Roper Technologies, Inc. · NASDAQ:ROP
Roper Technologies — Q2 2020 Earnings Presentation
25 slides from Roper Technologies's earnings presentation, Jul 28, 2020
Slide 1: Q2 2020 Financial Results
A DIVERSIFIED TECHNOLOGY COMPANY Q2 2020 FINANCIAL RESULTS JULY 28, 2020 SIMPLE IDEAS. POWERFUL RESULTS.
Slide 2: Safe Harbor Statement
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,
Slide 3: Reg. G Disclosure
REG. G DISCLOSURE Today’s Conference Call Will Discuss Results Primarily on an Adjusted (Non-GAAP) Basis. The Q2 Results are Adjusted for the Following Items: (1) Acquisition-Related Intangible Amortization Expense (2) Purchase Accounting Adjustment to Acquired Deferred Revenue (3) Restructuring Cha
Slide 4: Roper Conference Call
ROPER CONFERENCE CALL • Q2 Enterprise Highlights and Financial Results • Segment Detail & Outlook • Q3 & FY 2020 Enterprise Guidance • Q&A PAGE 4
Slide 5: Q2 2020 Enterprise Highlights
Q2 2020 ENTERPRISE HIGHLIGHTS • Revenue (2)% to $1.31B; Organic (3)% – Positive Organic Growth in Application Software and Network Software & Systems – Strong Demand for Medical Products and Laboratory Software Used to Battle COVID-19 • Gross Margin +70 Bps to 64.7% • EBITDA Margin 35.3%, Flat vs Pr
Slide 6: Q2 Segment Results Summary
Q2 SEGMENT RESULTS SUMMARY ORGANIC Q2 Q2 WHAT HAPPENED REVENUE GUIDANCE RESULTS • Maintained High Level of Recurring Revenue Application • Positive COVID-19 Impact for Lab Software Businesses - MSD + 1% Software • License Sales Better Than Expected • Remote Implementations Proving Successful Network
Slide 7: Q2 Income Statement Metrics
Q2 INCOME STATEMENT METRICS Q2’19 Q2’20 Revenue $1,332 $1,306 (2)%; Organic (3)% Gross Profit $852 $845 Gross Margin 64.0% 64.7% +70 bps EBITDA $471 $461 (2)% EBITDA Margin 35.3% 35.3% Flat Interest Expense $45 $47 Tax Rate 21.9% 22.3% Net Earnings $323 $311 DEPS $3.07 $2.94 (4)% In $ millions, exce
Slide 8: Compounding Cash Flow
COMPOUNDING CASH FLOW • Q2 Operating Cash Flow: $325M* Q2 FREE CASH FLOW in $ millions – +8% vs Prior Year +12% CAGR – 25% of Revenue • Q2 Free Cash Flow: $315M* – +10% vs Prior Year $315 – 24% of Revenue $286 • Adjusted for $124M of Income Tax $250 Payments Deferred from Q2 to Q3 Due to COVID-19 Q2
Slide 9: Net Working Capital
NET WORKING CAPITAL NET WORKING CAPITAL (1) (2) AS % OF Q2 ANNUALIZED REVENUE 2018 2019 2020 Q2’18 Q2’19 Q2’20 (1.9)% (I) Inventory 4.3% 4.3% 4.2% (2.4)% (R) Receivables 16.4% 17.3% 18.4% (5.4)% (P) Payables & 10.9% 10.5% 12.1% Accruals (D) Deferred 11.7% 13.5% 15.8% Revenue Total (I+R-P-D) (1.9)% (
Slide 10: Strong Financial Position
STRONG FINANCIAL POSITION 6/30/19 6/30/20 Cash $321 $1,871 Note: $600M Bond Offering in Gross Debt $4,721 $5,866 June; 2030 Notes @ 2.0% Net Debt $4,400 $3,996 TTM EBITDA $1,877 $1,944 Net Debt-to-EBITDA (TTM) 2.3x 2.1x Drawn on $2.5B Revolver $640 $0 Significant Capacity for Capital Deployment In $
Slide 11: Segment Detail & Outlook
SEGMENT DETAIL & OUTLOOK
Slide 12: Application Software
APPLICATION SOFTWARE Q2 HIGHLIGHTS Q2 RESULTS 31% of Roper Revenue • High Levels of Recurring Revenue Provided Stability; Retention Rates Remained High +2% vs PY Revenue $398 • Better Than Expected Execution Against +1% Organic Sales Pipeline (License and Services) EBITDA $172 43.1% Margin – Deltek,
Slide 13: Network Software & Systems
NETWORK SOFTWARE & SYSTEMS Q2 HIGHLIGHTS Q2 RESULTS 32% of Roper Revenue • Network Software +2% Organic – SaaS Business Models, Network Effects, +15% vs PY and Strong Retention Rates Revenue $423 +2% Organic • ConstructConnect Network Expanded; Increased Utilization of Enhanced Platform in EBITDA $1
Slide 14: Measurement & Analytical Solutions
MEASUREMENT & ANALYTICAL SOLUTIONS Q2 HIGHLIGHTS Q2 RESULTS 28% of Roper Revenue • Unprecedented Verathon Growth with COVID-19 Accelerating Broad-Based Adoption of Video (11)% vs PY Revenue $364 Intubation Technology (1)% Organic – Strong Demand for GlideScope Systems & EBITDA $132 36.2% Margin Cons
Slide 15: Process Technologies
PROCESS TECHNOLOGIES Q2 HIGHLIGHTS Q2 RESULTS 9% of Roper Revenue • Upstream Oil & Gas Businesses Down ~40% – Approx. 2% of Roper Revenue (27)% vs PY Revenue $121 (26)% Organic • PAC Declined Related to Weak Fuel Demand • CCC Field Service Pressure from Lack of EBITDA $33 27.4% Margin Access to Cust
Slide 16: 2020 Guidance
2020 GUIDANCE
Slide 17: Guidance Update
GUIDANCE UPDATE • Updating Full Year 2020 Guidance – Adjusted DEPS: $11.90 - $12.40 • Previously $11.60 - $12.60 • ~$0.20 from TransCore NYC Project Shifts into 2021 – Flat Full Year Organic Revenue • Establishing Q3 2020 Guidance – Adjusted DEPS: $2.90 - $3.00 Guidance excludes impact of unannounce
Slide 18: Summary
SUMMARY • Strong Execution Across Diverse Portfolio of Asset-Light Businesses – Revenue (2)% to $1.31B; (3)% Organic – EBITDA Margin 35.3%, Flat vs Prior Year – Free Cash Flow +10% to $315M • Businesses Remain Focused on Employee Health and Safety, Delivering Compelling Customer Value, and Long-Term
Slide 19: Appendix
APPENDIX
Slide 20: Reconciliations I
RECONCILIATIONS I Adjusted Revenue Growth Reconciliation Network Measurement Q2 2020 Application Software & & Analytical Process Software Systems Solutions Technologies Roper Organic 1% 2% (1%) (26%) (3%) Acquisitions/Divestitures 2% 13% (10%) - 1% Foreign Exchange (1%) - (1%) (1%) (1%) Rounding - -
Slide 21: Reconciliations II
RECONCILIATIONS II Adjusted Revenue, Gross Profit and EBITDA Reconciliation ($M) Q2 2019 Q2 2020 V% Adjusted Revenue Reconciliation GAAP Revenue $ 1,330 $ 1,305 (2%) Purchase accounting adjustment to acquired deferred A revenue 2 1 Adjusted Revenue $ 1,332 $ 1,306 (2%) Adjusted Gross Profit Reconcil
Slide 22: Reconciliations III
RECONCILIATIONS III Adjusted Net Earnings Reconciliation ($M) C Q2 2019 Q2 2020 V% GAAP Net Earnings $ 250 $ 219 (12%) Purchase accounting adjustment to acquired deferred A revenue 1 1 Restructuring charge associated with certain Process Technologies businesses - 11 Transaction-related expenses for
Slide 23: Reconciliations IV
RECONCILIATIONS IV Adjusted DEPS Reconciliation C Q2 2019 Q2 2020 V% GAAP DEPS $ 2.38 $ 2.08 (13%) Purchase accounting adjustment to acquired deferred A revenue 0.01 0.01 Restructuring charge associated with certain Process Technologies businesses - 0.10 Transaction-related expenses for completed B
Slide 24: Footnotes
FOOTNOTES A. 2020 actual results and forecast of estimated acquisition-related fair value adjustments to deferred revenue related to the acquisitions of Foundry and iPipeline as shown below ($M except per share data). Q2 2019A Q2 2020A Q3 2020E FY 2020E Pretax $ 2 $ 1 $ - $ 4 After-tax $ 1 $ 1 $ - $
Slide 25: A Diversified Technology Company
A DIVERSIFIED TECHNOLOGY COMPANY