A Diversified Technology Company
Q2 2018 Financial Results July 26, 2018 Safe Harbor Statement The - - PowerPoint PPT Presentation
Q2 2018 Financial Results July 26, 2018 Safe Harbor Statement The - - PowerPoint PPT Presentation
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
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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 Q2 2018 Results are Adjusted for the Following Items:
(1) Acquisition-Related Intangible Amortization Expense (2) Purchase Accounting Adjustment to Acquired Deferred Revenue (3) Recognition of Deferred Tax Expense Due to Held-For-Sale Classification
- f 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
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A Diversified Growth Company
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Roper Conference Call
» Q2 2018 Enterprise Financial Results » Segment Detail & Outlook » Q3 and FY 2018 Guidance » Q&A
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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.
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
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A Diversified Growth Company
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Q2 Income Statement Metrics
(in $ millions, except DEPS)
Q2’17 Q2’18 Revenue $1,151 $1,296
+13%; Organic +9%
Gross Profit $722 $818
Gross Margin 62.7% 63.1%
+40 bps
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.
$172 $266 2017 2018
Compounding Cash Flow
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Remain On Track for Record 2018 Cash Performance
» 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
Q2 Operating Cash Flow
(in $ millions)
Free Cash Flow = Operating Cash Flow less Capital Expenditures and Capitalized 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.
+55%
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Negative Net Working Capital; Sustainable Transformation
$281 $516 $627 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 30th.
6/30/16 6/30/17 6/30/18
(I) Inventory 5.1% 4.4% 4.3% (R) Receivables 16.9% 15.9% 16.4% (P) Payables & Accruals 10.6% 11.3% 10.9% (D) Deferred Revenue 7.5% 11.4% 11.7% Total (I+R-P-D) 3.9% (2.4)% (1.9)%
Net Working Capital(1)(2) as % of Q2 Annualized Revenue
Asset-Light Business Model
Note: Percentages may not sum correctly due to rounding.
Q2 Deferred Revenue(2)(3)
(in $ millions)
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Segment Detail & Outlook
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A Diversified Growth Company
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Q2 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% 34% 39% 42% 58% 51% 64% 71%
Gross Margin EBITDA Margin*
* Excludes Corporate Expenses
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A Diversified Growth Company
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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 Professional Services Software Markets – 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
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.
2nd 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
(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%
Another Perfect Fit for Roper
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PowerPlan Acquisition
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
»
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
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Medical & Scientific Imaging
Q2 Highlights
»
Organic +6%, FX +1%
»
Strong Growth and Execution in Niche Medical Software Businesses: Strata Decision Support, Data Innovations, SHP and SoftWriters
»
Market Adoption of Verathon’s New BladderScan Technology; GlideScope Consumables Growth
»
Double Digit Growth from Automated Surgical Scrub and Linen Technology Business (IPA)
»
Strong Revenue Contribution from Scientific Imaging Backlog
»
Reached Agreement to Sell Gatan; Expected to Close by the End of 2018 2nd Half 2018
»
High Single Digit Organic in Q3, MSD in Q4 – MSD Growth for Medical Businesses – Strong Q3 in Scientific Imaging from Delivery of Backlog
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
(29% of Roper Revenue)
(in $ millions)
Q2’18 V to PY Revenue $374 +7% Op Profit $126 +4% OP Margin 33.6% (100) bps EBITDA $155 +3%
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A Diversified Growth Company
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Industrial Technology / Energy Systems
Energy Segment Q2 Highlights
»
Organic +12%, FX +3%
»
Double-Digit Growth in Upstream Applications
»
CCC Returned to Growth
»
Industrial End Markets Remain Strong
»
2nd Half 2018: Double Digit Organic in Q3, MSD in Q4; Continued Strong Leverage 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
»
2nd Half 2018: Double Digit Organic in Q3, MSD in Q4; Continued Strong Leverage Energy Systems & Controls
(12% 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)
Q2’18 V to PY Revenue $232 +20% Op Profit $74 +27% OP Margin 32.0% +180 bps EBITDA $78 +25%
(in $ millions)
Q2’18 V to PY Revenue $151 +16% Op Profit $42 +28% OP Margin 27.8% +260 bps EBITDA $46 +25%
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Guidance Update
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Guidance Update
» Raising Full Year 2018 Guidance
– Adjusted DEPS: $11.40 - $11.56
- Previously $11.08 - $11.32
– Organic Revenue Growth: ~7%
- Previously +4 – 6%
» Establishing Q3 2018 Guidance
– Adjusted DEPS: $2.89 - $2.95
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 or divestitures, and also excludes the impact of the pending Gatan divestiture.
Q2 2018 Summary
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Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
» 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
Appendix
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Reconciliations I
Q2 2018 Revenue Growth Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology Roper Organic Growth 18% 12% 6% 7% 9% Acquisitions/Divestitures
- 1%
- 6%
2% Foreign Exchange 2% 3% 1% 1% 1% Rounding
- (1)%
1% Total Revenue Growth 20% 16% 7% 13% 13%
Q2 Revenue Detail
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Reconciliations II
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Cash Flow Reconciliation
(in $ millions)
Q2 2018 Operating Cash Flow $266 Capital Expenditures (13) Capitalized Software Expenditures (3) Free Cash Flow $250
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Reconciliations III
* Excludes Corporate Expenses
(in $ thousands)
Q2 2018
Margin Reconciliation Industrial Technology Energy Systems & Controls 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 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%
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Reconciliations IV
* Excludes Corporate Expenses
(in $ thousands)
Q2 2017
Margin Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology GAAP Revenue $193 $131 $351 $460 Add: Construct Connect / Deltek
- 16
Rounding
- 1
Adjusted Revenue 193 131 351 477 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%
A Diversified Technology Company