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

Rhea-AI Summary

Roper Technologies (ROP) announced robust Q3 2022 results, with total revenues reaching $1.35 billion, a 10% increase year over year. GAAP diluted earnings per share (DEPS) rose by 31% to $2.59. Adjusted DEPS also grew by 18% to $3.67, while adjusted EBITDA saw a 12% increase to $555 million. The company is raising its full-year adjusted DEPS guidance to $14.09 - $14.13, driven by strong organic growth across all segments and the recent acquisition of Frontline Education. The results reflect a positive outlook for Roper’s enhanced portfolio moving forward.

Positive

• 10% increase in GAAP and adjusted revenue to $1.35 billion.
• GAAP DEPS up 31% to $2.59; adjusted DEPS up 18% to $3.67.
• Adjusted EBITDA increased 12% to $555 million, with a margin of 41.1%.
• Increased full-year adjusted DEPS guidance to $14.09 - $14.13.

Negative

• GAAP operating cash flow decreased to $219 million, impacted by tax payments related to divestitures.

SARASOTA, Fla., Oct. 26, 2022 (GLOBE NEWSWIRE) -- Roper Technologies, Inc. (NYSE: ROP) reported financial results for the third quarter ended September 30, 2022. Unless otherwise noted, the results and guidance in this press release are presented on a continuing operations basis.

Third quarter GAAP and adjusted revenue increased 10% to $1.35 billion, with organic revenue also increasing 10%. GAAP diluted earnings per share (“DEPS”) was $2.59, a 31% increase, and adjusted DEPS was $3.67, an 18% increase.

Adjusted EBITDA increased 12% to $555 million and adjusted EBITDA margin increased 80 basis points to 41.1%. GAAP operating cash flow was $219 million, which included tax payments associated with Roper’s divestiture activity. Excluding these tax payments, adjusted operating cash flow increased 12% to $376 million.

"Roper’s enhanced portfolio delivered outstanding third quarter results," said Neil Hunn, Roper Technologies’ President and CEO. "Organic revenue grew 10%, with broad-based strength across each of our three segments. Furthermore, our recently completed Frontline Education acquisition adds another leading vertical software business to the enterprise."

"We are increasing our guidance for the year, driven by the combination of excellent third quarter results, continued strong demand for our niche software and product solutions, and the addition of Frontline Education.”

“With the pending completion of our industrial sale and the recent addition of Frontline, the new, higher quality Roper portfolio is becoming more evident, and we have never been more excited about the company's future,” concluded Mr. Hunn.

Increasing 2022 Guidance

The Company now expects full year adjusted DEPS of $14.09 - $14.13, compared to previous guidance of $13.46 - $13.62

For the fourth quarter of 2022, the Company expects adjusted DEPS of $3.72 - $3.76.

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

Discontinued Operations

During the second quarter, Roper announced an agreement to sell a majority stake in its industrial businesses, including its entire historical Process Technologies reportable segment (AMOT, CCC, Cornell, FTI, Metrix, PAC, Roper Pump, and Viatran) and the industrial businesses within its historical Measurement & Analytical Solutions reportable segment (Alpha, Dynisco, Hansen, Hardy, Logitech, Struers, Technolog, and Uson). The financial results for these businesses are reported as discontinued operations for all periods presented.

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 8:00 AM (ET) Today

A conference call to discuss these results has been scheduled for 8:00 AM ET on Wednesday, October 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 9601442.

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 DEPS Reconciliation (From Continuing Operations)
	Q3 2021				Q3 2022				V %
GAAP DEPS	$	1.97			$	2.59			31	%
Purchase accounting adjustment to acquired commission expense		(0.01	)			(0.01	)	A
Transaction-related expenses for completed acquisitions		—				0.02		B
Amortization of acquisition-related intangible assets		1.05				1.06		C
Income tax restructuring expense associated with discontinued operations		0.11				—
Adjusted DEPS	$	3.12			$	3.67			18	%

Table 2: Adjusted Revenue and EBITDA Reconciliation ($M) (From Continuing Operations)
	Q3 2021				Q3 2022				V %
Adjusted Revenue Reconciliation
GAAP Revenue	$	1,232			$	1,350			10	%
Adjusted Revenue	$	1,232			$	1,350			10	%
Components of Adjusted Revenue Growth
Organic									10	%
Acquisitions/Divestitures									1	%
Foreign Exchange									(2	)%
Adjusted Revenue Growth									10	%
Adjusted EBITDA Reconciliation
GAAP Net Earnings	$	211			$	277
Taxes		76				78
Interest Expense		58				41
Depreciation		10				9
Amortization		143				147
EBITDA	$	498			$	553			11	%
Purchase accounting adjustment to acquired commission expense		(1	)			(1	)	A
Transaction-related expenses for completed acquisitions		—				3		B
Adjusted EBITDA	$	497			$	555			12	%
% of Adjusted Revenue		40.3	%			41.1	%		+80 bps

Table 3: Adjusted Cash Flow Reconciliation ($M) (From Continuing Operations)
	Q3 2021			Q3 2022			V %
Operating Cash Flow	$	337		$	219
Taxes paid in period related to divestitures		—			157
Adjusted Operating Cash Flow	$	337		$	376		12	%

Table 4: Forecasted Adjusted DEPS Reconciliation (From Continuing Operations)
	Q4 2022								FY 2022
	Low End				High End				Low End				High End
GAAP DEPS	$	2.48			$	2.52			$	9.41			$	9.45
Purchase accounting adjustment to acquired commission expenseA		(0.01	)			(0.01	)			(0.04	)			(0.04	)
Transaction-related expenses for completed acquisitionsB		—				—				0.02				0.02
Amortization of acquisition-related intangible assetsC		1.25				1.25				4.43				4.43
Income tax restructuring expense associated with pending industrial sale		—				—				0.27				0.27
Adjusted DEPS	$	3.72			$	3.76			$	14.09			$	14.13

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). These adjustments are taxed at 21%.
		Q3 2021A					Q3 2022A					Q4 2022E				FY 2022E
	Pretax	$	(1	)			$	(1	)			$	(1	)		$	(5	)
	After-tax	$	(1	)			$	(1	)			$	(1	)		$	(4	)
	Per Share	$	(0.01	)			$	(0.01	)			$	(0.01	)		$	(0.04	)
B.	Transaction-related expenses for the Frontline and viGlobal acquisitions. This adjustment is taxed at 21%.
C.	Actual results and forecast of estimated amortization of acquisition-related intangible assets as shown below ($M, except per share data). These adjustments are taxed at 21%.
		Q3 2021A					Q3 2022A					Q4 2022E				FY 2022E
	Pretax	$	141				$	144				$	170			$	599
	After-tax	$	112				$	114				$	134			$	474
	Per Share	$	1.05				$	1.06				$	1.25			$	4.43

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 technology enabled 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, including risks related to labor shortages and rising interest rates, 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)
	September 30, 2022				December 31, 2021
ASSETS:
Cash and cash equivalents	$	1,894.5			$	351.5
Accounts receivable, net		630.3				687.6
Inventories, net		101.0				69.2
Income taxes receivable		33.5				16.8
Unbilled receivables		98.8				81.9
Other current assets		138.6				136.1
Current assets held for sale		1,094.7				1,078.0
Total current assets		3,991.4				2,421.1
Property, plant and equipment, net		83.2				82.7
Goodwill		13,672.8				13,476.3
Other intangible assets, net		6,243.5				6,509.1
Deferred taxes		47.2				50.0
Other assets		359.1				369.8
Assets held for sale		—				804.9
Total assets	$	24,397.2			$	23,713.9
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable	$	121.2			$	98.3
Accrued compensation		225.6				261.9
Deferred revenue		1,048.8				1,106.3
Other accrued liabilities		365.6				398.7
Income taxes payable		159.9				117.3
Current portion of long-term debt, net		698.9				799.2
Current liabilities held for sale		220.4				340.1
Total current liabilities		2,840.4				3,121.8
Long-term debt, net of current portion		5,960.6				7,122.6
Deferred taxes		1,365.0				1,466.2
Other liabilities		373.4				390.1
Liabilities held for sale		—				49.4
Total liabilities		10,539.4				12,150.1
Common stock		1.1				1.1
Additional paid-in capital		2,467.9				2,307.8
Retained earnings		11,874.8				9,455.6
Accumulated other comprehensive loss		(468.7	)			(183.1	)
Treasury stock		(17.3	)			(17.6	)
Total stockholders' equity		13,857.8				11,563.8
Total liabilities and stockholders' equity	$	24,397.2			$	23,713.9

Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(Amounts in millions, except per share data)
	Three months ended September 30,							Nine months ended September 30,
	2022			2021				2022			2021
Net revenues	$	1,350.3		$	1,232.1			$	3,940.9		$	3,577.2
Cost of sales		408.5			360.4				1,190.4			1,050.0
Gross profit		941.8			871.7				2,750.5			2,527.2
Selling, general and administrative expenses		548.6			524.8				1,638.5			1,546.5
Income from operations		393.2			346.9				1,112.0			980.7
Interest expense, net		41.3			58.2				138.6			178.2
Other income (expense), net		3.6			(2.1	)			0.2			25.0
Earnings before income taxes		355.5			286.6				973.6			827.5
Income taxes		78.6			75.8				235.3			189.3
Net earnings from continuing operations		276.9			210.8				738.3			638.2
Earnings from discontinued operations, net of tax		49.0			78.7				170.3			226.6
Gain on disposition of discontinued operations, net of tax		1.1			—				1,707.7			—
Net earnings from discontinued operations		50.1			78.7				1,878.0			226.6
Net earnings	$	327.0		$	289.5			$	2,616.3		$	864.8
Net earnings per share from continuing operations:
Basic	$	2.61		$	2.00			$	6.97		$	6.07
Diluted	$	2.59		$	1.97			$	6.91		$	6.00
Net earnings per share from discontinued operations:
Basic	$	0.47		$	0.75			$	17.74		$	2.15
Diluted	$	0.47		$	0.74			$	17.59		$	2.13
Net earnings per share:
Basic	$	3.08		$	2.75			$	24.71		$	8.22
Diluted	$	3.06		$	2.71			$	24.50		$	8.13
Weighted average common shares outstanding:
Basic		106.0			105.4				105.9			105.2
Diluted		106.8			106.7				106.8			106.4

Roper Technologies, Inc. and Subsidiaries
Selected Segment Financial Data (unaudited)
(Amounts in millions; percentages of net revenues)
	Three Months Ended September 30,												Nine Months Ended September 30,
	2022						2021						2022						2021
	Amount			%			Amount			%			Amount			%			Amount			%
Net revenues:
Application Software	$	644.0					$	600.2					$	1,899.7					$	1,761.2
Network Software		346.6						316.0						1,028.0						901.3
Technology Enabled Products		359.7						315.9						1,013.2						914.7
Total	$	1,350.3					$	1,232.1					$	3,940.9					$	3,577.2
Gross profit:
Application Software	$	440.2		68.4	%		$	418.5		69.7	%		$	1,306.5		68.8	%		$	1,223.0		69.4	%
Network Software		293.9		84.8	%			267.5		84.7	%			867.9		84.4	%			757.1		84.0	%
Technology Enabled Products		207.7		57.7	%			185.7		58.8	%			576.1		56.9	%			547.1		59.8	%
Total	$	941.8		69.7	%		$	871.7		70.7	%		$	2,750.5		69.8	%		$	2,527.2		70.6	%
Operating profit*:
Application Software	$	173.8		27.0	%		$	164.2		27.4	%		$	511.4		26.9	%		$	471.2		26.8	%
Network Software		148.1		42.7	%			126.5		40.0	%			422.0		41.1	%			343.3		38.1	%
Technology Enabled Products		126.5		35.2	%			104.1		33.0	%			337.6		33.3	%			312.0		34.1	%
Total	$	448.4		33.2	%		$	394.8		32.0	%		$	1,271.0		32.3	%		$	1,126.5		31.5	%
*Segment operating profit is before unallocated corporate general and administrative expenses. These expenses were $55.2 and $47.9 for the three months ended September 30, 2022 and 2021, respectively, and $159.0 and $145.8 for the nine months ended September 30, 2022 and 2021, respectively.

Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in millions)
	Nine months ended September 30,
	2022				2021
Cash flows from operating activities:
Net earnings from continuing operations	$	738.3			$	638.2
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities:
Depreciation and amortization of property, plant and equipment		28.0				33.9
Amortization of intangible assets		438.4				429.0
Amortization of deferred financing costs		9.2				10.1
Non-cash stock compensation		90.8				93.5
Gain on sale of assets, net of tax		—				(21.6	)
Income tax provision, excluding tax associated with gain on sale of assets		235.3				183.8
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable		48.3				(0.3	)
Unbilled receivables		(21.7	)			(22.9	)
Inventories		(33.6	)			—
Accounts payable		24.7				14.6
Other accrued liabilities		(59.0	)			10.8
Deferred revenue		(15.2	)			26.5
Cash tax payments related to disposal of businesses		(534.6	)			—
Cash income taxes paid		(397.5	)			(223.8	)
Other, net		(1.2	)			(29.2	)
Cash provided by operating activities from continuing operations		550.2				1,142.6
Cash provided by operating activities from discontinued operations		112.7				289.8
Cash provided by operating activities		662.9				1,432.4
Cash flows from (used in) investing activities:
Acquisitions of businesses, net of cash acquired		(580.9	)			(19.4	)
Capital expenditures		(30.0	)			(19.9	)
Capitalized software expenditures		(21.9	)			(22.2	)
Proceeds from sale of assets		—				27.1
Other, net		(1.8	)			(1.5	)
Cash used in investing activities from continuing operations		(634.6	)			(35.9	)
Proceeds from disposition of discontinued operations		2,997.1				—
Cash used in investing activities from discontinued operations		(4.9	)			(6.5	)
Cash provided by (used in) investing activities		2,357.6				(42.4	)
Cash flows from (used in) financing activities:
Payments on senior notes		(800.0	)			—
Borrowings (payments) under revolving line of credit, net		(470.0	)			(1,240.0	)
Debt issuance costs		(3.9	)			—
Cash dividends to stockholders		(196.2	)			(176.9	)
Proceeds from stock-based compensation, net		57.0				63.9
Treasury stock sales		11.6				11.8
Other		(0.3	)			—
Cash flows used in financing activities from continuing operations		(1,401.8	)			(1,341.2	)
Cash flows provided by (used in) financing activities from discontinued operations		(11.3	)			0.3
Cash flows used in financing activities		(1,413.1	)			(1,340.9	)
(Continued)
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited) - (Continued)
(Amounts in millions)
	Nine months ended September 30,
	2022				2021
Effect of foreign currency exchange rate changes on cash		(64.4	)			(4.9	)
Net increase in cash and cash equivalents		1,543.0				44.2
Cash and cash equivalents, beginning of period		351.5				308.3
Cash and cash equivalents, end of period	$	1,894.5			$	352.5

FAQ

What were Roper Technologies' Q3 2022 earnings results?

Roper Technologies reported Q3 2022 earnings with GAAP DEPS of $2.59, a 31% increase year-over-year, and adjusted DEPS of $3.67, an 18% increase.

What is Roper's revenue for Q3 2022?

Roper Technologies reported a total revenue of $1.35 billion for Q3 2022, marking a 10% increase from the previous year.

What guidance has Roper Technologies provided for 2022?

Roper Technologies has increased its full-year adjusted DEPS guidance to between $14.09 and $14.13.

How much did Roper's adjusted EBITDA increase in Q3 2022?

Roper Technologies' adjusted EBITDA increased by 12% to $555 million in Q3 2022.