Roper Industries Announces Record Third Quarter Results

Net Earnings Increase 49%; Sales Increase 25%; Orders Increase 31%; Operating Cash Flow Increases 60%; Guidance Raised

Oct 25, 2010, 07:00 ET from Roper Industries, Inc.

SARASOTA, Fla., Oct. 25 /PRNewswire-FirstCall/ -- Roper Industries, Inc. (NYSE: ROP) reported record results for its third quarter ended September 30, 2010.  

Net earnings for the third quarter were $84 million, a 49% increase over the third quarter of 2009, and diluted earnings per share (DEPS) were $0.87 compared to $0.61 in the prior year third quarter. Orders increased 31% to $654 million and sales increased 25% to $605 million, representing a 1.08 book-to-bill ratio.  Operating Cash Flow was a record $139 million.  

Free cash flow represented 21.9% of sales and 158% of net earnings.  Third quarter gross margin expanded 260 basis points to 53.2% and operating margin increased 230 basis points to 21.2%.  EBITDA grew to $163 million, or 27.0% of sales.  

“Roper performed exceptionally well in the third quarter,” said Brian Jellison, Roper’s Chairman, President and CEO.  “We achieved record levels in orders, sales, net earnings, DEPS, EBITDA and cash flow.  Our continued growth in orders and backlog gives us confidence that we will finish 2010 with record performance and enter 2011 with significant momentum.”

Third quarter results include the acquisition of iTradeNetwork which was completed on July 27, 2010.  “Our integration and international market development with iTradeNetwork is off to a good start, and we are excited about the growth prospects we see in all of our software businesses,” said Mr. Jellison.  “We saw substantial order growth in our businesses, led by Medical & Imaging (+81%), Industrial Technology (+35%) and Energy Systems & Controls (+29%).  Our backlog finished the third quarter at a record $770 million, up 39% from the prior year.”

Fourth Quarter and Full Year Guidance

Roper is increasing its full year DEPS guidance to $3.22-$3.26 from $3.05-$3.15, and establishing fourth quarter DEPS guidance of $0.96-$1.00.  The Company is increasing its guidance for operating cash flow to $465-$485 million from $425-$450 million.  The Company’s guidance excludes future acquisitions and the first quarter impact of acquisition-related inventory charges.

Table 1:

Q3 Sales Growth

Q3 Orders Growth

Organic Growth

13.7%

19.6%

Acquisitions / Divestitures

11.9%

12.6%

Foreign Exchange

(1.0%)

(1.1%)

Total Growth

24.6%

31.1%

Table 2:  Free Cash Flow (millions)

Q3 2010

Sales (A)

605.1

Net Earnings (B)

84.3

Operating Cash Flow

$139.1

Less: Capital Expenditures

(6.3)

Free Cash Flow (C)

$132.8

Free Cash Flow as % of Net Earnings (C)/(B)

158%

Free Cash Flow as % of Q2 Revenue (C)/(A)

22%

Table 3:  EBITDA (millions)

Q3 2010

Net Earnings

$84.3

Add: Interest Expense

17.1

Add: Income Taxes

29.5

Add: Depreciation and Amortization

32.2

EBITDA

$163.1

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 25, 2010. The call can be accessed via webcast or by dialing +1 888-280-4443 (US/Canada) or +1 719-325-2106, using confirmation code 4932667.  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 4932667.

About Roper Industries

Roper Industries is a market-driven, 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, radio frequency and research/medical applications.  Additional information about Roper Industries 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

2010

2009

CURRENT ASSETS:

 Cash and cash equivalents

$          250,813

$        167,708

 Accounts receivable

378,323

381,658

 Inventories

180,929

178,795

 Deferred taxes

28,941

27,306

 Unbilled receivable

76,928

57,153

 Other current assets

41,708

58,125

   Total current assets

957,642

870,745

PROPERTY, PLANT AND EQUIPMENT, NET

105,878

109,493

OTHER ASSETS:

 Goodwill

2,727,249

2,388,432

 Other intangible assets, net

1,128,435

868,900

 Deferred taxes

60,828

33,123

 Other assets

76,095

57,043

   Total other assets

3,992,607

3,347,498

TOTAL ASSETS

$       5,056,127

$     4,327,736

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

 Accounts payable

$          134,316

$        110,103

 Accrued liabilities

269,309

253,441

 Income taxes payable

-

-

 Deferred taxes

9,933

1,671

 Current portion of long-term debt

95,788

112,796

   Total current liabilities

509,346

478,011

NONCURRENT LIABILITIES:

 Long-term debt

1,380,742

1,040,962

 Deferred taxes

466,356

328,299

 Other liabilities

63,308

58,974

   Total liabilities

2,419,752

1,906,246

STOCKHOLDERS' EQUITY:

 Common stock

967

958

 Additional paid-in capital

1,019,993

982,321

 Retained earnings

1,583,997

1,395,586

 Accumulated other comprehensive earnings

52,514

63,945

 Treasury stock

(21,096)

(21,320)

   Total stockholders' equity

2,636,375

2,421,490

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$       5,056,127

$     4,327,736

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,

2010

2009

2010

2009

Net sales

$ 605,088

$ 485,676

$ 1,706,633

$ 1,496,030

Cost of sales

283,339

240,156

803,372

744,304

Gross profit

321,749

245,520

903,261

751,726

Selling, general and administrative expenses

193,516

153,648

555,125

477,098

Income from operations

128,233

91,872

348,136

274,628

Interest expense

17,134

14,437

49,608

41,708

Other income

2,631

105

1,421

2,917

Earnings from continuing operations before

  income taxes

113,730

77,540

299,949

235,837

Income taxes

29,467

21,130

84,680

68,280

Net Earnings

$   84,263

$   56,410

$    215,269

$    167,557

Earnings per share:

 Basic

$       0.89

$       0.62

$          2.29

$          1.85

 Diluted

$       0.87

$       0.61

$          2.23

$          1.81

Weighted average common and common

 equivalent shares outstanding:

   Basic

94,312

90,877

94,046

90,526

   Diluted

96,671

92,908

96,374

92,635

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,

2010

2009

2010

2009

Amount

%

Amount

%

Amount

%

Amount

%

Net sales:

Industrial Technology

$ 161,205

$ 130,538

$    442,007

$    397,730

Energy Systems & Controls

123,458

102,988

348,523

314,997

Scientific & Industrial Imaging

134,434

78,934

393,192

238,914

RF Technology

185,991

173,216

522,911

544,389

Total

$ 605,088

$ 485,676

$ 1,706,633

$ 1,496,030

Gross profit:

Industrial Technology

$   82,383

51.1%

$   62,060

47.5%

$    223,825

50.6%

$    190,501

47.9%

Energy Systems & Controls

65,590

53.1%

52,464

50.9%

183,884

52.8%

164,123

52.1%

Scientific & Industrial Imaging

82,610

61.5%

44,169

56.0%

238,427

60.6%

132,385

55.4%

RF Technology

91,166

49.0%

86,827

50.1%

257,125

49.2%

264,717

48.6%

Total

$ 321,749

53.2%

$ 245,520

50.6%

$    903,261

52.9%

$    751,726

50.2%

Operating profit*:

Industrial Technology

$   44,954

27.9%

$   30,547

23.4%

$    115,462

26.1%

$      91,614

23.0%

Energy Systems & Controls

28,611

23.2%

19,214

18.7%

76,606

22.0%

59,926

19.0%

Scientific & Industrial Imaging

31,193

23.2%

14,818

18.8%

88,323

22.5%

43,300

18.1%

RF Technology

37,155

20.0%

38,918

22.5%

104,060

19.9%

115,724

21.3%

Total

$ 141,913

23.5%

$ 103,497

21.3%

$    384,451

22.5%

$    310,564

20.8%

Operating profit excluding restructuring*:

Industrial Technology

$   44,954

27.9%

$   31,494

24.1%

$    115,462

26.1%

$      95,931

24.1%

Energy Systems & Controls

28,611

23.2%

20,503

19.9%

76,606

22.0%

63,739

20.2%

Scientific & Industrial Imaging

31,193

23.2%

15,195

19.3%

88,323

22.5%

44,797

18.8%

RF Technology

37,155

20.0%

38,976

22.5%

104,060

19.9%

116,542

21.4%

Total

$ 141,913

23.5%

$ 106,168

21.9%

$    384,451

22.5%

$    321,009

21.5%

Net Orders:

Industrial Technology

$ 169,887

$ 125,776

$    488,665

$    391,049

Energy Systems & Controls

135,224

104,593

377,484

298,551

Scientific & Industrial Imaging

152,499

84,329

418,874

235,433

RF Technology

196,265

184,243

555,427

534,251

Total

$ 653,875

$ 498,941

$ 1,840,450

$ 1,459,284

*  Operating profit is before unallocated corporate general and administrative expenses.  These expenses were $13,680 and $11,625 for the three months ended September 30, 2010 and 2009, respectively and $36,315 and $35,936 for the nine months ended September 30, 2010 and 2009, respectively.

Roper Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(Amounts in thousands)

Nine months ended

September 30,

2010

2009

Net earnings

$ 215,269

$ 167,557

Non-cash items:

Depreciation

27,271

25,828

Amortization

61,430

51,280

Stock-based compensation expense

19,384

20,821

Income taxes

10,943

(24,146)

Changes in assets and liabilities:

Receivables

(13,118)

53,303

Inventory

(7,277)

14,496

Accounts payable

22,549

(22,354)

Accrued liabilities

10,561

(42,375)

Other, net

(2,594)

3,439

 Cash provided by operating activities

344,418

247,849

Business acquisitions, net of cash acquired

(536,413)

(1,248)

Capital expenditures

(20,391)

(18,708)

Other, net

1,815

6,983

 Cash used by investing activities

(554,989)

(12,973)

Principal debt borrowings

-

500,000

Principal debt payments

(20,123)

(466,186)

Revolver borrowings (payments), net

318,000

(179,000)

Debt issuance costs

-

(4,310)

Dividends

(26,722)

(22,343)

Excess tax benefit from share-based payment

4,287

1,055

Proceeds from exercise of stock options

16,955

4,845

Other, net

922

(604)

 Cash provided/(used) by financing activities

293,319

(166,543)

Effect of exchange rate changes on cash

357

9,622

Net increase in cash and equivalents

83,105

77,955

Cash and equivalents, beginning of period

167,708

178,069

Cash and equivalents, end of period

$250,813

$256,024

SOURCE Roper Industries, Inc.



RELATED LINKS

http://www.roperind.com