Roper Technologies Announces First Quarter Financial Results and Increases Full Year Guidance

Rhea-AI Summary

Roper Technologies reported strong Q1 2022 financial results, with GAAP revenue rising 11% to $1.53 billion and adjusted diluted earnings per share increasing 10% to $3.77. Adjusted EBITDA also saw an 8% rise, reaching $577 million. Operating cash flow was $474 million. The company has raised its full-year adjusted DEPS guidance to a range of $15.50 - $15.75, reflecting robust organic growth and ongoing acquisition strategies.

Roper completed divestitures of non-core operations, improving its portfolio quality.

Positive

• GAAP revenue increased 11% to $1.53 billion.
• Adjusted diluted earnings per share rose 10% to $3.77.
• Adjusted EBITDA increased 8% to $577 million.
• Operating cash flow reported at $474 million.
• Full-year adjusted DEPS guidance raised to $15.50 - $15.75.

Negative

• Operating cash flow declined 10% compared to Q1 2021.
• Free cash flow decreased 10% to $459 million.

SARASOTA, Fla., April 26, 2022 (GLOBE NEWSWIRE) -- Roper Technologies, Inc. (NYSE: ROP) reported financial results for the first quarter ended March 31, 2022. Unless otherwise noted, the results and guidance in this press release are presented on a continuing operations basis.

First quarter GAAP and adjusted revenue increased 11% to $1.53 billion, with organic revenue also increasing 11%. GAAP diluted earnings per share (“DEPS”) was $2.70, a 6% increase, and adjusted DEPS was $3.77, a 10% increase.

Adjusted EBITDA increased 8% to $577 million and adjusted EBITDA margin was 37.8%. Operating cash flow was $474 million and free cash flow was $459 million.

"We are very pleased with the great start to 2022," said Neil Hunn, Roper Technologies’ President and CEO. "Organic revenue grew 11% in the quarter with broad-based strength across our portfolio of niche-leading businesses. Our enterprise continues to exhibit strong momentum fueled by double-digit software recurring revenue growth and robust product demand. As a result, we are increasing our full year guidance."

"Also in the quarter, the quality of our portfolio and business mix improved as we completed the divestiture of our project-based TransCore business. The proceeds from this transaction further enhance our ability to capitalize on our large pipeline of high-quality acquisition candidates," concluded Mr. Hunn.

Increasing 2022 Guidance

Roper now expects full year 2022 adjusted DEPS of $15.50 - $15.75, compared to previous guidance of $15.25 - $15.55.

For the second quarter of 2022, the Company expects adjusted DEPS of $3.80 - $3.84.

The Company’s guidance excludes the impact of unannounced future acquisitions or divestitures, as well as any redeployment of proceeds from completed divestitures.

Discontinued Operations

Roper has completed the divestitures of the TransCore, Zetec, and CIVCO Radiotherapy businesses. The financial results for these businesses are reported as discontinued operations for all periods presented.

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 Tuesday, April 26, 2022. The call can be accessed via webcast or by dialing +1 844-750-4898 (US/Canada) or +1 412-317-5294 and referencing Roper Technologies. Webcast information and conference call materials will be made available in the Investors section of Roper’s website (www.ropertech.com) prior to the start of the call. The webcast can also be accessed directly by using the following URL https://event.webcast. Telephonic replays will be available for up to two weeks and can be accessed by dialing +1 412-317-0088 with access code 6309734.

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: Adjusted Revenue and EBITDA Reconciliation ($M) (From Continuing Operations)
	Q1 2021				Q1 2022				V %
Adjusted Revenue Reconciliation
GAAP Revenue	$	1,376			$	1,527			11	%
Purchase accounting adjustment to acquired deferred revenue		1				—
Adjusted Revenue	$	1,377			$	1,527			11	%
Components of Adjusted Revenue Growth
Organic									11	%
Acquisitions/Divestitures									1	%
Foreign Exchange									(1)%
Adjusted Revenue Growth									11	%
Adjusted EBITDA Reconciliation
GAAP Net Earnings	$	270			$	288
Taxes		71				79
Interest Expense		61				53
Depreciation		13				11
Amortization		146				148
EBITDA	$	561			$	578			3	%
Purchase accounting adjustment to acquired deferred revenue and commission expense		—				(1	)	A
Gain on sale related to minority investment in Sedaru		(28	)			—
Adjusted EBITDA	$	533			$	577			8	%
% of Adjusted Revenue		38.7	%			37.8	%		(90 bps)

Table 2: Adjusted DEPS ReconciliationB (From Continuing Operations)
	Q1 2021				Q1 2022				V %
GAAP DEPS	$	2.55			$	2.70			6	%
Purchase accounting adjustment to acquired deferred revenue and commission expense		—				(0.01	)	A
Amortization of acquisition-related intangible assetsC		1.08				1.08
Gain on sale related to minority investment in Sedaru		(0.21	)			—
Adjusted DEPS	$	3.42			$	3.77			10	%

Table 3: Free Cash Flow Reconciliation ($M) (From Continuing Operations)
	Q1 2021				Q1 2022				V %
Operating Cash Flow	$	526			$	474			(10)	%
Capital Expenditures		(7	)			(7	)
Capitalized Software Expenditures		(7	)			(8	)
Free Cash Flow	$	512			$	459			(10)	%

Table 4: Forecasted Adjusted DEPS ReconciliationB (From Continuing Operations)
	Q2 2022								FY 2022
	Low End				High End				Low End				High End
GAAP DEPS	$	2.74			$	2.78			$	11.24			$	11.49
Purchase accounting adjustment to acquired commission expenseA		(0.01	)			(0.01	)			(0.03	)			(0.03	)
Amortization of acquisition-related intangible assetsC		1.07				1.07				4.29				4.29
Adjusted DEPS	$	3.80			$	3.84			$	15.50			$	15.75

A.	2022 actual results and 2022 forecast of estimated acquisition-related fair value adjustments to commission expense related to the acquisition of Vertafore as shown below ($M, except per share data).
		Q1 2021A			Q1 2022A					Q2 2022E				FY 2022E
	Pretax	$	—		$	(1	)			$	(1	)		$	(5	)
	After-tax	$	—		$	(1	)			$	(1	)		$	(4	)
	Per Share	$	—		$	(0.01	)			$	(0.01	)		$	(0.03	)
B.	All 2021 and 2022 adjustments taxed at 21%.
C.	Actual results and forecast of estimated amortization of acquisition-related intangible assets as shown below ($M, except per share data).
		Q1 2021A			Q1 2022A					Q2 2022E				FY 2022E
	Pretax	$	145		$	146				$	145			$	582
	After-tax	$	115		$	115				$	115			$	459
	Per share	$	1.08		$	1.08				$	1.07			$	4.29

Note: Numbers may not foot due to rounding.

About Roper Technologies

Roper Technologies is a constituent of the S&P 500 and Fortune 500. Roper has a proven, long-term track record of compounding cash flow and shareholder value. The Company operates market leading businesses that design and develop vertical software and application-specific products for a variety of defensible niche markets. Roper utilizes a disciplined, analytical, and process-driven approach to redeploy its excess free cash flow toward high-quality acquisitions. Additional information about Roper is available on the Company’s website at www.ropertech.com.

Contact Information:
Investor Relations
941-556-2601
investor-relations@ropertech.com

The information provided in this press release 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 may be indicated by words or phrases such as "anticipate," "estimate," "plans," "expects," "projects," "should," "will," "believes," "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 any ongoing impacts of the COVID-19 pandemic on our business, operations, financial results and liquidity, which will depend on numerous evolving factors which we cannot accurately predict or assess, including: the duration and scope of the pandemic, new variants of the virus and the distribution and efficacy of vaccines; any negative impact on global and regional markets, economies and economic activity; actions governments, businesses and individuals take in response to the pandemic; the effects of the pandemic, including all of the foregoing, on our customers, suppliers, and business partners, and how quickly economies and demand for our products and services recover after the pandemic subsides. Such risks and uncertainties also include our ability to identify and complete acquisitions consistent with our business strategies, integrate acquisitions that have been completed, realize expected benefits and synergies from, and manage other risks associated with, the newly acquired businesses, as well as complete any announced divestitures, including obtaining any required regulatory approvals with respect thereto. We also face other 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, cybersecurity and data privacy risks, including litigation resulting therefrom, risks related to political instability, armed hostilities, incidents of terrorism, public health crises (such as the COVID-19 pandemic) or natural disasters, increased product liability and insurance costs, increased warranty exposure, future competition, changes in the supply of, or price for, parts and components, including as a result of the current inflationary environment and ongoing supply chain constraints environmental compliance costs and liabilities, risks and cost associated with litigation, 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 Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(Amounts in millions)
	March 31, 2022				December 31, 2021
ASSETS:
Cash and cash equivalents	$	3,237.5			$	351.5
Accounts receivable, net		755.3				839.4
Inventories, net		202.7				176.1
Income taxes receivable		19.2				27.7
Unbilled receivables		110.0				95.3
Other current assets		160.9				142.5
Current assets held for sale		—				788.6
Total current assets		4,485.6				2,421.1
Property, plant and equipment, net		98.9				102.8
Goodwill		14,094.9				14,094.5
Other intangible assets, net		6,454.1				6,588.5
Deferred taxes		101.4				101.1
Other assets		400.9				405.9
Total assets	$	25,635.8			$	23,713.9
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable	$	167.8			$	150.8
Accrued compensation		208.2				309.8
Deferred revenue		1,120.3				1,130.2
Other accrued liabilities		413.0				440.7
Income taxes payable		793.0				132.0
Current portion of long-term debt, net		799.5				799.2
Current liabilities held for sale		—				159.1
Total current liabilities		3,501.8				3,121.8
Long-term debt, net of current portion		6,654.8				7,122.6
Deferred taxes		1,476.1				1,479.5
Other liabilities		451.2				426.2
Total liabilities		12,083.9				12,150.1
Common stock		1.1				1.1
Additional paid-in capital		2,363.9				2,307.8
Retained earnings		11,410.4				9,455.6
Accumulated other comprehensive loss		(206.0	)			(183.1	)
Treasury stock		(17.5	)			(17.6	)
Total stockholders' equity		13,551.9				11,563.8
Total liabilities and stockholders' equity	$	25,635.8			$	23,713.9

Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(Amounts in millions, except per share data)
		Three months ended March 31,
		2022				2021
Net revenues		$	1,526.6			$	1,376.1
Cost of sales			496.5				440.1
Gross profit			1,030.1				936.0
Selling, general and administrative expenses			609.0				561.4
Income from operations			421.1				374.6
Interest expense, net			52.6				60.6
Other income (expense), net			(1.9	)			27.1
Earnings before income taxes			366.6				341.1
Income taxes			79.0				71.2
Net earnings from continuing operations			287.6				269.9
Earnings from discontinued operations, net of tax			15.6				19.1
Gain on disposition of discontinued operations, net of tax			1,717.3				—
Net earnings from discontinued operations			1,732.9				19.1
Net earnings		$	2,020.5			$	289.0
Net earnings per share from continuing operations:
Basic		$	2.72			$	2.57
Diluted		$	2.70			$	2.55
Net earnings per share from discontinued operations:
Basic		$	16.41			$	0.18
Diluted		$	16.24			$	0.18
Net earnings per share:
Basic		$	19.13			$	2.75
Diluted		$	18.94			$	2.73
Weighted average common shares outstanding:
Basic			105.6				105.0
Diluted			106.7				106.0

Roper Technologies, Inc. and Subsidiaries
Selected Segment Financial Data (unaudited)
(Amounts in millions; percentages of net revenues)
		Three Months Ended March 31,
			2022						2021
		Amount			%			Amount			%
Net revenues:
Application Software		$	631.5					$	576.6
Network Software & Systems			368.7						314.2
Measurement & Analytical Solutions			392.4						369.6
Process Technologies			134.0						115.7
Total		$	1,526.6					$	1,376.1
Gross profit:
Application Software		$	437.8		69.3	%		$	398.7		69.1	%
Network Software & Systems			302.4		82.0	%			256.4		81.6	%
Measurement & Analytical Solutions			217.6		55.5	%			218.2		59.0	%
Process Technologies			72.3		54.0	%			62.7		54.2	%
Total		$	1,030.1		67.5	%		$	936.0		68.0	%
Operating profit*:
Application Software		$	173.8		27.5	%		$	153.7		26.7	%
Network Software & Systems			145.4		39.4	%			114.1		36.3	%
Measurement & Analytical Solutions			115.9		29.5	%			121.5		32.9	%
Process Technologies			41.8		31.2	%			35.1		30.3	%
Total		$	476.9		31.2	%		$	424.4		30.8	%
*Segment operating profit is before unallocated corporate general and administrative expenses. These expenses were $55.8 and $49.8 for the three months ended March 31, 2022 and 2021, respectively.

Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in millions)
	Three months ended March 31,
		2022				2021
Cash flows from operating activities:
Net earnings from continuing operations	$	287.6			$	269.9
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities:
Depreciation and amortization of property, plant and equipment		11.0				13.1
Amortization of intangible assets		148.1				146.3
Amortization of deferred financing costs		3.1				3.4
Non-cash stock compensation		35.9				31.6
Gain on sale of assets, net of tax		—				(21.6	)
Income tax provision, excluding tax associated with gain on sale of assets		79.0				65.7
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable		82.0				54.3
Unbilled receivables		(15.4	)			(17.8	)
Inventories		(27.7	)			(2.1	)
Accounts payable		17.9				13.3
Other accrued liabilities		(125.1	)			(59.0	)
Deferred revenue		29.4				60.9
Cash income taxes paid		(27.4	)			(17.2	)
Other, net		(24.6	)			(14.9	)
Cash provided by operating activities from continuing operations		473.8				525.9
Cash provided by operating activities from discontinued operations		1.5				33.7
Cash provided by operating activities		475.3				559.6
Cash flows from (used in) investing activities:
Acquisitions of businesses, net of cash acquired		(53.2	)			—
Capital expenditures		(7.1	)			(7.1	)
Capitalized software expenditures		(7.5	)			(7.2	)
Proceeds from sale of assets		—				27.1
Other, net		—				(0.1	)
Cash (used in) provided by investing activities from continuing operations		(67.8	)			12.7
Proceeds from disposition of discontinued operations		3,006.2				—
Cash used in investing activities from discontinued operations		(0.2	)			(2.0	)
Cash provided by investing activities		2,938.2				10.7
Cash flows from (used in) financing activities:
Borrowings (payments) under revolving line of credit, net		(470.0	)			(495.0	)
Cash dividends to stockholders		(65.3	)			(58.8	)
Proceeds from stock-based compensation, net		21.0				4.4
Treasury stock sales		5.5				4.7
Other		—				(0.1	)
Cash flows used in financing activities from continuing operations		(508.8	)			(544.8	)
Cash flows used in financing activities from discontinued operations		(11.4	)			(0.4	)
Cash flows used in financing activities		(520.2	)			(545.2	)
(Continued)
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited) - (Continued)
(Amounts in millions)
	Three months ended March 31,
		2022				2021
Effect of foreign currency exchange rate changes on cash		(7.3	)			(2.4	)
Net increase in cash and cash equivalents		2,886.0				22.7
Cash and cash equivalents, beginning of period		351.5				308.3
Cash and cash equivalents, end of period	$	3,237.5			$	331.0

FAQ

What were Roper Technologies' earnings for Q1 2022?

Roper Technologies reported adjusted diluted earnings per share of $3.77 for Q1 2022.

What is Roper Technologies' revenue growth in Q1 2022?

Roper Technologies achieved a revenue growth of 11%, reaching $1.53 billion in Q1 2022.

How has Roper Technologies' adjusted DEPS guidance changed for 2022?

Roper has increased its full-year 2022 adjusted DEPS guidance to a range of $15.50 - $15.75.

What is Roper Technologies' adjusted EBITDA for Q1 2022?

Roper Technologies reported an adjusted EBITDA of $577 million for Q1 2022.

What businesses did Roper Technologies divest recently?

Roper Technologies completed the divestiture of its TransCore, Zetec, and CIVCO Radiotherapy businesses.