respectively.

  

Roper Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(Amounts in thousands)

Nine months ended

September 30,

2013

2012

Net earnings

$  372,590

$  339,830

Non-cash items:

Depreciation

28,269

28,402

Amortization

111,210

82,398

Stock-based compensation expense

40,040

30,143

Income taxes

(12,643)

(14,258)

Changes in assets and liabilities:

Receivables

29,844

3,987

Inventory

(15,202)

(2,985)

Accounts payable

3,557

5,041

Accrued liabilities

9,498

(13,658)

Other, net

(390)

7,314

  Cash provided by operating activities

566,773

466,214

Business acquisitions, net of cash acquired

(1,014,952)

(1,445,549)

Capital expenditures

(33,349)

(29,236)

Other, net

1,596

654

  Cash used by investing activities

(1,046,705)

(1,474,131)

Principal debt borrowings

800,000

-

Principal debt payments

(502,115)

(26,826)

Revolver borrowings, net

290,000

1,050,000

Debt issuance costs

(7,717)

(4,551)

Dividends

(32,706)

(40,102)

Excess tax benefit from share-based payment

7,763

19,873

Proceeds from stock-based compensation, net

16,839

40,105

Premium on convertible debt conversions

(5,100)

(19,149)

Other, net

2,556

644

  Cash provided by financing activities

569,520

1,019,994

Effect of exchange rate changes on cash

(198)

4,931

Net increase in cash and equivalents

89,390

17,008

Cash and equivalents, beginning of period

370,590

338,101

Cash and equivalents, end of period

$459,980

$355,109

  

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

2013

2013

Adjustment

Accounting

3rd Quarter

3rd Quarter

to Acquired

Adjustment

Adjusted 

GAAP

Deferred Revenue

To Revenue

Non-GAAP

Net Orders

$    838,275

$                              -

$            7,893

$    846,168

Net Sales

$    827,810

$                      1,007

$            7,893

$    836,710

Cost of Sales

345,185

-

-

345,185

Gross Profit

482,625

1,007

7,893

491,525

Selling, general and administrative expenses

242,359

-

-

242,359

Segment income from operations

240,266

1,007

7,893

249,166

Corporate general and

administrative expenses

20,917

-

-

20,917

Income from operations

219,349

1,007

7,893

228,249

Interest Expense

24,705

-

-

24,705

Other income (expense)

409

-

-

409

Earnings from continuing operations

before income taxes

195,053

1,007

7,893

203,953

IncomeTaxes (1)

58,730

352

2,763

61,845

  Tax Rate

30.1%

35.0%

35.0%

30.3%

Net Earnings

$    136,323

$                          655

$            5,130

$    142,108

Weighted average common shares outstanding

100,302

100,302

Diluted earnings per share

$           1.36

$           1.42

(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