Roper Technologies, Inc. Q Financial Results

Transcription

1 Roper Technologies, Inc. Q Financial Results July 27, 2015

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) Purchase Accounting Adjustment to Acquired Deferred Click Revenue (Data to edit Innovations, Master SHP, SoftWriters, title Strata, style Foodlink) See Appendix for Reconciliation from GAAP to Adjusted Results 3

4 Roper Conference Call» Q2 Enterprise Financial Results A Diversified Growth Company» Segment Detail & Outlook» Q3 and FY 2015 Guidance Click to edit Master title style» Q&A 4

5 Q Enterprise Financial Results» Achieved Record Second Quarter Results Orders, Revenue, Net Earnings, EBITDA, Cash Flow» Revenue +1% to $892M Organic Flat; FX Headwind (3%) Growth Led by Medical +13% and RF Technology +4% Declines in Industrial (9%) and Energy (12%)» Gross Margin +100 Bps to 60.1%» Operating Margin +60 Bps to 28.5%» Net Earnings +10% to $173M; DEPS $1.70» Free Cash Flow +24% to $162M Record Results Despite FX and End Market Headwinds Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 5

6 Q2 Income Statement In $ Millions Note: Amounts may not total due to rounding Q2 14 Q2 15 Orders $874 $881 +1%; Book-to-Bill: 0.99x A Diversified Growth Company Revenue $885 $892 +1%; Organic Flat, FX (3%) Gross Profit $523 $536 Gross Margin 59.1% 60.1% +100 Bps Click to edit Master title style Operating Income $247 $254 +3% Operating Margin 27.9% 28.5% +60 Bps Interest Expense $20 $20 Other Income/(Expense) $(1) $(2) Earnings Before Tax $226 $233 Tax Rate 30.4% 25.7% Resolution of State Tax Matter Net Earnings $157 $ % DEPS $1.56 $1.70 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 6

7 Compounding Cash Flow In $ Millions» Q2 Operating Cash Flow: $173M 23% Increase 1 st Half Operating Cash Flow $433» Q2 Free Cash Flow: $162M 24% Increase $311 $353» 1 st Half Free Cash Flow: $412M 23% of Revenue 126% Conversion Note: Free Cash Flow = Operating Cash Flow Capital Expenditures 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. 7

8 Asset-Light Business Model Working Capital* as % of Q2 Annualized Net Sales 06/30/13 06/30/14 06/30/15 (I) Inventory 6.3% 6.0% 5.5% (R) Receivables 19.7% 17.6% 16.6% 7.5% (350 Bps) 6.2% (P) Payables & Accruals 18.6% 17.4% 18.1% 4.0% Total (I+R-P) 7.5% 6.2% 4.0% Note: Percentages may not sum correctly due to rounding Roper Governance Process Drives Working Capital Focus * Defined as Inventory + A/R + Unbilled Receivables A/P Accrued Liabilities; Sales and Working Capital Related to Acquisitions Completed in Each Quarter Removed from Calculation 8

9 Strong Financial Position In $ Millions 06/30/14 06/30/15 Cash $565 $679 Undrawn Revolver $1,470 $1,185 Cash and Undrawn Revolver $2,035 $1,864 Gross Debt $2,245 $2,525 Shareholders Equity $4,548 $5,019 Gross Debt to Capitalization 33.0% 33.5% TTM EBITDA $1,153 $1,232 Gross Debt-to-EBITDA (TTM) 1.9x 2.0x Deployed >$1B in Last 12 Months; Active Acquisition Pipeline Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 9

10 Segment Detail & Outlook 10

11 Q Segment Performance In $ Millions $305 $256 $145 $186 Revenue $43 $57 $92 $139 EBITDA* Energy Ind Tech RF Medical * Excludes Corporate Expenses Medical and RF Segments Represented 70% of Q2 EBITDA* Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 11

12 Energy Systems & Controls ($M) Q2 15 V to PY Revenue $145 (12)% Op Profit $38 (16)% Q Organic Revenue (7%); FX (5%) A Diversified Growth Company Oil & Gas Markets Weaker Than Expected, Primarily Impacting Upstream Applications Other Served Markets Flat Click to edit Master title style Businesses Executing Well; Additional Cost OP Margin 26.0% (100) Bps Actions Taken Segment Q2 15 % of Roper EBITDA* 13% 2H 2015 No Improvement in Oil & Gas Markets Modest Growth in Other Served Markets FX Headwinds Persist High Single Digit Organic Decline for Segment * Excludes Corporate Expenses Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 12

13 Industrial Technology ($M) Q2 15 V to PY Revenue $186 (9)% Op Profit $52 (14)% Organic Revenue (4%); FX (5%) Oil & Gas Markets Weaker Than Expected, Primarily Impacting Upstream Fluid Handling Applications A Diversified Growth Company Material Analysis Double Digit Organic Growth Click to edit Master title style Neptune Toronto Project Virtually Complete OP Margin 28.0% (150) bps Q Segment Q2 15 % of Roper EBITDA* 2H % 20% No Improvement in Oil & Gas Markets Material Analysis Remains Strong Neptune Grows in the U.S. Market Toronto Project Completion Headwind * Excludes Corporate Expenses Mid Single Digit Organic Decline for Segment Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 13

14 RF Technology ($M) Q2 15 V to PY Revenue $256 +4% Op Profit $80 +12% Organic Revenue +6%, FX (1%), Acq./Div. (1%) Strong Toll & Traffic Growth Continues Multiple Toll Expansion and Upgrade Projects A Diversified Growth Company Riyadh Traffic Project Started Double Digit Growth in Tag Shipments Software Growth Led By Subscriber Additions at Click to edit Master title style Freight Match OP Margin 31.3% +230 bps Segment Q2 15 % of Roper EBITDA* 28% 27% * Excludes Corporate Expenses Q Strength in RF Products Led by Senior Care, Submetering and UK Water Applications 2H 2015 Backlog and Proposal Activity Remain Strong for Toll and Traffic Projects Continued Subscriber Growth in SaaS Businesses Acquired On Center Software on July 20th for $157M; SaaS and Licensed Software Solutions for Construction Automation Management Mid Single Digit Organic Growth for Segment Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 14

15 Medical Solutions ($M) Q2 15 V to PY Revenue $ % Op Profit $ % A Diversified Growth Company Double Digit Growth in Medical Device Businesses Driven by New Products and Solid Channel Execution Sunquest Recurring Revenue Growth; Lower License Click to edit Master title style OP Margin 36.6% +150 bps Segment Q2 15 % of Roper EBITDA* 42% 42% * Excludes Corporate Expenses Q Organic Revenue +2%, FX (3%) Continued Strong Growth at MHA; Aided by Share Gains and Favorable Market Conditions and Service Sales due to Meaningful Use in Prior Year Q1 Acquisitions (Strata, SoftWriters and Data Innovations) Performing Well Exited Rugged Mobile Product Line 2H 2015 MHA Continues to Benefit From Favorable Market Conditions and Excellent Execution Medical Products Growth Led by New Products at Verathon and Northern Digital Scientific Imaging Flat Mid Single Digit Organic Growth for Segment Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 15

16 Guidance Update 16

17 Guidance Update» Full Year Adjusted DEPS: $ Previously $ A $6.95 Diversified Growth Company Full Year Organic Revenue 1 2% Medical and RF Segments Up Mid Single Digits Click to edit Master title style Oil & Gas Markets Remain Weak Full Year Tax Rate Unchanged: ~30.5%» Full Year Operating Cash Flow ~ $925M» Q3 Adjusted DEPS: $ $

18 Q Summary» Record Second Quarter Results Orders, Revenue, Net Earnings, EBITDA, Cash Flow» Revenue +1% to $892M Organic Flat; FX Headwind (3%) Growth Led by Medical +13% and RF Technology +4% Declines in Industrial (9%) and Energy (12%)» Gross Margin +100 Bps to 60.1%» Operating Margin: 28.5%; EBITDA Margin: 33.9%» Net Earnings +10% to $173M; DEPS $1.70» Free Cash Flow +24%» Acquired On Center Software; Active Acquisition Pipeline Record Cash Flow and Margin Performance Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 18

19 Appendix 19

20 Reconciliations I Q Revenue Growth Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology Roper Organic Growth (4)% (7)% 2% 6% - A Diversified Growth Company Acquisitions/Divestitures % (1)% 4% Foreign Exchange (5)% (5)% (3)% (1)% (3)% Rounding Total Revenue Click Growth to (9)% edit (12)% Master 13% 4% title style 1% Q Orders Growth Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology Roper Organic Growth (5)% (10)% 1% 7% (1)% Acquisitions/Divestitures % 1% 5% Foreign Exchange (5)% (6)% (3)% (1)% (3)% Rounding 1% Total Orders Growth (9)% (16)% 13% 7% 1% 20

21 Reconciliations II (in Thousands) Q Margin Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging A Diversified Growth Company RF Technology GAAP Revenue $186,467 $145,254 $302,262 $255,558 Add: DI / SHP / SoftWriters / Strata Purchase Accounting Adj 0 0 2,341 0 Add: FoodLink Purchase Accounting Adj Adjusted Revenue 186, , , ,738 Click to edit Master title style GAAP Gross Profit 93,565 83, , ,136 Add: DI / SHP / SoftWriters / Strata Purchase Accounting Adj 0 0 2,341 0 Add: FoodLink Purchase Accounting Adj Adjusted Gross Profit 93,565 83, , ,316 GAAP Operating Profit 52,188 37, ,261 79,940 Add: DI / SHP / SoftWriters / Strata Purchase Accounting Adj 0 0 2,341 0 Add: FoodLink Purchase Accounting Adj Adjusted Operating Profit 52,188 37, ,602 80,120 Add Amortization 2,260 4,084 24,255 9,731 EBITA 54,448 41, ,857 89,851 Add Depreciation 2,734 1,194 2,929 2,607 EBITDA 57,182 42, ,786 92,458 21

22 Reconciliations III Q2 15 TTM Reconciliation of GAAP to Adjusted; Revenue, Gross Profit, and EBITDA (All Numbers are In Thousands) Q2 15 TTM GAAP SHP Purchase Accounting Adjustment to Acquired Deferred Revenue IPA Adjustments Acquisition Purchase A Diversified Growth Accounting Company Related Inventory Step-up Charge FoodLink Purchase Adjustment to Acquired Deferred Revenue Data Innovations Accounting Adjustment to Acquired Deferred Revenue SoftWriters Purchase Accounting Adjustment to Acquired Deferred Revenue Strata Purchase Accounting Adjustment to Acquired Deferred Revenue Q2 15 TTM Adjusted Net Sales Click $3,585,089 to $3,426 edit Master - $720 $1,351 title $106 style $1,141 $3,591,833 Gross Profit $2,141,853 $3,426 $849 $720 $1,351 $106 $1,141 $2,149,446 Operating Profit $1,028,277 $3,426 $849 $720 $1,351 $106 $1,141 $1,035,870 Net Earnings $668,499 $2,227 $552 $468 $878 $69 $742 $673,435 Taxes 278,398 1, ,055 Interest 79, ,311 Depreciation 40, ,218 Amortization 157, ,657 EBITDA $1,224,083 $3,426 $849 $720 $1,351 $106 $1,141 $1,231,676 (1) For the six 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. 22

23 Reconciliations IV Q2 14 TTM Reconciliation of GAAP to Adjusted; Revenue, Gross Profit, and EBITDA Adjustments (All Numbers are In Thousands) Q2 14 TTM GAAP Sunquest Fair Value MHA Purchase Accounting Adjustment for Adjustment to Acquired Acquired Revenue A Diversified Deferred Revenue Growth Company Q2 14 TTM Adjusted Net Sales $3,436,210 $1,007 $7,893 $3,445,110 Gross Profit $2,027,963 $1,007 $7,893 $2,036,863 Click to edit Master title style Net Earnings $606,613 $655 $5,130 $612,398 Taxes 256, , ,101 Interest 84, ,159 Depreciation 39, ,103 Amortization 157, ,135 EBITDA $1,143,996 $1,007 $7,893 $1,152,896 (1) For the two adjustments, the company used a 35% tax rate as these adjustments are both US-based items and 35% is the statutory tax rate in the United States. 23

24 Roper Technologies, Inc.