Roper Technologies, Inc. · NASDAQ:ROP
Roper Technologies — Q4 2020 Earnings Presentation
30 slides from Roper Technologies's earnings presentation, Jan 29, 2021
Slide 1: Q4 2020 Financial Results
A DIVERSIFIED TECHNOLOGY COMPANY Q4 2020 FINANCIAL RESULTS JANUARY 29, 2021 SIMPLE IDEAS. POWERFUL RESULTS.
Slide 2: Safe Harbor Statement
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,
Slide 3: Reg. G Disclosure
REG. G DISCLOSURE Today’s Conference Call Will Discuss Results Primarily on an Adjusted (Non-GAAP) Basis. The Q4 Results are Adjusted for the Following Items: (1) Acquisition-Related Intangible Amortization Expense (2) Purchase Accounting Adjustments to Acquired Deferred Revenue and Related Commissi
Slide 4: Roper Conference Call
ROPER CONFERENCE CALL • Q4 & 2020 Highlights and Financial Results • Segment Performance • 2021 Guidance • Q&A PAGE 4
Slide 5: 2020 Enterprise Highlights
2020 ENTERPRISE HIGHLIGHTS • Strong Financial Performance Through Pandemic Demonstrates Durable Growth Model – Revenue and EBITDA +3% – Free Cash Flow +16% • Grew Software Recurring Revenue MSD, Further Solidifying Leadership Positions in Niche Vertical Markets • Nimble Execution from Businesses tha
Slide 6: Consistent Cash Flow Compounding
CONSISTENT CASH FLOW COMPOUNDING REVENUE EBITDA +9% CAGR +10% CAGR $5,199 $5,377 $5,539 $1,806 $1,925 $1,981 $4,665 $1,605 $3,593 $3,805 $1,245 $1,315 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 OPERATING CASH FLOW* FREE CASH FLOW* +13% CAGR +13% CAGR $1,717 $1,668 $1,430 $1,501 $1,3
Slide 7: 2021 Enterprise Outlook
2021 ENTERPRISE OUTLOOK • Double-Digit Revenue and EBITDA Growth; Strong Cash Conversion • Software Businesses Positioned for Accelerating Growth; Enter 2021 with Tailwind from Higher Recurring Revenue Base • Loosening Restrictions on Medical Procedures Aid Product Businesses; Verathon Expanded Inst
Slide 8: Q4 Income Statement Metrics
Q4 INCOME STATEMENT METRICS Q4’19 Q4’20 Revenue $1,400 $1,510 +8%; Organic (2)% Gross Profit $898 $972 Gross Margin 64.1% 64.3% +20 Bps EBITDA $518 $552 +7% EBITDA Margin 37.0% 36.6% (40) Bps Interest Expense $49 $64 Tax Rate 21.6% 19.9% Net Earnings $356 $378 DEPS $3.39 $3.56 +5% In $ millions, exc
Slide 9: Q4 Segment Results
Q4 SEGMENT RESULTS APPLICATION SOFTWARE NETWORK SOFTWARE & SYSYEMS 37% of Roper Revenue 30% of Roper Revenue +35% vs PY +4% vs PY Revenue $554 Revenue $448 (2)% Organic +2% Organic EBITDA $242 43.7% Margin EBITDA $191 42.7% Margin • MSD Recurring Revenue Growth; Continued • Network Software Organic
Slide 10: Net Working Capital
NET WORKING CAPITAL NET WORKING CAPITAL (1) (2) AS % OF Q4 ANNUALIZED REVENUE 2018 2019 2020 Q4’18 Q4’19 Q4’20 (I) Inventory 4.1% 3.6% 3.3% (3.4)% (R) Receivables 16.7% 17.8% 18.2% (5.3)% (P) Payables & 11.9% 11.6% 13.2% Accruals (8.0)% (D) Deferred 12.2% 15.1% 16.3% Revenue Total (I+R-P-D) (3.4)% (
Slide 11: 2020 Cash Flow Performance
2020 CASH FLOW PERFORMANCE • Q4 Free Cash Flow: $558M FULL YEAR FREE CASH FLOW* in $ millions – +23% vs Prior Year – 37% of Revenue +16% • FY Operating Cash Flow: $1.72B* – +14% vs Prior Year $1,668 – 31% of Revenue • FY Free Cash Flow: $1.67B* $1,438 – +16% vs Prior Year – 84% of EBITDA 2019 2020 T
Slide 12: Balance Sheet Update
BALANCE SHEET UPDATE • Deployed $6.0B in High-Quality Software Acquisitions in 2020 – No Change to Solid Investment Grade Credit Ratings – Blended Cost of Financing ~1% • Reduced Leverage by ~$500M in Q4 Post Close of EPSi Acquisition on October 15th • Expect Asset-Light Businesses to Drive Rapid De
Slide 13: Segment Performance
SEGMENT PERFORMANCE
Slide 14: FY 2020 Results vs April Guidance
FY 2020 RESULTS VS APRIL GUIDANCE APRIL ORGANIC FY 2020 SEGMENT KEY FACTORS HIGHLIGHTED IN APRIL WHAT HAPPENED GUIDANCE RESULTS • High Level of Recurring Revenue • Recurring Up MSD; Strong Retention; Increasing Bookings Shift to SaaS Application • Timing of License Sales, Expect Delays • Perpetual L
Slide 15: Application Software
APPLICATION SOFTWARE FY 2020 HIGHLIGHTS FY 2020 RESULTS 33% of Roper Revenue • Accelerating Demand for SaaS Solutions Expanded Recurring Revenue Base; +14% vs PY Revenue $1,808 License/Service Declined Due to COVID +1% Organic • Deltek Growth from Continued Solid EBITDA $772 42.7% Margin Performance
Slide 16: Network Software & Systems
NETWORK SOFTWARE & SYSTEMS FY 2020 HIGHLIGHTS FY 2020 RESULTS 31% of Roper Revenue • Network Software (Primarily SaaS) +LSD from Strong Customer Retention & Network Effects +13% vs PY Revenue $1,742 • Double-Digit DAT Growth; Continued Network +3% Organic Expansion and Premium Data Offering Adoption
Slide 17: Measurement & Analytical Solutions
MEASUREMENT & ANALYTICAL SOLUTIONS FY 2020 HIGHLIGHTS FY 2020 RESULTS 27% of Roper Revenue • Outstanding Verathon Growth from COVID Driven Demand for Video Intubation (8)% vs PY Revenue $1,470 +1% Organic – Expanded GlideScope Installed Base and Industry Shift to New Technology Creates EBITDA $508 3
Slide 18: Process Technologies
PROCESS TECHNOLOGIES FY 2020 HIGHLIGHTS FY 2020 RESULTS 9% of Roper Revenue • COVID Negatively Impacted O&G Businesses and Broad Base of Short Cycle (21)% vs PY Revenue $519 End Markets (21)% Organic • Delayed Project Timing and Reduced EBITDA $156 30.0% Margin Customer Facility Access Limited Activ
Slide 19: 2021 Guidance
2021 GUIDANCE
Slide 20: 2021 Full Year Segment Guidance
2021 FULL YEAR SEGMENT GUIDANCE 2020 ORGANIC REVENUE 2021 ORGANIC REVENUE FRAMEWORK Application Software +1% +MSD Recurring Up MSD; Strong Retention; Increasing Bookings Shift to SaaS Up MSD+; Tailwind from Mix Shift to SaaS Services Down MSD; COVID Impacted Pipelines and Implementations Flat as Pip
Slide 21: Establishing 2021 Guidance
ESTABLISHING 2021 GUIDANCE • Full Year Adjusted DEPS: $14.35 - $14.75 – Total Revenue Growth: Mid-Teens • Organic: MSD+ – Tax Rate: 21 - 22% • Q1 Adjusted DEPS: $3.26 - $3.32 – 22 - 23% of Year, Normal Seasonality • Note: Q1'19 Included $0.41 Tax Benefit; Q1'20 Was Higher Due to COVID Timing Guidanc
Slide 22: Year End Summary
YEAR END SUMMARY • Great Execution Against Challenging Backdrop – Revenue +3% to $5.54B; (1)% Organic – EBITDA +3% to $1.98B; EBITDA Margin 35.8%, Flat vs Prior Year – Free Cash Flow +16% to $1.67B; 30% of Revenue and 84% of EBITDA – Significant Forward Progress on Strategy and Innovation – Deployed
Slide 23: Appendix
APPENDIX
Slide 24: Reconciliations I
RECONCILIATIONS I Adjusted Revenue, Gross Profit and EBITDA Reconciliation ($M) Q4 2019 Q4 2020 V% FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 V% Adjusted Revenue Reconciliation GAAP Revenue $ 1,395 $ 1,505 8% $ 3,582 $ 3,790 $ 4,607 $ 5,191 $ 5,367 $ 5,527 3% Purchase accounting adjustment to a
Slide 25: Reconciliations II
RECONCILIATIONS II Adjusted Revenue Growth Reconciliation Network Measurement Q4 2020 Application Software & & Analytical Process Software Systems Solutions Technologies Roper Organic (2%) 2% 1% (21%) (2%) Acquisitions/Divestitures 36% 2% (6%) - 9% Foreign Exchange 1% - 1% 1% 1% Total Adjusted Reven
Slide 26: Reconciliations III
RECONCILIATIONS III Adjusted Revenue Growth Reconciliation Network Measurement FY 2020 Application Software & & Analytical Process Software Systems Solutions Technologies Roper Organic 1% 3% 1% (21%) (1%) Acquisitions/Divestitures 13% 10% (9%) - 4% Foreign Exchange - - - - - Total Adjusted Revenue G
Slide 27: Reconciliations IV
RECONCILIATIONS IV Adjusted Net Earnings Reconciliation ($M) C Q4 2019 Q4 2020 V% FY 2019 FY 2020 V% GAAP Net Earnings $ 871 $ 256 (71%) $ 1,768 $ 950 (46%) Purchase accounting adjustment to acquired deferred A A revenue and commission expense 4 3 8 8 Restructuring charge associated with certain Pro
Slide 28: Reconciliations V
RECONCILIATIONS V Adjusted DEPS Reconciliation C Q4 2019 Q4 2020 V% FY 2019 FY 2020 V% GAAP DEPS $ 8.28 $ 2.41 (71%) $ 16.82 $ 8.98 (47%) Purchase accounting adjustment to acquired deferred A A revenue and commission expense 0.04 0.03 0.08 0.07 Restructuring charge associated with certain Process Te
Slide 29: Footnotes
FOOTNOTES A. 2020 actual results and 2021 forecast of estimated acquisition-related fair value adjustments to deferred revenue and commission expense related to the acquisitions of Foundry, iPipeline, and Vertafore as shown below ($M except per share data). Q4 2020A FY 2020A Q1 2021E FY 2021E Pretax
Slide 30: A Diversified Technology Company
A DIVERSIFIED TECHNOLOGY COMPANY