Roper Technologies, Inc. Q Financial Results

Transcription

1 Roper Technologies, Inc. Q Financial Results February 1, 2016

2 Safe Harbor Statement The information provided in this presentation 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, profit and cash flow expectations. Forward-looking statements A Diversified Growth Company 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 Click include our ability to integrate edit our acquisitions Master and realize expected title synergies. style 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. We refer to certain non-gaap financial measures in this presentation. Reconciliations of these non-gaap financial measures to the most directly comparable GAAP financial measures can be found within this presentation. 2

3 Reg. G Disclosure Today s Conference Call Will Discuss Income Statement Results Primarily on an Adjusted (Non-GAAP) Basis. The Q Adjusted Results Exclude the Following Items: A Diversified Growth Company (1) Gain on Sale of Abel Pumps, Offset by Impairment Click Charge to on Minority edit Investment Master title style (2) Purchase Accounting Adjustment to Acquired Deferred Revenue (3) Acquisition-Related Inventory Step-Up Charge See Appendix for Reconciliation from GAAP to Adjusted Results 3

4 Roper Conference Call» Q4 and FY Enterprise Financial Results A Diversified Growth Company» Segment Detail & Outlook» Q1 and FY 2016 Guidance Click to edit Master title style» Q&A 4

5 Q4 Enterprise Results 5

6 Q Enterprise Highlights» Revenue: $948M, Flat to Last Year Organic (4%), FX Headwind (2%), Acquisitions/Divestitures +6% Declines in Industrial and Energy Segments Strong Growth in Medical and RF Technology Segments» Gross Margin +190 Bps to 61.8%» EBITDA Margin +60 Bps to 35.9%» EBITDA +2% to $341M» Free Cash Flow +3% to $261M; 140% Conversion» Completed $900M Bond Issuance in December» Deployed over $700M in Acquisitions; Abel Sale Completed Good Execution; Disciplined Capital Deployment Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 6

7 Q4 Income Statement In $ Millions Note: Amounts may not total due to rounding Q4 14 Q4 15 Orders $924 $924 Book-to-Bill: 0.98x A Diversified Growth Company Revenue $948 $948 Flat Gross Profit $568 $586 +3% Gross Margin 59.9% 61.8% +190 Bps Click to edit Master title style Operating Income $286 $285 Operating Margin 30.1% 30.1% Higher Amortization (70 bps) Interest Expense $19 $24 $900M Bond Issuance Other Income/(Expense) $(0) $0 Earnings Before Tax $266 $261 Tax Rate 29.6% 28.8% Net Earnings $187 $186 (1%) DEPS $1.85 $1.82 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 7

8 Full Year Enterprise Results 8

9 2015 Enterprise Highlights Achieved Record Annual Results Orders, Revenue, Margins, Net Earnings, EBITDA, Cash Flow Growth Led by Medical and RF Segments Continued Margin Improvement Gross Margin Bps to 60.7% Operating Margin + 80 Bps to 29.0% Strong Cash Flow Growth Operating Cash Flow +11%; 26% of Revenue Free Cash Flow +11%; 132% Conversion Deployed $1.8 Billion in Acquisitions Continued Focus on Software and Medical High Margin, Asset-Light, Leaders in Niche Markets with High Recurring Revenue and Strong Management Teams Recent Acquisitions Growing 10%+ Nimble Execution and Capital Deployment Drove Record Year Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 9

10 2015 Full Year Revenue Bridge In $ Millions 3,900 +7% (3%) (3%) 3, (35) 3,700 3,600 3,500 $3, RF Segment Organic + 39 Medical Segment Organic Acquisitions / Divestitures Industrial Segment Organic (72) Energy Segment Organic (104) Foreign Exchange $3,593 3,400 3, Revenue Growth Before Impact of FX 2015 Revenue Strong Execution Despite FX and Energy Market Declines Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 10

11 Outstanding Margins In $ Millions Full Year Gross Margin Full Year EBITDA Margin +210 Bps +180 Bps 58.6% 59.3% 60.7% 32.8% 33.8% 34.6% Continued Margin Expansion Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 11

12 Compounding Cash Flow In $ Millions Full Year Operating Cash Flow» Q4 Operating Cash Flow: $269M 145% Conversion» Q4 Free Cash Flow: $261M 3% Increase 27% of Revenue» Full Year Free Cash Flow: $893M 11% Increase 132% Conversion $ % $929 Notes: Free Cash Flow = Operating Cash Flow Capital Expenditures; Conversion Calculated Using Adjusted Net Income We Believe Cash is the Best Measure of Performance Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 12

13 Strong Financial Position In $ Millions 12/31/14 12/31/15 Cash $610 $779 Undrawn Revolver $1,500 $1,670 Gross Debt $2,214 $3,289 Net Debt $1,604 $2,510 Shareholders Equity $4,755 $5,299 TTM EBITDA $1,201 $1,245 Net Debt-to-EBITDA (TTM) 1.3x 2.0x $900M Bond Issuance; Revolver Upsized; Ample Liquidity Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 13

14 Segment Detail & Outlook 14

15 2015 Segment Results In $ Millions $1,223 $1,037 $588 $745 Revenue $183 $234 $376 $556 EBITDA* EBITDA Margin Energy Ind Tech RF Medical 31% 31% 36% 45% * Excludes Corporate Expenses Excellent Segment Margins; Medical and RF ~70% of EBITDA Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 15

16 Medical Solutions ($M) Q4 15 V to PY Revenue $ % Op Profit $ % OP Margin 36.6% +110 bps Q Organic Revenue +3%, Acq. +12%, FX (3%) 2014 Acquisitions SHP and IPA Each Delivered A Diversified Double Growth Digit Company Growth in Their First Organic Quarter Verathon Strong on New Product Sales Northern Digital Continued Excellent Year with Strong Revenue Growth and Record Backlog Click to edit Master title style Atlas Medical Integration with Sunquest On Track Medical % of Roper 2015 EBITDA* 41% 41% * Excludes Corporate Expenses FY 2016 Expect Mid Single Digit Organic Growth Segment Organic Growth Strengthens Throughout the Year Sunquest New Software Releases in Second Half 2015 Acquisitions (Strata, Data Innovations and SoftWriters) Become Organic in Q2 Verathon and Northern Digital Drive Medical Device Growth CliniSys Acquisition Closed on January 7 th ; European Hospital Laboratory Software Provider Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 16

17 RF Technology ($M) Q4 15 V to PY Revenue $ % Op Profit $88 +30% OP Margin 31.1% +270 bps Organic Revenue +4%, FX (1%), Acq./Div. +15% Aderant Acquired in October, Off to Great Start Software Performed Exceptionally Well Led By A Diversified Growth Company Q Freight Matching and itrade Toll & Traffic Projects Progressing Well Infinity Lanes in Florida and Texas Click to edit Master title style Riyadh Traffic Control RF Technology % of Roper 2015 EBITDA* 27% 28% * Excludes Corporate Expenses FY 2016 Expect Mid Single Digit Organic Growth for Year; Stronger in Second Half Record Backlog and Strong Project Outlook for Toll & Traffic Easier Comps in Second Half Software Businesses Grow Mid Single Digits with Exceptional Margins Recent Acquisitions, Aderant, RF Ideas and On Center Software, Contribute Strong Growth and Excellent Cash Flow Performance Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 17

18 Industrial Technology ($M) Q4 15 V to PY Revenue $182 (17)% Op Profit $52 (24)% OP Margin 28.7% (270) bps Organic Revenue (8%), FX (3%), Divest. (6%) Completed Abel Divestiture A Diversified Growth Company Q Neptune Grew Double Digits in the U.S.; Toronto Project Completion Headwind Remains Continued Declines in Upstream Oil & Gas Click to edit Master title style Industrial Technology % of Roper 2015 EBITDA* FY 2016 Expect Low Single Digit Organic Growth for Segment 17% 17% 20% Upstream O&G Declines 30% (~$20M) Neptune U.S. Growth Continues and Toronto Headwind Eases After Q1 Low Single Digit Growth in Other End Markets * Excludes Corporate Expenses Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 18

19 Energy Systems & Controls ($M) Q4 15 V to PY Revenue $158 (21)% Op Profit $52 (28)% OP Margin 32.7% (340) bps Q Organic Revenue (17%), FX (4%) Q4 Seasonal Improvement Less Than Expected A Diversified Growth Company Reduced Backlogs in Oil & Gas Project Businesses Strong Growth in Zetec Nuclear Business Click to edit Master title style Operating Margin Still Impressive at 32.7% Energy % of Roper 2015 EBITDA* 14% FY 2016 Expect High Single Digit Organic Decline for Segment Oil & Gas Remains Weak, Down (~15%) Project Activity Continues to Decline; Large Impact to Compressor Controls Modest Growth in Other Areas Led By Nuclear and Industrial Markets * Excludes Corporate Expenses Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 19

20 2016 Guidance 20

21 2016 Revenue Outlook In $ Millions Note: Excludes Future Acquisitions (HSD) Organic +8-10% $3,593 +MSD Organic RF Segment +MSD Organic Medical Segment +LSD Organic Industrial Segment Completed Acquisitions / Divestitures Energy Segment Foreign Exchange Growth Before Impact of FX 2015 Revenue 2016 Revenue Total Revenue Up 8-10%; Organic Revenue Up 2-4% Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 21

22 2016 Guidance Established» Full Year Operating Cash Flow ~ $1.0B A Diversified Growth Company» Full Year Adjusted DEPS: $6.85 $7.15 Key Assumptions: Click to edit Master title style Revenue Growth: 8 10% ; Organic 2 4%, Comps ease after Q1 Non-Cash Amortization +$30M to $195M Interest Expense +$25M to $109M Tax Rate 30.0% % Excludes Future Acquisitions or Divestitures» Q1 Adjusted DEPS: $1.42 $

23 2015 Summary / 2016 Outlook Full Year 2015 Record Annual Results: Orders, Revenue, Margins, Net Earnings, EBITDA, Cash Flow Operating Cash Flow +11%; Free Cash Flow +11% Significant Financial Achievements: Gross Margin Bps to 60.7% EBITDA Margin + 80 Bps to 34.6% Free Cash Flow of $893M; 25% of Revenue, 132% Conversion Deployed $1.8 Billion in Acquisitions Increased Dividend 20% 2016 Outlook Record Performance Expected Revenue Growth: 8 10%; Operating Cash Flow ~ $1 Billion Expect to Deploy Over $1 Billion in Acquisitions CliniSys Acquisition Closed in January; Pipeline Attractive Compounding Cash and Shareholder Value Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 23

24 Appendix 24

25 Reconciliations I Q Revenue Growth Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology Roper Organic Growth (8)% (17)% 3% 4% (4)% A Diversified Growth Company Acquisitions/Divestitures (6)% - 12% 15% 6% Foreign Exchange (3)% (4)% (3)% (1)% (2)% Rounding Total Revenue Click Growth to (17)% edit (21)% Master 12% 18% title style - Q Orders Growth Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology Roper Organic Growth (4)% (28)% 7% (3)% (6)% Acquisitions/Divestitures (4)% - 15% 17% 8% Foreign Exchange (4)% (3)% (3)% (1)% (3)% Rounding 1% % Total Orders Growth (11)% (31)% 19% 13% - 25

26 Reconciliations II (in Thousands) Q Margin Reconciliation Industrial Technology Energy Systems & Controls A Diversified Growth Company Medical & Scientific Imaging RF Technology GAAP Revenue $182,039 $157,983 $321,735 $281,883 Add: DI / SWI / Strata / Atlas Adj 0 0 1,821 0 Add: On Center / RF IDeas / Aderant Adj ,170 Adjusted Revenue 182, , , ,053 Click to edit Master title style GAAP Gross Profit 89,842 95, , ,731 Add: DI / SWI / Strata / Atlas Adj 0 0 1,821 0 Add: On Center / RF IDeas / Aderant Adj ,767 Adjusted Gross Profit 89,842 95, , ,498 GAAP Operating Profit 52,155 51, ,492 83,591 Add: DI / SWI / Strata / Atlas Adj 0 0 1,821 0 Add: On Center / RF IDeas / Aderant Adj ,767 Adjusted Operating Profit 52,155 51, ,313 88,358 Add Amortization 2,263 3,948 24,457 15,642 EBITA 54,418 55, , ,000 Add Depreciation 2,577 1,480 2,945 2,683 EBITDA 56,995 57, , ,683 26

27 Reconciliations III (in Thousands) Q Margin Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology GAAP Revenue $219,642 $200,009 $286,410 $240,084 Add: SHP Purchase Accounting Adjustment to Acquired Deferred Revenue Add: FoodLink Purchase Accounting Adjustment to Acquired Deferred Revenue A Diversified Growth Company 0 0 1, Adjusted Revenue Click to edit 219,642 Master 200,009 title 287,614 style 240,264 GAAP Operating Profit 69,056 72, ,488 67,994 Add: SHP Purchase Accounting Adjustment to Acquired Deferred Revenue Add: FoodLink Purchase Accounting Adjustment to Acquired Deferred Revenue Add: IPA Acquisition Related Inventory Step-up Charge 0 0 1, Adjusted Operating Profit 69,056 72, ,117 68,174 Add Amortization 2,266 4,289 21,150 11,510 EBITA 71,322 76, ,267 79,684 Add Depreciation 2,953 1,563 3,071 2,722 EBITDA 74,275 78, ,338 82,406 27

28 Reconciliations IV (in Thousands) Full Year 2015 Margin Reconciliation Industrial Technology Energy Systems & Controls A Diversified Growth Company Medical & Scientific Imaging RF Technology GAAP Revenue $745,381 $587,745 $1,215,318 $1,033,951 Add: SHP / DI / SWI / Strata / Atlas Adj 0 0 7,831 0 Add: FL / On Center / RF IDeas / Aderant Adj ,786 Adjusted Revenue 745, ,745 1,223,149 1,036,737 Click to edit Master title style GAAP Gross Profit 370, , , ,605 Add: SHP / DI / SWI / Strata / Atlas Adj 0 0 7,831 0 Add: FL / On Center / RF IDeas / Aderant Adj ,346 Adjusted Gross Profit 370, , , ,951 GAAP Operating Profit 214, , , ,112 Add: SHP / DI / SWI / Strata / Atlas Adj 0 0 7,831 0 Add: FL / On Center / RF IDeas / Aderant Adj ,346 Adjusted Operating Profit 214, , , ,458 Add Amortization 9,044 16,158 94,433 46,441 EBITA 223, , , ,899 Add Depreciation 10,868 5,096 11,495 10,436 EBITDA 234, , , ,335 28

29 Reconciliations V (in Thousands) Full Year 2014 Margin Reconciliation Industrial Technology Energy Systems & Controls A Diversified Growth Company Medical & Scientific Imaging RF Technology GAAP Revenue $827,145 $691,813 $1,080,309 $950,227 Add: SHP / IPA Adjustments 0 0 1,970 0 Add: FoodLink Adjustments Adjusted Revenue 827, ,813 1,082, ,587 Click to edit Master title style GAAP Gross Profit 417, , , ,637 Add: SHP / IPA Adjustments 0 0 2,819 0 Add: FoodLink Adjustments Adjusted Gross Profit 417, , , ,997 GAAP Operating Profit 247, , , ,177 Add: SHP / IPA Adjustments 0 0 2,819 0 Add: FoodLink Adjustments Adjusted Operating Profit 247, , , ,537 Add Amortization 9,085 17,614 81,841 47,854 EBITA 256, , , ,391 Add Depreciation 12,050 5,667 11,842 10,848 EBITDA 268, , , ,239 29

30 Reconciliations VI Full Year 2015 Reconciliation of GAAP to Adjusted; Revenue, Gross Profit, and EBITDA Adjustments (All Numbers are In Thousands) Full Year 2015 GAAP Purchase Accounting Adjustments to Write-Down of A Diversified Adjustments to Growth Company Acquired Deferred Revenue Purchase Accounting Acquired Inventory Investment Gain on Sale of Business Full Year 2015 Adjusted Net Sales $3,582,395 $10, $3,593,012 Click to edit Master title style Gross Profit $2,164,646 $10,617 $4, $2,179,823 Operating Profit $1,027,918 $10,617 $4, $1,043,095 Net Earnings $696,067 $6,901 $2,964 $6,193 $(33,431) $678,694 Taxes 306,278 3,716 1,596 3,335 $(37,429) 277,496 Interest 84, ,225 Depreciation 38, ,185 Amortization 166, ,076 EBITDA $1,290,831 $10,617 $4,560 $9,528 $(70,860) $1,244,676 (1) For the purchase accounting adjustments, 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. (2) For the write-down on investment adjustment, the company used a 35% tax rate as this adjustment was US-based and 35% is the statutory tax rate in the United States. (3) For the Gain on Sale, the specific taxes due in regard to this transaction have been identified above. 30

31 Reconciliations VII Full Year 2014 Reconciliation of GAAP to Adjusted; Revenue, Gross Profit, and EBITDA Adjustments (All Numbers are In Thousands) Full Year 2014 GAAP Purchase Accounting Adjustments to A Diversified Adjustments to Growth 2014 Company Acquired Deferred Revenue Purchase Accounting Acquired Inventory Full Year Adjusted Net Sales $3,549,494 $2,330 - $3,551,824 Click to edit Master title style Gross Profit $2,101,899 $2,330 $849 $2,105,078 Operating Profit $999,473 $2,330 $849 $1,002,652 Net Earnings $646,033 $1,515 $552 $648,100 Taxes $275, ,535 Interest 78, ,637 Depreciation 40, ,890 Amortization 156, ,394 EBITDA $1,197,377 $2,330 $849 $1,200,556 (1) For the purchase accounting adjustments, 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. 31

32 Reconciliations VIII Full Year 2013 Reconciliation of GAAP to Adjusted; Revenue, Gross Profit, and EBITDA Adjustments (All Numbers are In Thousands) Full Year 2013 GAAP Purchase Accounting Adjustment to Hansen A Diversified Adjustments to Growth Company 2013 Acquired Deferred Revenue Purchase Accounting Acquired Receivables Special Charge Full Year Adjusted Net Sales $3,238,128 $6,980 $26,433 - $3,271,541 Click to edit Master title style Gross Profit $1,882,928 $6,980 $26,433 - $1,916,341 Operating Profit $842,361 $6,980 $26,433 $9,100 $884,874 Net Earnings $538,293 $4,537 $17,181 $5,915 $565,926 Taxes $215,837 2,443 9,252 3, ,717 Interest 88, ,039 Depreciation 37, ,756 Amortization 151, ,434 EBITDA $1,031,359 $6,980 $26,433 $9,100 $1,073,872 (1) For the purchase accounting adjustments, 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. (2) For the special charge, the company used a 35% tax rate as this adjustment was US-based and 35% is the statutory tax rate in the United States. 32

33 Reconciliations IX Cash Flow Reconciliation ($ in Thousands) Q FY 2015 Operating Cash Flow (A) $269,258 $928,825 Capital Expenditures (8,757) (36,260) A Diversified Growth Company Free Cash Flow (B) 260, ,565 GAAP Net Income 208, ,067 Add: Purchase Accounting Adjustment to Acquired Deferred Revenue 2,594 6,901 Click to edit Master title style Add: Acquisition Related Inventory Step- Up Charge Add: Impairment Charge on Minority Investment 1,688 2,964 6,193 6,193 Subtract: Gain on Sale of Abel Pumps (33,431) (33,431) Adjusted Net Income (C) 185, ,694 Operating Cash Flow Conversion (A / C) 145% 137% Free Cash Flow Conversion (B / C) 140% 132% (1) For the purchase accounting adjustments, 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. (2) For the write-down on investment adjustment, the company used a 35% tax rate as this adjustment was US-based and 35% is the statutory tax rate in the United States. (3) For the Gain on Sale, the specific taxes due in regard to this transaction have been taken out. 33

34 Roper Technologies, Inc.