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Roper's (ROP) Q2 Earnings & Revenues Top Estimates, Up Y/Y

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Roper Technologies, Inc. ROP has reported better-than-expected second-quarter 2021 results, with earnings surpassing estimates by 2.7% and sales beating the same by 1.6%.

The company’s adjusted earnings in the second quarter were $3.76 per share, surpassing the Zacks Consensus Estimate of $3.66. On a year-over-year basis, earnings jumped 28% from $2.94.

Revenue Details

In the reported quarter, Roper’s net revenues amounted to $1,587.6 million, up 21.7% year over year. Adjusted revenues increased 22% year over year to $1,588 million. Organic revenues in the quarter increased 7%, while acquisitions/divestitures and foreign currency translation had positive impacts of 12% and 2%, respectively.

Roper’s top line surpassed the Zacks Consensus Estimate of $1,563 million.

The company reports revenues under four segments. A brief discussion of the quarterly results is provided below:

Application Software’s revenues totaled $591.6 million, representing 37.3% of the quarter’s top line. On a year-over-year basis, the segment’s revenues grew 48.5%.

Network Software & Systems generated revenues of $458.7 million, accounting for 28.9% of second-quarter revenues. The top line was up 8.7% year over year.

Measurement & Analytical Solutions generated revenues of $397 million, accounting for 25% of the quarter’s revenues. Sales grew 9.1% year over year.

Process Technologies generated revenues of $140.3 million, accounting for 8.8% of the quarter’s revenues. Sales were up 16.2% year over year.

Margin Profile

In the reported quarter, Roper’s cost of sales increased 20% year over year to $553.5 million. Cost of sales was 34.9% of the quarter’s net sales. Gross profit (adjusted) in the quarter grew 22.6% year over year to $1,034.1 million, while adjusted gross margin increased 40 basis points (bps) to 65.1%.

Selling, general and administrative expenses increased 20.8% year over year to $616.1 million. It represented 38.8% of net sales in the reported quarter. Adjusted earnings before interest, tax, depreciation and amortization were $579 million, reflecting year-over-year growth of 26%. Margin increased 110 bps to 36.4%. Interest expenses jumped 27.7% year over year to $60 million.

Balance Sheet & Cash Flow

Exiting the second quarter, Roper had cash and cash equivalents of $337.8 million, up 2.1% from $331 million recorded in the last reported quarter. Long-term debt fell 5.3% sequentially to $8,199.5 million.

During the quarter, the company’s payments under the revolving line of credit were $375 million. Free cash flow in the quarter increased 30% to $409 million.

The company generated net cash of $985.1 million from operating activities in the first six months of 2021, reflecting an increase of 21.2% from the year-ago period. Capital expenditure totaled $17.2 million compared with $15.5 million a year ago.

In the first half of 2021, the company rewarded shareholders with a dividend payout of $117.8 million. The amount represents growth from $106.6 million distributed in the year-ago period.

Outlook

For 2021, Roper remains optimistic about the improving end-market conditions, which were affected by the coronavirus pandemic.

For 2021, the company currently anticipates adjusted earnings of $15.00-$15.20 per share, higher than $14.75-$15.00 guided earlier.

For the third quarter, the adjusted earnings is projected to be $3.80-$3.84 per share.

Roper Technologies, Inc. Price, Consensus and EPS Surprise

Roper Technologies, Inc. Price, Consensus and EPS Surprise
Roper Technologies, Inc. Price, Consensus and EPS Surprise

Roper Technologies, Inc. price-consensus-eps-surprise-chart | Roper Technologies, Inc. Quote

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks are Griffon Corporation GFF, ITT Inc. ITT and 3M Company MMM, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Griffon delivered an earnings surprise of 122.71%, on average, in the trailing four quarters.

ITT delivered an earnings surprise of 26.36%, on average, in the trailing four quarters.

3M delivered an earnings surprise of 9.85%, on average, in the trailing four quarters.


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