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2014

Roper Industries Announces Record Third Quarter Results

Substantial Increases in Orders, Revenue and Net Earnings

Operating Cash Flow Increased 25% to $256 million

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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

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