Roper Industries Announces Record Results for Fourth Quarter and Full Year 2013

Fourth-Quarter Diluted Earnings Per Share of $1.65
Full-Year Operating Cash Flow Increased 18% to $803 million

PR Newswire

SARASOTA, Fla., Jan. 27, 2014 /PRNewswire/ -- Roper Industries, Inc. (ROP), a diversified growth company, reported financial results for the fourth quarter and full year ended December 31, 2013.

Roper reports full year results, including revenue, operating margin, net income and diluted earnings per share, on a GAAP and adjusted basis.  Fourth quarter results are presented on a GAAP basis with no adjustments.  Adjusted measures are reconciled to the corresponding GAAP measures at the end of this release. 

Fourth Quarter 2013

Net earnings for the fourth quarter were $166 million or $1.65 per diluted share.  Fourth quarter revenue was $889 million, 10% higher than in 2012 and 9% higher than 2012 fourth quarter adjusted revenue of $816 million. Orders increased 16% to $900 million, including 10% organic growth.  Operating margin expanded to 29.0%.  Operating cash flow in the quarter was $236 million, representing 27% of revenue.

"We are very pleased with our fourth-quarter performance, with record orders, revenue, margin and cash flow," said Brian Jellison, Roper's Chairman, President and CEO.  "Gross margin in the quarter was 60.0% and EBITDA reached $307 million, or 34.5% of revenue. Our asset-light businesses in favorable niche markets continue to deliver exceptional results.  Free cash flow in the quarter was $227 million, which represented 137% of net earnings."

Full Year 2013

2013 GAAP diluted earnings per share were $5.37 and adjusted diluted earnings per share were $5.65.  GAAP revenue was $3.24 billion, an increase of 8% over the prior year, while adjusted revenue was $3.27 billion, an increase of 9%.  GAAP operating margin increased 70 basis points to 26.0% and adjusted operating margin was 27.0%, a 130 basis point increase over the prior year. 

"2013 was another outstanding year for Roper as we once again achieved record results for sales, orders, backlog, net earnings and cash flow," said Mr. Jellison.  "We delivered $803 million of operating cash flow for the year and $760 million of free cash flow.  In May, we acquired Managed Health Care Associates (MHA), which has already proven to be an exciting new growth platform.  We ended the year with a strong balance sheet, including over $1.6 billion in cash and available liquidity."

2014 Outlook and Guidance

The company's guidance for 2014 is provided on a GAAP basis and excludes future acquisitions.

Roper expects 2014 full year diluted earnings per share (DEPS) between $6.05 and $6.25 with expected first quarter DEPS between $1.30 and $1.35.  "We enter 2014 with record year-end backlog, exciting growth opportunities and an expectation for record performance," said Mr. Jellison.

Use of Non-GAAP Financial Information

The company supplements its consolidated financial statements presented on a GAAP basis with certain non-GAAP financial information to provide investors with greater insight, increase transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making.  Reconciliation of non-GAAP measures to their most directly comparable GAAP measures are included in the accompanying financial schedules or tables.  The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP, and the financial results prepared in accordance with GAAP and reconciliations from these results should be carefully evaluated. 

Table 1:  Q4 Revenue Growth Detail






Q4 2012

Q4 2013

V%

GAAP Revenue

$810

$889

10%

Adjusted Revenue

$816

$889

9%





Adjusted Revenue Growth:




     Organic Growth



4%

     Acquisitions



5%

     Foreign Exchange



--

     Total Growth



9%





Table 2:  Free Cash Flow Reconciliation





Q4 2013

FY 2013

Operating Cash Flow

236

803

Less: Capital Expenditures

(9)

(43)

Free Cash Flow

227

760




Table 3:  EBITDA Reconciliation




Q4 2013

Revenue (B)

$889.2



Net Earnings

165.7

Add:  Interest Expense

20.1

Add:  Income Taxes

71.6

Add:  Depreciation & Amortization

49.7

EBITDA (A)

$307.1





% of Revenue (A) / (B)

34.5%



Conference Call to be Held at 8:30 AM (ET) Today

A conference call to discuss these results has been scheduled for 8:30 AM ET on Monday, January 27, 2014.  The call can be accessed via webcast or by dialing +1 888-417-8465 (US/Canada) or +1 719-325-2432, using confirmation code 6035185.  Webcast information and conference call materials will be made available in the Investors section of Roper's website (www.roperind.com) prior to the start of the call. Telephonic replays will be available for up to two weeks by calling +1 719-457-0820 and using the access code 6035185.

About Roper Industries

Roper Industries is a diversified growth company and is a constituent of the S&P 500, Fortune 1000, and the Russell 1000 indices. Roper provides engineered products and solutions for global niche markets, including software information networks, medical, water, energy, and transportation. Additional information about Roper is available on the company's website at www.roperind.com.

The information provided in this press release contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements 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 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 integrate acquisitions and realize expected synergies.  We also face other general risks, including our ability to realize cost savings from our operating initiatives, general economic conditions, unfavorable changes in foreign exchange rates, difficulties associated with exports, risks associated with our international operations, difficulties in making and integrating acquisitions, risks associated with newly acquired businesses, 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.

 

Roper Industries, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(Amounts in thousands)










December 31,


December 31,

ASSETS

2013


2012





CURRENT ASSETS:




  Cash and cash equivalents

$        459,720


$       370,590

  Accounts receivable

519,075


526,408

  Inventories 

204,923


190,867

  Unbilled receivable

86,945


72,193

  Deferred taxes

64,464


41,992

  Other current assets

38,210


43,492

    Total current assets

1,373,337


1,245,542





PROPERTY, PLANT AND EQUIPMENT, NET

117,310


110,397





OTHER ASSETS:




  Goodwill

4,549,998


3,868,857

  Other intangible assets, net

2,039,136


1,698,867

  Deferred taxes

28,773


78,644

  Other assets

76,427


68,797

    Total other assets

6,694,334


5,715,165





TOTAL ASSETS

$     8,184,981


$    7,071,104









LIABILITIES AND STOCKHOLDERS' EQUITY








CURRENT LIABILITIES:




  Accounts payable

$        150,313


$       138,340

  Accrued compensation

107,953


110,724

  Deferred revenue

209,332


185,912

  Other accrued liabilities

153,712


128,351

  Income taxes payable

4,275


-

  Deferred taxes

6,490


3,868

  Current portion of long-term debt

11,016


519,015

    Total current liabilities

643,091


1,086,210





NONCURRENT LIABILITIES:




  Long-term debt

2,453,836


1,503,107

  Deferred taxes

783,805


707,278

  Other liabilities

91,199


86,783

    Total liabilities

3,971,931


3,383,378





STOCKHOLDERS' EQUITY:




  Common stock

1,013


1,006

  Additional paid-in capital

1,229,233


1,158,001

  Retained earnings

2,959,196


2,489,858

  Accumulated other comprehensive earnings

43,083


58,537

  Treasury stock

(19,475)


(19,676)

    Total stockholders' equity

4,213,050


3,687,726





TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$     8,184,981


$    7,071,104





 

Roper Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (unaudited)

(Amounts in thousands, except per share data)





















Three months ended


Twelve months ended



December 31,


December 31,



2013


2012


2013


2012










Net sales


$  889,173


$  809,910


$3,238,128


$2,993,489

Cost of sales


355,953


343,549


1,355,200


1,321,772










Gross profit


533,220


466,361


1,882,928


1,671,717










Selling, general and administrative expenses


275,131


241,119


1,040,567


914,130










Income from operations


258,089


225,242


842,361


757,587










Interest expense


20,115


20,509


88,039


67,525

Loss on extinguishment of debt


-


-


-


(1,043)

Other income/(expense)


(645)


106


(192)


(2,338)










Earnings from continuing operations before income taxes


237,329


204,839


754,130


686,681










Income taxes


71,626


61,309


215,837


203,321










Net Earnings


$  165,703


$  143,530


$   538,293


$   483,360














































Earnings per share:









  Basic


$       1.67


$       1.46


$        5.43


$        4.95

  Diluted


$       1.65


$       1.44


$        5.37


$        4.86










Weighted average common and common equivalent shares outstanding:









    Basic


99,315


98,422


99,123


97,702

    Diluted


100,380


99,576


100,209


99,558










 

Roper Industries, Inc. and Subsidiaries

Selected Segment Financial Data (unaudited)

(Amounts in thousands and percents of net sales)





































Three months ended December 31,


Twelve months ended December 31,



2013


2012


2013


2012



Amount


%


Amount


%


Amount


%


Amount


%

Net sales:

















  Industrial Technology


$   199,098




$  197,152




$   779,564




$   795,240



  Energy Systems & Controls


195,889




184,608




651,920




646,116



  Medical & Scientific Imaging


256,542




217,628




902,281




703,835



  RF Technology


237,644




210,522




904,363




848,298



    Total


$   889,173




$  809,910




$3,238,128




$2,993,489





































Gross profit:

















  Industrial Technology(1)


$   101,873


51.2%


$  106,178


53.9%


$   398,287


51.1%


$   410,180


51.6%

  Energy Systems & Controls


117,778


60.1%


109,291


59.2%


374,209


57.4%


363,616


56.3%

  Medical & Scientific Imaging(2)


184,272


71.8%


139,084


63.9%


624,990


69.3%


453,495


64.4%

  RF Technology


129,297


54.4%


111,808


53.1%


485,442


53.7%


444,426


52.4%

    Total


$   533,220


60.0%


$  466,361


57.6%


$1,882,928


58.1%


$1,671,717


55.8%



































Operating profit*:

















  Industrial Technology(1)


$     58,775


29.5%


$    64,480


32.7%


$   223,053


28.6%


$   244,691


30.8%

  Energy Systems & Controls


65,247


33.3%


61,075


33.1%


183,679


28.2%


179,824


27.8%

  Medical & Scientific Imaging(2)


88,739


34.6%


62,015


28.5%


268,172


29.7%


187,246


26.6%

  RF Technology


69,704


29.3%


56,819


27.0%


253,532


28.0%


223,335


26.3%

    Total


$   282,465


31.8%


$  244,389


30.2%


$   928,436


28.7%


$   835,096


27.9%



































Net Orders:

















  Industrial Technology


$   190,475




$  185,285




$   772,337




$   783,362



  Energy Systems & Controls


207,155




175,596




673,569




634,051



  Medical & Scientific Imaging


270,157




208,784




958,830




703,034



  RF Technology


232,338




209,399




943,757




871,225



    Total


$   900,125




$  779,064




$3,348,493




$2,991,672






















































*  Operating profit is before unallocated corporate general and administrative expenses.  These expenses were $24,376 and $19,147 for the three months ended December 31, 2013 and 2012, respectively, and $86,075 and $77,509 for the twelve months ended December 31, 2013 and 2012, respectively.



















(1)  Includes a favorable fourth quarter 2012 accounts payable correction of $5.5 million.


















(2)  Includes a fourth quarter 2012 charge for inventory and tooling for a medical product line of $4.0 million.

 

Roper Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(Amounts in thousands)













Twelve months ended



December 31,



2013

2012






Net earnings


$    538,293


$    483,360

Non-cash items:





Depreciation


37,756


37,888

Amortization


151,434


116,860

Stock-based compensation expense


53,133


40,773

Income taxes


(6,427)


(15,988)

Changes in assets and liabilities:





Receivables


18,046


(21,577)

Inventory


(12,687)


18,361

Accounts payable


9,014


(8,480)

Accrued liabilities


14,291


17,689

Other, net


(300)


8,966

  Cash provided by operating activities


802,553


677,852






Business acquisitions, net of cash acquired


(1,074,413)


(1,467,772)

Capital expenditures


(42,528)


(38,405)

Other, net


1,078


632

  Cash used by investing activities


(1,115,863)


(1,505,545)






Principal debt borrowings


800,000


900,000

Principal debt payments


(503,702)


(57,304)

Revolver borrowings (payments), net


150,000


100,000

Debt issuance costs


(7,717)


(12,213)

Dividends


(49,092)


(69,903)

Excess tax benefit from share-based payment


11,709


30,747

Proceeds from stock-based compensation, net


7,944


37,679

Redemption premium on convertible debt


(9,124)


(76,641)

Other, net


3,615


1,505

  Cash provided by (used in) financing activities


403,633


853,870






Effect of exchange rate changes on cash


(1,193)


6,312






Net increase in cash and equivalents


89,130


32,489

Cash and equivalents, beginning of period


370,590


338,101






Cash and equivalents, end of period


$459,720


$370,590






 

ROPER INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENT OF EARNINGS -  RECONCILIATION OF GAAP TO NON-GAAP (Adjusted)

(Amounts in thousands, except per share data)



















Adjustments









Sunquest Fair Value


MHA Purchase


Special Charge


2013




2013


Adjustment


Accounting


Related to


Year-To-Date




Year-To-Date


to Acquired


Adjustment


Vendor-Supplied


Adjusted 




GAAP


Deferred Revenue


To Revenue


Component


Non-GAAP


Net Orders


$   3,348,493


$                    -


$   26,433


$                  -


$  3,374,926














Net Sales


$   3,238,128


$            6,980


$   26,433


$                  -


$  3,271,541


Cost of Sales


1,355,200


-


-




1,355,200


Gross Profit


1,882,928


6,980


26,433




1,916,341


Selling, general and administrative expenses


954,492


-


-


(9,100)


945,392


Segment income from operations


928,436


6,980


26,433


9,100


970,949


Corporate general and administrative expenses


86,075


-


-


-


86,075


Income from operations


842,361


6,980


26,433


9,100


884,874


Interest Expense


88,039


-


-


-


88,039


Other income (expense)


(192)


-


-


-


(192)


Earnings from continuing operations before income taxes


754,130


6,980


26,433


9,100


796,643


Income Taxes (1)


215,837


2,443


9,252


3,185


230,717


  Tax Rate


28.6%


35.0%


35.0%


35.0%


29.0%














Net Earnings


$      538,293


$            4,537


$   17,181


$          5,915


$    565,926














Weighted average common shares outstanding


100,209








100,209














Diluted earnings per share


$            5.37








$          5.65


























(1) For the adjustment, the company used a 35% tax rate, as these adjustments are US-based items and 35% is the statutory tax rate in the United States

 

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