Roper Technologies, Inc. · NASDAQ:ROP
Roper Technologies — J.P. Morgan Conference 2019
24 slides from Roper Technologies's conference presentation, Mar 6, 2019
Slide 1: Roper Technologies Overview
A DIVERSIFIED TECHNOLOGY COMPANY ROPER TECHNOLOGIES OVERVIEW J.P. MORGAN CONFERENCE MARCH 6, 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: Consistent Roper Strategy
CONSISTENT ROPER STRATEGY STRATEGY RESULTS Win in Niche Markets with Diverse Portfolio of Significant Growth Platforms Software and Engineered Products & Solutions • Leadership in Favorable Markets • Diverse End Markets, Broad Customer Base High Gross Margins Recurring Revenue Asset-Light Business M
Slide 4: Governance Process Enhances Growth and Drives Financial Discipline
GOVERNANCE PROCESS ENHANCES GROWTH AND DRIVES FINANCIAL DISCIPLINE • Cash Return on Investment Metrics • Product, Placement, Hit Rate Analysis • Sales & Operating Leverage; Working Capital Efficiency • Operating Reviews with Detailed Performance Analysis • Break-Even Analysis Drives Better Decision
Slide 5: CRI Discipline Drives Cash Flow
CRI DISCIPLINE DRIVES CASH FLOW Cash Earnings Net Income + D&A – C ash = Maintenance Cap-Ex R eturn on Gross Investment Net Working Capital* + Net PP&E + Accumulated Depreciation I nvestment • Common Metric throughout Roper Businesses • Focuses Businesses on Cash Flow Growth & Disciplined Asset Inve
Slide 6: Roper Business Model
ROPER BUSINESS MODEL Decentralized Centralized Capital Business Type Operating Structure Deployment • Niche • Nimble Execution • CRI-Driven • Market Leader • Local Resource • Strategy Centered on • Recurring Revenue Allocation Decisions Business Model vs. • Strategic Discipline End Market • Compete
Slide 7: Compelling Cash Conversion
COMPELLING CASH CONVERSION $1.4 • Free Cash Flow Has GAAP Net Income* Free Cash Flow** Exceeded Net $1.2 Income for 21 $1.0 Consecutive Years $0.8 • Expect Strong Cash Conversion to $0.6 Continue $0.4 • $1.43 Billion of Operating Cash $0.2 Flow in 2018 $0.0 2003 2004 2005 2006 2007 2008 2009 2010 20
Slide 8: Executing Our High Performance Model
EXECUTING OUR HIGH PERFORMANCE MODEL EBITDA OPERATING CASH FLOW $1,806 $1,430 COMPOUND ANNUAL SHAREHOLDER RETURN (2003 - 2018) $130 $71 18% 2003 2018 2003 2018 ASSET INTENSITY CASH RETURN ON INVESTMENT Net Working Capital / Sales Gross Fixed Assets / Sales 8% 300%+ 18% 20% 8% S&P 500 ROP ~30% (3)% 2
Slide 9: Full Year 2018 Growth
FULL YEAR 2018 GROWTH EBITDA OPERATING CASH FREE CASH FLOW FLOW +13% +16% +17% $1,806 $1,430 $1,371 $1,605 $1,234 $1,175 2017 2018 2017 2018 2017 2018 % OF REVENUE 34.4% 34.7% 26.5% 27.5% 25.2% 26.4% In $ Millions. PAGE 9 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this pr
Slide 10: Asset-Light Business Model
ASSET-LIGHT BUSINESS MODEL NET WORKING CAPITAL(1)(2) AS % OF Q4(3) ANNUALIZED REVENUE 12/31/08 12/31/13 12/31/18 (10 Yrs Ago) (5 Yrs Ago) (Today) (1,420) Bps (I) Inventory 8.1% 5.7% 4.1% (R) Receivables 19.0% 17.0% 16.7% (P) Payables & 13.1% 11.0% 11.9% 10.8% Accruals 5.7% (D) Deferred 3.2% 5.9% 12.
Slide 11: New Segments
NEW SEGMENTS APPLICATION SOFTWARE NETWORK SOFTWARE & SYSTEMS 28% of Roper Revenue 26% of Roper Revenue 67% 68% $1,461 $1,345 40% 43% $578 $582 Revenue EBITDA Gross EBITDA Revenue EBITDA Gross EBITDA Margin Margin Margin Margin Businesses: Aderant, CBORD, CliniSys, Data Innovations, Businesses: Const
Slide 12: 2019 Guidance on New Segment Basis
2019 GUIDANCE ON NEW SEGMENT BASIS 2019 Organic NEW SEGMENTS Revenue Guidance Application Software +4% to +6% Network Software & Systems +4% to +6% Measurement & Analytical Solutions +4% to +6% Process Technologies (1%) to (5%) Roper Technologies Total +3% to +5% 2019 Organic OLD SEGMENTS Revenue Gu
Slide 13: Disciplined Acquisition Strategy Focused on High Quality Targets
DISCIPLINED ACQUISITION STRATEGY FOCUSED ON HIGH QUALITY TARGETS • We Only Acquire High CRI Deployed ~$10B in Acquisitions Over Businesses; Primarily Software Last Eight Years (2011- 2018) and Networks $6.9 • Acquisitions Funded by Excess Cash Flow and Investment Grade Debt • Leaders in Niche Market
Slide 14: Roper Technologies Today
ROPER TECHNOLOGIES TODAY • Diversified Technology Company – Independent Businesses with Leadership Positions in Niche Markets – Highly Profitable: 63% Gross Margin, 35% EBITDA Margin – Asset Light Model: Negative Working Capital and Minimal Cap Ex Requirements – Greater than 50% of Revenue is Recurr
Slide 15: Total Shareholder Return
TOTAL SHAREHOLDER RETURN COMPARISON OF CUMULATIVE TOTAL SHAREHOLDER RETURN Roper Technologies, Inc. S&P 500 $16,000 $15,000 $14,000 $13,000 $12,000 $11,000 $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 IPO '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '0
Slide 16: Appendix
APPENDIX
Slide 17: New Segment Financials
NEW SEGMENT FINANCIALS Adjusted Segment Financials ($M) (Unaudited) 2016 2017 2018 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Revenue Application Software $ 707 $ 301 $ 313 $ 321 $ 334 $ 1,269 $ 326 $ 360 $ 380 $ 394 $ 1,461 Network Software & Systems 1,111 303 316 326 321 1,265 314 334 342 355 1,345 Measurem
Slide 18: New Segment Revenue Growth
NEW SEGMENT REVENUE GROWTH Adjusted Revenue Growth (Unaudited) Application Software 2017 2018 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Organic Growth 6% 4% 3% 1% 4% 3% 7% 4% 7% 5% Acquisitions/Divestitures 73 % 77 % 77 % 77 % 76 % 4% 7% 15 % 11 % 9% Foreign Exchange (1)% (1)% —% 1% —% 2% 1% —% (1)% —% Total Re
Slide 19: Reconciliations I
RECONCILIATIONS I Adjusted Segment & Consolidated Financials Reconciliation (Unaudited) Application Software Reconciliation ($M) 2016 2017 2018 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY GAAP Revenue $ 699 $ 284 $ 300 $ 311 $ 327 $ 1,222 $ 324 $ 358 $ 378 $ 392 $ 1,453 Purchase accounting adjustment to acquir
Slide 20: Reconciliations II
RECONCILIATIONS II Adjusted Segment & Consolidated Financials Reconciliation (Unaudited) Network Software & Systems Reconciliation ($M) 2016 2017 2018 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY GAAP Revenue $ 1,104 $ 297 $ 313 $ 325 $ 320 $ 1,254 $ 314 $ 334 $ 342 $ 355 $ 1,345 Purchase accounting adjustment
Slide 21: Reconciliations III
RECONCILIATIONS III Adjusted Segment & Consolidated Financials Reconciliation (Unaudited) Measurement & Analytical Solutions Reconciliation ($M) A 2016 2017 2018 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY GAAP Revenue 1,456 371 379 373 408 1,531 404 426 430 446 1,706 GAAP Gross Profit 864 219 224 216 235 894
Slide 22: Reconciliations IV
RECONCILIATIONS IV Adjusted Segment & Consolidated Financials Reconciliation (Unaudited) Roper Consolidated Reconciliation ($M) A 2016 2017 2018 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY GAAP Revenue $ 3,790 $ 1,086 $ 1,135 $ 1,160 $ 1,227 $ 4,607 $ 1,203 $ 1,294 $ 1,319 $ 1,376 $ 5,191 Purchase accounting a
Slide 23: Reconciliations V
RECONCILIATIONS V Free Cash Flow Reconciliation ($M) Adjusted EBITDA Reconciliation ($M) FY 2016 FY 2017 FY 2018 FY 2018 Operating Cash Flow $ 964 $ 1,234 $ 1,430 GAAP Revenue $ 5,191 Add: Cash Paid for Taxes on Sale of ABEL 37 - - Purchase accounting adjustment to acquired Adjusted Operating Cash F
Slide 24: A Diversified Technology Company
A DIVERSIFIED TECHNOLOGY COMPANY