A Diversified Technology Company
Q1 2018 Financial Results April 20, 2018 Safe Harbor Statement The - - PowerPoint PPT Presentation
Q1 2018 Financial Results April 20, 2018 Safe Harbor Statement The - - PowerPoint PPT Presentation
A Diversified Technology Company Q1 2018 Financial Results April 20, 2018 Safe Harbor Statement The information provided in this presentation contains forward-looking statements within the meaning of the federal securities laws. These
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A Diversified Growth Company
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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
- perating 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 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 identify and complete acquisitions consistent with our business strategies, integrate acquisitions that have been completed, realize expected benefits and synergies from, and manage
- ther 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
- f 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.
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A Diversified Growth Company
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- Reg. G Disclosure
Today’s Conference Call Will Discuss Results Primarily on an Adjusted (Non-GAAP) Basis. The Q1 2018 Results are Adjusted for the Following Items: (1) Acquisition-Related Intangible Amortization Expense (2) Purchase Accounting Adjustment to Acquired Deferred Revenue See Appendix and Press Release for Reconciliation from GAAP to Adjusted Results
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A Diversified Growth Company
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Roper Conference Call
» Q1 2018 Enterprise Financial Results » Segment Detail & Outlook » Q2 and FY 2018 Guidance » Q&A
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Great Q1; Outstanding Execution Across the Enterprise
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
Q1 2018 Enterprise Highlights
» Record First Quarter Results » Revenue +9% to $1.20B; Organic +6%
–
Broad-Based Growth; All Segments Grew MSD or Greater
» Gross Margin +30 Bps to 62.5% » Earnings Before Taxes +10% to $332M » DEPS +24% to $2.61 » Operating Cash Flow of $282M; 23% of Revenue » Reduced Debt by $535M in Q1; $1.6B Since December 2016
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A Diversified Growth Company
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Q1 Income Statement Metrics
(in $ millions, except Adjusted DEPS)
Q1’17 Q1’18 Revenue $1,108 $1,205
+9%, Organic +6%
Gross Profit $689 $753
Gross Margin 62.2% 62.5%
+30 bps
EBITDA $362 $389
EBITDA Margin 32.7% 32.3%
Interest Expense $46 $43 Earnings Before Taxes $303 $332
+10%
Tax Rate 28.2% 18.1% Net Earnings $218 $272 Adjusted DEPS $2.11 $2.61
+24%
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
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Deferred Revenue Continues to Grow; Provides Source of Cash
4.8% (2.9)% (2.7)% 2016 2017 2018
(750) Bps
* Defined as Inventory + A/R + Unbilled Receivables – A/P – Accrued Liabilities – Deferred Revenue; Excludes Acquisitions Completed in Each Quarter and Dividend Accrual
3/31/16 3/31/17 3/31/18
(I) Inventory 5.5% 4.4% 4.5% (R) Receivables 17.4% 16.0% 16.4% (P) Payables & Accruals 10.6% 11.5% 11.5% (D) Deferred Revenue 7.5% 11.8% 12.1% Total (I+R-P-D) 4.8% (2.9)% (2.7)%
($ Millions)
Deferred Revenue
$275 $514 $585
Net Working Capital* as % of Q1 Annualized Revenue
Asset-Light Business Model
Notes: Percentages may not sum correctly due to rounding.
Compounding Cash Flow
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On Track for Record 2018 Cash Performance
» Year Over Year Cash Flow Impacted by:
– Timing of Tax Payments in 2018 – TransCore MTA Project in 2017
» Q1 Operating Cash Flow: $282M
– 23% of Revenue
» Q1 Free Cash Flow: $270M
– 22% of Revenue
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
TTM Q1 2018 Operating Cash Flow Conversion
(in $ millions)
Free Cash Flow = Operating Cash Flow less Capital Expenditures and Capitalized Software * Excludes one-time $215 million net gain resulting from the Tax Cuts and Jobs Act, see reconciliation in appendix
111% 141% Adjusted Net Earnings GAAP Net Earnings*
Strong Financial Position
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Deleveraged Rapidly; Enhances Capacity for 2018 Capital Deployment
(in $ millions)
3/31/17 3/31/18
V to PY Cash
$731 $366
Undrawn on $2.5B Revolver
$940 $1,765
+$825
Gross Debt
$5,841 $4,622
($1,219)
Net Debt
$5,110 $4,256
TTM EBITDA
$1,370 $1,631
+$261
Gross Debt-to-EBITDA (TTM)
4.3x 2.8x
Net Debt-to-EBITDA (TTM)
3.7x 2.6x
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results.
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Segment Detail & Outlook
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TTM Q1 2018 Segment Margins
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
Energy Ind Tech RF & Software Medical & Imaging 31% 32% 38% 42% 57% 50% 63% 72%
Gross Margin EBITDA Margin*
TTM = Trailing Twelve Months * Excludes Corporate Expenses
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Q1 Highlights
»
Organic +4%, FX +1%
»
LSD Toll and Traffic Growth; Continued Strong Project Execution
»
Deltek Software Growth Across GovCon and Professional Services Markets; Recent Bolt- On Acquisitions Performing Well
»
ConstructConnect Bolt-Ons Expand Pre- Construction Take-Off and Estimation Software Capabilities (QuoteSoft, PlanSwift)
»
Multiple Large Law Firm Wins for Aderant Drove Share Gains and Double Digit Growth
»
Outstanding Freight Match Growth Driven by Net Subscriber Adds and Favorable Markets
»
RF IDeas Growth Aided by Adoption of Identity Access Management Solutions
RF Technology & Software
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
Q2-Q4 2018
»
MSD Growth Continues for Software Businesses with Strong Margin and Cash Performance
»
Toll and Traffic Project Timing Remains Difficult to Forecast
»
4 - 5% Organic Growth for Segment
(40% of Roper Revenue)
(in $ millions)
Q1’18 V to PY Revenue $484 +7% Op Profit $123 +13% OP Margin 25.4% +130 bps EBITDA $172 +11%
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Medical & Scientific Imaging
Q1 Highlights
»
Organic +4%, FX +2%
»
Accelerating Adoption of Financial Decision Support Cloud Software at Strata; Kaiser Permanente Adopts for National Cost Accounting Program
»
Revenue Decline, as Expected, in Higher Margin U.S. Lab Business, Offset by Revenue Growth in Diagnostic Connectivity and International Lab Solutions
»
High Single Digit Growth in Software Solutions for Long-Term Care and Home Health (SoftWriters and SHP)
»
MSD Growth in Medical Product Businesses
»
Strong Backlog Growth for Gatan; Commenced Shipping of Next Generation Cryo-EM Products Q2-Q4 2018
»
Broad-Based Growth Across Medical Businesses
»
Scientific Imaging Continues to Improve
»
MSD Organic Growth for the Segment; Lower Margins (~100 bps)
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
(30% of Roper Revenue)
(in $ millions)
Q1’18 V to PY Revenue $366 +5% Op Profit $121 +1% OP Margin 32.9% (150) bps EBITDA $150 Flat
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Industrial Technology / Energy Systems
Energy Segment Q1 Highlights
»
Organic +5%, FX +4%
»
Strength in Upstream Applications
»
Broad-Based Growth Across Industrial End Markets
»
Q2-Q4 2018: 5 – 7% Organic Growth; Continued Strong Leverage Industrial Segment Q1 Highlights
»
Organic +15%, FX +3%
»
Double Digit Growth at Neptune; Continuing to Benefit from Customer-Focused Innovation
»
Cornell Record Performance and Share Gains
»
Strong End Markets and Execution Drove Roper Pump Growth
»
Q2-Q4 2018: High Single Digit Organic Growth; Continued Strong Leverage Energy Systems & Controls
(11% of Roper Revenue)
Industrial Technology
(18% of Roper Revenue)
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
(in $ millions)
Q1’18 V to PY Revenue $216 +18% Op Profit $66 +23% OP Margin 30.4% +120 bps EBITDA $70 +21%
(in $ millions)
Q1’18 V to PY Revenue $139 +11% Op Profit $35 +16% OP Margin 25.4% +120 bps EBITDA $39 +14%
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Guidance Update
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Guidance Update
» Raising Full Year 2018 Guidance
– Adjusted DEPS: $11.08 - $11.32
- Previously $10.88 - $11.20
– Organic Revenue Growth: +4 – 6%
- Previously +4 – 5%
– Tax Rate: ~23% for Q2 through Q4
» Establishing Q2 2018 Guidance
– Adjusted DEPS: $2.65 - $2.71
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
Guidance excludes the impact of future acquisitions and divestitures.
Q1 2018 Summary
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Great Q1 and Positive Outlook for 2018; Guidance Raised
» Asset-Light, Niche Market Strategy Continues to Deliver
Outstanding Operating Performance
–
Broad-Based Revenue Growth Across All Segments; Organic +6%
–
End Market Data Encouraging; Optimistic About Balance of the Year
–
Gross Margin +30 Bps to 62.5%
–
Earnings Before Taxes +10% to $332M
–
DEPS +24% to $2.61
» Capital Deployment Opportunities Enhanced by Strengthened
Balance Sheet
–
Reduced Debt by $1.6B Since December 2016
–
Expect to Deploy $7B+ Over The Next Four Years
–
Many Attractive Opportunities in the Pipeline
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
Appendix
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Reconciliations I
Q1 2018 Revenue Growth Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology Roper Organic Growth 15% 5% 4% 4% 6% Acquisitions/Divestitures
- 1%
- 3%
1% Foreign Exchange 3% 4% 2% 1% 2% Rounding
- 1%
(1)% (1)%
- Total Revenue Growth
18% 11% 5% 7% 9%
Q1 Revenue Detail
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Reconciliations II
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Cash Flow Reconciliation
(in $ millions)
Q1 2018 Operating Cash Flow $282 Capital Expenditures (10) Capitalized Software Expenditures (2) Free Cash Flow $270
All 2017 adjustments taxed at 35%, all 2018 adjustments taxed at 21%.
Cash Flow Reconciliation
(in $ millions)
TTM Q1 2018 Operating Cash Flow (A) $1,138 GAAP Net Earnings $1,025 One-Time Net Gain Resulting from the Tax Cuts and Jobs Act (215) Net Earnings (excl. Tax Cuts and Jobs Act) (B) 810 Purchase Accounting Adjustment to Acquired Deferred Revenue and Prepaid Commissions 23 Amortization of Acquisition-Related Intangible Assets 202 Gain on Sale of Divested Energy Product Line (6) Impairment Charge on Minority Investment 1 Rounding (1) Adjusted Net Earnings (C) 1,029 Operating Cash Flow Conversion (A / B) 141% Operating Cash Flow Conversion (A / C) 111%
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Reconciliations III
(in $ millions)
TTM Q1 2018
Margin Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology GAAP Revenue 816 565 1,428 1,914 Add: Deltek / Onvia
- 38
Adjusted Revenue 816 565 1,428 1,952 GAAP Gross Profit 412 325 1,024 1,187 Add: Deltek / Onvia
- 38
Less: Deltek Prepaid Commissions Adj
- Adjusted Gross Profit
412 325 1,024 1,225 Adjusted Gross Margin 50% 57% 72% 63% GAAP Operating Profit 247 156 487 511 Add: Deltek / Onvia
- 38
Less: Deltek Prepaid Commissions Adj
- (4)
Adjusted Operating Profit 247 156 487 545 Add Amortization 9 14 105 170 Rounding
- 1
EBITA 256 170 592 716 Add Depreciation 8 3 13 24 Rounding
- 1
- EBITDA
264 173 606 740 EBITDA Margin 32% 31% 42% 38%
* Excludes Corporate Expenses
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Reconciliations IV
(in $ millions)
Q1 2018
Margin Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology GAAP Revenue $216 $139 $366 $482 Add: Deltek / Onvia
- 2
Adjusted Revenue 216 139 366 484 GAAP Gross Profit 109 79 261 302 Add: Deltek / Onvia
- 2
Adjusted Gross Profit 109 79 261 304 GAAP Operating Profit 66 35 121 120 Add: Deltek / Onvia
- 2
Rounding
- 1
Adjusted Operating Profit 66 35 121 123 Add Amortization 2 4 26 44 Rounding
- (1)
EBITA 68 39 147 166 Add Depreciation 2 1 3 6 Rounding
- (1)
- EBITDA
70 39 150 172 EBITDA Margin 32% 28% 41% 36%
* Excludes Corporate Expenses
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Reconciliations V
* Excludes Corporate Expenses
(in $ millions)
Q1 2017
Margin Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology GAAP Revenue $183 $125 $348 $430 Add: CliniSys
- Add: Construct Connect / Deltek
- 22
Rounding
- (1)
Adjusted Revenue 183 125 348 451 GAAP Gross Profit 93 71 252 251 Add: CliniSys
- Add: Construct Connect / Deltek
- 22
Less: Deltek Prepaid Commissions Adj
- Adjusted Gross Profit
93 71 252 273 GAAP Operating Profit 54 30 120 89 Add: CliniSys
- Add: Construct Connect / Deltek
- 22
Less: Deltek Prepaid Commissions Adj
- (2)
Adjusted Operating Profit 54 30 120 109 Add Amortization 2 3 27 41 Rounding
- 1
(1)
- EBITA
56 34 146 150 Add Depreciation 2 1 3 6 Rounding
- 1
EBITDA 58 35 150 156 EBITDA Margin 32% 28% 43% 34%
A Diversified Technology Company