A Diversified Technology Company
Q4 2017 Financial Results February 2, 2018 Safe Harbor Statement - - PowerPoint PPT Presentation
Q4 2017 Financial Results February 2, 2018 Safe Harbor Statement - - PowerPoint PPT Presentation
A Diversified Technology Company Q4 2017 Financial Results February 2, 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 Q4 and Full Year 2017 Results are Adjusted for the Following Items: (1) One-Time $215M Net Gain Resulting from the Tax Cuts and Jobs Act (2) Acquisition-Related Intangible Amortization Expense (3) Purchase Accounting Adjustment to Acquired Deferred Revenue and Related Commission Expense 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
» Q4 and FY 2017 Enterprise Financial Results » 2017 Segment Detail & 2018 Segment Outlook » 2018 Enterprise Guidance » Q&A
Q4 2017 Enterprise Highlights
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Strong Revenue Growth and Excellent Cash Performance
» Record Q4 Results: Revenue, Net Earnings, EBITDA, Cash Flow » Revenue +21% to $1.23B; Organic +5% » Gross Margin +30 Bps to 62.6% » DEPS +23% to $2.70 » EBITDA +21% to $441M » Operating Cash Flow +36% to $369M » Deltek and ConstructConnect Exceeded 2017 Expectations for
Revenue and Cash Flow
» Full Year Debt Reduction $1.06B; Deleveraged Rapidly
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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A Diversified Growth Company
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Q4 Income Statement Metrics
(in $ millions, except Adjusted DEPS)
Q4’16 Q4’17 Revenue $1,018 $1,235
+21%, Organic +5%
Gross Profit $634 $773
Gross Margin 62.3% 62.6%
+30 bps
EBITDA $365 $441
+21%
EBITDA Margin 35.9% 35.7%
Interest Expense $30 $43 Tax Rate 30.6% 26.9%
Excludes Q4’17 Tax Reform Impact
Net Earnings $225 $280
+24%
Adjusted DEPS $2.20 $2.70
+23%
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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A Diversified Growth Company
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Q4 Segment Results
Energy Systems & Controls
(13% of Roper Revenue)
Industrial Technology
(17% of 2017 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.
RF Technology & Software
(40% of Roper Revenue)
Medical & Scientific Imaging
(30% of Roper Revenue)
(in $ millions)
Q4’17 V to PY Revenue $160 +12% Op Profit $52 +13% OP Margin 32.2% Flat EBITDA $56 +11%
(in $ millions)
Q4’17 V to PY Revenue $207 +16% Op Profit $61 +18% OP Margin 29.4% +50 bps EBITDA $65 +16%
(in $ millions)
Q4’17 V to PY Revenue $368 +4% Op Profit $130 Flat OP Margin 35.3% (160) bps EBITDA $160 Flat
(in $ millions)
Q4’17 V to PY Revenue $499 +45% Op Profit $144 +35% OP Margin 28.8% Core +350 bps EBITDA $192 +47%
»
Organic Revenue (1%), +4% Excluding Toll & Traffic, Acquisitions +45% (Anniversary of Q4’16 Acquisitions)
»
Organic Revenue +14%, FX +2%
»
Organic Revenue +3%, FX +1%
»
Organic Revenue +9%, FX +3%
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A Diversified Growth Company
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Full Year Income Statement Metrics
(in $ millions, except Adjusted DEPS)
FY’16 FY’17 Revenue $3,805 $4,665
+23%, Organic +5%
Gross Profit $2,348 $2,922
Gross Margin 61.7% 62.6%
+90 bps
EBITDA $1,315 $1,605
+22%
EBITDA Margin 34.6% 34.4%
Interest Expense $112 $181 Tax Rate 30.9% 28.9%
Excludes Q4’17 Tax Reform Impact
Net Earnings $804 $975
+21%
Adjusted DEPS $7.84 $9.42
+20%
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
$3,805 $4,665 2016 2017 $1,315 $1,605 2016 2017 $1,001 $1,234 2016* 2017
Remarkable Year
Revenue
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EBITDA
+23%
Operating Cash Flow
+22% +23%
Full Year 2017 Growth
* Adjusted for Cash Taxes from ABEL Sale, See Reconciliation in Appendix
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
Compounding Cash Flow
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Cash Remains the Best Measure of Performance
» FY Operating Cash Flow: $1.23B
– 26% of Revenue
» FY Free Cash Flow: $1.17B
– 25% of Revenue
» FY Free Cash Conversion
– 121% of Adjusted Net Earnings
» Reduced Debt by $1.06B in 2017
– Deleveraged Rapidly
Full Year Free Cash Flow
(in $ millions)
Free Cash Flow = Operating Cash Flow less Capital Expenditures and Capitalized Software * Adjusted for Cash Taxes from ABEL Sale, See Reconciliation in Appendix
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
$961 $1,175 2016* 2017
+22%
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Net Working Capital Now a Source of Cash
4.3% 2.7% (3.3)% 2015 2016 2017
(760) Bps
* Defined as Inventory + A/R + Unbilled Receivables – A/P – Accrued Liabilities – Deferred Revenue; Excludes Acquisitions Completed in Each Quarter and Dividend Accrual
12/31/15 12/31/16 12/31/17
(I) Inventory 5.1% 4.6% 4.2% (R) Receivables 16.1% 16.3% 16.0% (P) Payables & Accruals 10.5% 10.9% 12.0% (D) Deferred Revenue 6.5% 7.2% 11.4% Total (I+R-P-D) 4.3% 2.7% (3.3)%
($ Millions)
Deferred Revenue
$267 $488 $566
Net Working Capital* as % of Q4 Annualized Revenue
Asset-Light Business Model
Notes: Percentages may not sum correctly due to rounding.
Strong Financial Position
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Deleveraged Rapidly; Enhances Capacity for 2018 Deployment 12/31/16 12/31/17 Cash $757 $671 Undrawn Revolver $570 $1,230 Gross Debt $6,210 $5,156 Net Debt $5,452 $4,484 TTM EBITDA $1,315 $1,605 Net Debt-to-EBITDA (TTM) 4.1x 2.8x
(in $ millions)
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results.
Multiple Tax Reform Benefits
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Tax Reform Increases Future Capital Deployment
Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results.
» Tax Cuts and Jobs Act Provides Meaningful Benefits to Roper » Effective Tax Rate Expected to be 21 - 23% in 2018
– Increases Earnings and Cash Flow
» Expect to Repatriate $500M+ of Offshore Cash in 2018
– Further Enhances Acquisition Capacity
» Mobility of Worldwide Cash Flows Enhances Ability to Deploy
Capital in the United States
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Segment Detail & Outlook
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FY 2017
»
Deltek and ConstructConnect Exceeded Initial Revenue and Cash Flow Expectations – Deltek Growth Balanced Across GovCon and Professional Services; Onvia Acquisition Strengthens Market Intelligence Subscription Platform – ConstructConnect Network Growth Drove Recurring Revenue Increases
»
+5% Organic Growth Across Software Businesses – Led by Freight Match and Aderant
»
RF Products Growth Led by RF IDeas
»
Toll and Traffic – Strong Project Execution; MTA and Saudi – Tag Shipments Improved after Weak Q1
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.
FY 2018
»
Deltek (Acquired Dec 2016) and ConstructConnect (Oct 2016) Become Organic
»
5 – 6% Organic Growth for Software Businesses; Strong Margin and Cash Performance
»
RF Products Continue to Grow MSD
»
Toll and Traffic Flat (~25% of Segment); Pipeline for New Opportunities Remains Strong; Timing Difficult to Forecast
(41% of 2017 Roper Revenue)
(in $ millions)
FY’17 V to PY Revenue $1,920 +57% Op Profit $531 +38% OP Margin 27.7% Core +130 bps EBITDA $723 +54%
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Medical & Scientific Imaging
FY 2017
»
Medical Products – Growth Led by NDI and CIVCO – Verathon Q4 Successful Product Launches: New BladderScan, Portable GlideScope
»
Alternate Site Healthcare – Broad-Based Growth Across Long Term Care GPO and Software Businesses
»
Acute Care Software – Growth Led by Decision Support SaaS, Diagnostic Connectivity and International Solutions – Challenges Continued for U.S. Lab Business
»
Scientific Imaging – Large Demand Created Substantial Backlog for Gatan Cryo-EM Products in Q4 FY 2018
»
4 – 6% Organic Revenue Growth for the Segment; Lower Margins (~100 bps)
»
Medical Products and Alternate Site: Broad- Based Growth
»
Acute Care Software – Decision Support SaaS and International Diagnostics Rapid Growth – U.S. Lab Business Declines
»
Imaging Strong as Gatan Delivers on 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.
(30% of 2017 Roper Revenue)
(in $ millions)
FY’17 V to PY Revenue $1,410 +3% Op Profit $487 +1% OP Margin 34.5% (60) bps EBITDA $605 +1%
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Industrial Technology / Energy Systems
Energy Segment 2017 Highlights
»
Broad-Based Growth Throughout the Segment More Than Offset Expected CCC Declines
»
Outstanding 50%+ Operating Leverage from Nimble Execution
»
FY 2018: 5 – 7% Organic Growth; Continued Strong Leverage Industrial Segment 2017 Highlights
»
Record Year for Neptune with Market Share Gains
»
Excellent Growth from Fluid Handling Businesses Aided by Rebound in Upstream Oil & Gas and Strength in Rental Markets
»
Operating Leverage Exceeded 40%
»
FY 2018: 5 – 7% Organic Growth; Continued Strong Leverage Energy Systems & Controls
(12% of 2017 Roper Revenue)
Industrial Technology
(17% of 2017 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)
FY’17 V to PY Revenue $784 +11% Op Profit $235 +16% OP Margin 30.0% +130 bps EBITDA $252 +14%
(in $ millions)
FY’17 V to PY Revenue $551 +8% Op Profit $151 +17% OP Margin 27.4% +200 bps EBITDA $168 +12%
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2018 Guidance
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Establishing 2018 Guidance
» Full Year Adjusted DEPS: $10.88 - $11.20
– Organic Revenue Growth: +4 – 5% – Tax Rate: 21 - 23%
» Q1 Adjusted DEPS: $2.44 - $2.50
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.
Year End Summary
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Entering 2018 With Positive Momentum
»
Asset-Light, Niche Market Strategy Delivers Outstanding Performance –
20%+ Annual Growth: Revenue, Net Earnings, EBITDA, Cash Flow
»
Consistent and Broad-Based Organic Growth Expected to Continue
»
Deltek and ConstructConnect Exceeded Expectations in First Year; Poised for Continued Growth
»
Ability to Compound Cash Enhanced –
Balance Sheet Strengthened: Deleveraged Rapidly, Reduced Debt by $1.06B
–
Tax Reform Improves Cash Flow and Ability to Deploy Capital
–
Net Working Capital Now a Source of Cash
»
Proven CRI Discipline Drives Successful Capital Deployment –
Expect to Deploy $7B+ Over The Next Four Years
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
Q4 2017 Revenue Growth Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology Roper Organic Growth 14% 9% 3% (1)% 5% Acquisitions/Divestitures
- 1%
- 45%
15% Foreign Exchange 2% 3% 1% 1% 1% Rounding
- (1)%
- Total Revenue Growth
16% 12% 4% 45% 21%
Q4 Revenue Detail
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Reconciliations II
(in $ thousands)
Q4 2017
Margin Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology GAAP Revenue $206,994 $160,440 $367,711 $491,438 Add: Construct Connect / Deltek / Onvia
- 8,044
Adjusted Revenue 206,994 160,440 367,711 499,482 GAAP Gross Profit 102,778 93,397 262,104 306,833 Add: Construct Connect / Deltek / Onvia
- 8,044
Less: Deltek Prepaid Commissions Adj
- (15)
Adjusted Gross Profit 102,778 93,397 262,104 314,862 GAAP Operating Profit 60,901 51,709 129,961 136,605 Add: Construct Connect / Deltek / Onvia
- 8,044
Less: Deltek Prepaid Commissions Adj
- (836)
Adjusted Operating Profit 60,901 51,709 129,961 143,813 Add Amortization 2,212 3,471 26,270 41,981 EBITA 63,113 55,180 156,231 185,794 Add Depreciation 2,004 768 3,490 6,270 EBITDA 65,117 55,948 159,721 192,064 EBITDA Margin 31% 35% 43% 38%
* Excludes Corporate Expenses
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Reconciliations III
(in $ thousands)
Q4 2016
Margin Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology GAAP Revenue $178,446 $142,639 $351,987 $337,728 Add: Atlas / CliniSys Adj
- 200
- Add: ConstructConnect / Deltek Adj
6,990 Adjusted Revenue 178,446 142,639 352,187 344,718 GAAP Gross Profit 90,683 85,824 256,941 193,430 Add: Atlas / CliniSys Adj
- 200
- Add: ConstructConnect / Deltek Adj
- 6,990
Less: Deltek Prepaid Commissions Adj
- (3)
Adjusted Gross Profit 90,683 85,824 257,141 200,417 GAAP Operating Profit 51,601 45,874 129,842 99,562 Add: Atlas / CliniSys Adj
- 200
- Add: ConstructConnect / Deltek Adj
- 6,990
Less: Deltek Prepaid Commissions Adj
- (93)
Adjusted Operating Profit 51,601 45,874 130,042 106,459 Add Amortization 2,237 3,622 26,966 21,180 EBITA 53,838 49,496 157,008 127,639 Add Depreciation 2,255 977 3,046 2,941 EBITDA 56,093 50,473 160,054 130,580 EBITDA Margin 31% 35% 45% 38%
* Excludes Corporate Expenses
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Reconciliations IV
(in $ thousands)
Full Year 2017
Margin Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology GAAP Revenue $783,707 $551,289 $1,410,349 $1,862,126 Add: CliniSys
- 49
- Add: Construct Connect / Deltek / Onvia
- 57,443
Adjusted Revenue 783,707 551,289 1,410,398 1,919,569 GAAP Gross Profit 396,188 316,479 1,015,200 1,136,929 Add: CliniSys
- 49
- Add: Construct Connect / Deltek / Onvia
- 57,443
Less: Deltek Prepaid Commissions Adj
- (129)
Adjusted Gross Profit 396,188 316,479 1,015,249 1,194,243 GAAP Operating Profit 235,018 151,163 486,575 479,295 Add: CliniSys
- 49
- Add: Construct Connect / Deltek / Onvia
- 57,443
Less: Deltek Prepaid Commissions Adj
- (5,372)
Adjusted Operating Profit 235,018 151,163 486,624 531,366 Add Amortization 8,848 13,433 105,377 167,794 EBITA 243,866 164,596 592,001 699,160 Add Depreciation 8,261 3,314 13,266 24,082 EBITDA 252,127 167,910 605,267 723,242 EBITDA Margin 32% 30% 43% 38%
* Excludes Corporate Expenses
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Reconciliations V
(in $ thousands)
Full Year 2016
Margin Reconciliation Industrial Technology Energy Systems & Controls Medical & Scientific Imaging RF Technology GAAP Revenue $706,625 $510,223 $1,362,813 $1,210,264 Add: Strata / SWI / DI / Atlas / CliniSys
- 1,884
- Add: Aderant / On Center / ConstructConnect / Deltek
- 13,243
Adjusted Revenue 706,625 510,223 1,364,697 1,223,507 GAAP Gross Profit 357,362 291,459 997,666 685,923 Add: Strata / SWI / DI / Atlas / CliniSys / PCI
- 2,141
- Add: Aderant / On Center / ConstructConnect / Deltek
- 13,243
Less: Deltek Prepaid Commissions Adj
- (3)
Adjusted Gross Profit 357,362 291,459 999,807 699,163 GAAP Operating Profit 202,451 129,602 477,548 372,467 Add: Strata / SWI / DI / Atlas / CliniSys / PCI
- 2,141
- Add: Aderant / On Center / ConstructConnect / Deltek
- 13,243
Less: Deltek Prepaid Commissions Adj
- (93)
Adjusted Operating Profit 202,451 129,602 479,689 385,617 Add Amortization 8,964 15,311 106,960 71,919 EBITA 211,415 144,913 586,649 457,536 Add Depreciation 9,609 4,390 12,288 10,734 EBITDA 221,024 149,303 598,937 468,270 EBITDA Margin 31% 29% 44% 38%
* Excludes Corporate Expenses
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Reconciliations VI
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Cash Flow Reconciliation
(in $ thousands)
FY 2016 FY 2017 Operating Cash Flow $963,833 $1,234,482 Cash Paid for Taxes on Sale of ABEL 37,429
- Adjusted Operating Cash Flow
1,001,262 1,234,482 Capital Expenditures (37,353) (48,752) Capitalized Software Expenditures (2,801) (10,784) Free Cash Flow $961,108 $1,174,946
A Diversified Technology Company