Q4 2014 Financial Results January 26, 2015 Safe Harbor Statement - PowerPoint PPT Presentation

A Diversified Technology Company Q4 2014 Financial Results January 26, 2015

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 Click to edit Master title style uncertainties include our ability to integrate our acquisitions and realize expected synergies. 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

Reg. G Disclosure Today’s Conference Call will Discuss Income Statement Results Primarily on an Adjusted (Non-GAAP) Basis. The Q4 2014 Adjusted Results Exclude the Following Items: A Diversified Growth Company (1) Purchase Accounting Adjustment to Acquired Deferred Click to edit Master title style Revenue (SHP, Foodlink) (2) Acquisition-Related Inventory Step-up Charge (IPA) See Appendix for Reconciliation from GAAP to Adjusted Results 3

Roper Conference Call » Q4 and FY Enterprise Financial Results A Diversified Growth Company » Segment Detail & Outlook Click to edit Master title style » 2015 Guidance » Q&A 4

Q4 Enterprise Results 5

Q4 2014 Enterprise Financial Results » Achieved Record Fourth Quarter Results • Orders, Revenue, Net Earnings, EBITDA, Cash Flow » Organic Revenue +7% • Broad-Based Revenue Growth Across All Segments » Operating Margin +110 Bps to 30.1% • 47% Operating Leverage » Net Earnings +13% to $187M; DEPS $1.85 » Operating Cash Flow +11% to $261M » Free Cash Flow +12% to $253M Excellent Q4 Performance; Strong Organic Growth and Leverage Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 6

Q4 Income Statement In $ Millions Q4’13 Q4’14 Note: Amounts may not total due to rounding Orders $900 $924 +3%; Book-to-Bill: 0.98x A Diversified Growth Company Revenue $889 $948 Organic +7%, FX (2%) Gross Profit $533 $568 Gross Margin 60.0% 59.9% Click to edit Master title style Operating Income $258 $286 +11%; 47% Leverage Operating Margin 29.0% 30.1% +110 Bps Interest Expense $20 $19 Other Income/(Expense) $(1) $(0) Earnings Before Tax $237 $266 +12% Tax Rate 30.2% 29.6% Net Earnings $166 $187 +13% DEPS $1.65 $1.85 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 7

Cash Flow Performance In $ Millions Q4 Operating Cash Flow » Q4 Operating Cash Flow: $261M • 11% Increase $261 • 140% Conversion $236 » Q4 Free Cash Flow: $253M $212 • 12% Increase • 136% Conversion » 2014 Free Cash Flow: $803M • 23% of Revenue 2012 2013 2014 We Believe Cash is the Best Measure of Performance Free Cash Flow = Operating Cash Flow – Capital Expenditures 8

Full Year Enterprise Results 9

Full Year Income Statement In $ Millions FY’13 FY’14 Note: Amounts may not total due to rounding Orders $3,375 $3,538 +5%; Book-to-Bill: 1.00x A Diversified Growth Company Revenue $3,272 $3,552 +9%; Organic +6% Gross Profit $1,916 $2,105 Gross Margin 58.6% 59.3% +70 Bps Click to edit Master title style Operating Income $885 $1,003 +13%; 42% Leverage Operating Margin 27.0% 28.2% +120 Bps Interest Expense $88 $79 Other Income/(Expense) $(0) $1 Earnings Before Tax $797 $925 +16% Tax Rate 29.0% 29.9% Net Earnings $566 $648 DEPS $5.65 $6.42 +14% Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 10

2014 EBITDA and Margin In $ Millions Full Year EBITDA Margin Full Year EBITDA +300 Bps +30% $1,201 33.8% 32.8% $1,074 30.8% $925 2012 2013 2014 2012 2013 2014 Record EBITDA Performance Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 11

Asset-Light Business Model Working Capital* as % of Q4 Annualized Net Sales 12/31/12 12/31/13 12/31/14 (I) Inventory 5.9% 5.7% 5.1% (200 Bps) 7.0% (R) Receivables 18.5% 17.0% 16.1% 5.2% 5.0% (P) Payables & 17.4% 17.5% 16.2% Accruals Total (I+R-P) 7.0% 5.2% 5.0% 2012 2013 2014 Note: Percentages may not sum correctly due to rounding Continuing to Execute Our Asset-Light Model * 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 12

Strong Financial Position In $ Millions 12/31/13 12/31/14 Cash $460 $610 Undrawn Revolver $1,250 $1,500 Cash and Undrawn Revolver $1,710 $2,110 Gross Debt $2,465 $2,214 Shareholders’ Equity $4,213 $4,755 Gross Debt to Capitalization 36.9% 31.8% TTM EBITDA $1,074 $1,201 Gross Debt-to-EBITDA (TTM) 2.3x 1.8x Pipeline Attractive; Expect to Deploy Over $1 Billion in 2015 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 13

Segment Detail & Outlook 14

Broad-Based Revenue Growth Full Year Organic Revenue Full Year Total Revenue Growth by Segment Growth by Segment A Diversified Growth Company 16% 8% 7% Click to edit Master title style 5% 5% 6% 6% 5% Energy Ind Tech RF Medical Energy Ind Tech RF Medical Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 15

2014 Segment Performance In $ Millions $1,082 A Diversified Growth Company $951 $827 $692 Revenue Click to edit Master title style $472 EBITDA* $330 $269 $226 Energy Ind Tech RF Medical * Excludes Corporate Expenses Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results. 16

2015 Oil & Gas Outlook Roper 2014 Revenue Downstream, Midstream (9%) A Diversified Growth Company Upstream (5%) Medical, RF, Software, Water and Other Markets Click to edit Master title style (86%) Expect (20%) Market Decline; Upstream (~5% of Rev.) Roper Pump Share Gains Mitigate Declines in Other Upstream Businesses Midstream Field Service & Pipeline Retrofits Up Modestly; Project Activity Weakness (~3% of Rev.) Downstream Refinery Instrumentation Applications & Field Service Growth (~6% of Rev.) Note: Table above depicts management’s estimates. 17

Energy Systems & Controls Q4 2014 • Q4’14 ($M) V to PY Organic Revenue +4% with Outstanding Margins A Diversified Growth Company • Strength in Product Businesses Offset Declines Revenue $200 +2% in Project Activity – Op Profit $72 +11% Product Business Growth Led by Diesel Engine Safety Systems and Vibration Click to edit Master title style OP Margin 36.1% +280 bps Monitoring – Field Service Growth Continued – CCC Upstream Project Activity Declined Energy % of Roper 2014 EBITDA* FY 2015 36 • 17% Upstream Declines (20% of segment) % • Modest Midstream/Downstream Growth (40% of segment) • Growth in Non Oil & Gas Businesses (40% of segment) • Flat to Modest Organic Growth 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. 18