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 forward-looking statements may 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 uncertainties include our ability to identify and complete acquisitions consistent with our business strategies, Click to edit Master title style integrate acquisitions that have been completed, realize expected benefits and synergies from, and manage other 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 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 Results Primarily on an Adjusted (Non-GAAP) Basis. The Q4 and Full Year 2017 Results are Adjusted for the Following Items: A Diversified Growth Company (1) One-Time $215M Net Gain Resulting from the Tax Cuts and Click to edit Master title style 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 3
Roper Conference Call » Q4 and FY 2017 Enterprise Financial Results A Diversified Growth Company » 2017 Segment Detail & 2018 Segment Outlook » 2018 Enterprise Guidance Click to edit Master title style » Q&A 4
Q4 2017 Enterprise Highlights » 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 Strong Revenue Growth and Excellent Cash Performance 5 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
Q4 Income Statement Metrics Q4’16 Q4’17 (in $ millions, except Adjusted DEPS) Revenue $1,018 $1,235 +21%, Organic +5% A Diversified Growth Company Gross Profit $634 $773 Gross Margin 62.3% 62.6% +30 bps Click to edit Master title style 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% 6 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
Q4 Segment Results RF Technology & Software Medical & Scientific Imaging (40% of Roper Revenue) (30% of Roper Revenue) Q4’17 V to PY Q4’17 V to PY (in $ millions) (in $ millions) A Diversified Growth Company Revenue $499 +45% Revenue $368 +4% Op Profit $144 +35% Op Profit $130 Flat OP Margin 28.8% Core +350 bps OP Margin 35.3% (160) bps EBITDA $192 +47% EBITDA $160 Flat Click to edit Master title style » » Organic Revenue (1%), +4% Excluding Toll & Traffic, Organic Revenue +3%, FX +1% Acquisitions +45% (Anniversary of Q4’16 Acquisitions) Industrial Technology Energy Systems & Controls (17% of 2017 Roper Revenue) (13% of Roper Revenue) Q4’17 V to PY Q4’17 V to PY (in $ millions) (in $ millions) Revenue $207 +16% Revenue $160 +12% Op Profit $61 +18% Op Profit $52 +13% OP Margin 29.4% +50 bps OP Margin 32.2% Flat EBITDA $65 +16% EBITDA $56 +11% » » Organic Revenue +14%, FX +2% Organic Revenue +9%, FX +3% 7 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
Full Year Income Statement Metrics FY’16 FY’17 (in $ millions, except Adjusted DEPS) Revenue $3,805 $4,665 +23%, Organic +5% A Diversified Growth Company Gross Profit $2,348 $2,922 Gross Margin 61.7% 62.6% +90 bps Click to edit Master title style 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% 8 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
Full Year 2017 Growth Revenue EBITDA Operating Cash Flow +23% +22% +23% $1,234 $4,665 $1,605 $1,315 $3,805 $1,001 2016 2017 2016 2017 2016* 2017 * Adjusted for Cash Taxes from ABEL Sale, See Reconciliation in Appendix Remarkable Year 9 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 » FY Operating Cash Flow: $1.23B Full Year Free Cash Flow (in $ millions) – 26% of Revenue » FY Free Cash Flow: $1.17B +22% $1,175 – 25% of Revenue » FY Free Cash Conversion $961 – 121% of Adjusted Net Earnings » Reduced Debt by $1.06B in 2017 – Deleveraged Rapidly 2016* 2017 Free Cash Flow = Operating Cash Flow less Capital Expenditures and Capitalized Software * Adjusted for Cash Taxes from ABEL Sale, See Reconciliation in Appendix Cash Remains the Best Measure of Performance 10 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation and press release for reconciliations from GAAP to Adjusted results.
Asset-Light Business Model Net Working Capital* as % of Q4 Annualized Revenue 12/31/15 12/31/16 12/31/17 (760) Bps (I) Inventory 5.1% 4.6% 4.2% 4.3% 2.7% (R) Receivables 16.1% 16.3% 16.0% (P) Payables & 10.5% 10.9% 12.0% Accruals (D) Deferred 6.5% 7.2% 11.4% Revenue Total (I+R-P-D) 4.3% 2.7% (3.3)% (3.3)% 2015 2016 2017 ($ Millions) $267 $488 $566 Deferred Revenue * Defined as Inventory + A/R + Unbilled Receivables – A/P – Accrued Liabilities – Deferred Revenue; Excludes Acquisitions Completed in Each Quarter and Dividend Accrual Net Working Capital Now a Source of Cash 11 Notes: Percentages may not sum correctly due to rounding.
Strong Financial Position (in $ millions) 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 Deleveraged Rapidly; Enhances Capacity for 2018 Deployment 12 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 » 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 Tax Reform Increases Future Capital Deployment 13 Results are presented on an Adjusted (Non-GAAP) basis. See appendix of this presentation for reconciliations from GAAP to Adjusted results.
Segment Detail & Outlook 14
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