A Diversified Technology Company Q2 2018 Financial Results July 26, 2018
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 may 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 may be indicated by words or phrases A Diversified such as "anticipate," Growth "estimate," Company "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 identify and complete acquisitions consistent with our business strategies, integrateclick acquisitions thatto have been edit completed, Master realize expected benefits title and synergies style from, and manage other risks associated with, the newly acquired businesses. We also face general risks, including our ability to realize cost savings from our operating initiatives, general economic conditions and the conditions of the specific markets in which we operate, changes in foreign exchange rates, difficulties associated with exports, risks associated with our international operations, 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
Reg. G Disclosure Today s Conference Call Will Discuss Results Primarily on an Adjusted (Non-GAAP) Basis. The Q2 2018 Results are Adjusted for the Following Items: A Diversified Growth Company (1) Acquisition-Related Intangible Amortization Expense (2) Purchase Accounting Adjustment to Acquired Deferred Revenue Click to edit Master title style (3) Recognition of Deferred Tax Expense Due to Held-For-Sale Classification of Gatan (4) Measurement Period Adjustment to 2017 Provisional Income Tax Amounts Resulting from the Tax Cuts and Jobs Act See Appendix and Press Release for Reconciliation from GAAP to Adjusted Results 3
Roper Conference Call» Q2 2018 Enterprise Financial Results» Segment Detail & Outlook A Diversified Growth Company» Q3 and FY 2018 Guidance» Q&A Click to edit Master title style 4
Q2 2018 Enterprise Highlights» Record Q2 Results: Revenue, Net Earnings, EBITDA, Cash Flow» Revenue +13% to $1.30B; Organic +9% Broad-Based Growth Across All Segments» Gross Margin +40 Bps to 63.1%» EBITDA +14% to $449M; EBITDA Margin +30 Bps to 34.6%» DEPS +29% to $2.89» Operating Cash Flow +55% to $266M» Deployed $1.1B to Acquire PowerPlan; Entered Agreement to Divest Gatan for $925M Outstanding Q2: Strong Growth, Margin Expansion and Record Cash Flow Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results. 5
Q2 Income Statement Metrics (in $ millions, except DEPS) Q2 17 Q2 18 Revenue $1,151 $1,296 A Diversified Growth Company Gross Profit $722 $818 +13%; Organic +9% Gross Margin 62.7% 63.1% +40 bps Click to edit Master title style EBITDA $394 $449 +14% EBITDA Margin 34.3% 34.6% +30 bps Interest Expense $46 $43 Earnings Before Taxes $336 $392 +17% Tax Rate 31.0% 23.1% Net Earnings $232 $302 DEPS $2.24 $2.89 +29% Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results. 6
Compounding Cash Flow Q2 Operating Cash Flow (in $ millions)» Q2 Operating Cash Flow: $266M +55% vs Prior Year» Q2 Free Cash Flow: $250M +57% vs Prior Year» TTM Operating Cash Flow: $1.23B 25% of Revenue $172 +55% $266 2017 2018 Free Cash Flow = Operating Cash Flow less Capital Expenditures and Capitalized Software Remain On Track for Record 2018 Cash Performance Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results. 7
Asset-Light Business Model Net Working Capital (1)(2) as % of Q2 Annualized Revenue Q2 Deferred Revenue (2)(3) 6/30/16 6/30/17 6/30/18 (in $ millions) $627 (I) Inventory 5.1% 4.4% 4.3% $516 (R) Receivables 16.9% 15.9% 16.4% (P) Payables & Accruals 10.6% 11.3% 10.9% $281 (D) Deferred 7.5% 11.4% 11.7% Revenue Total (I+R-P-D) 3.9% (2.4)% (1.9)% 2016 2017 2018 1) Defined as Inventory + A/R + Unbilled Receivables A/P Accrued Liabilities Deferred Revenue; Excludes Acquisitions Completed in Each Quarter and Dividend Accrual. 2) Includes Gatan s assets and liabilities that have been classified as held-for-sale on Roper's balance sheet. 3) Ending balance as of June 30 th. Negative Net Working Capital; Sustainable Transformation Note: Percentages may not sum correctly due to rounding. 8
Segment Detail & Outlook 9
Q2 2018 Segment Margins A Diversified Growth Company Click to edit Master title style 31% 58% 34% 51% 39% 64% 42% 71% Gross Margin EBITDA Margin* Energy Ind Tech RF & Software Medical & Imaging * Excludes Corporate Expenses Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results. 10
RF Technology & Software Q2 Highlights» Organic +7%, FX +1%» Deltek Delivered Double Digit Growth and Great Operating Leverage Outstanding Execution in Enterprise and SMB Across Both GovCon and A Diversified Growth Company Click Professional Services to Software edit Markets Master title style Large Wins Delivered in the Quarter» Freight Match Strong Execution with Net Subscriber Adds; Favorable Market Conditions» CBORD Grew Subscriptions for Food and Nutritional Software in Healthcare Markets» Toll and Traffic Grew LSD with Strong Project Execution and Double Digit Growth from Customer Service Center Business» Completed Acquisition and Onboarding of PowerPlan; Another Industry-Leading, Niche Application Software Business (42% of Roper Revenue) (in $ millions) Q2 18 V to PY Revenue $539 +13% Op Profit $159 +19% OP Margin 29.6% +140 bps EBITDA $212 +16% 2 nd Half 2018» 4 6% Organic Growth for the Segment» Strong Growth and Cash Performance for Software Businesses» Toll and Traffic Grows Low Single Digits in Q3, Stronger in Q4 on Timing of Tag Shipments Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results. 11
PowerPlan Acquisition» Leading Provider of Software and Solutions for Asset-Centric Companies Enhances Operational Efficiency, Supports Tax Strategies, Mitigates Compliance Risk and Improves Cash Flow» Strong Competitive Advantages with High Barriers to Entry» Loyal, Diverse Customer Base with 98%+ Retention Rates» Attractive Financial Model Focused on Growth and Profitability Multiple Drivers for Strong Organic Growth Large Deferred Revenue Balance Meets All Acquisition Criteria Strong Cash Flow Characteristics Asset Light Excellent Management Team Niche Market Leader Deep Domain Expertise High Recurring Revenue Multiple Growth Opportunities Another Perfect Fit for Roper 12
Medical & Scientific Imaging Q2 Highlights (29% of Roper Revenue)» Organic +6%, FX +1%» Strong Growth and Execution in Niche Medical Software Businesses: Strata Decision Support, Data Innovations, SHP and SoftWriters A Diversified Growth Company Click to edit Master title style» Market Adoption of Verathon s New BladderScan Technology; GlideScope Consumables Growth» Double Digit Growth from Automated Surgical Scrub and Linen Technology Business (IPA) (in $ millions) Q2 18 V to PY Revenue $374 +7% Op Profit $126 +4% OP Margin 33.6% (100) bps EBITDA $155 +3% 2 nd Half 2018» High Single Digit Organic in Q3, MSD in Q4 MSD Growth for Medical Businesses» Strong Revenue Contribution from Scientific Imaging Backlog Strong Q3 in Scientific Imaging from Delivery of Backlog» Reached Agreement to Sell Gatan; Expected to Close by the End of 2018 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results. 13
Industrial Technology / Energy Systems Industrial Segment Q2 Highlights» Organic +18%, FX +2%» Another Record Quarter for Neptune; Double Digit Growth Driven by Customer-Focused Innovation» Meaningful Share Gains Helped Drive Exceptional Performance at Cornell» Nimble Execution at Roper Pump Delivered Growth and Strong Operating Leverage» 2 nd Half 2018: Double Digit Organic in Q3, MSD in Q4; Continued Strong Leverage Industrial Technology (18% of Roper Revenue) A Diversified Growth Company (in $ millions) Q2 18 V to PY Revenue $232 +20% Op Profit $74 +27% OP Margin 32.0% +180 bps Click to edit Master title style EBITDA $78 +25% Energy Segment Q2 Highlights» Organic +12%, FX +3%» Double-Digit Growth in Upstream Applications» CCC Returned to Growth» Industrial End Markets Remain Strong» 2 nd Half 2018: Double Digit Organic in Q3, MSD in Q4; Continued Strong Leverage Energy Systems & Controls (12% of Roper Revenue) (in $ millions) Q2 18 V to PY Revenue $151 +16% Op Profit $42 +28% OP Margin 27.8% +260 bps EBITDA $46 +25% Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results. 14
Guidance Update 15
Guidance Update» Raising Full Year 2018 Guidance Adjusted DEPS: $11.40 A Diversified - $11.56Growth Company Previously $11.08 - $11.32 Click to edit Master title style Organic Revenue Growth: ~7% Previously +4 6%» Establishing Q3 2018 Guidance Adjusted DEPS: $2.89 - $2.95 Guidance excludes the impact of future acquisitions or divestitures, and also excludes the impact of the pending Gatan divestiture. Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results. 16
Q2 2018 Summary» Niche Market Strategy and Nimble Execution Delivers Another Outstanding Quarter Record Q2 Results: Revenue, Net Earnings, EBITDA, Cash Flow 9% Organic Revenue Growth; Broad-Based Across All Segments Gross Margin +40 Bps to 63.1%; EBITDA Margin +30 Bps to 34.6% Earnings Before Taxes +17%; DEPS +29% to $2.89 Operating Cash Flow Increased 55%» Asset-Light, Diversified Technology Transformation Continues PowerPlan Acquisition Demonstrates Disciplined Capital Deployment Strategy Agreement to Divest Gatan Will Enhance Ability to Deploy Future Capital Continue to See Attractive Acquisition Opportunities CRI Discipline Creates Shareholder Value and Compounds Cash Performance Outstanding Quarter; Great Momentum for Strong Second Half Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results. 17
Appendix 18
Reconciliations I Q2 Revenue Detail Q2 2018 Revenue Growth A Diversified Growth Company Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology Roper Click Organic Growth 18% 12% 6% 7% 9% to edit Master title style Acquisitions/Divestitures - 1% - 6% 2% Foreign Exchange 2% 3% 1% 1% 1% Rounding - - - (1)% 1% Total Revenue Growth 20% 16% 7% 13% 13% 19
Reconciliations II Cash Flow Reconciliation (in $ millions) Q2 2018 Operating Cash Flow $266 Capital Expenditures (13) Capitalized Software Expenditures (3) A Diversified Growth Company Click to edit Master title style Free Cash Flow $250 20
Reconciliations III (in $ thousands) Q2 2018 Margin Reconciliation Industrial Technology Energy Systems & Controls A Diversified Growth Company Medical & Scientific Imaging RF Technology GAAP Revenue $232 $151 $374 $537 Add: PowerPlan / Onvia - - - 2 Adjusted Revenue 232 151 374 539 GAAP Gross Profit 119 87 266 344 Click to edit Master title style Add: PowerPlan / Onvia - - - 2 Adjusted Gross Profit 119 87 266 346 Adjusted Gross Margin 51% 58% 71% 64% GAAP Operating Profit 74 42 126 158 Add: PowerPlan / Onvia - - - 2 Rounding - - - (1) Adjusted Operating Profit 74 42 126 159 Add Amortization 2 3 26 46 Rounding - - - 1 EBITA 76 45 152 206 Add Depreciation 2 1 4 6 Rounding - - (1) - EBITDA 78 46 155 212 EBITDA Margin 34% 31% 42% 39% * Excludes Corporate Expenses 21
Reconciliations IV (in $ thousands) Q2 2017 Margin Reconciliation Industrial Technology Energy Systems & Controls A Diversified Growth Company Medical & Scientific Imaging RF Technology GAAP Revenue $193 $131 $351 $460 Add: Construct Connect / Deltek - - - 16 Rounding - - - 1 Adjusted Revenue 193 131 351 477 Click to edit Master title style GAAP Gross Profit 98 74 254 280 Add: Construct Connect / Deltek - - - 16 Adjusted Gross Profit 98 74 254 296 GAAP Operating Profit 58 33 121 120 Add: Construct Connect / Deltek - - - 16 Less: Deltek Prepaid Commissions Adj - - - (1) Rounding - - - (1) Adjusted Operating Profit 58 33 121 134 Add Amortization 2 3 26 43 Rounding - - 1 - EBITA 60 36 148 177 Add Depreciation 2 1 3 6 Rounding 1 - - - EBITDA 63 37 151 183 EBITDA Margin 32% 28% 43% 38% * Excludes Corporate Expenses 22
A Diversified Technology Company