Roper Technologies, Inc. · NASDAQ:ROP
Roper Technologies — Q4 2018 Earnings Presentation
28 slides from Roper Technologies's earnings presentation, Feb 1, 2019
Slide 1: Q4 2018 Financial Results
A DIVERSIFIED TECHNOLOGY COMPANY Q4 2018 FINANCIAL RESULTS FEBRUARY 1, 2019 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 Q4 Results are Adjusted for the Following Items: (1) Acquisition-Related Intangible Amortization Expense (2) Purchase Accounting Adjustment to Acquired Deferred Revenue (3) Recognition of De
Slide 4: Roper Conference Call
ROPER CONFERENCE CALL • Q4 and FY 2018 Enterprise Financial Results • 2018 Segment Detail & 2019 Segment Outlook • 2019 Enterprise Guidance • Q&A PAGE 4
Slide 5: Q4 2018 Enterprise Highlights
Q4 2018 ENTERPRISE HIGHLIGHTS • Record Q4 Results: Revenue, EBITDA, Net Earnings, Cash Flow • Revenue +12% to $1.38B; Organic +9% • Gross Profit +13%; Margin +90 Bps to 63.5% • EBITDA +12% to $496M; EBITDA Margin +30 Bps to 36.0% • Earnings Before Taxes +14% to $435M • DEPS +19% to $3.22 • Operating
Slide 6: Q4 Income Statement Metrics
Q4 INCOME STATEMENT METRICS Q4’17 Q4’18 Revenue $1,235 $1,378 +12%; Organic +9% Gross Profit $773 $874 Gross Margin 62.6% 63.5% +90 bps EBITDA $441 $496 +12% EBITDA Margin 35.7% 36.0% Interest Expense $43 $47 Earnings Before Taxes $383 $435 +14% Tax Rate 26.9% 22.8% Net Earnings $280 $336 DEPS $2.70
Slide 7: Q4 Segment Results
Q4 SEGMENT RESULTS RF TECHNOLOGY & SOFTWARE MEDICAL & SCIENTIFIC IMAGING 43% of Roper Revenue 29% of Roper Revenue Q4’18 V to PY Q4’18 V to PY Revenue $590 +18% Revenue $402 +9% Op Profit $171 +19% Op Profit $142 +9% OP Margin 29.0% Core +110 bps OP Margin 35.3% Flat EBITDA $229 +19% EBITDA $170 +7%
Slide 8: Full Year Income Statement Metrics
FULL YEAR INCOME STATEMENT METRICS FY’17 FY’18 Revenue $4,665 $5,199 +11%; Organic +8% Gross Profit $2,922 $3,287 Gross Margin 62.6% 63.2% +60 bps EBITDA $1,605 $1,806 +13% EBITDA Margin 34.4% 34.7% +30 bps Interest Expense $181 $182 Earnings Before Taxes $1,371 $1,571 +15% Tax Rate 28.9% 21.5% Sust
Slide 9: Compounding Cash Flow
COMPOUNDING CASH FLOW • Q4 Free Cash Flow: $447M FULL YEAR FREE CASH FLOW in $ millions – +27% vs Prior Year +19% – 32% of Revenue CAGR • FY Operating Cash Flow: $1.43B – +16% vs Prior Year $1,371 – 28% of Revenue $1,175 • FY Free Cash Flow: $1.37B $961 – +17% vs Prior Year – 26% of Revenue 2016* 20
Slide 10: Asset-Light Business Model
ASSET-LIGHT BUSINESS MODEL NET WORKING CAPITAL (1)(2) AS % OF Q4 Q4 DEFERRED REVENUE (2 )(3 ) ANNUALIZED REVENUE in $ millions 12/31/16 12/31/17 12/31/18 (I) Inventory 4.6% 4.2% 4.1% (R) Receivables 16.3% 16.0% 16.7% (P) Payables & 10.9% 12.0% 11.9% $682 Accruals $566 (D) Deferred 7.2% 11.4% 12.2% $
Slide 11: Strong Financial Position
STRONG FINANCIAL POSITION 12/31/17 12/31/18 V to PY Cash $671 $364 Gross Debt $5,156 $4,942 ($214) Net Debt $4,484 $4,578 TTM EBITDA $1,605 $1,806 +$201 Gross Debt-to-EBITDA (TTM) 3.2x 2.7x Net Debt-to-EBITDA (TTM) 2.8x 2.5x Undrawn on $2.5B Revolver $1,230 $1,635 Reduced Leverage; Deployed $1.3B in
Slide 12: Segment Detail & Outlook
SEGMENT DETAIL & OUTLOOK
Slide 13: RF Technology & Software
RF TECHNOLOGY & SOFTWARE 42% of 2018 Roper Revenue FY’18 V to PY • Freight Match Record Year from Network Revenue $2,176 +13% Expansion and Favorable Market Conditions Op Profit $621 +17% • Aderant Double Digit Growth on Share Gains OP Margin 28.5% Core +130 bps • iTradeNetwork Grew MSD with Solid M
Slide 14: Medical & Scientific Imaging
MEDICAL & SCIENTIFIC IMAGING 29% of 2018 Roper Revenue FY’18 V to PY • Rapid Growth from Niche Medical Product Revenue $1,522 +8% Businesses: CIVCO, NDI and IPA Op Profit $521 +7% • Double-Digit Growth from Verathon OP Margin 34.2% (30) bps – Strong Demand for New BladderScan EBITDA $637 +5% – Recur
Slide 15: Industrial Technology / Energy Systems & Controls
INDUSTRIAL TECHNOLOGY / ENERGY SYSTEMS & CONTROLS INDUSTRIAL TECHNOLOGY 2018 HIGHLIGHTS 17% of 2018 Roper Revenue • Segment Organic +14% FY’18 V to PY • Double Digit Growth at Neptune; Continued Share Gains from Customer-Focused Innovation Revenue $900 +15% • Great Year at Cornell and Roper Pump Dri
Slide 16: 2019 Guidance
2019 GUIDANCE
Slide 17: Establishing 2019 Guidance
ESTABLISHING 2019 GUIDANCE • Full Year Adjusted DEPS: $12.00 - $12.40 – Organic Revenue Growth: +3 – 5% – Tax Rate: ~22% – Includes ~($0.25) Impact from Pending Imaging Divestitures, Net of Interest • Q1 Adjusted DEPS: $2.74 - $2.80 • Guidance Excludes Impact of Future Acquisitions or Divestitures –
Slide 18: Year End Summary
YEAR END SUMMARY • Excellent 2018 Performance – Diversified, Niche Market Strategy Continues to Produce Strong Results – 8% Organic Revenue Growth; Broad-Based Across All Four Segments – Gross Margin +60 Bps to 63.2%; EBITDA Margin +30 Bps to 34.7% – Free Cash Flow Increased 17% to $1.37B; 26% of Re
Slide 19: Appendix
APPENDIX
Slide 20: Reconciliations I
RECONCILIATIONS I Revenue Growth Reconciliation Medical & Energy Q4 2018 RF Scientific Industrial Systems & Technology Imaging Technology Controls Roper Organic Growth 10% 10% 8% 2% 9% Acquisitions/Divestitures 9% - - - 4% Foreign Exchange - (1%) (1%) (1%) (1%) Rounding (1%) - 1% - - Total Revenue G
Slide 21: Reconciliations II
RECONCILIATIONS II Adjusted Gross Margin Reconciliation ($M) Free Cash Flow Reconciliation ($M) Q4 2017 Q4 2018 V% / Bps Q4 2017 Q4 2018 V% GAAP Revenue $ 1,227 $ 1,376 12% Operating Cash Flow $ 369 $ 464 26% Purchase accounting adjustment to acquired Capital Expenditures (13) (15) A deferred revenu
Slide 22: Reconciliations III
RECONCILIATIONS III Adjusted EBITDA Reconciliation ($M) FY 2017 FY 2018 V% / Bps Q4 2017 Q4 2018 V% / Bps GAAP Revenue $ 4,607 $ 5,191 13% GAAP Revenue $ 1,227 $ 1,376 12% Purchase accounting adjustment to acquired A Purchase accounting adjustment to acquired deferred revenue 57 8 A deferred revenue
Slide 23: Reconciliations IV
RECONCILIATIONS IV Adjusted Earnings Before Taxes Reconciliation ($M) Q4 2017 Q4 2018 V% GAAP Earnings Before Taxes $ 303 $ 318 5% Purchase accounting adjustment to acquired deferred A revenue 8 1 Amortization of acquisition-related intangible assets D 73 81 One-time expense for accelerated vesting
Slide 24: Reconciliations V
RECONCILIATIONS V Adjusted Net Earnings Reconciliation ($M) E FY 2017 FY 2018 V% Q4 2017 Q4 2018 V% GAAP Net Earnings $ 972 $ 944 (3%) GAAP Net Earnings $ 444 $ 257 (42%) Purchase accounting adjustment to acquired deferred A Purchase accounting adjustment to acquired deferred A revenue 37 6 revenue
Slide 25: Reconciliations VI
RECONCILIATIONS VI Adjusted DEPS Reconciliation E FY 2017 FY 2018 V% Q4 2017 Q4 2018 V% GAAP DEPS $ 9.39 $ 9.05 (4%) GAAP DEPS $ 4.27 $ 2.46 (42%) Purchase accounting adjustment to acquired deferred Purchase accounting adjustment to acquired deferred A revenue 0.36 0.06 A revenue 0.05 0.01 D Amortiz
Slide 26: Reconciliations VII
RECONCILIATIONS VII Segment Reconciliation ($M) RF Technology Medical & Scientific Imaging Industrial Technology Energy Systems & Controls Q4 2017 Q4 2018 Q4 2017 Q4 2018 Q4 2017 Q4 2018 Q4 2017 Q4 2018 GAAP Revenue $ 491 $ 589 $ 368 $ 402 $ 207 $ 223 $ 160 $ 162 Add: ConstructConnect & Deltek; Powe
Slide 27: Footnotes
FOOTNOTES A. Q4'18 acquisition-related fair value adjustment to deferred revenue related to the acquisitions of Onvia and PowerPlan ($1M pretax, $1M after-tax). FY'18 acquisition-related fair value adjustment to deferred revenue related to the acquisitions of Deltek, Onvia, and PowerPlan ($8M pretax
Slide 28: A Diversified Technology Company
A DIVERSIFIED TECHNOLOGY COMPANY